Document:

Prepared by R.R. Donnelley Financial -- Form of Exec. Separation Agrmt for J. Bruce Riddle

  
 EXHIBIT 10.2 
  
 SEPARATION AND RELEASE AGREEMENT 
  
 THIS
SEPARATION AGREEMENT (“Agreement”), dated as of July 15, 2002, is by and between J. Bruce Riddle (“Riddle”), and Pacific Continental Bank, an Oregon state-chartered bank (the “Bank”), and Pacific Continental Corporation
(the “Corporation”). 
  
 Riddle, the Bank and the Corporation are parties to an Employment Agreement dated
April 24, 2001 (the “Employment Agreement”). The parties desire that Riddle’s employment with the Bank and the Corporation terminate effective on July 15, 2002 and intend for this Agreement to fully satisfy and supercede the
provisions set forth in Sections 1 through 9(f) of the Employment Agreement. However, Sections 9(g) through 16 of the Employment Agreement shall remain in full force and effect. 
  
 In exchange for the mutual promises and covenants contained herein and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged,
Riddle, the Bank and the Corporation agree as follows: 
  
 1.  Termination of
Employment.    The parties agree that Riddle’s employment as President and Chief Executive Officer of the Bank and Corporation, and his related service on all official and unofficial committees or bodies of the Bank and
the Corporation in his capacity as an officer of the Bank and the Corporation terminated effective as of July 15, 2002. Riddle hereby resigns from the Board of Directors of the Bank and the Corporation effective as of July 15, 2002. 

 
 2.  Severance Pay.    As severance pay, the Bank and the Corporation shall
continue to pay to Riddle his current base salary, less normal tax withholdings, in accordance with the Bank’s normal payroll schedule through July 15, 2003, with the final payment to be made on July 15, 2003. 
  
 3.  Vacation.    Concurrently with the execution of this Agreement, Bank shall pay to
Riddle $24,175, approximately the cash of value of all vacation accrued but unused through July 15, 2002. 
  
 4.  Bonus.    In January 2003 (but in any event not later than the date the Bank and/or Corporation pays related bonuses to its other officers), the Bank and Corporation will pay to Riddle
$177,500, the amount agreed to between the parties as satisfaction of the bonus payment required in Section 6 of the Employment Agreement. 
  
 5.  Bank Automobile.    The Bank hereby sells to Riddle the 1998 Suburban that the Bank currently furnishes for his use and will, promptly after the execution of
this Agreement, transfer title to such vehicle to Riddle free and clear of all liens or encumbrances (other than liens attributable to Riddle). The parties agree that the value for vehicle is $2,500; such amount shall be deducted from the amount
payable by the Bank and/or the Corporation to Riddle under the terms of this Agreement. The parties agree that Bank and Corporation shall no longer be responsible for any charges relating to the Suburban, including insurance, maintenance and fuel,
after July 15, 2002. 

  
 6.  Club
Memberships.    During his employment, the Bank has provided Riddle with memberships to the Eugene Country Club, the Downtown Athletic Club, and the Arlington Club in Portland (the “Memberships”). In order to enable
Riddle to maintain the Memberships through July 31, 2003, concurrently with the execution of this Agreement the Bank and/or the Corporation will pay to Riddle a lump sum of $6,339 ($1,605—Downtown Athletic Club; $3,888—Eugene Country Club
(including food allowance); and $846—Arlington Club). The Bank and/or the Corporation will have no further obligations to Riddle with respect to the Memberships. 
  
 7.  Sporting Tickets.    For the 2002-2003 University of Oregon sports season, the Bank and Corporation will permit
Riddle to use four (4) football season tickets and two (2) basketball season tickets (collectively, the “Tickets”). With regard to the football tickets, the Bank will be entitled to initially select four (4) tickets and Riddle will be
entitled to select his four (4) tickets from the remaining tickets available to the Bank and the Corporation. With regard to the basketball tickets, Riddle will be entitled to the two (2) tickets that he used during the 2001-2002 season. The Bank
will deliver the Tickets to Riddle promptly after receipt thereof. At the conclusion of the 2002-2003 sports season, the Bank and/or the Corporation will use their best efforts to transfer the rights to the Tickets to Riddle and will thereafter have
no further obligations to Riddle with respect to the Tickets. If the Bank and/or the Corporation are unable to transfer the Tickets to Riddle, Riddle will be entitled to continued use of the Tickets, so long as Riddle pays to the Bank or the
Corporation, prior to the start of the applicable sporting season, (a) the amount that the Bank and/or the Corporation are required to pay for the Tickets; and (b) the pro rata portion that the Bank and/or the Corporation are required to contribute
to the Duck Fund to be eligible to purchase season tickets. 
  
 8.  Health, Dental, Life
and Disability Coverage.    The Bank and Corporation will continue Riddle’s participation in the group health, dental, life and disability insurance plans, or, if that is not possible, the Bank and Corporation shall pay
on a monthly basis an amount equivalent to the monthly cost of premiums for Riddle’s health, dental, life and disability insurance continuation coverage on a monthly basis through July 31, 2003, plus any amount equal to cover any applicable
income taxes to Riddle, unless he obtains such coverages or is eligible to obtain such coverages sooner from another employer at no cost to Riddle. Riddle agrees to promptly notify the Bank and Corporation when he obtains such other health, dental,
life or disability insurance or becomes eligible to do so. After July 31, 2003, Riddle will be entitled to extend COBRA benefits an additional six months at his own expense. Through June 1, 2003, the Bank and/or the Corporation will continue to pay
the COBRA benefits for Riddle’s former spouse. 
  
 9.  Expense
Reimbursement.    Riddle acknowledges that he has presented and been reimbursed for all expense account charges to which he is entitled, and that the Bank and Corporation have no further obligation for any such expenses
incurred by him. 
  
 10.  Return of Property.    Riddle
acknowledges that he has taken all of his personal property from Bank premises, and confirms that he has returned to the Bank and Corporation any of its property, including but not limited to: keys, computer equipment, software, customer lists,
documents, files and correspondence. The Bank and Corporation acknowledge that Riddle may 
 

 2 

  
 retain originals and/or copies of any agreements, correspondence and/or other
communications personal to him or to which he is a party. 
  
 11.  Stock
Options.    The Company agrees to accelerate the vesting on 2,200 of the options granted to Riddle in September 2000 (such that a total of 6,600 of such options are now vested and fully exercisable) and 1,650 of the options
granted in August 2001 (such that a total of 3,300 of such options are now vested and fully exercisable). Riddle acknowledges that, pursuant to the Company’s Employee Stock Option Plan, all of his vested stock options will terminate if not
exercised by Riddle within ninety (90) days of the date Riddle’s employment terminated. 
  
 12.  Triggering Event.    The parties agree that for purposes of Section 10(a)(3) of the Employment Agreement termination of Riddle’s employment relationship with the Bank and Corporation
shall be deemed a termination of Riddle’s employment by the Bank “without Cause” and that upon the occurrence of a Triggering Event as described in such Section 10(a)(3), Riddle will be entitled to receive the payment and benefits
described in Section 10(b) of the Employment Agreement. The parties further agree that, notwithstanding anything that may be contained herein or in the Employment Agreement to the contrary, Riddle’s rights under Section 10 of the Employment
Agreement may not be further modified, amended or terminated without the express written agreement of Riddle. 
  
 13.  Nondisparagement.    The parties agree that they shall refrain (and the Bank and Corporation shall cause its officers, directors and employees to refrain) from making any remarks or
statements about each other, whether oral or written, that disparage the other party’s character, goodwill or reputation. 
  
 14.  Release by Riddle.    Riddle hereby releases and forever discharges the Bank and Corporation and its proposed parent corporation, directors, officers,
attorneys and other affiliates of and from all debts, demands, actions, causes of action, suits, accounts, covenants, contracts, agreements, damages, and any and all claims, demands and liabilities whatsoever of every name and nature, both in law
and in equity, against the Bank and Corporation or its parent or affiliates or their successors and assigns which Riddle now has or ever had to this date, including without limitation all rights and any claims under any state or federal
discrimination law; except that this paragraph does not release the Bank and Corporation’s obligations under this Agreement, the Bank and Corporation’s under Sections 9(g) through 16 of the Employment Agreement, or any claims Riddle may
have under the Age Discrimination Employment Act of 1967, as amended, that may arise after the effective date of this Agreement. 
  
 15.  Cooperation.    Riddle further agrees that, for a period of four years after the date of this Agreement, at the reasonable written request of the Bank and
Corporation, he will, without compensation, reasonably cooperate with the Bank and Corporation with respect to any actual or potential litigation, investigation, legal proceedings or dispute arising out of or in connection with the financial
affairs, legal affairs and/or business matters of the Bank and Corporation within his knowledge, including providing truthful and accurate information, to his knowledge, concerning such matters, testifying in regards to such matters and/or appearing
in person with respect to such matters (at times and places reasonably acceptable to Riddle); provided that (a) the Bank and Corporation shall be responsible for any reasonable travel and/or other out-of- 
 

 3 

  
 pocket costs or expenses that Riddle may reasonably incur in connection
therewith, and (b) after the one-year anniversary of this Agreement (July 15, 2003), in the event that such cooperation requires that Riddle travel out of town or spend more than one business day on any such matter, the Bank and Corporation shall
also compensate Riddle at the rate of $100 per hour for such time, up to a maximum of $1,000 per day. For his actions as a director of the Bank and the Corporation, the Bank and Corporation agree to indemnify and hold harmless Riddle to the full
extent permitted by the Bank’s and the Corporation’s Articles of Incorporation. With regard to the indemnification of Riddle, the parties will enter into an indemnification agreement, substantially in the form attached as Exhibit A to this
Agreement. 
  
 16.  Release by the Bank and Corporation.    The
Bank and Corporation, on behalf of themselves and their respective parent corporations, subsidiary corporations, directors, officers, attorneys and other affiliates, and their respective successors, heirs and assigns, each hereby releases and
forever discharges Riddle, his attorneys and other affiliates, and their respective successors, heirs, assigns, of and from all debts, demands, actions, causes of action, suits, accounts, covenants, contracts, agreements, damages, and any and all
claims, demands and liabilities whatsoever of every name and nature, both in law and in equity, against Riddle or his attorneys and other affiliates, and their respective successors, heirs, assigns, which the Bank, Corporation, or any of their
respective parent corporations, subsidiary corporations, directors, officers, attorneys and other affiliates, or their respective successors, heirs and assigns, now has or ever had to this date; except that this paragraph does not release any claims
in respect of fraud, larceny or misappropriation of funds by Riddle or any of Riddle’s obligations under this Agreement or under Sections 9(g) through 16 of the Employment Agreement, that may arise after the effective date of this Agreement.

  
 17.  OWBPA Compliance.    Riddle acknowledges that his
assent to this Agreement’s terms is wholly voluntary and that he has retained and had the opportunity to consult with counsel and that he fully understands said Agreement. Riddle acknowledges that he has been given a period of at least
twenty-one (21) days to consider this Agreement. Riddle may revoke this Settlement and Release Agreement at any time during the seven (7) day period after he signs it. This Agreement shall not become effective until said revocation period has
expired. 
  
 18.  Continuing Provisions of Employment
Agreement.    The parties acknowledge and agree that the provisions of Sections 9(g) through 16 of the Employment Agreement shall survive the termination of Riddle’s employment relationship with the Bank and Corporation.

  
 19.  Entire Agreement.    Except for Sections 9(g) through
16 of the Employment Agreement, this Agreement sets forth the entire agreement between Riddle and the Bank and Corporation. Riddle acknowledges that in considering whether to sign this Agreement he has not relied upon any representation, written or
oral, not set forth herein. 
  
