ASSET PURCHASE AGREEMENT

Asset Purchase Agreement

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Title: ASSET PURCHASE AGREEMENT
Governing Law: Indiana Date: 4/15/2005

ASSET PURCHASE AGREEMENT

BY AND BETWEEN

UHI CANADA, CORPORATION

AND

THE GSI GROUP (CANADA) CO.

AND

THE GSI GROUP, INC.

DATED OCTOBER 31, 2004

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-iv-

TABLE OF CONTENTS

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PAGE

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1. DEFINITIONS AND USAGE 1

1.1 Definitions 1

1.2 Usage. 8

2. SALE AND TRANSFER OF ASSETS; CLOSING 9

2.1 Assets 9

2.2 Excluded Assets 11

2.3 Consideration. 11

2.4 Liabilities. 11

2.5 Allocation 13

2.6 Closing 13

2.7 Contemporaneously Executed Documents 13

2.8 Section 22 Election 15

2.9 GST Election 15

2.10 Provincial Sales Tax Certificates 15

2.11 Bulk Sales Act Compliance 16

3. REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER 16

3.1 Organization And Good Standing. 16

3.2 Enforceability; Authority; No Conflict. 16

3.3 Capitalization 17

3.4 Financial Statements. 18

3.5 Books And Records 18

3.6 All Assets of Business 18

3.7 No Owned Real Property 18

3.8 Description Of Leased Real Property 18

3.9 Title To Assets; Encumbrances 18

3.10 Condition Of Facilities 18

3.11 Accounts Receivable 18

3.12 Inventories 19

3.13 No Undisclosed Liabilities 19

3.14 Taxes. 19

3.15 No Material Adverse Change 20

3.16 Employee Benefits. 20

3.17 Compliance With Legal Requirements; Governmental Authorizations.

3.18 Legal Proceedings; Orders. 21

3.19 Intentionally Omitted. 22

3.20 Contracts; No Defaults. 22

3.21 Insurance. 24

3.22 Environmental Matters 25

3.23 Employees. 26

3.24 Labor Disputes; Compliance. 26

3.25 Intellectual Property Assets. 27

3.26 Certain Relationships 28

3.27 Brokers Or Finders 28

3.28 Intentionally Omitted. 29

3.29 Intentionally Omitted. 29

3.30 Disclosure 29

4. REPRESENTATIONS AND WARRANTIES OF BUYER 29

4.1 Organization And Good Standing 29

4.2 Authority; No Conflict. 29

4.3 Certain Proceedings 30

4.4 Brokers Or Finders 30

4.5 GST 30

5. ADDITIONAL COVENANTS 30

5.1 Employees And Employee Benefits. 30

5.2 Intentionally Omitted. 31

5.3 Intentionally Omitted. 31

5.4 Reports And Returns 31

5.5 Further Assurances 31

6. INDEMNIFICATION; REMEDIES 31

6.1 Survival 31

6.2 Indemnification And Reimbursement By Seller And Shareholder 31

6.3 Indemnification And Reimbursement By Seller--Environmental Matters

6.4 Indemnification And Reimbursement By Buyer 33

6.5 Limitations On Amount--Seller And Shareholder 34

6.6 Limitations On Amount--Buyer 34

6.7 Time Limitations. 34

6.8 Intentionally Omitted. 34

6.9 Third-Party Claims. 34

6.10 Other Claims 36

6.11 Intentionally Omitted. 36

6.12 Certain Warranty Matters 36

7. GENERAL PROVISIONS 37

7.1 Expenses 37

7.2 Public Announcements 37

7.3 Notices 37

7.4 Enforcement Of Agreement 38

7.5 Waiver; Remedies Cumulative 38

7.6 Entire Agreement And Modification 39

7.7 Intentionally Omitted. 39

7.8 Assignments, Successors And No Third-Party Rights 39

7.9 Severability 39

7.10 Construction 39

7.11 Time Of Essence 39

7.12 Governing Law 39

7.13 Execution Of Agreement 39

7.14 Shareholder Obligations 39

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LIST OF EXHIBITS

Exhibit 2.1(b) Tangible Personal Property

Exhibit 2.2 Intentionally Omitted

Exhibit 2.3(b)(iii) Intentionally Omitted

Exhibit 2.3(b)(iv) Intentionally Omitted

Exhibit 2.3(b)(v) Intentionally Omitted

Exhibit 2.5 Allocation

Exhibit 2.7(a)(i) Form of Bill of Sale and Assumption

Exhibit 2.7(a)(iii) Form of Non-Competition Agreement

Exhibit 2.7(a)(v) Intentionally Omitted

Exhibit 3.1(a) Seller's Jurisdiction of Incorporation

Exhibit 3.1(b) Governing Documents of Seller

Exhibit 3.1(c) Seller's Shares of Capital Stock or Other Securities

Exhibit 3.2(b) Enforceability; Authority; No Conflict

Exhibit 3.2(c) Consents

Exhibit 3.6 Assets

Exhibit 3.8 Leasehold Interests in Real Property

Exhibit 3.11 Accounts Receivable

Exhibit 3.13 Liabilities

Exhibit 3.14(b) Intentionally Omitted

Exhibit 3.14(c)(vii) Intentionally Omitted

Exhibit 3.17(a) Legal Requirements

Exhibit 3.17(b) Governmental Authorizations

Exhibit 3.18(a) Threatened or Pending Proceedings

Exhibit 3.18(b) Orders

Exhibit 3.18(c) Compliance

Exhibit 3.20(a) Seller Contracts

Exhibit 3.20(b) Rights under Seller Contracts

Exhibit 3.20(c) Validity of Seller Contracts

Exhibit 3.20(d) Compliance under Seller Contracts

Exhibit 3.21(b) Insurance Policies

Exhibit 3.21(d) Validity of Insurance

Exhibit 3.22 Environmental Matters

