Section 1.1

Defined Terms    2

Section 1.2

Certain Rules of Interpretation    16

Section 1.3

Schedules    18

Section 2.1

Arrangement    18

Section 2.2

Interim Order    18

Section 2.3

The Company Meeting    19

Section 2.4

The Company Circular    21

Section 2.5

Final Order    23

Section 2.6

Court Proceedings    23

Section 2.7

Company Equity Awards, Company Warrants and Convertible Debentures    24

Section 2.8

Amendment to Plan of Arrangement, Articles of Arrangement and Effective Date    24

Section 2.9

Payment of Consideration and Other Amounts    25

Section 2.10

Withholding Taxes    25

Section 2.11

Adjustment of Consideration    26

Section 2.12

U.S. Securities Law Matters    26

Section 3.1

Representations and Warranties of the Company    27

Section 3.2

Representations and Warranties of the Purchaser    27

Section 4.1

Conduct of Business of the Company    28

Section 4.2

Conduct of Business of the Purchaser    31

Section 4.3

Covenants of the Purchaser Relating to the Consideration Shares    33

Section 4.4

Regarding the Arrangement    33

Section 4.5

Company Credit Agreement    35

Section 4.6

Access to Information; Confidentiality    37

Section 4.7

Pre-Acquisition Reorganization    38

Section 4.8

Public Communications    39

Section 4.9

Notice and Cure Provisions    39

Section 4.10

Insurance and Indemnification    40

Section 4.11

Company 401(k) Plans    41

Section 5.1

Non-Solicitation    41

Section 5.2

Notification of Acquisition Proposals    42

Section 5.3

Responding to an Acquisition Proposal    43

Section 5.4

Right to Match    44

Section 5.5

Breach by Subsidiaries and Representatives    45

Section 6.1

Mutual Conditions Precedent    46

Section 6.2

Additional Conditions Precedent to the Obligations of the Purchaser    47

Section 6.3

Additional Conditions Precedent to the Obligations of the Company    49

Section 6.4

Satisfaction of Conditions    50

Section 7.1

Term    50

Section 7.2

Termination    50

Section 7.3

Effect of Termination/Survival    52

Section 8.1

Amendments    53

Section 8.2

Termination Fee    53

Section 8.3

Expenses    54

Section 8.4

Notices    55

Section 8.5

Time of the Essence    56

Section 8.6

Injunctive Relief    56

Section 8.7

Third Party Beneficiaries    56

Section 8.8

Waiver    57

Section 8.9

Entire Agreement    57

Section 8.10

Successors and Assigns    57

Section 8.11

Severability    57

Section 8.12

Governing Law and Process Agent    58

Section 8.13

Rules of Construction    58

Section 8.14

No Liability    58

Section 8.15

Counterparts    58

A.

The Purchaser and the Company wish to propose an arrangement involving the acquisition by the Purchaser of all of the issued and outstanding common shares of the Company in exchange for Purchaser Shares;

B.

The Special Committee has determined that the Arrangement is fair to the Company Shareholders and in the best interests of the Company, and has recommended to the Board that the Board approve this Agreement and the Arrangement and recommend that the Company Shareholders vote in favour of the Arrangement;

C.

The Board has determined that the Arrangement is fair to the Company Shareholders and in the best interests of the Company, and has resolved to recommend that the Company Shareholders vote in favour of the Arrangement;

D.

The Parties intend to carry out the transaction contemplated herein by way of a plan arrangement under the provisions of the CBCA;

E.

The Purchaser has entered into support and voting agreements with certain Company Shareholders as well as all of the directors and officers of the Company who are holders of Company Common Shares, pursuant to which, among other things, such Persons have agreed to vote in favour of the Arrangement Resolution, on the terms and subject to the conditions set forth in such agreements;

F.

The Company has obtained waivers, consents and amendments to, or in respect of, the terms of certain of the Convertible Debentures from holders representing approximately 71.3% of the principal amount of the Convertible Debentures in connection with the entering into of this Agreement; and

G.

The Parties have entered into this Agreement to provide for the matters referred to in the foregoing recitals and for other matters related to the transaction herein provided for.

(a)

any change generally affecting the industries in which the Company and its Subsidiaries operate;

(b)

any change in general economic, business, regulatory, political or market conditions or in financial or capital markets in Canada or the United States;

(c)

any adoption, proposal, implementation or change in Law or any interpretation of Law by any Governmental Entity;

(d)

any change in IFRS;

(e)

any natural disaster;

(f)

any change in the market price or trading volume of any securities of the Company (provided, however, that the causes underlying such failure may be considered to determine whether such causes constitute a Company Material Adverse Effect);

(g)

the failure of the Company to meet any internal or published projections, forecasts or estimates of revenues, earnings or cash flow for any period ending on or after the date of this Agreement (provided, however, that the causes underlying such failure may be considered to determine whether such causes constitute a Company Material Adverse Effect);

(h)

the announcement of this Agreement or the transactions contemplated hereby; or

(i)

any action taken by the Company or any of its Subsidiaries which is required to be taken pursuant to this Agreement,

(a)

Liens for Taxes which are not delinquent and for which adequate provisions have been made in accordance with IFRS;

(b)

inchoate or statutory Liens of contractors, subcontractors, mechanics, workers, suppliers, materialmen, carriers and others in respect of the construction, maintenance, repair or operation of the Company Assets, provided that such Liens are incurred in the Ordinary Course and related to obligations not due or delinquent, are not registered against title to any Company Assets and in respect of which adequate holdbacks are being maintained as required by applicable Law;

(c)

the right reserved to or vested in any Governmental Entity by any statutory provision or by the terms of any lease, licence, franchise, grant or permit of the Company or any of its Subsidiaries, to terminate any such lease, licence, franchise, grant or permit, or to require annual or other payments as a condition of their continuance; and

(d)

Liens listed and described in Section 1.1 of the Company Disclosure Letter.

(a)

any change generally affecting the industries in which the Purchaser and its Subsidiaries operate;

(b)

any change in general economic, business, regulatory, political or market conditions or in financial or capital markets in Canada or the United States;

(c)

any adoption, proposal, implementation or change in Law or any interpretation of Law by any Governmental Entity;

(d)

any change in U.S. GAAP;

(e)

any natural disaster;

(f)

any change in the market price or trading volume of any securities of the Purchaser (provided, however, that the causes underlying such failure may be considered to determine whether such causes constitute a Purchaser Material Adverse Effect);

(g)

the failure of the Purchaser to meet any internal or published projections, forecasts or estimates of revenues, earnings or cash flow for any period ending on or after the date of this Agreement (provided, however, that the causes underlying such failure may be considered to determine whether such causes constitute a Purchaser Material Adverse Effect);

(h)

the announcement of this Agreement or the transactions contemplated hereby; or

(i)

any action taken by the Purchaser or any of its Subsidiaries which is required to be taken pursuant to this Agreement,

(1)

Headings, etc. The provision of a Table of Contents, the division of this Agreement into Articles and Sections and the insertion of headings are for convenient reference only and do not affect the construction or interpretation of this Agreement.

(2)

Currency. All references to dollars or to $ are references to Canadian dollars, unless otherwise specified.

(3)

Gender and Number. Any reference to gender includes all genders. Words importing the singular number only include the plural and vice versa.