 20.  Modifications and
Waivers.    No variations or modifications hereof shall be deemed valid unless reduced to writing and signed by the parties. No waiver, express or implied, of any breach of any covenant or agreement shall ever be held or
construed as a waiver of any other breach of the same or any other covenant or agreement. 
 

 4 

  
 21.  Governing Law.    This
Agreement shall be governed by and construed under the laws of Oregon. This Agreement was made and executed in Oregon, and shall be deemed an Oregon contract. 
  
 22.  Venue.    Any dispute arising out of this Agreement may only be litigated in a court of competent jurisdiction in
Oregon, and the parties expressly waive any rights they may have to have any dispute litigated in any jurisdiction other than Oregon. 
  
 23.  Notices.    Any notices given pursuant to this Agreement shall be in writing and shall be given by either hand delivery, overnight courier (Federal
Express or similar courier service) or certified mail, return receipt requested, addressed as follows: 
  
 
	 To the Bank and Corporation:
 	  	 Pacific Continental Bank
 
	  	  	 Attention: Hal Brown, President and CEO
 
	  	  	 111 West 7th
Avenue
 
	  	  	 Eugene, Oregon 97401
 

 
  
  
 
	 To Riddle:
 	  	 J. Bruce Riddle
 
	  	  	 3530 Spring Blvd.
 
	  	  	 Eugene, Oregon 97405
 

 
  
 or to such other address of which notice has been given in
accordance with this provision. 
  
 24.  Legal Fees.    All
parties are responsible for their own costs and expenses, including legal fees. 
  
 25.  Successors and Assigns.    This Agreement shall be binding upon, and shall inure to the benefit of the Bank and Corporation and its respective successors and assigns, and Riddle, and his
respective heirs, executors, administrators, successors and assigns. 
  
 26.  Severability.    The parties intend this Agreement to be enforced as written. However, (i) if any portion or provision of this Agreement shall to any extent be declared illegal or
unenforceable by a duly authorized court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall
not be affected thereby, and each portion and provision of this Agreement shall be valid and be enforceable to the fullest extent permitted by law; and (ii) if any provision, or any part thereof, is held to be unenforceable because of the duration
of such provision or the area covered thereby, the Bank and Corporation and Riddle agree that the court making such determination shall have the power to reduce the duration and/or area of such provision, and/or to delete specific words and phrases
(“blue-penciling”) and in its reduced or blue-penciled form such provisions shall then be enforceable and shall be enforced. 
  
 27.  Captions.    All captions in this Agreement are intended solely for the convenience of the parties, and none shall be deemed to affect the meaning or
construction of any provision hereof. 
 

 5 

  
 28.  Counterparts;
Facsimile.    This Agreement may be executed in one or more counterparts, each of which will be deemed an original, but all of which taken together will constitute one and the same document. Delivery of an executed signature
page to this Agreement shall be as effective as delivery of a manually signed counterpart. 
  
 [signatures appear on
following page] 
 

 6 

  
 IN WITNESS WHEREOF, THE PARTIES HAVE DULY EXECUTED THIS AGREEMENT AS OF THE DATE
FIRST ABOVE WRITTEN. 
  
 
	 
	 By:
 	 	 /s/    J. BRUCE
RIDDLE        
 

	  	 	 J. Bruce Riddle
 

 
  
 
	 PACIFIC CONTINENTAL BANK
  
 
	 
	 By:
 	 	 /s/    HAL BROWN       
 

	  	 	 Hal Brown
 President &
CEO
 

 
  
 
	 PACIFIC CONTINENTAL CORPORATION
  
 
	 
	 By:
 	 	 /s/     HAL BROWN        

	  	 	 Hal Brown
 President &
CEO
 

 
 

 7EXHIBIT 10.1

                            STOCK PURCHASE AGREEMENT

                                  by and among

                      BONSO ELECTRONICS INTERNATIONAL INC.

                       MODUS ENTERPRISE INTERNATIONAL INC.

                                  MOHAN THADANI

                           GRAM PRECISION SCALES INC.

                                  JULY 31, 2002

--------------------------------------------------------------------------------

<PAGE>

                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

ARTICLE I TERMS OF PURCHASE AND SALE ..........................................1
1.1        Purchase and Sale of Shares of the Company  ........................1
1.2        The Closing   ......................................................1
1.3        Purchase Price......................................................1
1.4        Purchase Price Adjustment...........................................2
1.5        Escrow of Portion of Purchase Price.................................4
1.6        Shareholders' Loans.................................................5

ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER............................5
2.1        Corporate Existence of Company, Etc.................................5
2.2        Capitalization......................................................5
2.3        Title to Shares.....................................................5
2.4        Consents and Approvals..............................................6
2.5        No Conflicts........................................................6
2.6        Subsidiaries........................................................6
2.7        Financial Statements................................................6
2.8        Liabilities.........................................................7
2.9        Absence of Certain Changes or Events................................7
2.10       Title to Properties.................................................8
2.11       Patents, Trade-marks, Etc...........................................8
2.12       Insurance...........................................................8
2.13       Company Contracts...................................................8
2.14       Litigation.........................................................10
2.15       Taxes..............................................................11
2.16       Compliance with Laws...............................................11
2.17       Employee Benefits and Agreements...................................11
2.18       Licenses and Permits...............................................12
2.19       Business Relations.................................................12
2.20       Interest in Competitors, Suppliers, Customers, Etc.................12
2.21       Promissory Notes and Accounts Receivable...........................12
2.22       Employee Relations.................................................13

ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER...........................13
3.1        Organization.......................................................13
3.2        Corporate Power and Authority......................................13
3.3        No Conflicts.......................................................13
3.4        Investment Intent..................................................13
3.5        Consents...........................................................14
3.6        SEC Documents; Financial Information...............................14
3.7        Litigation.........................................................14

                                       ii
<PAGE>

                                                                            PAGE
                                                                            ----

ARTICLE IV CERTAIN COVENANTS OF THE PARTIES...................................14
4.1        Conduct of Business................................................14
4.2        Undertakings.......................................................15
4.3        Access.............................................................15
4.4        Confidentiality....................................................16
4.5        Exclusivity........................................................16
4.6        Personal Guarantees................................................16
4.7        Bonso Indemnity and Personal Guarantee.............................17

ARTICLE V COVENANTS RELATING TO THE SHARES....................................17
5.1        Legend on Shares...................................................17
5.2        Registration Under the 1933 Act....................................17
5.3        Lockup Agreement...................................................19

ARTICLE VI CONDITIONS TO BUYER'S OBLIGATIONS..................................19
6.1        Representations, Warranties and Covenants of Seller................19
6.2        Further Action.....................................................19
6.3        No Governmental or Other Proceeding................................19
6.4        Delivery of Shares.................................................19
6.5        Resignations.......................................................19
6.6        Non-Competition Agreements.........................................20

ARTICLE VII CONDITIONS TO SELLER'S OBLIGATIONS................................20
7.1        Representations, Warranties and Covenants of Buyer.................20
7.2        Further Action.....................................................20
7.3        No Governmental or Other Proceeding................................20

ARTICLE VIII SURVIVAL AND INDEMNIFICATION.....................................20
8.1        Survival...........................................................20
8.2        Indemnification....................................................21
8.3        Notice of Claim....................................................21
8.4        Defense............................................................21

ARTICLE IX TERMINATION PRIOR TO CLOSING.......................................21
9.1        Termination of Agreement...........................................21
9.2        Termination of Obligations.........................................22

ARTICLE X MISCELLANEOUS.......................................................22
10.1       Entire Agreement...................................................22
10.2       Successors and Assigns.............................................22
10.3       Counterparts.......................................................22
10.4       Headings...........................................................22
10.5       No Waiver..........................................................23

                                      iii
<PAGE>

                                                                            PAGE
                                                                            ----

10.6       Expenses...........................................................23
10.7       Notices............................................................23
10.8       Further Assurances.................................................24
10.9       Governing Law......................................................24
10.10      Dispute Resolution; Arbitration....................................24
10.11      English Language...................................................25
10.12      Public Announcements...............................................25
10.13      Specific Performance...............................................25
10.14      Facsimile Signatures...............................................25

                                       iv
<PAGE>

                        CONTENTS OF DISCLOSURES SCHEDULE

                                                                         SECTION
                                                                         -------
Company Certificate of Incorporation.........................................2.1
Company By-Laws..............................................................2.1
Consents and Approvals.......................................................2.4
No Conflicts.................................................................2.6
Subsidiaries.................................................................2.7
Financial Statements.........................................................2.7
Liabilities..................................................................2.8
Absence of Changes...........................................................2.9
Title to Properties.........................................................2.10
Patents, Trade-marks, etc...................................................2.11
Insurance...................................................................2.12
Company Contracts...........................................................2.13
Litigation..................................................................2.14
Taxes.......................................................................2.15
Compliance with Law.........................................................2.16
Employee Benefits and Agreements............................................2.17
Consents....................................................................2.18
Licenses and Permits........................................................2.19
Business Relations..........................................................2.20
Interest in Competitors, Suppliers, Customers, etc..........................2.21
Consents.....................................................................3.5
Litigation...................................................................3.6

                                       v
<PAGE>

                              LIST OF DEFINED TERMS

                                                                         SECTION
                                                                         -------
"Accounting Firm"............................................................1.4
"Ancillary Documents"......................................................10.10
"Bonso".................................................................Preamble
"Bonso Shares"...............................................................1.3
 "Buyer"................................................................Preamble
"Buyer's Review Accountants".................................................1.4
"Cash Portion"...............................................................1.3
"Closing"....................................................................1.2
"Closing Date"...............................................................1.2
"Closing Balance Sheet"......................................................1.4
"Company"...............................................................Preamble
"Company Contracts".........................................................2.13
"Confidential Information"...................................................4.4
"Encumbrances"...............................................................2.3
"Final Closing Balance Sheet"................................................1.4
"Financial Statements".......................................................2.7
"Gap Amount".................................................................1.4
"ICC Rules"................................................................10.10
"Indemnified Party"..........................................................8.2
"Indemnifying Party".........................................................8.2
"Insurance Policies"........................................................2.12
"Interim Balance Sheet"......................................................2.7
"Litigation"...............................................................2.14
"Material Permits".........................................................2.18
"Modus".................................................................Preamble
"Most Recent Financial Statements" ..........................................2.7
"Note".......................................................................1.3
"Notice"....................................................................10.7
"Notice of Disagreement".....................................................1.4
"Official Documents........................................................10.11
"Patent and Trade-mark Rights"..............................................2.11
"Provider"..................................................................4.4
"Purchase Price".............................................................1.3
"Reasonable Investigation"..................................................2.11
"Recipient"..................................................................4.4
"Registration Statement".....................................................5.2
"SEC"........................................................................5.2
"SEC Documents"..............................................................3.6
"Second Note"................................................................1.4
"Securities Act".............................................................1.3
"Seller"................................................................Preamble
"Seller Affiliates"..........................................................5.2
"Shareholder Loans"..........................................................1.5
"Shares"...............................................................Recital B
"Stock Portion"..............................................................1.3
"Subsidiary".................................................................2.6
"Subsidiaries"...............................................................2.6
"Taxes".....................................................................2.15
"Thadani"...............................................................Preamble
"U.S. GAAP"..................................................................1.4
"Vector Distribution"........................................................2.7

                                       vi
<PAGE>

                            STOCK PURCHASE AGREEMENT

     THIS AGREEMENT, made and entered into as of this 31st day of July, 2002
between Gram Precision Scales, Inc., an Ontario corporation (the "Company"),
Mohan Thadani ("Thadani" or the "Seller") and Bonso Electronics International
Inc., a British Virgin Islands International Business Company (the "Bonso") and
Modus Enterprise International, Inc., a wholly-owned British Virgin Islands
International Business Company ("Modus" or the "Buyer").