Exhibit 3.24(b) Labor Disputes

Exhibit 3.25(b) Intellectual Property Assets

Exhibit 3.25(c) Additional Intellectual Property Assets

Exhibit 3.25(h) Net Names

Exhibit 3.26 Certain Relationships

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ASSET PURCHASE AGREEMENT

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This Asset Purchase Agreement ("Agreement") is dated November 1, 2004, by

and among UHI Canada, Corporation, a Nova Scotia unlimited liability company

("Buyer") and The GSI Group (Canada) Co., a Nova Scotia corporation ("Seller")

and The GSI Group, Inc., a Delaware corporation, ("Shareholder").

RECITALS

Seller desires to sell, and Buyer desires to purchase, the Assets of Seller

for the consideration and on the terms set forth in this Agreement.

The parties, intending to be legally bound, agree as follows:

1. DEFINITIONS AND USAGE

1.1 Definitions. For purposes of this Agreement, the following terms

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and variations thereof have the meanings specified or referred to in this

Section 1.1:

"Accounts Payable"-- all trade accounts payable and other obligations of

payment from vendors of Seller.

"Accounts Receivable"--(a) all trade accounts receivable and other rights to

payment from customers of Seller and the full benefit of all security for such

accounts or rights to payment, including all trade accounts receivable

representing amounts receivable in respect of goods shipped or products sold or

services rendered to customers of Seller, (b) all other accounts or notes

receivable of Seller and the full benefit of all security for such accounts or

notes and (c) any claim, remedy or other right related to any of the foregoing

as identified on Exhibit 3.11.

"Appurtenances"--all privileges, rights, easements, hereditaments and

appurtenances belonging to or for the benefit of the Land, including all

easements appurtenant to and for the benefit of any Land (a "Dominant Parcel")

for, and as the primary means of access between, the Dominant Parcel and a

public way, or for any other use upon which lawful use of the Dominant Parcel

for the purposes for which it is presently being used is dependent, and all

rights existing in and to any streets, alleys, passages and other rights-of-way

included thereon or adjacent thereto (before or after vacation thereof) and

vaults beneath any such streets.

"Assets"--as defined in Section 2.1.

"Assumed Liabilities"--as defined in Section 2.4(a).

"Balance Sheet"--as defined in Section 3.4(a).

"Bill of Sale and Assumption"--as defined in Section 2.7(a)(i).

"Breach"--any breach of, or any inaccuracy in, any representation or warranty or

any breach of, or failure to perform or comply with, any covenant or obligation,

in or of this Agreement or any other Contract, or any event which with the

passing of time or the giving of notice, or both, would constitute such a

breach, inaccuracy or failure.

"Business Day"--any day other than (a) Saturday or Sunday or (b) any other day

on which banks in Elkhart, Indiana or Toronto, Canada are permitted or required

to be closed.

"Buyer"--as defined in the first paragraph of this Agreement.

"Buyer Indemnified Persons"--as defined in Section 6.2.

"Closing"--as defined in Section 2.6.

"Closing Balance Sheet"-- The closing balance sheet as of the Closing prepared

by Buyer in conformity with GAAP, and to the extent consistent with GAAP also

consistent with prior accounting practices of Seller.

"Closing Date"--the date the Agreement is executed.

"COBRA"--as defined in Section 3.16(d).

"Code"--the Internal Revenue Code of 1986, as amended.

"Consent"--any approval, consent, ratification, waiver or other authorization.

"Contemplated Transactions"--all of the transactions contemplated by this

Agreement.

"Contract"--any agreement, contract, Lease, consensual obligation, promise or

undertaking (whether written or oral and whether express or implied).

"Copyrights"--as defined in Section 3.25(a)(iii).

"Damages"--as defined in Section 6.2.

"Effective Time"--12:01 a.m., Elkhart, Indiana local time, on the day of

Closing.

"Encumbrance"--any charge, claim, community or other marital property interest,

condition, equitable interest, lien, option, pledge, security interest,

mortgage, right of way, servitude, right of first option, right of first refusal

or similar restriction, including any restriction on use, voting (in the case of

any security or equity interest), transfer, receipt of income or exercise of any

other attribute of ownership. "Encumbrance" shall not include zoning and local

land use ordinances.