(4)

Certain Phrases and References, etc. The words “ including ”, “ includes ” and “include ” mean “ including (or includes or include) without limitation ,” and “ the aggregate of ”, “the total of” , “the sum of” , or a phrase of similar meaning means “the aggregate (or total or sum), without duplication, of. ” Unless stated otherwise, “Article”, “Section” , and “ Schedule ” followed by a number or letter mean and refer to the specified Article or Section of or Schedule to this Agreement. The term “ Agreement ” and any reference in this Agreement to this Agreement or any other agreement or document includes, and is a reference to, this Agreement or such other agreement or document as it may have been, or may from time to time be, amended, restated, replaced, supplemented or novated and includes all schedules to it. The term “ made available ” means copies of the subject materials were included in the Data Room.

(5)

Capitalized Terms. All capitalized terms used in any Schedule or in the Company Disclosure Letter have the meanings ascribed to them in this Agreement.

(6)

Knowledge. Where any representation or warranty is expressly qualified by reference to the knowledge of the Company, it is deemed to refer to the knowledge of Sohail Khan, President and Chief Executive Officer, Indra Laksono, Chief Technology Officer, Charlie Glavin, Chief Financial Officer, Michael Michalyshyn, General Counsel, Perry Chappell, Vice-President of Sales and Marketing, Andrew Shih, Vice-President of Operations, and Donna Wong, Vice-President, Finance. The Company confirms that it and such officers have made due and diligent inquiry of such Persons as they consider necessary as to the matters that are the subject of the representations and warranties.

(7)

Accounting Terms. Unless otherwise specified herein, all accounting terms are to be interpreted in accordance with IFRS and all determinations of an accounting nature in respect of the Company required to be made shall be made in a manner consistent with IFRS.

(8)

Statutes. Any reference to a statute refers to such statute and all rules and regulations made under it, as it or they may have been or may from time to time be amended or re-enacted, unless stated otherwise.

(9)

Computation of Time. A period of time is to be computed as beginning on the day following the event that began the period and ending at 4:30 p.m. on the last day of the period, if the last day of the period is a Business Day, or at 4:30 p.m. on the next Business Day if the last day of the period is not a Business Day.

(10)

Time References. References to time are to local time, Toronto, Ontario.

(11)

Consent . If any provision requires approval or consent of a Party and such approval or consent is not delivered within the specified time limit, the Party whose consent or approval is required shall be conclusively deemed to have withheld its approval or consent.

(12)

Affiliates and Subsidiaries . For the purpose of this Agreement, a Person is an “ affiliate ” of another Person if one of them is a Subsidiary of the other or each one of them is controlled, directly or indirectly, by the same Person. A “ Subsidiary ” means a Person that is controlled directly or indirectly by another Person and includes a Subsidiary of that Subsidiary. A Person is considered to “ control ” another Person if: (i) the first Person beneficially owns or directly or indirectly exercises control or direction over securities of the second Person carrying votes which, if exercised, would entitle the first Person to elect a majority of the directors of the second Person, unless that first Person holds the voting securities only to secure an obligation, or (ii) the second Person is a partnership, other than a limited partnership, and the first Person holds more than 50% of the interests of the partnership, or (iii) the second Person is a limited partnership, and the general partner of the limited partnership is the first Person.

(1)

The schedules attached to this Agreement form an integral part of this Agreement for all purposes of it.

(2)

The Company Disclosure Letter itself and all information contained in it is confidential information and may not be disclosed unless (i) it is required to be disclosed pursuant to Law unless such Law permits the Parties to refrain from disclosing the information for confidentiality or other purposes or (ii) a Party needs to disclose it in order to enforce or exercise its rights under this Agreement.

Section 2.1

Arrangement

Section 2.2

Interim Order

(a)

for the persons and classes of persons to whom notice is to be provided in respect of the Arrangement and the Company Meeting and for the manner in which such notice is to be provided;

(b)

that the required level of approval (the “ Required Approval ”) for the Arrangement Resolution shall be: (i)  66 ^2/3 % of the votes cast on the Arrangement Resolution by Company Shareholders present in person or by proxy at the Company Meeting; and (ii) “majority of the minority” approval, if required pursuant to MI 61-101;

(c)

that, in all other respects, the terms, restrictions and conditions of the Company’s Constating Documents, including quorum requirements and all other matters, shall apply in respect of the Company Meeting;

(d)

for the grant of the Dissent Rights to those Company Shareholders who are registered Company Shareholders as contemplated in the Plan of Arrangement;

(e)

for the notice requirements with respect to the presentation of the application to the Court for the Final Order;

(f)

that the Company Meeting may be adjourned or postponed from time to time by the Company in accordance with the terms of this Agreement without the need for additional approval of the Court;

(g)

confirmation of the record date for the purposes of determining the Company Shareholders entitled to notice of and to vote at the Company Meeting in accordance with the Interim Order;

(h)

that the record date for the Company Shareholders entitled to notice of and to vote at the Company Meeting will not change in respect of any adjournment(s) of the Company Meeting, unless required by Canadian Securities Law;

(i)

that the Purchaser intends to rely upon the exemption from registration provided by Section 3(a)(10) of the U.S. Securities Act, subject to and conditioned on the Court’s determination that the terms and conditions of the Arrangement are substantively and procedurally fair to the Company Shareholders with respect to the issuance of the Consideration Shares in exchange for Company Common Shares pursuant to the Arrangement.

(j)

for such other matters as the Purchaser may reasonably require, subject to obtaining the prior consent of the Company, such consent not to be unreasonably withheld or delayed.

Section 2.3

The Company Meeting

(a)

convene and conduct the Company Meeting in accordance with the Interim Order, the Company’s Constating Documents and Law on or before July 28 , 2017, for the purpose of considering the Arrangement Resolution and for any other proper purpose as may be set out in the Circular , and not adjourn, postpone or cancel (or propose the adjournment, postponement or cancellation of) the Company Meeting without the prior written consent of the Purchaser, acting reasonably, except:

(i)

in the case of an adjournment, as required for quorum purposes;

(ii)

as required by Law or by a Governmental Entity; or

(iii)

as required or permitted under Section 4.9(3) or Secti on 5.4(5);

(b)

use its commercially reasonable efforts to solicit proxies, in accordance with the Law, in favour of the approval of the Arrangement Resolution and against any resolution submitted by any Company Shareholder that is inconsistent with the Arrangement Resolution and the completion of any of the transactions contemplated by this Agreement, including, if so requested by the Purchaser , acting reasonably, using dealer and proxy solicitation services firms and cooperating with any Persons engaged by the Purchaser to solicit proxies in favour of the approval of the Arrangement Resolution;

(c)

provide the Purchaser with copies of or access to information regarding the Company Meeting generated by any dealer or proxy solicitation services firm, as requested from time to time by the Purchaser, acting reasonably;

(d)

consult with the Purchaser in fixing the date of the Company Meeting, give notice to the Purchaser of the Company Meeting and allow the Purchaser’s representatives and legal counsel to attend the Company Meeting;

(e)

promptly advise the Purchaser, at such times as the Purchaser may reasonably request and at least on a daily basis on each of the last 10 Business Days prior to the date of the Company Meeting, as to the aggregate tally of the proxies received by the Company in respect of the Arrangement Resolution;