                                    RECITALS

     A. Seller owns of record and beneficially 51% of all of the outstanding
shares of capital stock of the Company; and

     B. Seller desires to sell to Buyer, and Buyer desires to buy from Seller,
51% of the issued and outstanding shares of the common stock of the Company (the
"Shares");

     C. Buyer will purchase the Shares from Seller through Modus.

     NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements contained herein, and upon the terms and subject to the
conditions hereinafter set forth, the parties do hereby agree as follows:

                                    ARTICLE I
                           TERMS OF PURCHASE AND SALE

     1.1 Purchase and Sale of Shares of the Company. On the Closing Date, Seller
shall sell to Buyer, and Buyer shall purchase from Seller, the Shares for the
purchase price specified herein. At the Closing, Seller shall deliver to Buyer
certificates representing all of the Shares which are required to be delivered
or are otherwise deliverable by Seller pursuant hereto at the Closing duly
endorsed in blank for transfer or accompanied by duly executed stock powers
assigning such Shares in blank, and Buyer shall deliver the Purchase Price to
Seller.

     1.2 The Closing. The purchase and sale of the Shares shall take place at
the offices of Pallett Valo, LLP, 90 Burnhamthorpe Road West, Suite 1600,
Mississauga, Ontario L5B 3C3 at 10:00 a.m. on August 1, 2002, or at such other
place and/or other date as the parties may mutually agree (the "Closing Date").
The Closing shall be deemed to have taken place at 11:59 P.M. on July 31, 2002.

     1.3 Purchase Price. Subject to the purchase price adjustment provided for
in paragraph 1.4 below and the escrow provisions of paragraph 1.5 below, the
purchase price shall be 125,000 shares of Bonso's Common Stock and the sum of
U.S. $1,000,000 payable in cash and through issuance of a promissory note as
described below (the "Purchase Price"). The Purchase Price shall be satisfied on
the Closing Date as follows:

                                       1
<PAGE>

     (i)  subject to the purchase price adjustment provided for in paragraph 1.4
          below and the escrow provisions of paragraph 1.5 below, the Buyer will
          pay to the Seller the sum of U.S. $500,000 in cash or by certified
          cheque, money order or bank draft (the "Cash Portion");

     (ii) the Buyer shall provide the Seller with a share certificate evidencing
          the ownership by the Seller of 125,000 shares of Bonso's common stock
          (the "Bonso Shares") (the "Stock Portion"), and

     (iii) subject to the escrow provisions of paragraph 1.5 below, the Buyer
          shall provide the Seller with a non-interest bearing promissory note
          (the "Note") in the amount of U.S. $500,000 payable in five (5) equal
          annual payments. The form of the Note is to be satisfactory to the
          Seller in its reasonable discretion.

     Bonso's Common Stock, which comprises the Stock Portion of the Purchase
Price, will be "restricted," as that term is defined in Rule 144 adopted under
the Securities Act of 1933, as amended (the "Securities Act"). The stock will be
issued by Bonso under an appropriate exemption from the registration
requirements of the Securities Act, including, but not limited to the statutory
exemption under Section 4(2) of the Securities Act, and the exemption for the
offshore offer and sale of securities set forth in Regulation S adopted under
the Securities Act. Seller will make all necessary investment representations
required to establish an exemption from the registration requirements of the
Securities Act. Bonso will register the shares of Bonso's Common Stock issued to
Seller for resale under the Securities Act as provided for in Paragraph 5.2
below.

     1.4 Purchase Price Adjustment.

     (i)  The Purchase Price shall be increased or decreased based upon the
          amount of Shareholders' Equity on the "Final Closing Balance Sheet",
          as defined and determined in paragraph 1.4(ii) below. Shareholders'
          Equity shall mean total assets minus total liabilities as set forth on
          the Final Closing Balance Sheet. Any adjustment in the Purchase Price
          shall be applied one-half to the Cash Portion and one-half to the
          Note. To the extent that Shareholders' Equity on July 31, 2002, as
          reflected on the Final Closing Balance Sheet, exceeds Five Hundred
          Thousand United States Dollars (U.S. $500,000) then the Purchase Price
          shall be increased by the difference between the Shareholders Equity
          and $500,000. For example, if the Shareholders' Equity on July 31,
          2002, is U.S. $600,000, then the Purchase Price shall be increased by
          U.S. $100,000 with the Cash Portion increased from U.S. $500,000 to
          U.S. $550,000 and the amount to be paid pursuant to the Note increased
          from U.S. $500,000 to U.S. $550,000. If the Purchase Price is
          increased in accordance with this paragraph, the Buyer shall
          immediately pay to the Seller the increase in the Cash portion by
          certified cheque, bank draft or money order, and a second promissory
          note (the "Second Note") shall be immediately prepared and signed by
          the Buyer, on the same terms and conditions as the Note, evidencing
          such extra payment and the Second Note shall be immediately delivered
          to the Seller. To the extent that total Shareholders' Equity on July
          31, 2002, as reflected on the Final Closing Balance Sheet is less than
          Five Hundred Thousand United States Dollars (U.S. $500,000) then the
          Purchase Price shall be decreased by the difference between the

                                       2
<PAGE>

          Shareholders Equity and $500,000 (hereinafter referred to as the "Gap
          Amount"). For example, if the Shareholders' Equity on July 31, 2002,
          is U.S. $100,000, then the Purchase Price shall be decreased by U.S.
          $400,000 (i.e., the Gap Amount) with the Cash Portion decreased from
          U.S. $500,000 to U.S. $300,000 and the Note decreased from U.S.
          $500,000 to U.S. $300,000. If the Purchase Price is decreased in
          accordance with this paragraph, Seller shall immediately pay to Buyer
          the decrease in the Cash Portion by certified cheque, bank draft or
          money order, and a Second Note shall be immediately prepared and
          signed by the Buyer, on the same terms and conditions as the Note,
          evidencing the new lower principal amount and the Second Note shall be
          immediately delivered to the Seller in exchange for the Note which
          shall then be cancelled. The calculation of the Shareholders' Equity
          shall be done in accordance with United States Generally Accepted
          Accounting Principles ("U.S. GAAP"). To the extent that Buyer's
          acquisition of its interest in the equity of the Company triggers or
          results in any liability to employees of the Company based on change
          of control provisions in either employment agreements or under
          applicable law, then the Purchase Price shall be further reduced for
          any such liabilities.

     (ii) Not later than August 7, 2002, or a soon as reasonably practical
          thereafter, Thadani shall cause the Company to prepare and deliver to
          Buyer a balance sheet as of July 31, 2002, prepared in accordance with
          U.S. GAAP and in a manner that is consistent with prior practise (the
          "Final Closing Balance Sheet"). Buyer shall select an accounting firm
          or accountant ("Buyer's Review Accountants") to perform certain
          procedures and tests on the Final Closing Balance Sheet, in order to
          determine if Buyer accepts the Final Closing Balance Sheet for
          purposes of the adjustment to the purchase price.

     (iii) During the 45-day period following Buyer's receipt of the Final
          Closing Balance Sheet, Buyer, Buyer's Review Accountants, or Buyer's
          designated agents shall be permitted to review and make copies of (a)
          any of the Company's working papers relating to the Final Closing
          Balance Sheet, and (b) any supporting schedules, supporting analyses
          and other supporting documentation relating to the Final Closing
          Balance Sheet. The Company will make available electronic copies of
          their general ledger if requested by the Buyer or Buyer's Review
          Accountants. The Final Closing Balance Sheet shall become final and
          binding upon the Parties on the 46th day following delivery of the
          Final Closing Balance Sheet (unless such day is a Saturday, Sunday or
          Public Holiday in Ontario or Hong Kong in which case the date shall be
          extended until the next business day), unless Buyer gives written
          notice of disagreement with the Final Closing Balance Sheet ("Notice
          of Disagreement") to Thadani prior to such date. Any Notice of
          Disagreement shall specify in reasonable detail the nature of any
          disagreement so asserted. If a Notice of Disagreement complying with
          the preceding sentence is received by Thadani in a timely manner, then
          the Final Closing Balance Sheet (as revised in accordance with clause
          (I) or (II) below) shall become final and binding upon the parties on
          the earlier of (I) the date Thadani and Buyer resolve in writing any
          differences they have with respect to the matters specified in the
          Notice of Disagreement or (II) the date any disputed matters are
          finally resolved in writing by the Accounting Firm (as defined below).

                                       3
<PAGE>

     (iv) During the 60-day period following Thadani's receipt of a Notice of
          Disagreement that complies with the preceding paragraph, Buyer and
          Thadani shall act in good faith to resolve in writing any differences
          which they may have with respect to the matters specified in the
          Notice of Disagreement. During such period Thadani and the Company's
          independent auditors shall be permitted to review and make copies
          reasonably required of (a) the Buyer's or Buyer's Review Accountant's
          working papers (if any) relating to the preparation of the Notice of
          Disagreement; and (b) any supporting schedules, supporting analyses
          and other supporting documentation relating to the preparation of the
          Notice of Disagreement. If, at the end of such 60-day period, the
          differences as specified in the Notice of Disagreement are not
          resolved, Thadani and Buyer shall submit to an independent accounting
          firm (the "Accounting Firm") for review and resolution any and all
          matters which remain in dispute and which are properly included in the
          Notice of Disagreement. The Accounting Firm shall be a Toronto office
          of Deloitte & Touche (or another mutually acceptable independent
          public accounting firm and office agreed upon by the Parties in
          writing). Any such decision shall be final and binding upon the Buyer
          and the Seller and shall not be subject to appeal or contestation.
          Thadani and Buyer shall use reasonable efforts to cause the Accounting
          Firm to render a decision resolving the matters in dispute within 30
          days following the receipt of the submission of such matters by the
          Accounting Firm. Upon receipt by Thadani and Buyer of such decision,
          either Thadani or Buyer may request that judgment be entered upon the
          determination of the Accounting Firm in any court having jurisdiction
          over the party against which such determination is to be enforced.
          Except as specified in the following sentence, the cost of any dispute
          resolution procedure (including the fees and expenses of the
          Accounting Firm) pursuant to this paragraph 1.4 shall be borne by
          Thadani, on the one hand, and Buyer, on the other hand, in the same
          proportion as their proportionate success on matters resolved by the
          Accounting Firm, which proportionate allocations shall be determined
          by the Accounting Firm at the time the decision of the Accounting Firm
          is rendered on the merits of the matters submitted. The fees and
          expenses incurred by Buyer's Review Accountants and Price
          WaterhouseCoopers in connection with the tests and procedures
          performed upon the Final Closing Balance Sheet shall be borne by
          Buyer.

     1.5 Escrow of Portion of Purchase Price. The sum of U.S. $29,000 shall be
deducted at Closing from the Cash Portion of the Purchase Price, and shall be
held in escrow with Schlueter & Associates, P.C. pending the final determination
of the Purchase Price Adjustment in accordance with the provisions of paragraph
1.4 above, and the balance of the Cash Portion which shall be based upon the
estimated Shareholder's Equity of the Company at July 31, 2002 (as mutually
agreed to by the Parties in writing) shall be immediately paid to Thadani on
Closing. Once the Shareholders' Equity has been finally established in
accordance with paragraph 1.4 above and the Purchase Price has been adjusted,
the funds being held in Escrow shall be distributed to either the Buyer or the
Seller as is appropriate.