"Environment"--soil, land surface or subsurface strata, surface waters

(including navigable waters and ocean waters), groundwaters, drinking water

supply, stream sediments, ambient air (including indoor air), plant and animal

life and any other environmental medium or natural resource.

"Environmental, Health and Safety Liabilities"--any cost, damages, expense,

liability, obligation or other responsibility arising from or under any

Environmental Law or Occupational Safety and Health Law, including those

consisting of or relating to: (a) any environmental, health or safety matter or

condition (including on-site or off-site contamination, occupational safety and

health and regulation of any chemical substance or product); (b) any fine,

penalty, judgment, award, settlement, legal or administrative proceeding,

damages, loss, claim, demand or response, remedial or inspection cost or expense

arising under any Environmental Law or Occupational Safety and Health Law; (c)

financial responsibility under any Environmental Law or Occupational Safety and

Health Law for cleanup costs or corrective action, including any cleanup,

removal, containment or other remediation or response actions ("Cleanup")

required by any Environmental Law or Occupational Safety and Health Law (whether

or not such Cleanup has been required or requested by any Governmental Body or

any other Person) and for any natural resource damages; or (d) any other

compliance, corrective or remedial measure required under any Environmental Law

or Occupational Safety and Health Law. The terms "removal," "remedial" and

"response action" include the types of activities covered by the United States

Comprehensive Environmental Response, Compensation and Liability Act of 1980

(CERCLA) or any equivalent activity covered by the Ontario Environmental

Protection Act, the Ontario Water Resources Act or the Canadian Environmental

Protection Act

"Environmental Law"--any Legal Requirement that requires or relates to: (a)

advising appropriate authorities, employees or the public of intended or actual

Releases of pollutants or hazardous substances or materials, violations of

discharge limits or other prohibitions and the commencement of activities, such

as resource extraction or construction, that could have significant impact on

the Environment; (b) preventing or reducing to acceptable levels the Release of

pollutants or hazardous substances or materials into the Environment; (c)

reducing the quantities, preventing the Release or minimizing the hazardous

characteristics of wastes that are generated; (d) assuring that products are

designed, formulated, packaged and used so that they do not present unreasonable

risks to human health or the Environment when used or disposed of; (e)

protecting resources, species or ecological amenities; (f) reducing to

acceptable levels the risks inherent in the transportation of hazardous

substances, pollutants, oil or other potentially harmful substances; (g)

cleaning up pollutants that have been Released, preventing the Threat of Release

or paying the costs of such clean up or prevention; or (h) making responsible

parties pay private parties, or groups of them, for damages done to their health

or the Environment or permitting self-appointed representatives of the public

interest to recover for injuries done to public assets.

"ERISA"--the Employee Retirement Income Security Act of 1974.

"Excluded Assets"--as defined in Section 2.2.

"Facilities"--any real property, leasehold or other interest in real property

currently owned or operated by Seller, including the Tangible Personal Property

used or operated by Seller at the respective locations of the Real Property

specified in Section 3.8.

"GAAP"--generally accepted accounting principles for financial reporting in the

United States.

"Governing Documents"--with respect to any particular entity, (a) if a

corporation, the articles or certificate of incorporation and the code of

regulations or bylaws; (b) if a general partnership, the partnership agreement

and any statement or certificate of partnership; (c) if a limited partnership,

the limited partnership agreement and the certificate of limited partnership;

(d) if a limited liability company, the articles of organization or certificate

of formation and limited liability company agreement or operating agreement; (e)

if another type of Person, any other charter or similar document adopted or

filed in connection with the creation, formation or organization of the Person;

(f) all equityholders' agreements, voting agreements, voting trust agreements,

joint venture agreements, registration rights agreements or other agreements or

documents relating to the organization, management or operation of any Person or

relating to the rights, duties and obligations of the equityholders of any

Person; and (g) any amendment or supplement to any of the foregoing.

"Governmental Authorization"--any Consent, license, registration or permit

issued, granted, given or otherwise made available by or under the authority of

any Governmental Body or pursuant to any Legal Requirement.

"Governmental Body"--any: (a) nation, state, province, county, city, town,

borough, village, district or other jurisdiction; (b) federal, state,

provincial, local, municipal, foreign or other government; (c) governmental or

quasi-governmental authority of any nature (including any agency, branch,

department, board, commission, court, tribunal or other entity exercising

governmental or quasi-governmental powers); (d) multinational organization or

body; (e) body exercising, or entitled or purporting to exercise, any

administrative, executive, judicial, legislative, police, regulatory or taxing

authority or power; or (f) official of any of the foregoing.

"Hazardous Activity"--the distribution, generation, handling, importing,

management, manufacturing, processing, production, refinement, Release, storage,

transfer, transportation, treatment or use (including any withdrawal or other

use of groundwater) of Hazardous Material in, on, under, about or from any of

the Facilities or any part thereof into the Environment.