(f)

promptly advise the Purchaser of receipt by the Company of any communication (written or oral) from any Company Shareholder or other securityholder of the Company in opposition to the Arrangement, written notice of dissent, purported exercise or withdrawal of Dissent Rights, and written communications sent by or on behalf of the Company to any Company Shareholder exercising or purporting to exercise Dissent Rights;

(g)

not make any payment or settlement offer, or agree to any payment or settlement prior to the Effective Time with respect to Dissent Rights without the prior written consent of the Purchaser;

(h)

not change the record date for the Company Shareholders entitled to vote at the Company Meeting in connection with any adjournment or postponement of the Company Meeting (unless required by Law); and

(i)

at the request of the Purchaser from time to time, provide the Purchaser with a list (in both written and electronic form) of (i) the Company Shareholders, together with their addresses and respective holdings of Company Common Shares, (ii) the holders of the Convertible Debentures, together with their addresses and respective holdings of the Convertible Debentures, (iii) the names, addresses and holdings of all Persons having rights issued by the Company to acquire Company Common Shares (including holders of Company Equity Awards and Company Warrants), and (iv) participants and book-based nominee registrants such as CDS & Co., CEDE & Co. and DTC, and non-objecting beneficial owners of Company Common Shares and other security holders of the Company, together with their addresses and respective holdings of Company Common Shares and other securities of the Company. The Company shall from time to time require that its registrar and transfer agent furnish the Purchaser with such additional information, including updated or additional lists of Company Shareholders, and lists of securities positions and other assistance as the Purchaser may reasonably request in order to be able to communicate with respect to the Arrangement with the Company Shareholders.

Section 2.4

The Company Circular

(1)

The Company shall promptly prepare and complete, in consultation with the Purchaser, the Company Circular together with any other documents required by Law in connection with the Company Meeting and the Arrangement, and the Company shall, promptly after obtaining the Interim Order, cause the Company Circular and such other documents to be filed and sent to each Company Shareholder and other Person as required by the Interim Order and Law, in each case so as to permit the Company Meeting to be held by the date specified in Section 2.3(a) .

(2)

The Company shall ensure that the Company Circular complies in all material respects with Law and the Interim Order, does not contain any Misrepresentation regarding the Company and provides the Company Shareholders with sufficient information to permit them to form a reasoned judgement concerning the matters to be placed before the Company Meeting. Without limiting the generality of the foregoing, the Company Circular must include: (i) a copy of the Fairness Opinion, (ii) a statement that the Special Committee and the Board have received the Fairness Opinion, and have, after receiving legal and financial advice, determined that the Arrangement Resolution is in the best interests of the Company and recommend that the Company Shareholders vote in favour of the Arrangement Resolution (the “ Board Recommendation ”), (iii) a statement that each director and senior officer of the Company intends to vote all of such individual’s Company Common Shares in favour of the Arrangement Resolution and against any resolution submitted by any Company Shareholder that is inconsistent with the Arrangement, the whole in accordance with their Support and Voting Agreements, and (iv) a statement that certain other Company Shareholders have entered into Support and Voting Agreements and specifying the percentage of the issued and outstanding Company Common Shares covered by such Support and Voting Agreements. The Company Circular shall also contain such information as may be required to allow the Purchaser to rely upon the Section 3(a)(10) Exemption with respect to the offer and sale of the Consideration Shares pursuant to the Arrangement.

(3)

The Company shall indemnify and save harmless the Purchaser and each of its representatives from and against any and all liabilities, claims, demands, losses, costs, damages and expenses to which they may be subject or may suffer, in any way caused by, or arising, directly or indirectly, from or in consequence of:

(a)

any Misrepresentation or alleged Misrepresentation in any information included in the Company Circular, other than the information relating to the Purchaser, its affiliates or the Consideration Shares furnished to the Company in writing by the Purchaser for inclusion in the Company Circular; and

(b)

any order made, or any inquiry, investigation or proceeding by any Securities Authority or other Governmental Entity, to the extent based on any Misrepresentation or any alleged Misrepresentation in the Company Circular other than the information relating to the Purchaser, its affiliates or the Consideration Shares furnished to the Company in writing by the Purchaser for inclusion in the Company Circular.

(4)

The Company shall give the Purchaser and its legal counsel a reasonable opportunity to review and comment on drafts of the Company Circular and other related documents, and shall give reasonable consideration to any comments made by them, and agrees that all information relating solely to the Purchaser, its affiliates and Consideration Shares included in the Company Circular must be in a form and content satisfactory to them, acting reasonably.

(5)

The Company shall not be responsible for any information in the Company Circular relating to the Purchaser, its affiliates or Consideration Shares.

(6)

The Purchaser shall provide the Company with all information regarding the Purchaser, its affiliates and the Consideration Shares, including any pro forma financial statements, as required by Law (and in particular, Canadian Securities Law) for inclusion in the Company Circular or in any amendments or supplements to such Company Circular. The Purchaser shall ensure that such information does not include any Misrepresentation concerning the Purchaser, its affiliates and the Consideration Shares.

(7)

The Purchaser shall indemnify and save harmless the Company and its representatives from and against any and all liabilities, claims, demands, losses, costs, damages and expenses to which they may be subject or may suffer, in any way caused by, or arising, directly or indirectly, from or in consequence of:

(a)

any Misrepresentation or alleged Misrepresentation in any information included in the Company Circular regarding the Purchaser, its affiliates or the Consideration Shares furnished to the Company in writing by the Purchaser for inclusion in the Company Circular pursuant to Section 2.4(6) ; and

(b)

any order made, or any inquiry, investigation or proceeding by any securities regulatory authority or other Governmental Entity, to the extent based on any Misrepresentation or any alleged Misrepresentation in any information included in the Company Circular regarding the Purchaser, its affiliates or the Consideration Shares furnished to the Company in writing by the Purchaser for inclusion in the Company Circular pursuant to Section 2.4(6) .

(8)

The Purchaser shall not be responsible for any information in the Company Circular relating to the Company, its affiliates or the Company Common Shares.

(9)

The Purchaser and the Company shall also use their commercially reasonable efforts to obtain any necessary consents from any of their respective auditors and any other advisors to the use of any financial, technical or other expert information required to be included in the Company Circular and to the identification in the Company Circular of each such advisor.

(10)

Each Party shall promptly notify the others if it becomes aware that the Company Circular contains a Misrepresentation, or otherwise requires an amendment or supplement. The Parties shall co-operate in the preparation of any such amendment or supplement as required or appropriate, and the Company shall promptly mail, file or otherwise publicly disseminate any such amendment or supplement to the Company Shareholders and, if required by the Court or by Law, file the same with the Securities Authorities or any other Governmental Entity as required.