                                       4
<PAGE>

     1.6 Shareholder's Loans. If the Purchase Price is reduced as described in
paragraph 1.4 above, the cash portion of the Gap Amount up to a maximum of U.S.
$150,000 shall be applied toward repayment of the loans made to the Company by
Seller (the "Shareholder Loans"). The Company will then execute a promissory
note in Buyer's favor incorporating the same terms and conditions, as the
remaining Shareholder's Loans require, in the amount of the payment made to
Seller on the Shareholder Loans. After the Closing, the Company will pay the
Seller and the Buyer $20,000 (Canadian) per month until the Shareholder's Loans
are paid in full. If the Company's cash flow will not allow for both Buyer and
Seller to receive $20,000 (Canadian) payments on their Shareholder Loans, the
cash that is available for the Shareholder Loan payments shall be paid out
equally to Buyer and Seller.

                                   ARTICLE II
                    REPRESENTATIONS AND WARRANTIES OF SELLER

     Seller hereby represents and warrants:

     2.1 Corporate Existence of Company, Etc. The Company is a corporation duly
organized and validly existing, under the laws of Ontario, has all requisite
corporate power and authority to own or lease and operate its properties and to
carry on its business as presently conducted. The Company is duly qualified as a
foreign corporation, and is in good standing, in each jurisdiction listed on the
Disclosure Schedule hereto, and in each other jurisdiction where the character
of its properties owned or held under lease require it to be so qualified.
Attached to the Disclosure Schedule is a complete and correct notarial copy of
the Company's Articles of Incorporation, as amended to date, and a copy of the
Company's By-Laws, as currently in effect. This Agreement has been duly executed
and delivered on behalf of the Company and constitutes the valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except to the extent that such enforceability may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other
similar laws relating to creditors' rights generally, or (ii) subject to general
principles of equity and equitable rights.

     2.2 Capitalization. The authorized capital stock of the Company consists of
an unlimited number of common shares and an unlimited number of Class A Special
Shares, no par value per share, of which 5,500 common shares are issued and
outstanding, 2,805 of which are owned of record and beneficially by Seller, and
2,695 of which are owned of record and beneficially by Sky Group of Companies
Inc. All outstanding Shares have been duly authorized and validly issued, are
fully paid and non-assessable and were not issued in violation of any preemptive
rights. There is outstanding no security, option, warrant, right, call,
subscription, agreement, commitment or understanding of any nature whatsoever,
fixed or contingent, that directly or indirectly (i) calls for the issuance,
sale, pledge or other disposition of any Shares or of any other capital stock of
the Company or any securities convertible into, or other rights to acquire, any
such Shares or other capital stock of the Company or (ii) obligates the Company
or Seller to grant, offer or enter into any of the foregoing or (iii) relates to
the voting or control of such Shares, capital stock, securities or rights.

     2.3 Title to Shares. The sale and delivery of the Shares to Buyer pursuant
to this Agreement will vest in Buyer legal and valid title to the Shares, free
and clear of all liens, security interests, adverse claims or other encumbrances
of any character whatsoever ("Encumbrances") (other than Encumbrances contained
in the Company's Articles or created by Buyer and restrictions on re-sales of
the Shares under applicable securities laws).

                                       5
<PAGE>

     2.4 Consents and Approvals. Except as set forth on the Disclosure Schedule,
there is no authorization, consent order or approval of, or notice to or filing
with, any governmental or regulatory authority required to be obtained or given
or waiting period required to expire as a condition to: (i) the lawful
consummation by the Seller of the sale of the Shares pursuant to this Agreement,
or (ii) in connection with execution, delivery and performance by Seller of this
Agreement and the consummation by Seller of the transactions contemplated
hereby.

     2.5 No Conflicts. Except as set forth in the Disclosure Schedule, the
execution, delivery and performance of this Agreement by Seller and the
consummation by Seller of the transactions contemplated hereby will not conflict
with, or constitute or result in a breach, default or violation of (with or
without the giving of notice or the passage of time) any of the terms,
provisions or conditions of, (i) the Articles of Incorporation or By-Laws of the
Company; (ii) any law, ordinance, regulation or rule applicable to Seller or the
Company; (iii) any order, judgment, injunction or other decree by which Seller
or the Company or any of their respective assets or properties is bound; or (iv)
any written or oral contract, agreement, or commitment to which Seller or the
Company is a party or by which they or any of their respective assets or
properties is bound; nor will such execution, delivery and performance result in
the creation of any material Encumbrance upon any properties, assets or rights
of the Company, except for violations, conflicts, breaches or defaults which in
the aggregate would not materially hinder or impair the consummation of the
transactions contemplated hereby.

     2.6 Subsidiaries. Except as set forth in the Disclosure Schedule, the
Company does not own any equity ownership interest, directly or indirectly, in
any person, corporation or other entity. The entities so set forth in the
Disclosure Schedule are collectively referred to as the "Subsidiaries" and
individually as a "Subsidiary." The Company owns, either directly or indirectly
through one or more Subsidiaries, all of the shares of capital stock of the
Subsidiaries indicated on the Disclosure Schedule free and clear of any
Encumbrance (other than Encumbrances described in the Disclosure Schedule and
other than restrictions on re-sales of such shares under applicable securities
laws). All of the issued and outstanding shares of capital stock of the
Subsidiaries are validly issued, fully paid and non-assessable. Except as set
forth in the Disclosure Schedule, there are outstanding no securities
convertible into, exchangeable for, or carrying the right to acquire, equity
securities of any of the Subsidiaries, or subscriptions, warrants, options,
rights or other arrangements or commitments obligating any Subsidiary to issue
or dispose of any of its equity securities or any ownership interest therein.

     2.7 Financial Statements. Attached hereto in the Disclosure Schedules are
the following financial statements (collectively the "Financial Statements"):
(i) audited balance sheets and statements of operations, retained earnings
(deficit), and cash flows for the Company as of and for the fiscal years ended
March 31, 1999, 2000, and 2001; (ii) an audited balance sheet and statements of
operations, retained earnings (deficit), and cash flows for the Company as of
and for the eight months ended November 30, 2001; (iii) an unaudited balance
sheet and statements of operations, retained earnings (deficit), and cash flows
for the Company as of and for the six months ended May 31, 2002 (iv) an audited
balance sheet and statements of operations, retained earnings (deficit), and
cash flows for Vector Distribution Systems, Inc. ("Vector Distribution") as of

                                       6
<PAGE>

and for the five month period ended March 31, 2001; (v) an audited balance sheet
and statements of operations, retained earnings (deficit), and cash flows for
Vector Distribution as of and for the eight month period ended November 30,
2001; and (vi) ) an unaudited balance sheet and statements of operations,
retained earnings (deficit), and cash flows for Vector Distribution as of and
for the six months ended May 31, 2002. The unaudited balance sheet and
statements of operations, retained earnings (deficit), and cash flows for the
Company as of and for the six months ended May 31, 2002, and the unaudited
balance sheet and statements of operations, retained earnings (deficit), and
cash flows for Vector Distribution as of and for the six months ended May 31,
2002 are collectively referred to herein as the "Most Recent Financial
Statements." Except as noted therein, the Financial Statements (including the
notes thereto) have been prepared in accordance with Canadian GAAP in the case
of the Company and U.S. GAAP in the case of Vector Distribution, applied on a
consistent basis throughout the periods covered thereby and present fairly the
financial condition of the Company and Vector Distribution as of such dates and
the results of operations of the Company and Vector Distribution for such
periods; provided however, that the Most Recent Financial Statements are subject
to normal year-end adjustments (which will not be material individually or in
the aggregate) and lack footnotes and other presentation items.

     2.8 Liabilities. Except as set forth in the Disclosure Schedule, neither
the Company nor any Subsidiary has any debts, obligations or liabilities of
whatever kind or nature, either direct or indirect, absolute or contingent,
matured or unmatured, except debts, obligations and liabilities that are fully
reflected in, or reserved against in the Interim Balance Sheet or incurred in
the ordinary course of business subsequent to the date of the Interim Balance
Sheet.

     2.9 Absence of Certain Changes or Events. Except as set forth in the
Disclosure Schedule or except as otherwise contemplated by this Agreement, since
May 31, 2002, there has not been (a) any damage, destruction or casualty loss to
the physical properties of the Company (whether covered by insurance or not);
(b) any material change in the business, operations or financial condition of
the Company and the Subsidiaries; (c) any entry into any transaction, commitment
or agreement (including without limitation any borrowing or capital expenditure)
material to the Company and the Subsidiaries course of business; (d) any
redemption or other acquisition by the Company or any Subsidiary of the
Company's capital stock or any declaration, setting aside or payment of any
dividend or other distribution in cash, stock or property with respect to the
Company's capital stock; (e) any increase in the rate or terms of compensation
payable or to become payable by the Company or any subsidiary to its directors,
officers or employees or any increase in the rate or terms of any bonus,
pension, insurance or other employee benefit plan, payment or arrangement made
to, for or with any such directors, officers or key employees; (f) any change in
production schedules, acceleration of sales, or reduction of aggregate
administrative, marketing, advertising and promotional expenses or research and
development expenditures other than in the ordinary course of business; (g) any
sale, transfer or other disposition of any asset of the Company or the
Subsidiaries to any party, including Seller, except for payment of third-party
obligations incurred in the ordinary course of business in accordance with the
Company's or the Subsidiaries' regular payment practices; (h) any termination or
waiver of any material rights of value to the business of the Company and the
Subsidiaries; or (i) any failure by the Company or the Subsidiaries to pay their
accounts payable or other obligations in the ordinary course of business
consistent with past practice unless such account payable is disputed by the
Company or any applicable Subsidiary.

                                       7
<PAGE>

     2.10 Title to Properties. Except as set forth on the Disclosure Schedule,
the Company and the Subsidiaries have good and marketable title to all of the
assets and properties which they purport to own and which are reflected on the
Interim Balance Sheet, free and clear of all Encumbrances, except for (a) liens
for current taxes not yet due and payable or for taxes the validity of which is
being contested in good faith by appropriate proceedings, and (b) encumbrances
which individually or in the aggregate do not materially and adversely affect
the business, operations or financial condition of the Company and the
Subsidiaries.

     2.11 Patents, Trade-marks, Etc. Except as set forth in the Disclosure
Schedule, (a) the Company and the Subsidiaries own or possess adequate licenses
or other valid rights to use all Canadian and foreign patents, trade-marks,
trade names, service marks, copyrights, and applications therefor which are
material to the conduct of the business, operations or financial condition of
the Company and the Subsidiaries (the "Patent and Trade-mark Rights"); (b) the
validity of the Patent and Trade-mark Rights and the title thereto of the
Company or the Subsidiaries were not being questioned in any litigation to which
the Company or any of the Subsidiaries was a party, nor, was any such litigation
threatened or claims of third parties made; (c) to the best of Seller's actual
knowledge after Reasonable Investigation, as defined below, the conduct of the
business of the Company and the Subsidiaries as now conducted does not conflict
with any valid patents, trade-marks, trade names, service marks or copyrights of
others. The consummation of the transactions contemplated hereby will not result
in the loss or impairment of any of the Patent and Trade-mark Rights. The
Disclosure Schedule contains a list of all Patent and Trade-mark Rights. For
purposes of this Agreement the term "Reasonable Investigation" shall mean
investigation of the Company's correspondence, documents and other business
records and inquiring of the Company's employees.