"Hazardous Material"--any substance, material or waste which is regulated by any

Governmental Body, including any material, substance or waste which is defined

as a "dangerous good," "waste," "pollutant," "hazardous waste," "hazardous

material," "hazardous substance," "extremely hazardous waste," "restricted

hazardous waste," "contaminant," "toxic waste" or "toxic substance" under any

provision of Environmental Law, and including petroleum, petroleum products,

asbestos, presumed asbestos-containing material or asbestos-containing material,

urea formaldehyde and polychlorinated biphenyls.

"Improvements"--all buildings, structures, fixtures and improvements located on

the Land or included in the Assets, including those under construction.

"Indemnified Person"--as defined in Section 6.9(a).

"Indemnifying Person"--as defined in Section 6.9(a).

"Intellectual Property Assets"--as defined in Section 3.25(a).

"Inventories"--all inventories of Seller, wherever located, including all

finished goods, work in process, raw materials, spare parts and all other

materials and supplies to be used or consumed by Seller in the production of

finished goods.

"IRS"--the United States Internal Revenue Service and, to the extent relevant,

the United States Department of the Treasury.

"Land"--all parcels and tracts of land in which Seller has a leasehold interest.

"Lease"--any Real Property Lease or any lease or rental agreement, license,

right to use or installment and conditional sale agreement to which Seller is a

party and any other Seller Contract pertaining to the leasing or use of any

Tangible Personal Property.

"Legal Requirement"--any federal, state, provincial, local, municipal, foreign,

international, multinational or other constitution, law, ordinance, principle of

common law, code, Order, regulation, statute or treaty.

"Liability"--with respect to any Person, any liability or obligation of such

Person of any kind, character or description, whether known or unknown, absolute

or contingent, accrued or unaccrued, disputed or undisputed, liquidated or

unliquidated, secured or unsecured, joint or several, due or to become due,

vested or unvested, executory, determined, determinable or otherwise, and

whether or not the same is required to be accrued on the financial statements of

such Person.

"Marks"--as defined in Section 3.25(a)(i).

"Material Agreement" - as defined in Section 3.20.

"New Lease"--as defined in Section 2.7(a)(v).

"Occupational Safety and Health Law"--any Legal Requirement designed to provide

safe and healthful working conditions and to reduce occupational safety and

health hazards, including the Occupational Safety and Health Act, Occupational

Health and Safety Act, and any program mandated by Legal Requirement designed to

provide safe and healthful working conditions.

"Order"--any order, direction, injunction, judgment, decree, ruling, assessment

or arbitration award of any Governmental Body or arbitrator.

"Ordinary Course of Business"--an action taken by a Person will be deemed to

have been taken in the Ordinary Course of Business only if that action is

consistent in nature, scope and magnitude with the past practices of such Person

and is taken in the ordinary course of the normal, day-to-day operations of such

Person.

"Patents"--as defined in Section 3.25(a)(ii).

"Person"--an individual, partnership, corporation, business trust, limited

liability company, limited liability partnership, joint stock company, trust,

unincorporated association, joint venture or other entity or a Governmental

Body.

"Proceeding"--any action, arbitration, audit, hearing, investigation, litigation

or suit (whether civil, criminal, administrative, judicial or investigative,

whether formal or informal, whether public or private) commenced, brought,

conducted or heard by or before, or otherwise involving, any Governmental Body

or arbitrator.

"Purchase Price"--as defined in Section 2.3.

"Real Property"--the Land and Improvements and all Appurtenances thereto.

"Real Property Lease"-- any lease or rental agreement pertaining to the

occupancy of any improved space on any Land.

"Record"--information that is inscribed on a tangible medium or that is stored

in an electronic or other medium and is retrievable in perceivable form.

"Related Person"--

With respect to a particular individual: (a) each other member of such

individual's Family; (b) any Person that is directly or indirectly controlled by

any one or more members of such individual's Family; and (c) any Person with

respect to which one or more members of such individual's Family serves as a

director, officer, partner, executor or trustee (or in a similar capacity).

With respect to a specified Person other than an individual: (a) any Person

that directly or indirectly controls, is directly or indirectly controlled by or

is directly or indirectly under common control with such specified Person; (b)

each Person that serves as a director, officer, partner, executor or trustee of

such specified Person (or in a similar capacity); and (c) any Person with

respect to which such specified Person serves as a general partner or a trustee

(or in a similar capacity).

For purposes of this definition, (a) "control" (including "controlling,"

"controlled by," and "under common control with") means the possession, direct

or indirect, of the power to direct or cause the direction of the management and

policies of a Person, whether through the ownership of voting securities, by

contract or otherwise, and shall be construed as such term is used in the rules

promulgated under the Securities Act; and (b) the "Family" of an individual

includes (i) the individual, (ii) the individual's spouse, (iii) any other

natural person who is related to the individual or the individual's spouse

within the second degree and (iv) any other natural person who resides with such

individual.

"Release"--any release, spill, emission, leaking, pumping, pouring, dumping,

emptying, injection, deposit, disposal, discharge, dispersal, leaching or

migration on or into the Environment or into or out of any property.