Section 2.5

Final Order

Section 2.6

Court Proceedings

(a)

diligently pursue, and cooperate with the Purchaser in diligently pursuing, the Interim Order and the Final Order;

(b)

provide legal counsel to the Purchaser with a reasonable opportunity to review and comment upon drafts of all material to be filed with the Court in connection with the Arrangement, and give reasonable consideration to all such comments;

(c)

provide the Purchaser with copies of any notice of appearance, evidence or other documents served on the Company or its legal counsel in respect of the application for the Interim Order or the Final Order or any appeal from them, and any notice, written or oral, indicating the intention of any Person to appeal, or oppose the granting of, the Interim Order or the Final Order;

(d)

ensure that all material filed with the Court in connection with the Arrangement is consistent with this Agreement and the Plan of Arrangement and that such material has been approved by the Purchaser, acting reasonably, for filing;

(e)

not file any material with the Court in connection with the Arrangement or serve any such material, or agree to modify or amend any material so filed or served, except as contemplated by this Agreement or with the Purchaser’s prior written consent, acting reasonably, provided the Purchaser may, in its sole discretion, withhold its consent with respect to any increase in or variation in the form of the Consideration or other modification or amendment to such filed or served materials that expands or increases the Purchaser’s obligations, or diminishes or limits the Purchaser’s rights, set forth in any such filed or served materials or under this Agreement;

(f)

oppose any proposal from any Person that the Final Order contain any provision inconsistent with this Agreement, and if required by the terms of the Final Order or by Law to return to Court with respect to the Final Order do so only after notice to, and in consultation and cooperation with, the Purchaser; and

(g)

not object to legal counsel to the Purchaser making such submissions on the hearing of the motion for the Interim Order and the application for the Final Order as such counsel considers appropriate, provided the Purchaser advises the Company of the nature of any such submissions prior to the hearing and such submissions are consistent with this Agreement and the Plan of Arrangement.

Section 2.7

Company Equity Awards, Company Warrants and Convertible Debentures

(1)

Each Company Common Share, Company Option, Company RSU, Company Warrant and Convertible Debenture Subject to Roll-over will be dealt with as provided in the Plan of Arrangement.

(2)

The Purchaser RSUs to be issued to holders of unvested Company RSUs in connection with the Arrangement shall be subject to the same term to expiry and conditions to and manner of vesting as is applicable to the corresponding Company RSU for which they were exchanged, subject to the modification described Section 2.7(2) of the Company Disclosure Letter.

(3)

Each holder of a Convertible Debenture Subject to Repayment outstanding immediately prior to the Effective Time shall be entitled to receive repayment of the principal sum and all accrued and unpaid interest thereon (the “ Repayment ”) to the extent that such holder provides the Company with a notice of acceleration within 30 days after the Effective Date.

Section 2.8

Amendment to Plan of Arrangement, Articles of Arrangement and Effective Date

(1)

The Company shall amend the Plan of Arrangement from time to time at the reasonable request of the Purchaser, provided that no such amendment is inconsistent with the Interim Order or the Final Order or is prejudicial to the Company Shareholders or other Persons to be bound by the Plan of Arrangement.

(2)

The Company shall file the Articles of Arrangement with the Director, and the Effective Date shall occur, on the date which is five (5) Business Days after the date on which all conditions set forth in Section 6.1 , Section 6.2 and Section 6.3 have been satisfied or waived (excluding conditions that, by their terms, cannot be satisfied until the Effective Date, but subject to the satisfaction or, where not prohibited, the waiver by the applicable Party or Parties in whose favour the condition is, of those conditions as of the Effective Date), unless another time or date is agreed to in writing by the Parties. From and after the Effective Time, the Arrangement will have all of the effects provided by applicable Law, including the CBCA.

(3)

The closing of the Arrangement (the “ Closing ”) will take place at the offices of Stikeman Elliott LLP, Suite 5300 Commerce Court West, 199 Bay Street, Toronto, Ontario, M5L 1B9, or at such other location as may be agreed upon by the Parties.

Section 2.9

Payment of Consideration and Other Amounts

i.

The Purchaser shall, immediately prior to the Effective Time, deposit in escrow with the Depositary (the terms and conditions of such escrow to be satisfactory to the Parties, acting reasonably) sufficient Purchaser Shares to satisfy the aggregate Consideration payable to Company Shareholders pursuant to the Plan of Arrangement.

(2)

The Company shall be authorized and directed, immediately prior to the Effective Time, to pay all directors’ fees specifically set forth in Section 2.9 of the Company Disclosure Letter that have accrued and are outstanding as of the Effective Time to the members of the Board, and any outstanding directors’ fees that would have been payable in the form of Company RSUs that have not been issued by the Effective Time shall instead be payable in cash in an amount equal to the value of such Company RSUs as specifically set forth in Section 2.9 of the Company Disclosure Letter.

Section 2.10

Withholding Taxes

Section 2.11

Adjustment of Consideration

(a)

the Consideration to be paid per Company Common Share shall be appropriately adjusted to provide to Company Shareholders the same economic effect as contemplated by this Agreement and the Arrangement prior to such action and as so adjusted shall, from and after the date of such event, be the Consideration to be paid per Company Common Share; and

(b)

the number of Purchaser RSUs to be issued to holders of unvested Company RSUs shall be appropriately adjusted to provide to Company RSU Holders the same economic effect as contemplated by this Agreement and the Arrangement prior to such action and as so adjusted shall, from and after the date of such event, be the number of Purchaser RSUs to be issued to holders of unvested Company RSUs.

Section 2.12

U.S. Securities Law Matters

(1)

The Parties intend that the issuance of the Consideration Shares under the Arrangement shall be exempt from the registration requirements of the U.S. Securities Act pursuant to the exemption provided by Section 3(a)(10) thereof (the “ Section 3(a)(10) Exemption ”). Each Party shall act in good faith, consistent with the intent of the Parties and the intended treatment of the Arrangement set forth in this Section 2.12 .

(2)

In order to ensure the availability of the Section 3(a)(10) Exemption, the Parties agree that the Arrangement shall be carried out on the following basis:

(a)

the Arrangement shall be subject to the approval of the Court;

(b)

the Court shall be advised as to the intention of the Parties to rely on the Section 3(a)(10) Exemption prior to the hearing required to approve the Arrangement;

(c)

the Court shall be provided sufficient information to, and shall be asked to satisfy itself as to the substantive and procedural fairness of the Arrangement to each Person receiving Consideration Shares under the Arrangement;

(d)

the Final Order shall expressly state that the Arrangement is approved by the Court as being substantively and procedurally fair to the Persons to whom the Consideration Shares will be issued;

(e)

the Parties shall ensure that each Person entitled to receive Consideration Shares on completion of the Arrangement shall be given adequate notice advising them of their right to attend and appear before the Court at the hearing of the Court for the Final Order and providing them with adequate information to enable such Person to exercise such right;

(f)

each Person to whom Consideration Shares shall be issued pursuant to the Arrangement shall be advised that such Consideration Shares have not been registered under the U.S. Securities Act and shall be issued by the Purchaser in reliance upon the Section 3(a)(10) Exemption and, in the case of affiliates of the Purchaser, shall be subject to certain restrictions on resale under the U.S. Securities Laws, including Rule 144 under the U.S. Securities Act;

(g)

the Interim Order shall specify that each Person to whom Consideration Shares shall be issued pursuant to the Arrangement shall have the right to appear before the Court at the hearing of the Court to give approval of the Arrangement so long as such securityholder enters an appearance within a reasonable time; and

(h)

the Court shall be asked to include a statement in the Final Order to substantially the following effect:

(1)

Except as set forth in the Company Disclosure Letter, the Company represents and warrants to the Purchaser as set forth in Schedule C and acknowledges and agrees that the Purchaser is relying upon such representations and warranties in connection with the entering into of this Agreement.