     2.12 Insurance. All insurance policies with respect to the properties,
assets, operations and business of the Company and the Subsidiaries (the
"Insurance Policies") are in full force and effect. Except as set forth in the
Disclosure Schedule there are no pending claims against the Insurance Policies
by the Company or any of the Subsidiaries as to which the insurers have denied
liability and with respect to which there is a reasonable likelihood of a
settlement or determination adverse the Company and the Subsidiaries. To the
best of Seller's actual knowledge after Reasonable Investigation, there are no
circumstances existing that would enable the insurers to avoid liability under
the Insurance Policies or no other parties having an interest under the
Insurance Policies. Except as set forth in the Disclosure Schedule (i) there
exists no material claims under the Insurance Policies that have not been
properly filed by the Company or a Subsidiary, (ii) no insurance company has
refused to renew any material insurance policy of the Company or the
Subsidiaries during the past 18 months, and (iii) there have been no material
rate or premium increases or written notice of prospective changes therein on
general liability, property or directors and officers liability Insurance
Policies during the past 18 months. The Disclosure Schedule contains a list of
all Insurance Policies.

     2.13 Company Contracts. The Disclosure Schedule lists the following (to the
extent any of the following exist) (such agreements, commitments, and written
summaries of oral agreements being sometimes collectively referred to herein as
the "Company Contracts"):

     (i)  all leases of real property to which the Company or any of the
          Subsidiaries is a party (whether as lessor or lessee);

                                       8
<PAGE>

     (ii) all leases of machinery or equipment to which the Company or any of
          the Subsidiaries is a party (whether as lessor or lessee), with the
          annual rental, the termination date, and the conditions of assignment
          and renewal being given with respect to each lease;

     (iii) all rights and all licenses, leases, and other agreements relating to
          rights in other tangible personal property to which the Company or any
          of the Subsidiaries is a party, involving the payment by or to it of
          more than U.S. $20,000 in the aggregate with respect to any one
          agreement.

     (iv) all policies of insurance and fidelity or surety bonds in force with
          respect to the directors, officers, properties, assets, liabilities,
          or operations of the Company or any of the Subsidiaries in each case
          with a notation as to the status of premiums paid thereon;

     (v)  all agreements of the Company or any of the Subsidiaries for the
          borrowing or lending of money;

     (vi) all agreements granting any person a lien, security interest, or
          mortgage on any property or asset of the Company or any of the
          Subsidiaries, including any factoring agreement or agreement for the
          assignment of receivables or inventory;

     (vii) all agreements of the Company or any of the Subsidiaries
          guaranteeing, indemnifying, or otherwise becoming liable for the
          obligations or liabilities of another;

     (viii) all agreements of the Company or any of the Subsidiaries with any
          manufacturer or supplier with respect to discounts or allowances or
          extended payment terms;

     (ix) all agreements of the Company or any of the Subsidiaries with any
          distributor, dealer, sales agent, or representative;

     (x)  all agreements that restrict the Company from doing any kind of
          business or from doing business in any jurisdiction or from competing
          with any person;

     (xi) all agreements for the purchase of goods, materials, supplies,
          machinery, capital assets or services in excess of U.S. $50,000 in any
          one case or in excess of U.S. $100,000 in the aggregate;

     (xii) all collective bargaining agreements and employee pension benefit
          plans which are currently in effect and all information relating to
          such employee benefit plans required to be disclosed pursuant to
          Paragraph 2.17(b) hereof;

     (xiii) all bonus, deferred compensation, profit sharing, pension,
          retirement, stock option, stock purchase, hospitalization, insurance,
          medical, dental, or other plans, arrangements, or practices providing
          employee or executive benefits;

     (xiv) all shareholders' agreements, proxies, voting trusts, or powers of
          attorney to act on behalf of the Company or any of the Subsidiaries or
          in connection with its properties or business affairs other than such
          powers to so act as normally pertain to corporate officers;

     (xv) all agreements relating to the sale of assets of the Company or any of
          the Subsidiaries;

                                       9
<PAGE>

     (xvi) all joint venture or partnership agreements with any other person;

     (xvii) all agreements for the construction or modification of any building
          or structure or for the incurrence of any other capital expenditure;

     (xviii) all advertising agreements;

     (xix) all agreements giving any party the right to renegotiate or require a
          reduction in price or the repayment of any amount previously paid;

     (xx) all other agreements and commitments (including employment and
          consulting agreements) to which the Company or any of the Subsidiaries
          is a party, by which it is or may be bound, or from which it does or
          may derive benefit, and a description of the terms thereof, with the
          termination date and conditions of assignment and renewal being given
          in each case, except any contract or commitment (A) involving the
          payment by or to the Company of less than U.S. $10,000 in the
          aggregate, (B) terminable by such Company without liability or expense
          on 60 days' notice or less, (C) for the purchase or sale of
          merchandise or services entered into in the ordinary course of
          business, which will be performed by such Company in less than three
          months and which will not have any material effect on the properties
          and business of such Company, or (D) covered by any other paragraph of
          this Paragraph 2.13;

     (xxi) the name and current rate of compensation of (A) each director and
          officer of each Company and (B) each other employee of or consultant
          to the Companies whose current annual rate of compensation (including
          bonuses and commissions) from any Company is U.S. $70,000 or more;

     (xxii) the name of each retired employee, officer, or director, if any, of
          the Company who is receiving or is entitled to receive any payments
          not covered by any Employee Benefit Plan and his or her age, sex and
          current unfunded pension benefits; and

     (xxiii) the name of each bank in which any Company has an account or safe
          deposit box and the names of all persons authorized to draw thereon or
          to have access thereto.

     Except as set forth in the Disclosure Schedule, to the best of Seller's
actual knowledge after Reasonable Investigation, each of the Company Contracts
is valid, binding, and enforceable in accordance with its terms for the periods
(if any) stated therein, except to the extent enforceability may be limited by
bankruptcy, insolvency, moratorium, or other similar laws affecting creditors'
rights generally and limitations on the availability of equitable remedies; the
Company has fulfilled or has taken all actions necessary to enable it to fulfill
when due all of its obligations under the Company Contracts, and there is not,
under any of the foregoing, any existing default or event of default or any
event which, with or without the giving of notice or the passage of time, would
constitute a material default under any of the Company Contracts. To the best of
Seller's actual knowledge after Reasonable Investigation, there are no laws,
regulations, rules or decrees currently in effect or to be in effect which
materially adversely affect or might materially adversely affect the Company's
rights under any of the Company Contracts.

     2.14 Litigation. Except as set forth in the Disclosure Schedule, there is
no action, proceeding or investigation in any court or before any governmental
or regulatory authority pending or to the best of Seller's actual knowledge
after Reasonable Investigation, threatened in writing or orally (a) against the

                                       10
<PAGE>

Company or any of the Subsidiaries or against Seller, in connection with the
conduct of the businesses of the Company and the Subsidiaries, (b) which seeks
to enjoin or obtain damages in respect of the consummation of the transactions
contemplated hereby, or (c) render the Buyer unable to hold shares in, or
designate at least a majority of the members of the Board of Directors of, or
exercise control over, the Company. The actions or proceedings described in
clauses (a), (b) and (c) are collectively referred to as "Litigation." Except as
disclosed in the Disclosure Schedule, neither the Company nor any of the
Subsidiaries is subject to any outstanding order, writ, judgment or decree. The
Disclosure Schedule contains a list of all Litigation.

     2.15 Taxes. (a) Except as set forth in the Disclosure Schedule, (i) all
federal, state, local and material foreign income, franchise, excise, sales and
use tax ("Taxes") returns required to be filed with respect to the Company and
the Subsidiaries have been filed in a timely manner (taking into account all
extensions of due dates); (ii) the Company and the Subsidiaries have paid, or
have made sufficient provision for, or have set up adequate reserves for the
payment of, all Taxes shown as due on such returns; (iii) neither the Company
nor any Subsidiary has executed any presently effective waiver or extension of
any statute of limitations against assessment and collection of Taxes with
respect to the Company or any Subsidiary; and (iv) the proper amounts have been
withheld by the Company and each Subsidiary from employees with respect to all
cash compensation paid to employees for all periods in compliance in all
material respects with the tax and other withholding provisions of all
applicable laws. Except as set forth in the Disclosure Schedule, or as reflected
in the Financial Statements, no deficiencies for any taxes have been asserted in
writing or assessed against the Company or any of the Subsidiaries that remain
unpaid.

     2.16 Compliance with Laws. Except as set forth in the Disclosure Schedule,
to the best of Seller's actual knowledge after Reasonable Investigation, the
Company and the Subsidiaries have complied in all material respects with all
laws, statutes, rules, regulations, judgments, decrees and orders applicable to
their business (including without limitation, any of the above which relate to
the environment).

     2.17 Employee Benefits and Agreements.

     (a) The Disclosure Schedule contains a list of (1) all material employment
contracts between the Company and each Subsidiary and each executive officer
thereof, (2) all collective bargaining agreements between the Company or any
Subsidiary and employee representatives, and (3) all bonus, incentive, stock
option, stock purchase, phantom stock, stock appreciation rights, performance
shares, and similar plans either currently maintained by the company or any
Subsidiary or, if terminated, under which employees or former employees have
rights that are outstanding, and all awards and agreements under any of such
plans pursuant to which any employees or former employees hold outstanding
rights.

     (b) The Disclosure Schedule contains a list of each employee pension
benefit plan that the Company or any subsidiary maintains or to which any of
such parties contributes or is required to contribute on behalf of its
employees. With respect to each of such plans, the most recent summary plan
descriptions and the most recent actuarial reports prepared with respect to such
plans have been furnished or made available to Buyer.

                                       11
<PAGE>

     (c) The Disclosure Schedule contains a list of each material unfunded
deferred compensation, supplemental death, disability, medical reimbursement,
employee welfare benefit plan and, to the extent not included in Paragraph
2.17(b) above, each material employee pension benefit plan maintained by the
Company or any Subsidiary. With respect to each such plan that is funded or
required to be funded through insurance, all premiums due and payable with
respect to such insurance have been paid. With respect to each of such plans,
the most recent summary plan descriptions and the most recent actuarial reports,
if any, prepared with respect to such plans have been furnished or made
available to Buyer.

     (d) The Disclosure Schedule lists (i) all governmental or court required
plans, including, but not limited to, affirmative action plans, with respect to
the Company or any Subsidiary, and (ii) all governmental or court ordered audits
for compliance with applicable law that would require the continuation of any
such plan or the implementation of any such plan that has not been put into
effect on the date of this Agreement.

     2.18 Licenses and Permits. The Company and the Subsidiaries have all
governmental licenses and permits and other governmental authorizations and
approvals required for the conduct of their businesses as presently conducted
("Material Permits"). The Disclosure Schedule includes a list of all Material
Permits.

     2.19 Business Relations. Except as disclosed in the Disclosure Schedule,
neither the Company nor the Subsidiaries is required to provide any bonding or
other financial security arrangements in connection with any transactions with
any of its customers or suppliers. Except as set forth in the Disclosure
Schedule, to the best of Seller's actual knowledge after Reasonable
Investigation, no customer or supplier of the Company or the Subsidiaries will
cease to do business with the Company or the Subsidiaries after the consummation
of the transactions contemplated hereby. Except as set forth in the Disclosure
Schedule, neither the Company nor any Subsidiary has experienced any
difficulties in obtaining any raw materials necessary to the operations of its
business, and to the best of Seller's actual knowledge after Reasonable
Investigation, no such shortage of raw materials is threatened.

     2.20 Interest in Competitors, Suppliers, Customers, Etc. Except as set
forth in the Disclosure Schedule, neither the Seller nor any affiliate of the
Seller has any ownership interest in any competitor, supplier or customer of the
Company or its Subsidiaries accounting for not less than 1% of the Company's
purchases from suppliers in the most recently ended fiscal year or any property
used in the operation of the business of the Company or its Subsidiaries.