"Remedial Action"--all actions, including any capital expenditures, required or

voluntarily undertaken (a) to clean up, remove, treat or in any other way

address any Hazardous Material or other substance; (b) to prevent the Release or

Threat of Release or to minimize the further Release of any Hazardous Material

or other substance so it does not migrate or endanger or threaten to endanger

public health or welfare or the Environment; (c) to perform pre-remedial studies

and investigations or post-remedial monitoring and care; or (d) to bring all

Facilities and the operations conducted thereon into compliance with

Environmental Laws and environmental Governmental Authorizations.

"Representative"--with respect to a particular Person, any director, officer,

manager, employee, agent.

"Retained Liabilities"--as defined in Section 2.4(b).

"Seller"--as defined in the first paragraph of this Agreement.

"Seller Contract"--any Contract (a) under which Seller has or may acquire any

rights or benefits; (b) under which Seller has or may become subject to any

obligation or liability; or (c) by which Seller or any of the assets owned or

used by Seller is or may become bound.

"Seller Indemnified Persons"--as defined in Section 6.4.

"Shareholder"--as defined in the first paragraph of this Agreement.

"Software"--all computer software and subsequent versions thereof, including

source code, object, executable or binary code, objects, comments, screens, user

interfaces, report formats, templates, menus, buttons and icons and all files,

data, materials, manuals, design notes and other items and documentation related

thereto or associated therewith.

"Subsidiary"--with respect to any Person (the "Owner"), any corporation or other

Person of which securities or other interests having the power to elect a

majority of that corporation's or other Person's board of directors or similar

governing body, or otherwise having the power to direct the business and

policies of that corporation or other Person (other than securities or other

interests having such power only upon the happening of a contingency that has

not occurred), are held by the Owner or one or more of its Subsidiaries.

"Tangible Personal Property"--all machinery, equipment, tools, furniture, office

equipment, computer hardware, supplies, materials, vehicles and other items of

tangible personal property (other than Inventories or Improvements) of every

kind owned or leased by Seller (wherever located and whether or not carried on

Seller's books), together with any express or implied warranty by the

manufacturers or sellers or lessors of any item or component part thereof and

all maintenance records and other documents relating thereto.

"Tax"--any income, gross receipts, license, payroll, employment, excise,

severance, stamp, occupation, premium, property, environmental, windfall profit,

customs, vehicle, airplane, boat, vessel or other title or registration, capital

stock, franchise, employees' income withholding, foreign or domestic

withholding, social security, unemployment, disability, real property, personal

property, sales, use, transfer, value added, alternative, add-on minimum and

other tax, fee, assessment, levy, tariff, charge or duty of any kind whatsoever

and any interest, penalty, addition or additional amount thereon imposed,

assessed or collected by or under the authority of any Governmental Body or

payable under any tax-sharing agreement or any other Contract.

"Tax Return"--any return (including any information return), report, statement,

schedule, notice, form, declaration, claim for refund or other document or

information filed with or submitted to, or required to be filed with or

submitted to, any Governmental Body in connection with the determination,

assessment, collection or payment of any Tax or in connection with the

administration, implementation or enforcement of or compliance with any Legal

Requirement relating to any Tax.

"Third Party"--a Person that is not a party to this Agreement.

"Third-Party Claim"--any claim against any Indemnified Person by a Third Party,

whether or not involving a Proceeding.

"Threat of Release"--a reasonable likelihood of a Release that may require

action in order to prevent or mitigate damage to the Environment that may result

from such Release.

"Trade Accounts Receivable" -- all trade accounts receivable and other rights

to payment from customers of Seller and the full benefit of all security for

such accounts or rights to payment, including all trade accounts receivable

representing amounts receivable in respect of goods shipped or products sold or

services rendered to customers of Seller, as identified on Exhibit 3.11.

1.2 Usage.

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(a) Interpretation. In this Agreement, unless a clear contrary

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intention appears:

(i) the singular number includes the plural number and vice versa;

(ii) reference to any Person includes such Person's successors and assigns

but, if applicable, only if such successors and assigns are not prohibited by

this Agreement, and reference to a Person in a particular capacity excludes such

Person in any other capacity or individually;

(iii) reference to any gender includes each other gender;

(iv) reference to any agreement, document or instrument means such

agreement, document or instrument as amended or modified and in effect from time

to time in accordance with the terms thereof;

(v) reference to any Legal Requirement means such Legal Requirement as

amended, modified, codified, replaced or reenacted, in whole or in part, and in

effect from time to time, including rules and regulations promulgated

thereunder, and reference to any section or other provision of any Legal

Requirement means that provision of such Legal Requirement from time to time in

effect and constituting the substantive amendment, modification, codification,

replacement or reenactment of such section or other provision;

(vi) "hereunder," "hereof," "hereto," and words of similar import shall be

deemed references to this Agreement as a whole and not to any particular

Article, Section or other provision hereof;

(vii) "including" (and with correlative meaning "include") means including

without limiting the generality of any description preceding such term;

(viii) "or" is used in the inclusive sense of "and/or";

(ix) with respect to the determination of any period of time, "from" means

"from and including" and "to" means "to but excluding"; and

(x) references to documents, instruments or agreements shall be deemed to

refer as well to all addenda, exhibits, schedules or amendments thereto.