(2)

The representations and warranties of the Company contained in this Agreement shall not survive the completion of the Arrangement and shall expire and be terminated on the earlier of the Effective Time and the date on which this Agreement is terminated in accordance with its terms.

(1)

The Purchaser represents and warrants to the Company as set forth in Schedule D and acknowledges and agrees that the Company is relying upon such representations and warranties in connection with the entering into of this Agreement.

(2)

The representations and warranties of the Purchaser contained in this Agreement shall not survive the completion of the Arrangement and shall expire and be terminated on the earlier of the Effective Time and the date on which this Agreement is terminated in accordance with its terms.

(1)

The Company covenants and agrees that, during the period from the date of this Agreement until the earlier of the Effective Time and the time that this Agreement is terminated in accordance with its terms, except (i) with the express prior written consent of the Purchaser, acting reasonably, or (ii) as required or permitted by this Agreement, the Company shall, and shall cause its Subsidiaries to, conduct their business in the Ordinary Course, and the Company shall use commercially reasonable efforts to maintain and preserve its and its Subsidiaries’ business organization, assets (including, for greater certainty, the Company Assets), goodwill and business relationships with other Persons with which the Company or any of its Subsidiaries have business relations.

(2)

Without limiting the generality of Section 4.1(1) , the Company covenants and agrees that, during the period from the date of this Agreement until the earlier of the Effective Time and the time that this Agreement is terminated in accordance with its terms, except (i) with the express prior written consent of the Purchaser, acting reasonably, or (ii) as required or permitted by this Agreement, the Company shall not, and the Company shall not permit any of its Subsidiaries to, directly or indirectly:

(a)

amend its Constating Documents or, in the case of any Subsidiary which is not a corporation, its similar organizational documents;

(b)

split, combine or reclassify any shares of its capital stock or declare, set aside or pay any dividend or other distribution thereon (whether in cash, stock or property or any combination thereof), or amend or modify any term of any outstanding debt security ;

(c)

redeem, purchase, or otherwise acquire or offer to redeem, purchase or otherwise acquire any shares of its capital stock or any of its outstanding securities;

(d)

issue, deliver, sell, pledge or otherwise encumber, or authorize the issuance, delivery, sale, pledge or other encumbrance of any shares of its capital stock or other equity or voting

(e)

reduce its stated capital or reorganize, arrange, restructure, amalgamate or merge with any Person;

(f)

adopt a plan of liquidation or resolutions providing for the liquidation or dissolution of the Company or any of its Subsidiaries;

(g)

acquire (by merger, consolidation, acquisition of stock or assets or otherwise), directly or indirectly, in one transaction or in a series of related transactions, assets, securities, properties, interests or businesses having a cost, on a per transaction or series of related transactions basis, in excess of US$100,000 and subject to a maximum of US$300,000 for all such transactions, other than acquisition of inventory and patent prosecution and maintenance decisions in the Ordinary Course ;

(h)

sell, pledge, lease, dispose of, lose the right to use, mortgage, license, encumber (other than a Permitted Lien) or otherwise transfer any (i) Intellectual Property, other than patent prosecution and maintenance decisions in the Ordinary Course or (ii) any assets of the Company or of any of its Subsidiaries or any interest in any assets of the Company and its Subsidiaries having a value greater than US$100,000 individually and subject to a maximum of US$300,000 in the aggregate, other than assets sold in the Ordinary Course;

(i)

make any capital expenditure or commitment to do so which, individually exceeds US$100,000 or in the aggregate exceeds US$300,000;

(j)

amend or modify, or terminate or waive any right under, any Material Contract or enter into any contract or agreement that would be a Material Contract if in effect on the date hereof, or enter into or amend any contract with the Company Principal Customers;

(k)

except in the Ordinary Course of patent prosecution decisions, in respect of any Company Assets, waive, release, surrender, abandon, let lapse, grant or transfer any material right or amend, modify or change, or agree to amend, modify or change, any existing material Authorization, right to use, lease, contract or Intellectual Property;

(l)

except as contemplated in Section 4.10 [Director & Officer Insurance] amend, modify or terminate, cancel or let lapse any material insurance (or re-insurance) policy of the Company or any Subsidiary in effect on the date of this Agreement, unless simultaneously with such termination, cancellation or lapse, replacement policies underwritten by insurance and re-insurance companies of nationally recognized standing providing coverage equal to or greater than the coverage under the terminated, cancelled or lapsed policies for substantially similar premiums are in full force and effect;

(m)

prepay any indebtedness before its scheduled maturity, or increase, create, incur, assume or otherwise become liable for any indebtedness for borrowed money or guarantees thereof;

(n)

make any loan or advance to, or any capital contribution or investment in, or assume, guarantee or otherwise become liable with respect to the liabilities or obligations of, any Person other than advances and capital contributions to wholly-owned Subsidiaries of the Company in the Ordinary Course;

(o)

enter into any interest rate, currency, equity or commodity swaps, hedges, derivatives, forward sales contracts or similar financial instruments;

(p)

make any material Tax election or designation, settle or compromise any material Tax claim, assessment, reassessment or liability, file any amended Tax Return, enter into any material agreement with a Governmental Entity with respect to Taxes, surrender any right to claim a material Tax abatement, reduction, deduction, exemption, credit or refund, consent to the extension or waiver of the limitation period applicable to any material Tax matter or materially amend or change any of its methods of reporting income, deductions or accounting for income Tax purposes except as may be required by Law;

(q)

make any change in the Company’s methods of accounting, except as required by concurrent changes in IFRS;

(r)

grant any increase in the rate of wages, salaries, bonuses or other remuneration of any Company Employee or independent contractor or make any bonus or profit sharing distribution or similar payment of any kind, except as may be required by the terms of a Contract listed in Section 3.1(28)(a) of the Company Disclosure Letter or as otherwise described in Section 3.1(28)(a) of the Company Disclosure Letter;

(s)

(i) adopt, enter into or amend any Employee Plan; (ii) pay any benefit to any director or officer of the Company or any of its Subsidiaries or to any Company Employee that is not required under the terms of any Employee Plan in effect on the date of this Agreement; (iii) grant, accelerate, increase or otherwise amend any payment, award or other benefit payable to, or for the benefit of, any director or officer of the Company or any of its Subsidiaries or to any Company Employee; (iv) make any material determination under any Employee Plan that is not in the Ordinary Course; or (v) take or propose any action to effect any of the foregoing;  

(t)

cancel, waive, release, assign, settle or compromise any material claims or rights;

(u)

commence, waive, release, assign, settle, compromise or settle any litigation, proceeding or governmental investigation relating to the assets or the business of the Company in excess of an aggregate amount of US$100,000 other than amounts or liabilities disclosed in the Company Filings which are resolved for an amount equal to or less than the amount disclosed, or which could reasonably be expected to impede, prevent or delay the consummation of the transaction contemplated by this Agreement;

(v)

enter into any Contract with a Person (other than a wholly-owned Subsidiary of the Company) that does not deal at arm’s length with the Company within the meaning of the Tax Act;

(w)

enter into or amend any Contract with any broker, finder or investment banker, including any amendment of any of the Contracts listed in Section 3.1(35) of the Company Disclosure Letter; or

(x)

authorize, agree, resolve or otherwise commit, whether or not in writing, to do any of the foregoing.