     2.21 Promissory Notes and Accounts Receivable. There are no promissory
notes receivable. All accounts receivable of the Company and its Subsidiaries
reflected on the Interim Balance Sheet represent sales actually made, or
services actually rendered in the ordinary course of business on or prior to May
31, 2002, are valid accounts receivables subject to no setoffs or counterclaims,
are current and collectible, and will be collected in accordance with their
terms at their recorded amounts, subject only to the reserve for bad debts set
forth on the face of the balance sheet dated as of May 31, 2002 (rather than in
any notes thereto) as adjusted for operations and transactions through the
Closing Date in accordance with the past custom and practice of the Company and
it Subsidiaries.

                                       12
<PAGE>

     2.22 Employee Relations. No union organizational campaign is in process or
to the best of Seller's actual knowledge after Reasonable Investigation, has
been threatened in writing. Neither the Company nor any Subsidiary has incurred
any work stoppages, general labor disputes, or union strikes in the past three
(3) years which have had an adverse effect on the business operations or
financial condition of the Company and the Subsidiaries nor to the best of
Seller's actual knowledge after Reasonable Investigation, have any which would
have such an adverse effect been threatened in writing.

                                   ARTICLE III
                     REPRESENTATIONS AND WARRANTIES OF BUYER

     Buyer hereby represents and warrants to Sellers as follows:

     3.1 Organization. Buyer is an international business company duly
organized, validly existing and in good standing under the laws of British
Virgin Islands and has all requisite corporate power and authority to own or
lease and operate its properties and to carry on its business as it is now being
conducted and to execute, deliver and perform this Agreement and to consummate
the transactions contemplated hereby.

     3.2 Corporate Power and Authority. The execution, delivery and performance
by Buyer of this Agreement and the consummation by Buyer of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Buyer. This Agreement has been duly and validly executed and
delivered by Buyer and constitutes a valid and binding obligation of Buyer,
enforceable against the Buyer in accordance with its terms, except to the extent
that such enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws relating
to creditors' rights generally, or (ii) general principles of equity and
equitable rights. Buyer need not give any notice to, make any filing with, or
obtain any authorisation, consent, or approval of any government or governmental
agency in order to consummate the transactions contemplated by this Agreement.

     3.3 No Conflicts. The execution, delivery and performance of this Agreement
by Buyer and the consummation by Buyer of the transactions contemplated hereby
will not conflict with, or constitute or result in a breach, default or
violation of (with or without the giving of notice or the passage of time, or
both), (i) any provision of law, statute, rule, ordinance or regulation
applicable to Buyer or to which Buyer is subject, (ii) any order, judgment or
decree applicable to Buyer or (iii) any term or condition of the Memorandum or
Articles of Association of Buyer or any oral or written contract, agreement,
commitment or other instrument to which Buyer or any of its subsidiaries is a
party or by which any of them may be bound; except for violations, conflicts,
breaches or defaults which in the aggregate would not materially hinder or
impair the consummation of the transactions contemplated hereby.

     3.4 Investment Intent. Buyer is acquiring the Shares solely for its own
account and not with a view to a sale or distribution thereof in violation of
any securities laws. Buyer acknowledges that it has received, or has had access
to, all information which it considers necessary or advisable to enable it to
make a decision concerning its purchase of the Shares, provided that the
foregoing shall not limit or otherwise affect the rights or remedies of Buyer
hereunder with respect to the breach of any representations, warranties,
covenants or agreements of Sellers contained herein.

                                       13
<PAGE>

     3.5 Consents. Except as set forth in the Disclosure Schedule, no consent,
approval or authorization of, exemption by, or filing with, any governmental or
regulatory authority is required in connection with the execution, delivery and
performance by Buyer of this Agreement or the consummation by Buyer of the
transactions contemplated hereby, excluding, however, consents, approvals,
authorizations, exemptions and filings, if any, which Seller is required to
obtain or make.

     3.6 SEC Documents; Financial Information. For purposes of this Agreement,
"SEC Documents" means all reports, schedules, registration statements and other
documents (including all exhibits and schedules thereto) required to be filed by
Buyer with the SEC on or after July 28, 2001. Thadani has had access to Buyer's
SEC Documents on the SEC's web site, which contains true and complete copies of
all SEC Documents filed with the SEC. As of their respective filing dates, the
SEC Documents complied in all material respects with the requirements of the
Securities Act, the Exchange Act and the rules and regulations of the SEC
thereunder applicable to such SEC Documents, and as of their respective dates
none of the SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of Buyer and its
material subsidiaries included in the SEC Documents comply as of their
respective dates in all material respects with applicable accounting
requirements and the rules and regulations of the SEC with respect thereto
(except as may be indicated in the notes thereto) and present fairly in all
material respects as of their respective dates the consolidated financial
position of Buyer and its material subsidiaries as at the dates thereof and the
consolidated results of their operations and their consolidated cash flows for
each of the respective periods, in conformity with U.S. GAAP.

     3.7 Litigation. Except as set forth in the Disclosure Schedule, there is no
action, proceeding or investigation in any court or before any governmental or
regulatory authority pending or threatened in writing or, to Buyer's knowledge,
orally threatened which seeks to enjoin or obtain damages in respect of the
consummation of the transactions contemplated hereby.

                                   ARTICLE IV
                        CERTAIN COVENANTS OF THE PARTIES

     Seller and Company, on the one hand, and Buyer, on the other hand, hereby
covenant to and agree with one another as follows:

     4.1 Conduct of Business. Except as may be otherwise contemplated by this
Agreement or required by any of the documents listed in the Disclosure Schedule
or except as Buyer may otherwise consent to in writing (which consent shall not
be unreasonably withheld), between the date hereof and the Closing Date:

     (a) Seller will cause the Company and the Subsidiaries to (i) operate their
businesses only in the ordinary course; (ii) use their best efforts to preserve
the business organization of the Company and the Subsidiaries as a whole intact;

                                       14
<PAGE>

(iii) maintain their properties, machinery and equipment in sufficient operating
condition and repair to enable the Company and the Subsidiaries to operate their
business in the manner in which they were operated immediately prior to the date
hereof, except for maintenance required by reason of fire, flood or other acts
of God (except that any insurance proceeds paid by reason of any such casualty
after the date hereof shall be applied towards such maintenance); (iv) continue
all of the Insurance Policies (or comparable insurance) in full force and
effect; (v) use commercially reasonable efforts to keep available until the
Closing Date the services of their present officers and key employees; (vi) pay
their accounts payable and all other obligations in the ordinary course of
business; and (vii) use commercially reasonable efforts to preserve their
relationships with their material lenders, suppliers, customers, licensors and
licensees and others having material business dealings with them such that the
business will not be impaired; and

     (b) Seller will cause the Company and the Subsidiaries not to (i) make any
change in their respective Certificates of Incorporation, By-Laws or similar
charter documents; (ii) make any change in their issued or outstanding capital
stock, or issue any warrant, option or other right to purchase shares of their
capital stock or any security convertible into shares of their capital stock, or
redeem, purchase or otherwise acquire any shares of their capital stock, or
declare any dividends or make any other distribution in respect of their capital
stock; (iii) voluntarily incur or assume, whether directly or by way of
guarantee or otherwise, any material obligation or liability, except obligations
and liabilities incurred in the ordinary course of business; (iv) mortgage,
pledge or encumber any material part of their properties or assets, tangible or
intangible; (v) sell or transfer any material part of their assets, property or
rights, or cancel any material debts or claims; (vi) amend or terminate any
Company Contract or any Material Permit to which they are parties, except in the
ordinary course of business pursuant to the terms of such Agreement; (vii) make
any material change in any company benefit plans, except as required by law and
except for changes made in the ordinary course of business in accordance with
their customary practices (including increases in compensation and benefits
after normal periodic performance reviews); (viii) make any changes in the
accounting methods, principles or practices employed by them, except as required
by generally accepted accounting principles; (ix) make any capital expenditure
or enter into any commitment therefor; (x) incur any debt or make any
borrowings, or enter into any commitment therefor; or (xi) enter into any other
agreement, course of action or transaction material to the Company and the
Subsidiaries except in the ordinary course of business.

     4.2 Undertakings. Seller, Company, and Buyer will use commercially
reasonable efforts, and will cooperate with one another, to secure all necessary
consents, approvals, authorizations and exemptions from governmental agencies
and other third parties, and to obtain the satisfaction of the conditions
specified in Articles VI and VII, as shall be required in order to enable
Sellers and Buyer to effect the transactions contemplated hereby in accordance
with the terms and conditions hereof.

     4.3 Access. Subject to compliance by Buyer with the provisions of Paragraph
4.4, from the date of this Agreement to the Closing Date, Sellers shall (i)
provide Buyer with such information as Buyer may from time to time request with
respect to the Company, the Subsidiaries and the transactions contemplated by
this Agreement, (ii) provide Buyer and its officers, counsel and other
authorized representatives reasonable access during regular business hours and
upon reasonable notice to the properties, books, and records of the Company and
the Subsidiaries, or as Buyer may otherwise from time to time reasonably
request, and (iii) permit Buyer to make such inspections thereof as Buyer may
reasonably request.

                                       15
<PAGE>

     4.4 Confidentiality.

     (a) Unless and until the Closing is consummated, Buyer or Seller, Company
or the Subsidiaries, as the case may be (the "Recipient"), will keep
confidential any information which has been furnished to it by or on behalf of
Seller, the Company or the Subsidiaries, or by or on behalf of Buyer, as the
case may be (the "Provider"), in connection with the transactions contemplated
by this Agreement ("Confidential Information"), and shall use the Confidential
Information solely in connection with the transactions contemplated by this
Agreement. If this Agreement is terminated, the Recipient will return all
Confidential Information to the Provider and either destroy any writings
prepared by or on behalf of the Recipient based on Confidential Information or
deliver such writings to the Provider. Confidential Information does not include
information which (i) is or becomes (but only when it becomes) generally
available to the public other than as a result of disclosure in violation of
this paragraph 4.4, or (ii) is or becomes (but only when it becomes) available
to the Recipient on a non-confidential basis from a source other than the
Provider, or any of its agents or advisors or employees, provided that such
source is not bound by a confidentiality agreement with the Provider in respect
thereof.

     (b) The Recipient may disclose Confidential Information to any of its
directors, officers, employees, agents, advisors and, in the case of Buyer, its
prospective lenders and equity participants who need to know such Confidential
Information in connection with the transactions contemplated by this Agreement;
provided that, prior to making such disclosure, the Recipient shall inform all
such persons and entities of the confidential nature of such Confidential
Information and such persons and entities shall agree, for the benefit of the
Provider, to be bound by the terms and conditions of this paragraph 4.4. In any
event, the Recipient will be responsible for damages incurred by the Provider
arising from any breach of this paragraph 4.4 by any person or entity to whom
Confidential Information shall have been furnished. The Recipient may disclose
Confidential Information if required by legal process or by operation of
applicable law (but only to the extent so required), provided that such
Recipient shall first promptly notify the Provider thereof so that the Provider
may seek an appropriate protective order and/or waive compliance by such
Recipient with the provisions of this paragraph 4.4.

     4.5 Exclusivity. Buyer shall have the exclusive right through the close of
business on August 31, 2002 (or such later date as the term of this Agreement
may be extended by the parties hereto in writing) to consummate the transactions
contemplated herein, and during such exclusive period, neither Seller, the
Company nor any of their authorized representatives will solicit or accept any
other offer to purchase any of the capital stock or all or any significant part
of the assets of the Company or any similar transaction nor hold discussions or
negotiations with, or provide any information to, any other individual or
corporation, partnership or other entity concerning such purchase (other than
such discussions which are in furtherance of the transactions contemplated
herein).