(b) Accounting Terms and Determinations. Unless otherwise specified

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herein, all accounting terms used herein shall be interpreted and all accounting

determinations hereunder shall be made in accordance with GAAP.

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the parties with the benefit of legal representation, and any rule of

construction or interpretation otherwise requiring this Agreement to be

construed or interpreted against any party shall not apply to any construction

or interpretation hereof.

2. SALE AND TRANSFER OF ASSETS; CLOSING

2.1 Assets. Upon the terms and subject to the conditions set forth in

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this Agreement, at the Closing, but effective as of the Effective Time, Seller

shall sell, convey, assign, transfer and deliver to Buyer, and Buyer shall

purchase and acquire from Seller, free and clear of any Encumbrances, all of

Seller's right, title and interest in and to all of Seller's property and

assets, real, personal or mixed, tangible and intangible, of every kind and

description, wherever located, including the following (but excluding the

Excluded Assets):

(a) all leasehold interests in Real Property described in Exhibit 3.8.

(b) all Tangible Personal Property, including those items described in

Exhibit 2.1(b);

(d) all Accounts Receivable;

(e) all Seller Contracts, including those listed in Exhibit 3.20(b), and all

outstanding offers or solicitations made by or to Seller to enter into any

Contract;

(f) all Governmental Authorizations and all pending applications therefor or

renewals thereof, in each case to the extent transferable to Buyer, including

those listed in Exhibit 3.17(b);

(g) all data and Records related to the operations of Seller, including

client and customer lists and Records, referral sources, research and

development reports and Records, production reports and Records, service and

warranty Records, equipment logs, operating guides and manuals, financial and

accounting Records (excluding such Records identified in Section 2.2), creative

materials, advertising materials, promotional materials, studies, reports,

correspondence and other similar documents and Records and copies of all

personnel Records (provided, however, that Seller shall have the right to use

and duplicate (at Seller's expense) all documents and other information to be

conveyed hereunder which are necessary for Tax reporting and payment in respect

of periods prior to the Closing);

(h) all of the intangible rights and property of Seller, including

Intellectual Property Assets, going concern value, goodwill, telephone, telecopy

and e-mail addresses and listings;

(i) all claims of Seller against third parties relating to the Assets,

whether choate or inchoate, known or unknown, contingent or noncontingent; and

(j) all rights of Seller relating to deposits made by Seller and prepaid

expenses, claims for refunds and rights to offset in respect thereof.

All of the property and assets to be transferred to Buyer hereunder are

herein referred to collectively as the "Assets."

Buyer agrees that the Seller and Shareholder shall have the right to obtain

access to such documents, books, records (including any tax records), agreements

and financial data of Seller, and the Assets to the extent related to the period

prior to the Closing and make photocopies thereof for a proper purpose, such as

in connection with the preparation of the tax return or to defend any tax claim,

audit or assessment.

Notwithstanding the foregoing, the transfer of the Assets pursuant to this

Agreement shall not include the assumption of any Liability related to the

Assets unless Buyer expressly assumes that Liability pursuant to Section 2.4(a).

2.2 Excluded Assets. Notwithstanding anything to the contrary

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contained in Section 2.1 or elsewhere in this Agreement, the following assets of

Seller (collectively, the "Excluded Assets") are not part of the sale and

purchase contemplated hereunder, are excluded from the Assets and shall remain

the property of Seller after the Closing:

(a) all cash, cash equivalents and short-term investments, all money

deposited in Seller's bank accounts including without limitation all items

acceptable for deposit (including but not limited to currency, checks, drafts

and money orders), and taking into account all deposits in transit not yet

reflected on bank statements, including without limitation those accounts listed

on Exhibit 2.2(a);

(b) all minute books, stock Records and corporate seals, taxpayer and other

identification numbers, original tax returns and other documents relating to the

organization, maintenance and existence of Seller as a corporation.

(d) all rights of Seller with respect to insurance policies and coverage for

periods on or prior to Closing;

(e) all of Seller's tax records and supporting work papers and all of the

Seller's rights to payment or refund to federal, state, foreign and/or local

taxes;

(f) all rights of Seller and Shareholder under this Agreement, the Bill of

Sale and Assumption Agreement;

2.3 Consideration.

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(a) Purchase Price. The consideration for the Assets (the "Purchase

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

Price") will be Three Hundred Fifty Thousand Dollars ($350,000.00), less any

Assumed Liabilities.

(b) Payments at Closing. In accordance with Section 2.7(b), at the Closing,

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Buyer shall deliver to Seller the following:

(i) Three Hundred Fifty Thousand Dollars ($350,000.00) paid in cash at

closing in immediately available funds less any Assumed Liabilities in Section

(ii) below;

(ii) The assumption of the Assumed Liabilities, if any.