(3)

The Company shall not incur aggregate Transaction Costs in excess of US$2,000,000, and the payment of all such Transaction Costs at or prior to the Effective Time shall be in full satisfaction of all present and future obligations owed to the recipients thereof in connection with the transactions contemplated by this Agreement and, in the case of payment of fees and expenses of financial advisors, shall be conditioned upon receipt of fee acknowledgement and release letters from such financial advisors, and such releases shall remain valid, in force and binding on the relevant financial advisors as of Closing .

(4)

The Company shall promptly, and in any event within two (2) Business Days of each of the following, notify the Purchaser in writing of:

(a)

any Company Material Adverse Effect; or

(b)

any material penalty, filing, action, suit, claim, investigation, audit inquiry, assessment or proceedings commenced or, to its knowledge, threatened against, relating to or involving or otherwise affecting the Company or its Subsidiaries.

i.

The Purchaser covenants and agrees that, during the period from the date of this Agreement until the earlier of the Effective Time and the time that this Agreement is terminated in accordance with its terms, except (i) with the express prior written consent of the Company, acting reasonably, or (ii) as required or permitted by this Agreement, the Purchaser shall, and shall cause its Subsidiaries to, conduct their business in the Ordinary Course in all material respects.

ii.

Without limiting the generality of Section 4.2 (1) , the Purchaser (1) covenants and agrees that, during the period from the date of this Agreement until the earlier of the Effective Time and the time that this Agreement is terminated in accordance with its terms, except (i) with the express prior written consent of the Company, acting reasonably, or (ii) as required or permitted by this Agreement, the Purchaser shall not, and the Purchaser shall not permit any of its Subsidiaries to, directly or indirectly:

(i)

amend or propose to amend its Constating Documents in a manner that would impact the nature or value of the Consideration (other than, for greater certainty, to effect a split or consolidation of the issued and outstanding Consideration Shares (which split or consolidation shall be subject to Section 2.11 )), or where such amendment would reasonably be expected to have a Purchaser Material Adverse Effect, would reasonably be expected to adversely affect the securityholders of the Purchaser or the Company, or would reasonably be expected to materially delay or prevent the consummation of the Arrangement and the transactions contemplated by this Agreement;

(ii)

declare, set aside or pay any dividend or other distribution (whether in cash, securities or property or any combination thereof) in respect of any Purchaser Shares, except for regular quarterly dividends to shareholders of the Purchaser in the ordinary course consistent with past practice;

(iii)

redeem, purchase or otherwise acquire or offer to redeem, purchase or otherwise acquire any Purchaser Shares, other than purchases of Purchaser Shares made in the public markets or off-market at then prevailing market price and other than redemptions or repurchases of Purchaser Shares in connection with the administration of equity or employee incentive plans;

(iv)

issue, deliver or sell, or authorize the issuance, delivery or sale, of any shares of its capital stock or other equity or voting interests which represent, in the aggregate, more than 20% of the outstanding capital stock of the Purchaser, except for the issuance of awards under, and except for the Purchaser Shares reserved for issuance pursuant to, the Purchaser’s 2006 Stock Incentive Plan and the 2010 Pixelworks, Inc. Employee Stock Purchase Plan, as the same may be amended from time to time;

(v)

adopt or propose a plan of liquidation or resolutions providing for the liquidation or dissolution of Purchaser;

(vi)

materially change the business carried on by Purchaser and its Subsidiaries, taken as a whole;

(vii)

take any action that would result in the need for stockholder approval of the Purchaser of the transactions contemplated by this Agreement; or

(viii)

authorize, agree, resolve or otherwise commit to do any of the foregoing.

iii.

The Purchaser shall promptly, and in any event within two (2) Business Days, notify the Company in writing of:

(b)

any material penalty, filing, action, suit, claim, investigation, audit inquiry, assessment or proceedings commenced or, to its knowledge, threatened against, relating to or involving or otherwise affecting the Purchaser.

(1)

The Purchaser shall, no later than 15 calendar days prior to the Effective Time, file with NASDAQ a Listing of Additional Shares Notification Form with respect to the Consideration Shares issuable pursuant to the Arrangement and with respect to the Purchaser Shares to be issued from time to time after the Effective Time upon the conversion of the Convertible Debentures as set out in the Plan of Arrangement and shall use commercially reasonable efforts to cause each of the Consideration Shares and the Purchaser Shares to be issued upon the conversion of the Convertible Debentures to be listed on NASDAQ.

(2)

The Purchaser shall use its commercially reasonable efforts to ensure that the Consideration Shares to be issued pursuant to the Arrangement shall, at the Effective Time, either be registered or qualified under all applicable U.S. state securities laws, or exempt from such registration and qualification requirements.

(3)

The Purchaser shall use commercially reasonable efforts to maintain the effectiveness of its current registration statement on Form S-8, which covers the Purchaser Shares issuable upon the settlement of Purchaser RSUs issued in exchange for Company RSUs pursuant to the terms of the Plan of Arrangement for so long as any such Purchaser RSUs remain outstanding.

(4)

The Purchaser shall file with the United States Securities and Exchange Commission by no later than October 31, 2017, and shall use its commercially reasonable efforts to have declared effective by no later than November 30, 2017, a registration statement on Form S-3 (the ‘‘ S-3 Registration Statement ’’) to register under the U.S. Securities Act the Purchaser Shares to be issued from time to time after the Effective Time upon the conversion of the Convertible Debentures as set out in the Plan of Arrangement. The Purchaser shall use commercially reasonable efforts to maintain the effectiveness of the S-3 Registration Statement for so long as any Convertible Debentures remain outstanding.

(5)

Prior to the Effective Time, the Purchaser shall reserve for issuance the Consideration Shares and the Purchaser Shares issuable upon settlement of Purchaser RSUs and upon conversion of Convertible Debentures. The Purchaser covenants that the Purchaser Shares when issued (A) in accordance with this Agreement and the Arrangement, (B) upon the settlement of Purchaser RSUs issued pursuant to this Agreement and the Arrangement and (C) upon the conversion of Convertible Debentures will be validly issued and fully paid and non-assessable.