     4.6 Personal Guarantees. Buyer shall obtain the release of Thadani's
personal guarantee and the corporate guarantee of Thadani's affiliated
corporation, Educational Beginnings Inc., (and any security provided therefor)
of the Company's obligations to its banks (including, without limitation, TD
Canada Trust and Business Development Corporation) no later than August 31,
2002. Thadani's personal guarantee of amounts owed by the Company to Buyer for
inventory purchased from Buyer shall be deemed to be released upon Closing of
this transaction, and such further written confirmation of such release as is
reasonably required by the Seller shall be provided on Closing.

                                       16
<PAGE>

     4.7 Bonso Indemnity and Guarantee. Bonso shall indemnify and hold Seller
harmless from and against any and all claims, losses, liabilities and damages,
including, without limitation, amounts paid in settlement, reasonable costs of
investigation and reasonable fees and disbursements of counsel, arising out of
or resulting from Buyer's obligation and performance under (a) Thadani's
Employment Agreement, (b) the Note, (c) and the Shareholders' Agreement.

                                    ARTICLE V
                        COVENANTS RELATING TO THE SHARES

     5.1 Legend on Shares. Each certificate representing the Shares shall be
stamped or otherwise imprinted on its face with a legend in the following form:

          "The Shares represented by this certificate have not been
     registered under Canadian or U.S. securities laws. The Shares have
     been acquired for investment and may not be sold, transferred or
     otherwise disposed of except in compliance with such securities laws.
     In addition, the shares represented by this certificate are subject to
     a Stock Purchase Agreement dated as of July 31, 2002, a copy of which
     is on file at the office of the Secretary of the Company, the
     provisions of which the holder hereof, by acceptance hereof, agrees to
     be bound."

     5.2 Registration Under the 1933 Act. Buyer agrees that it shall immediately
register the Stock Portion of the Purchase Price with the United States
Securities and Exchange Commission ("SEC") pursuant to the 1933 Act, at its own
expense on a Form F-2 or other appropriate form (the "Registration Statement")
and shall use reasonable efforts to keep the Registration Statement current and
effective through December 31, 2003.

     Buyer further agrees that it will (i) furnish without charge to Seller such
number of copies of the Registration Statement, each amendment and supplement
thereto, the prospectus included in the Registration Statement, any documents
incorporated by reference therein and such other documents as Seller may
reasonably request in order to facilitate sale of the Bonso Shares, (ii) notify
Seller in writing (a) when a prospectus or any prospectus supplement or
post-effective amendment to the Registration Statement has been filed and, with
respect to any post-effective amendment, when the same has become effective, (b)
of the issuance by any state securities or other regulatory authority of any
order suspending the qualification or exemption from qualification of any of the
Bonso Shares under state securities or "blue sky" laws or the initiation of any
proceedings for that purpose, and (c) of the happening of any event which makes
any statement made in the Registration Statement or related prospectus untrue or
which requires the making of any changes in the Registration Statement,
prospectus or documents so that they will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and, as promptly as
practicable thereafter, prepare and file with the SEC a supplement or amendment

                                       17
<PAGE>

to such prospectus and notify Seller of such filing so that, as thereafter
deliverable to the purchasers of the Bonso Shares, such prospectus will not
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; (iii) cause the Bonso Shares to be listed
on the NASDAQ National Market System concurrently with effectiveness of the
Registration Statement; (iv) advise Seller promptly after it shall receive
notice or obtain knowledge thereof, of the issuance of any stop order by the SEC
suspending the effectiveness of the Registration Statement or the initiation or
threatening of any proceeding for such purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal at the
earliest possible moment if such stop order should be issued; (v) notify Seller
of any requests by the SEC for the amending or supplementing of the Registration
Statement or prospectus or for additional information; (vi) furnish to Seller,
without charge, at least one signed copy of the Registration Statement and any
post-effective amendments thereto, including financial statements and schedules,
all documents incorporated therein by reference and all exhibits, including
those incorporated by reference; and (vii) take all such other actions
consistent with reasonable best efforts as are necessary or advisable in order
to expedite or facilitate the disposition of the Bonso Shares.

     Buyer agrees to indemnify and reimburse, to the fullest extent permitted by
law, Seller and each of its employees, advisors, agents, representatives,
partners, officers, and directors and each person who controls Seller (within
the meaning of the 1933 Act) (collectively, the "Seller Affiliates") (i) against
any and all losses, claims, damages, liabilities and expenses, (including,
without limitation, reasonable attorneys fees and disbursements) resulting from
any untrue or alleged untrue statement of a material fact contained in the
Registration Statement, any prospectus, or preliminary prospectus or any
amendment thereof or supplement thereto, or any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and (ii) against any and all costs and
expenses (including reasonable fees and disbursements of counsel) as may be
reasonably incurred in investigating, preparing, or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, based upon, arising out of, related to or
resulting from any such untrue statement or omission or alleged untrue statement
or omission, to the extent that any such expense or cost is not paid under
clause (i) above; except insofar as the untrue statements or omissions are made
in reliance upon and in strict conformity with information furnished to Buyer by
Seller in its capacity as a seller specifically for use therein. The
reimbursements required by the previous sentence will be made by periodic
payments during the course of the investigation or defense, as and when bills
are received or expenses incurred.

     Buyer agrees that, if for any reason the indemnification provisions
contemplated above are unavailable to or insufficient to hold harmless Seller in
respect of any losses, claims, damages, liabilities, or expenses (or actions in
respect thereof) referred to therein, then Buyer shall contribute to the amount
paid or payable by Seller as a result of such losses, claims, liabilities, or
expenses (or actions in respect thereof) in such proportion as is appropriate to
reflect the relative fault of the Buyer and the Seller in connection with the
actions which resulted in the losses, claims, damages, liabilities or expenses
as well as any other relevant equitable considerations. The relative fault of
Buyer and Seller shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by
Buyer or Seller, and the person's relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.

                                       18
<PAGE>

     5.3 Lockup Agreement. After the Bonso Shares have been registered with the
SEC, Seller agrees not to offer, pledge, sell or otherwise transfer or dispose
of, directly or indirectly, more than 20,000 shares of the Common Stock during
any calendar month.

                                   ARTICLE VI
                        CONDITIONS TO BUYER'S OBLIGATIONS

     The obligations of Buyer to consummate the transactions contemplated hereby
shall be subject to the satisfaction on or prior to the Closing Date of all of
the following conditions, except such conditions as Buyer may waive:

     6.1 Representations, Warranties and Covenants of Seller. Seller shall have
complied in all material respects with all of its agreements and covenants
contained herein required to be complied with at or prior to the Closing Date,
and all the representations and warranties of Seller contained herein shall be
true in all material respects on and as of the Closing Date with the same effect
as though made on and as of the Closing Date, except as otherwise contemplated
hereby, and except to the extent that such representations and warranties
expressly make reference to a specified date and as to such representations and
warranties the same shall continue on the Closing Date to have been true as of
the specified date. Buyer shall have received a certificate executed by or on
behalf of Seller, and dated as of the Closing Date, certifying as to the
fulfillment of the conditions set forth in this Paragraph 6.1.

     6.2 Further Action. All action (including notifications and filings) that
shall be required to be taken by Seller in order to consummate the transactions
contemplated hereby shall have been taken and all consents, approvals,
authorizations and exemptions from third parties that shall be required in order
to enable Seller to consummate the transactions contemplated hereby shall have
been duly obtained (except for such actions, consents, approvals, authorizations
and exemptions, the absence of which would not prohibit consummation of such
transactions or render such consummation illegal), and, as of the Closing Date,
the transactions contemplated hereby shall not violate any applicable law or
governmental regulation.

     6.3 No Governmental or Other Proceeding. No order of any court or
governmental or regulatory authority or body which restrains or prohibits the
transactions contemplated hereby shall be in effect on the Closing Date and no
suit or investigation by any government agency to enjoin the transactions
contemplated hereby or seek damages or other relief as a result thereof shall be
pending or threatened as of the Closing Date.

     6.4 Delivery of Shares. Buyer shall have received certificates representing
the Shares.

     6.5 Resignations. Buyer shall have received the resignations of all the
officers and directors of the Company except for that of Thadani.

                                       19
<PAGE>

     6.6 Non-Competition Agreements. Prior to the Closing Date, Seller and any
other employees of the Company that Buyer deems necessary shall have executed
Buyer's standard form one-year non-competition and confidentiality agreements.

                                   ARTICLE VII
                       CONDITIONS TO SELLER'S OBLIGATIONS

     The obligations of Seller to consummate the transactions contemplated
hereby shall be subject to the satisfaction on or prior to the Closing Date of
all of the following conditions, except such conditions as Seller may waive:

     7.1 Representations, Warranties and Covenants of Buyer. Buyer shall have
complied in all material respects with all of its agreements and covenants
contained herein required to be complied with at or prior to the Closing Date,
and all of the representations and warranties of Buyer contained herein shall be
true in all material respects on and as of the Closing Date with the same effect
as though made on and as of the Closing Date, except as otherwise contemplated
hereby, and except to the extent that such representations and warranties
expressly make reference to a specified date and as to such representations and
warranties the same shall continue on the Closing Date to have been true as of
the specified date. Seller shall have received a certificate of Buyer, dated as
of the Closing Date and signed by an officer of Buyer, certifying as to the
fulfillment of the condition set forth in this Paragraph 7.1.

     7.2 Further Action. All action (including notifications and filings) that
shall be required to be taken by Buyer in order to consummate the transactions
contemplated hereby shall have been taken and all consents, approvals,
authorizations and exemptions from third parties that shall be required in order
to enable Seller to consummate the transactions contemplated hereby shall have
been duly obtained (except for such actions, consents, approvals, authorizations
and exemptions, the absence of which would not prohibit consummation of such
transactions or render such consummation illegal), and, as of the Closing Date,
the transactions contemplated hereby shall not violate any applicable law or
governmental regulation.

     7.3 No Governmental or Other Proceeding. No order of any court or
governmental or regulatory authority or body which restrains or prohibits the
transactions contemplated hereby shall be in effect on the Closing Date and no
suit or investigation by any government agency to enjoin the transactions
contemplated hereby or seek damages or other relief as a result thereof shall be
pending or threatened in writing as of the Closing Date.

                                  ARTICLE VIII
                          SURVIVAL AND INDEMNIFICATION

     8.1 Survival. The representations, warranties, covenants and agreements
contained herein to be performed or complied with after the Closing shall
survive for a period of 3 years after the Closing Date. A claim for
indemnification by a party against the other under this Article VIII for
inaccuracy in a representation or warranty or breach of any covenants and
agreements contained herein must be asserted in writing and in accordance with
Paragraph 8.3 prior to the expiration of the applicable time period referenced
above, following which the same shall be barred for all purposes. If written
notice of a claim for indemnification is given in accordance with Paragraph 8.3
prior to the expiration of the applicable time period referenced above, then the
representation, warranty, covenant, or agreement applicable to such claim shall
survive until, but only for purposes of, resolution of such claim.

                                       20
<PAGE>

     8.2 Indemnification. Subject to the provisions of Paragraph 8.1, from and
after the Closing, the Seller, the Company and the Subsidiaries, jointly and
severally, on the one hand, and the Buyer, on the other hand, shall indemnify
and hold harmless the other (the party seeking indemnification being referred to
as the "Indemnified Party") from and against any and all claims, losses,
liabilities and damages, including, without limitation, amounts paid in
settlement, reasonable costs of investigation and reasonable fees and
disbursements of counsel, arising out of or resulting from the inaccuracy of any
representation or warranty, or the breach of any covenant or agreement,
contained herein or in any instrument or certificate delivered pursuant hereto,
by the party against whom indemnification is sought (the "Indemnifying Party").