2.4 Liabilities.

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(a) Assumed Liabilities. On the Closing Date but effective as of the

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

Effective Time, Buyer shall assume and agree to discharge only the following

Liabilities of Seller (the "Assumed Liabilities"):

(i) any account payable reflected on the Closing Balance Sheet (other

than an account payable to the Shareholder or a Related Person of Seller or the

Shareholder) that remains unpaid as of the Effective Time;

(ii) Intentionally Omitted.

(iii) Intentionally Omitted.

(iv) any Liability to Seller's customers incurred by Seller in the Ordinary

Course of Business for nondelinquent orders, as specified by their terms,

outstanding as of the Effective Time reflected in the Seller Contracts (other

than any Liability arising out of or relating to a Breach that occurred prior to

the Effective Time); and

(v) any Liability arising after the Effective Time under the Seller

Contracts described in Exhibit 3.20(a) (other than any Liability arising out of

or relating to a Breach that occurred prior to the Effective Time).

(b) Retained Liabilities. The Retained Liabilities shall remain the

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sole responsibility of and shall be retained, paid, performed and discharged

solely by Seller. "Retained Liabilities" shall mean every Liability of Seller

other than the Assumed Liabilities, including:

(i) any Liability arising out of or relating to products of Seller to

the extent manufactured, sold, or installed prior to the Effective Time;

(ii) any Liability under any Contract assumed by Buyer pursuant to Section

2.4(a) that arises after the Effective Time but that arises out of or relates to

any Breach that occurred prior to the Effective Time;

(iii) any Liability for Taxes incurred or relating to periods prior to the

Effective Time, including any Taxes arising as a result of Seller's operation of

its business or ownership of the Assets prior to the Effective Time, and any

Taxes that will arise as a result of the sale of the Assets pursuant to this

Agreement;

(iv) any Liability under any Contract not assumed by Buyer under Section

2.4(a), including any Liability arising out of or relating to Seller's credit

facilities or any security interest related thereto;

(v) any Environmental, Health and Safety Liabilities arising out of or

relating to the operation of Seller's business or Seller's leasing, ownership or

operation of real property;

(vi) any Liability under the Employee Plans or relating to payroll,

vacation, sick leave, workers' compensation, unemployment benefits, pension

benefits, employee stock option or profit-sharing plans, or any other

self-funded employee plans or benefits of any kind for Seller's employees or

former employees or both;

(vii) any Liability under any Seller employment, severance, retention or

termination agreement with any employee of Seller or any of its Related Persons;

(viii) any Liability arising out of or relating to any employee grievance

whether or not the affected employees are hired by Buyer;

(ix) any Liability of Seller to Shareholder or any Related Person of Seller

or any Shareholder;

(x) any Liability to indemnify, reimburse or advance amounts to any officer,

director, employee or agent of Seller;

(xi) any Liability to distribute to Seller's Shareholder or otherwise apply

all or any part of the consideration received hereunder;

(xii) any Liability arising out of any Proceeding pending as of the

Effective Time;

(xiii) any Liability arising out of any Proceeding commenced after the

Effective Time and arising out of or relating to any occurrence or event

happening prior to the Effective Time;

(xiv) any Liability arising out of or resulting from Seller's compliance or

noncompliance with any Legal Requirement or Order of any Governmental Body;

(xv) any Liability of Seller under this Agreement or any other document

executed in connection with the Contemplated Transactions; and

(xvi) any Liability of Seller based upon Seller's acts or omissions

occurring after the Effective Time.

2.5 Allocation. Buyer and Seller agree to (a) allocate the Purchase

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Price among the Assets in accordance with Exhibit 2.5, Section 1060 of the Code

and IRS Form 8594, (b) treat and report the transactions contemplated by this

Agreement in all respects consistently for purposes of any federal, state,

provincial, or local tax, and (c) not take any action inconsistent with such

obligation.

2.6 Closing. The purchase and sale provided for in this Agreement (the

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"Closing") will take place commencing at 10:00 a.m. (local time) on the date of

this Agreement, and the Agreement shall be effective by facsimile transfers of

original signatures followed by delivery of original signatures overnight

courier to the parties.

2.7 Contemporaneously Executed Documents. In addition to any other

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documents to be delivered under other provisions of this Agreement:

(a) Seller and Shareholder, as the case may be, shall deliver to Buyer:

(i) A bill of sale for all of the Assets that are Tangible Personal

Property and assignment of all of the Assets that are intangible personal

property in the form of Exhibit 2.7(a)(i), which assignment shall also contain

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

Buyer's undertaking and assumption of the Assumed Liabilities (the "Bill of

Sale and Assumption") executed by Seller.

(ii) Intentionally omitted.

(iii) A non-competition agreement executed by Seller and Shareholder in the

form of Exhibit 2.7(a)(iii) and a non-competition agreement executed by Seller

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

in the form of Exhibit 2.7(a)(iii),.

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

(iv) Intentionally Omitted.

(v) Intentionally Omitted.

(vi) Employment Agreement with Richard Johnson.