(1)

Subject to the terms and conditions of this Agreement, the Company shall, and shall cause its Subsidiaries to, perform all obligations required or desirable to be performed by the Company or any of its Subsidiaries under this Agreement, cooperate with the Purchaser in connection therewith, and do all such other commercially reasonable acts and things as may be necessary or desirable to consummate and make effective, as soon as reasonably practicable, the Arrangement and, without limiting the generality of the foregoing, the Company shall and, where appropriate, shall cause its Subsidiaries to:

(a)

use its commercially reasonable efforts to obtain and maintain all third party or other consents, waivers, permits, exemptions, orders, approvals, agreements, amendments or confirmations that are (i) necessary under the Company Material Contracts in connection with the Arrangement or (ii) required in order to maintain the Company Material Contracts in full force and effect following completion of the Arrangement (including the Key Consents to the extent not obtained prior to execution of this Agreement), in each case, on terms that are reasonably satisfactory to the Purchaser, and without paying, and without committing itself or the Purchaser to pay, any consideration or incur any liability or obligation without the prior written consent of the Purchaser;

(b)

prepare and file, as promptly as practicable, all necessary documents, registrations, statements, petitions, filings and applications for the Regulatory Approvals and using its commercially reasonable efforts to obtain and maintain all Regulatory Approvals, and providing or submitting all documentation and information that is required, or in the reasonable opinion of the Purchaser, advisable, in connection with obtaining the Regulatory Approvals;

(c)

use its commercially reasonable efforts to oppose, lift or rescind any injunction, restraining or other order, decree or ruling seeking to restrain, enjoin or otherwise prohibit or adversely

(d)

carry out the terms of the Interim Order and the Final Order applicable to it and complying promptly with all requirements imposed by Law on it or its Subsidiaries with respect to this Agreement or the Arrangement;

(e)

not take any action, or refrain from taking any commercially reasonable action, or permit any action to be taken or not taken, which is inconsistent with this Agreement or which would reasonably be expected to prevent, delay or otherwise impede the consummation of the Arrangement; and

(f)

use its commercially reasonable efforts to assist in causing each member of its Board and the board of directors of each of its wholly-owned Subsidiaries (in each case to the extent requested by the Purchaser) to be replaced by Persons designated or nominated, as applicable, by the Purchaser effective as of the Effective Time.

(2)

Subject to the terms and conditions of this Agreement, the Purchaser shall, and shall cause its Subsidiaries to, perform all obligations required or desirable to be performed by the Purchaser or any of its Subsidiaries under this Agreement, cooperate with the Company in connection therewith, and do all such other commercially reasonable acts and things as may be necessary or desirable to consummate and make effective, as soon as reasonably practicable, the Arrangement and, without limiting the generality of the foregoing, the Purchaser shall and, where appropriate, shall cause its Subsidiaries to:

(a)

prepare and file, as promptly as practicable, all necessary documents, registrations, statements, petitions, filings and applications for the Regulatory Approvals and using its commercially reasonable efforts to obtain and maintain all Regulatory Approvals, and providing or submitting all documentation and information that is required, or in the opinion of the Company, advisable, in connection with obtaining the Regulatory Approvals;

(b)

use its commercially reasonable efforts to oppose, lift or rescind any injunction, restraining or other order, decree or ruling seeking to restrain, enjoin or otherwise prohibit or adversely affect the consummation of the Arrangement and defend, or cause to be defended, any proceedings to which it is a party or brought against it or its directors or officers challenging the Arrangement or this Agreement;  

(c)

carry out the terms of the Interim Order and the Final Order applicable to it and complying promptly with all requirements imposed by Law on it or its Subsidiaries with respect to this Agreement or the Arrangement; and

(d)

not take any action, or refrain from taking any commercially reasonable action, or permit any action to be taken or not taken, which is inconsistent with this Agreement or which would reasonably be expected to prevent, delay or otherwise impede the consummation of the Arrangement.

(3)

Each of the Parties shall promptly, and in any event within two (2) Business Days of each of the following, notify the other Parties in writing of:

(a)

any notice or other communication from any Person alleging (i) that the consent (or waiver, permit, exemption, order, approval, agreement, amendment or confirmation) of such Person is required in connection with this Agreement or the Arrangement, or (ii) that such Person is terminating or may terminate or is otherwise materially adversely modifying or may materially adversely modify its relationship with the Company as a result of this Agreement or the Arrangement;

(b)

any notice or other communication from any Governmental Entity in connection with this Agreement (and such Party shall contemporaneously provide a copy of any such written notice or communication to the other Party).

(1)

The Company shall co-operate with the Purchaser to obtain the written consent, waiver or other agreement of the lender under the Company Credit Agreement as is necessary to effect a waiver of the “change of control” event of default or similar restrictions under the Company Credit Agreement arising as a result of the completion of the Arrangement (including any repayment to holders of Convertible Debentures Subject to Repayment), on terms that are reasonably satisfactory to the Purchaser, and without paying, and without committing itself or the Purchaser to pay, any consideration to, or incur any liability or obligation from, the lender under the Company Credit Agreement, without the prior written consent of the Purchaser. In the event that such consent, waiver or other agreement is not obtained by the Effective Date, the Purchaser agrees that it shall make arrangements to repay or refinance (subject to the conditions set out in clause (3) below) the indebtedness under the Company Credit Agreement effective as of the Effective Date in accordance with the terms of a payoff and discharge letter to be issued by the lender under the Company Credit Agreement.

(2)

The Company shall also provide, and shall use its commercially reasonable efforts to cause its Representatives to provide, to the Purchaser cooperation reasonably requested by the Purchaser in connection with any refinancing, replacement, retirement, satisfaction or discharge of any indebtedness of the Company or its Subsidiaries under the Company Credit Agreement (collectively, the “ Refinancing ”), including:

(a)

furnishing the Purchaser and the proposed lenders, as promptly as reasonably practicable, with such financial and other reasonably required information regarding the Company and its Subsidiaries (information required to be delivered under this clause (a) being referred to as the “ Required Information ”), provided that competitively sensitive information may be provided only to external counsel of the Purchaser or the proposed lender;

(b)

using its commercially reasonable efforts to facilitate the pledging of collateral in connection with the Refinancing (subject to the occurrence of the Effective Time) including facilitating the execution and delivery of any customary collateral documents and other customary certificates and documents as may reasonably be requested by the Purchaser;

(c)

assisting the Purchaser and the proposed lenders in the preparation of bank information memoranda and other marketing materials for the Refinancing;

(d)

cooperating with the Purchaser to obtain customary credit ratings including for the Company and the Refinancing; and

(e)

obtaining customary payoff letters, redemption notices, releases of Liens and instruments of termination or discharge,

(3)

The Company and the Purchaser agree that:

(a)

the amount of any Refinancing to which the Convertible Debentures shall be subordinated shall be no more than US$10 million;

(b)

any subordination or other agreements to be entered into by the holders of the Convertible Debentures in connection with any Refinancing shall be on substantially the same terms and conditions as those in the existing subordination and other agreements entered into by the holders of the Convertible Debentures in connection with the Company Credit Agreement; and

(c)

the Repayment shall be permitted under any Refinancing.

Section 4.6

Access to Information; Confidentiality

(1)

Subject to Law and the terms of any existing Contracts, the Company shall, and shall cause its Subsidiaries to: (a) give the Purchaser and its representatives upon reasonable notice, reasonable access during normal business hours to their: (i) premises, (ii) property and assets (including all books and records, whether retained internally or  otherwise), (iii) Contracts, and (iv) senior personnel, so long as the access does not unduly interfere with the Ordinary Course conduct of the business of the Company or its Subsidiaries; and (b) give the Purchaser copies of the Company’s monthly management reports, reports or presentations to the board of directors of the Company relating to the Company’s or its Subsidiaries’ financial condition and operations, and such other financial and operating data or other information with respect to the assets or business of the Company or its Subsidiaries as the Purchaser from time to time reasonably requests.

(2)

Subject to Law and the terms of any existing Contracts, the Purchaser shall: (a) give the Company and its representatives upon reasonable notice, reasonable access during normal business hours to their senior personnel, so long as the access does not unduly interfere with the Ordinary Course conduct of the business of the Purchaser; and (b) give the Company such financial data relating to the Purchaser as the Company from time to time reasonably requests in the circumstances of the transactions contemplated by this Agreement.