     8.3 Notice of Claim. The Indemnified Party shall promptly notify the
Indemnifying Party in writing of any claim for indemnification, specifying in
detail the basis of such claim, the facts pertaining thereto and, if known, the
amount, or an estimate of the amount, of the liability arising therefrom. The
Indemnified Party shall provide to the Indemnifying Party as promptly as
practicable thereafter all information and documentation necessary to support
and verify the claim asserted and the Indemnifying Party shall be given
reasonable access to all books and records in the possession or control of the
Indemnified Party or any of its affiliates which the Indemnifying Party
reasonably determines to be related to such claim.

     8.4 Defense. If the facts giving rise to a right to indemnification arise
out of the claim of any third party, or if there is any claim against a third
party, the Indemnifying Party may assume the defense or the prosecution thereof,
including the employment of counsel, at its cost and expense. The Indemnified
Party shall have the right to employ counsel separate from counsel employed by
the Indemnifying Party in any such action and to participate therein, but the
fees and expenses of such counsel employed by the Indemnified Party shall be at
its expense. The Indemnifying Party shall not be liable for any settlement of
any such claim effected without its prior written consent which consent shall
not be unreasonably withheld. Whether or not the Indemnifying Party does choose
to so defend or prosecute such claim, all the parties hereto shall cooperate in
the defense or prosecution thereof and shall furnish such records, information
and testimony, and attend at such conferences, discovery proceedings, hearings,
trials and appeals, as may be reasonably requested in connection therewith. The
Indemnifying Party shall be subrogated to all rights and remedies of the
Indemnified Party to the extent of any indemnifications provided hereunder.

                                   ARTICLE IX
                          TERMINATION PRIOR TO CLOSING

     9.1 Termination of Agreement. This Agreement may be terminated at any time
prior to the Closing:

     (i)  By the mutual written consent of Buyer and the Seller; or

                                       21
<PAGE>

     (ii) By the Buyer or Seller in writing if the Closing shall not have
          occurred on or before August 1, 2002 or such other date to which the
          Agreement has been extended pursuant to paragraph 1.2;

     (iii) By the Buyer or Seller, if the other shall (x) fail to perform in any
          material respect its agreements contained herein required to be
          performed prior to the Closing Date, or (y) materially breach any of
          its representations, warranties, covenants or agreements contained
          herein, which failure or breach is not cured within five (5) days
          after the party seeking to terminate has notified the other party of
          its intent to terminate this Agreement pursuant to this clause.

     9.2 Termination of Obligations. Termination of this Agreement pursuant to
this Article IX shall terminate all obligations of the parties hereunder, except
for the obligations under Paragraphs 4.4 and 10.6; provided, however, that
termination pursuant to clause (ii) and (iii) of Section 9.1 shall not relieve
the defaulting or breaching party from any liability to the other party hereto
resulting from its willful breach of this Agreement.

                                    ARTICLE X
                                  MISCELLANEOUS

     10.1 Entire Agreement. This Agreement (including the Disclosure Schedule)
constitutes the sole understanding of the parties with respect to the subject
matter hereof. No amendment, modification or alteration of the terms or
provisions of this Agreement shall be binding unless the same shall be in
writing and duly executed by the parties hereto.

     10.2 Successors and Assigns. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors of
the parties hereto; provided, however, that this Agreement may not be assigned
by any party without the prior written consent of the other party hereto, except
that the Buyer may, at its election and without the prior written consent of
Seller, assign this Agreement to any direct or indirect wholly-owned subsidiary
or any other affiliate of Buyer so long as the representations and warranties of
Buyer made herein are equally true of such assignee. If this Agreement is
assigned with such consent or pursuant to such exceptions, the terms and
conditions hereof shall be binding upon and shall inure to the benefit of the
parties hereto and their respective assigns; provided, however, that no
assignment of this Agreement or any of the rights or obligations hereof shall
relieve any party of its obligations under this Agreement. With the exception of
the parties to this Agreement, (except as set forth in Article V) there shall
exist no right of any person to claim a beneficial interest in this Agreement or
any rights occurring by virtue of this Agreement.

     10.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument.

     10.4 Headings. The headings of the Sections and paragraphs of this
Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof.

                                       22
<PAGE>

     10.5 No Waiver. No action taken pursuant to this Agreement, including any
investigation by or on behalf of any party hereto will be deemed to constitute a
waiver by the party taking any action of compliance with any representation,
warranty or agreement contained herein. The waiver by any party hereto of any
condition or of a breach of any other provision of this Agreement will not
operate or be construed as a waiver of any other condition or subsequent breach.
The waiver by any party of any of the conditions precedent to its obligations
under the Agreement will not preclude it from seeking redress for breech of this
Agreement other than with respect to the condition so waived.

     10.6 Expenses. Seller and Buyer shall each pay all costs and expenses
incurred by them or on their behalf in connection with this Agreement and the
transactions contemplated hereby, including, without limiting the generality of
the foregoing, fees and expenses of its own financial consultants, accountants
and counsel.

     10.7 Notices. Any notice, request, instruction or other document (each, a
"Notice") to be given hereunder by any party hereto to any other party hereto
shall be in writing and delivered personally or sent by registered or certified
mail, postage prepaid,

     If to Company:        Mr. Mohan Thadani
                           Gram Precision Scales Inc.
                           4120 Ridgeway Drive, No. 37
                           Mississauga, Ontario L5L 5S9
                           Canada

     with a copy to:       Murray Gottheil, Esq.
                           Pallett Valo, LLP
                           90 Burmhamthorpe Road West
                           Mississauga, Ontario L5B 3C3
                           Canada

     If to Seller:         Mr. Mohan Thadani
                           Gram Precision Scales Inc.
                           4120 Ridgeway Drive, No. 37
                           Mississauga, Ontario L5L 5S9
                           Canada

     with a copy to:       Murray Gottheil, Esq.
                           Pallett Valo, LLP
                           90 Burmhamthorpe Road West
                           Mississauga, Ontario L5B 3C3
                           Canada

                                       23
<PAGE>

     If to Buyer:          Mr. Anthony So, President
                           Bonso Electronics International Inc.
                           Unit 1106-1110, 11/F, Star House
                           3 Salisbury Road
                           Tsimshatui Kowloon, Hong Kong

     with a copy to:       Henry F. Schlueter, Esq.
                           Schlueter & Associates, P.C.
                           1050 17th Street, Suite 1700
                           Denver, Colorado 80265

     10.8 Further Assurances. From and after the Closing Date, each party, at
the request of the other party and at the requesting party's expense, will each
take all such action and deliver all such documents as shall be reasonably
necessary or appropriate to confirm and vest title to the Shares in Buyer and to
confirm and vest title in the Bonso Shares in Seller and otherwise enable Buyer
and Seller to enjoy the respective benefits contemplated by this Agreement.

     10.9 Governing Law. The validity, performance and enforcement of this
Agreement and any agreement entered into pursuant hereto, unless expressly
provided to the contrary, will be governed by the Laws of Ontario without giving
effect to the principles of conflicts of law thereof.

     10.10 Dispute Resolution; Arbitration.

     (i)  All claims for specific performance of one or more provisions of this
          Agreement prior to the Closing, including all such claims with respect
          to the obligations hereunder to consummate the Closing, shall be
          resolved exclusively by litigation before a court of competent
          jurisdiction located in Toronto. The Parties hereby irrevocably (A)
          submit to the exclusive jurisdiction of any of such court in any
          action or proceedings relating to the aforementioned claims, (B)
          submit to the jurisdiction of any court, located in any jurisdiction
          in which such Party has contacts or assets sufficient to sustain
          jurisdiction, in any action or proceeding relating to the enforcement
          of any arbitral award or judgment pursuant to this paragraph10, and
          (C) waive the defences of lack of personal jurisdiction, sovereign
          immunity, improper venue, and inconvenient forum in any action or
          proceeding as set forth in this paragraph10.10.

     (ii) Except for (A) the claims covered by paragraph 10.10(i) of this
          Agreement, all disputes or claims arising out of or in connection with
          this Agreement or the certificates, instruments and document delivered
          at the Closing (the "Ancillary Documents") shall be finally settled by
          arbitration under the Rules of Arbitration of the International
          Chamber of Commerce (the "ICC Rules"). The place of arbitration shall
          be Toronto, Ontario, Canada. The number of arbitrators shall be three
          (3), and the arbitrators shall be appointed in accordance with the ICC
          Rules and this Agreement. The two party-appointed arbitrators shall
          agree on a third arbitrator, who shall serve as chairman of the
          arbitral tribunal, within twenty (20) days after appointment of the
          second party-appointed arbitrator, failing which the third arbitrator
          shall be appointed by the ICC International Court of Arbitration. The

                                       24
<PAGE>

          language to be used in the arbitral proceedings shall be English. Any
          award of the arbitral tribunal shall be made in writing, shall be
          final and binding on the parties and may be entered in any court of
          competent jurisdiction. The Parties hereby waive any right to appeal
          insofar as such waiver can validly be made. Each of the Parties agree
          that arbitration under this paragraph 10.10(ii) is the exclusive
          method for resolving any of the disputes defined in this paragraph
          10.10(ii), and that no Party shall commence any action or proceeding
          in any court with respect to any such dispute, except to (1) enforce
          this paragraph10.10(ii), (2) obtain provisional judicial assistance in
          aid of arbitration under this paragraph 10.10(ii), or (3) file a
          petition to enforce or set aside an arbitral award made in accordance
          with this paragraph 10.10(ii).

     10.11 English Language. The English language version of any documents
furnished by one Party to the other and the English language version of this
Agreement and the related schedules and exhibits shall control in the event of
any conflict between the English language version and non-English language
version of any such documents. With respect to documents furnished by one Party
to the other, such as balance sheets, tax declarations and tax assessments,
Commercial Register files and the like ("Official Documents"), that the language
of origin shall govern in the event of a conflict between the English language
version and non-English versions of any such Official Documents.

     10.12 Public Announcements. Seller and Buyer shall consult with each other
before issuing any press releases or otherwise making any public statements with
respect to this Agreement and the transactions contemplated hereby and shall not
issue any such press release or make any public statement prior to such
consultation.

     10.13 Specific Performance. Buyer on the one hand, and Seller, on the other
hand, each acknowledges that the other will be irreparably harmed and that there
will be no adequate remedy at law in the event of a violation by it of any of
its covenants or agreements which are contained in this Agreement. It is
accordingly agreed that, in addition to any other remedies which may be
available upon the breach of such covenants and agreements, Seller or Buyer, as
the case may be, shall have the right to obtain injunctive relief to restrain
any breach or threatened breach of, or otherwise to obtain specific performance
of, the other's covenants or agreements contained in this Agreement.

     10.14 Facsimile Transmission. The Parties to this Agreement are authorized
to execute the Agreement, and transmit a signed copy of same via facsimile to
the other parties, who hereby agree to accept and rely upon such documents as if
they bore original signatures. The Parties sending such facsimiles hereby
acknowledge and agree to provide to the other Parties, within seven days of
transmission, the Agreement bearing an original signature.

                                       25
<PAGE>

     IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed on its behalf as of the date first above written.

MODUS ENTERPRISE INTERNATIONAL INC.
                                            GRAM PRECISION SCALES INC.

By: ______________________________          By: ________________________________
    Henry F. Schlueter, Assistant               Mohan Thadani, President
    Secretary and Attorney-in-Fact

                                            BONSO ELECTRONICS INTERNATIONAL INC.

                                             By: _______________________________
                                                 Henry F. Schlueter, Assistant
                                                 Secretary and Attorney-in-Fact

                                                 _______________________________
                                                 Mohan Thadani, an individual

                                       26

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00041-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00041-of-00352.parquet"}]]