(vii) A new lease between Buyer and Veldare Investments (Seller's landlord)

and a termination of lease executed by Veldare Investments and Seller.

(viii) Such other bills of sale, assignments, certificates of title,

documents and other instruments of transfer and conveyance as may reasonably be

requested by Buyer, each in form and substance reasonably satisfactory to Buyer

and its legal counsel and executed by Seller.

(ix) Resignation of Richard Johnson from the Seller.

(x) Releases of all Encumbrances on the Assets.

(xi) Each of the Consents identified in Exhibit 3.2(c).

(xii) Certificates of status dated as of a date not earlier than the seventh

business day prior to the Closing as to the good standing of Seller, executed by

the appropriate officials of the province of Nova Scotia.

(xiii) Intentionally Omitted.

(xiv) The articles of incorporation and all amendments thereto of Seller,

duly certified as of a recent date by the appropriate governmental official of

the jurisdiction of Seller's incorporation.

(xv) Intentionally Omitted.

(xvi) Intentionally Omitted.

(b) Buyer shall deliver to Seller and Shareholder:

(i) Three Hundred Fifty Thousand Dollars ($350,000.00) in cash less

Assumed Liabilities.

(ii) Intentionally Omitted.

(iii) Intentionally Omitted.

(iv) The Bill of Sale and Assumption Agreement executed by Buyer.

(v) The Noncompetition Agreements executed by Buyer.

(vi) Intentionally Omitted.

(vii) Intentionally Omitted.

(viii) Intentionally Omitted.

(ix) Intentionally Omitted.

(x) The articles of incorporation and all amendments thereto of Buyer, duly

certified as of a recent date by the appropriate governmental official of the

jurisdiction of Buyer's incorporation.

(xi) Intentionally Omitted.

(xii) A certificate of status dated as of a date not earlier than the 30th

day prior to the Closing as to the good standing of Buyer, executed by the

appropriate official of the province of Nova Scotia.

(xiii) Intentionally Omitted.

2.8 Section 22 Election. Buyer and Seller shall execute jointly an

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election in prescribed form under Section 22 of the Income Tax Act (Canada) in

respect of the Accounts Receivable and shall each file such election with their

respective tax returns for their respective taxation years that include the

Effective Time.

2.9 GST Election. At the Closing, Buyer and Seller shall execute jointly an

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

election under Section 167 of the Excise Tax Act (Canada) to have the sale of

the Assets take place on a GST-fee basis under Part IX of the Excise Tax Act

(Canada) and Buyer shall file such election with its GST return for the

reporting period in which the sale of the Assets takes place.

2.10 Provincial Sales Tax Certificates. Seller shall apply for a

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

certificate (a "Clearance Certificate") pursuant to section 6 of the Retail

Sales Tax Act (Ontario) or similar legislation in those jurisdictions in which

the Assets are located, each of which indicates that Seller has paid all

provincial sales taxes under such statutes in respect of the Assets up to the

Closing Date or have entered into satisfactory arrangements for the payment of

such provincial sales taxes. Seller shall provide the duplicate of such

Clearance Certificate(s) to Buyer on the Closing Date. Seller agrees to

indemnify and hold harmless the Buyer, its officers, directors, employees and

controlling persons for any provincial sales taxes, penalties and interest

payable or assessed against Buyer, directly or indirectly, by reason of, or in

the event of, any non-compliance with section 6 of the Retail Sales Tax Act

(Ontario) or any corresponding provision of any analogous provincial sales tax

legislation.

2.11 Bulk Sales Act Compliance. The Seller shall provide to the Buyer

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

evidence satisfactory to the Buyer that the bulk sales legislation in each of

the provinces in which the Assets are located has been complied with or that the

sale of the Assets is exempt from compliance with such legislation.

3. REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER

Seller and Shareholder represent and warrant, jointly and severally, to

Buyer as follows:

3.1 Organization And Good Standing.

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

(a) Exhibit 3.1(a) contains a complete and accurate list of Seller's

jurisdiction of incorporation and any other jurisdictions in which it is

qualified to do business as a foreign corporation. Seller is a corporation duly

organized, validly existing and in good standing under the laws of its

jurisdiction of incorporation, with full corporate power and authority to

conduct its business as it is now being conducted, to own or use the properties

and assets that it purports to own or use, and to perform all its obligations

under the Seller Contracts. Seller is duly qualified to do business as a

foreign corporation and is in good standing under the laws of each state,

province or other jurisdiction in which either the ownership or use of the

properties owned or used by it, or the nature of the activities conducted by it,

requires such qualification.

(b) Complete and accurate copies of the Governing Documents of Seller, as

currently in effect, are attached to Exhibit 3.1(b).

does not own any shares of capital stock or other securities of any other

Person.

3.2 Enforceability; Authority; No Conflict.

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

(a) This Agreement constitutes the legal, valid and binding obligation

of Seller and Shareholder, enforceable against each of them in accordance with

its terms subject to limitations on enforcement imposed by bankruptcy,

insolvency, reorganization, or other Legal Requirements affecting t

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