(3)

Investigations made by or on behalf of a Party, whether under this Section 4.5 or otherwise, will not waive, diminish the scope of, or otherwise affect any representation or warranty made by another Party in this Agreement.

(4)

Notwithstanding this Section 4.5 or any other provision of this Agreement, a Party shall not be obligated to provide access to, or to disclose, any information to another Party if such first Party reasonably determines that such access or disclosure would jeopardize any privilege claim by such first Party or any of it Subsidiaries or interfere unreasonably with the conduct of the business of the first Party and its Subsidiaries or require any action by the first Party outside of normal business hours.

(5)

The Parties acknowledge that the Confidentiality Agreement continues to apply and that any information provided under this Section 4.5 that is non-public and/or proprietary in nature shall be subject to the terms of the Confidentiality Agreement. If this Agreement is terminated in accordance with its terms, the obligations under the Confidentiality Agreement shall survive the termination of this Agreement.

Section 4.7

Pre-Acquisition Reorganization

(1)

Subject to Section 4.7(2) , the Company agrees that, upon request of the Purchaser, the Company shall (i) perform such reorganizations of its corporate structure, capital structure, business, operations and assets or such other transactions as the Purchaser may request, acting reasonably (each a “ Pre-Acquisition Reorganization ”), and (ii) cooperate with the Purchaser and its advisors to determine the nature of the Pre-Acquisition Reorganizations that might be undertaken and the manner in which they would most effectively be undertaken.

(2)

The Company will not be obligated to participate in any Pre-Acquisition Reorganization under Section 4.7(1) unless such Pre-Acquisition Reorganization:

(a)

can be completed immediately prior to the Effective Date, and can be unwound in the event the Arrangement is not consummated without adversely affecting the Company in any material manner ;

(b)

is not prejudicial to the Company in any material respect or to the Company Shareholders; and

(c)

does not impair the ability of the Company to consummate, and will not materially delay the consummation of, the Arrangement.  

(3)

Furthermore, such Pre-Acquisition Reorganization will not be considered in determining whether a representation or warranty of the Company under this Agreement has been breached (including where any such Pre-Acquisition Reorganization requires the consent of any third party under a Contract).

(4)

The Purchaser shall provide written notice to the Company of any proposed Pre-Acquisition Reorganization at least 10 Business Days prior to the Effective Date. Upon receipt of such notice, the Company and the Purchaser shall work cooperatively and use commercially reasonable efforts to prepare prior to the Effective Time all documentation necessary and do such other acts and things as are necessary to give effect to such Pre-Acquisition Reorganization, including any amendment to this Agreement or the Plan of Arrangement and shall seek to have any such Pre-Acquisition Reorganization made effective as of the last moment of the Business Day ending immediately prior to the Effective Date (but after the Purchaser has waived or confirmed that all of the conditions set out in Section 6.1 and Section 6.2 have been satisfied).

(5)

The Purchaser agrees that it will be responsible for all costs and expenses (including any professional fees and expenses) associated with any Pre-Acquisition Reorganization to be carried out at its request or unwound and shall indemnify and save harmless the Company and its affiliates from and against any and all liabilities, losses, damages, claims, costs, expenses, interest awards, judgements and penalties suffered or incurred by any of them in connection with or as a result of any such Pre-Acquisition Reorganization or the unwinding of any such Pre-Acquisition Reorganization.

Section 4.8

Public Communications

Section 4.9

Notice and Cure Provisions

(1)

Each Party shall promptly notify the other Parties of the occurrence, or failure to occur, of any event or state of facts which occurrence or failure would, or would be reasonably likely to:

(a)

cause any of the representations or warranties of such Party contained in this Agreement to be untrue or inaccurate in any respect at any time from the date of this Agreement to the Effective Time; or

(b)

result in the failure to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by such Party under this Agreement.

(2)

Notification provided under this Section 4.9 will not affect the representations, warranties, covenants, agreements or obligations of the Parties (or remedies with respect thereto) or the conditions to the obligations of the Parties under this Agreement.

(3)

The Purchaser may not elect to exercise its right to terminate this Agreement pursuant to Section 7.2(1)(d)(i) and the Company may not elect to exercise its right to terminate this Agreement pursuant to Section 7.2(1)(c)(i) , unless the Party seeking to terminate the Agreement (the “ Terminating Party ”) has delivered a written notice (“ Termination Notice ”) to the other Party (the “ Breaching Party ”) specifying in reasonable detail all breaches of covenants, representations and warranties or other matters which the Terminating Party asserts as the basis for termination. After delivering a Termination Notice, provided the Breaching Party is proceeding diligently to cure such matter and such matter is capable of being cured prior to the Outside Date (with any intentional breach being deemed to be incurable), the Terminating Party may not exercise such termination right until the earlier of (a) the Outside Date, and (b) if such matter has not been cured by the date that is 10 Business Days following receipt of such Termination Notice by the Breaching Party, such date. If the Terminating Party delivers a Termination Notice prior to the date of the Company Meeting, unless the Parties agree otherwise, the Company shall, to the extent permitted by Law, postpone or adjourn the Company Meeting to the earlier of (a) five (5) Business Days prior to the Outside Date and (b) the date that is 10 Business Days following receipt of such Termination Notice by the Breaching Party.

Section 4.10

Insurance and Indemnification

(1)

Prior to the Effective Date, the Company shall purchase customary “tail” policies of directors’ and officers’ liability insurance providing protection no less favourable in the aggregate to the protection provided by the policies maintained by the Company and its Subsidiaries which are in effect immediately prior to the Effective Date and providing protection in respect of claims arising from facts or events which occurred on or prior to the Effective Date and the Purchaser shall, or shall cause the Company and its Subsidiaries to maintain such tail policies in effect without any reduction in scope or coverage for six (6) years from the Effective Date; provided that the Purchaser shall not be required to pay any amounts in respect of such coverage prior to the Effective Time and provided further that the cost of such policies shall not exceed 300% of the Company’s current annual aggregate premium for policies currently maintained by the Company or its Subsidiaries.

(2)

The Purchaser shall cause the Company to, honour all rights to indemnification or exculpation now existing in favour of present and former employees, officers and directors of the Company and its Subsidiaries to the extent that they are (i) included in the Constating Documents of the Company or any of its Subsidiaries, or (ii) disclosed in Section 3.1(20)(a) of the Company Disclosure Letter, and acknowledges that such rights under both (i) and (ii) shall survive the completion of the Plan of Arrangement and shall continue in full force and effect in accordance with their terms for a period of not less than six (6) years from the Effective Date.

(3)

If the Company or any of its Subsidiaries or any of their respective successors or assigns (i) consolidates with or merges into any other Person and is not a continuing or surviving corporation or entity of such consolidation or merger, or (ii) transfers all or substantially all of its properties and assets to any Person, the Purchaser shall ensure that any such successor or assign (including, as applicable, any acquirer of substantially all of the properties and assets of the Company or its Subsidiaries) assumes all of the obligations set forth in this Section 4.10 .

Section 5.1

Non-Solicitation

(1)

Except as expressly provided in this Article 5 , the Company shall not, directly or indirectly, through any officer, director, employee, representative (including any financial or other adviser) or agent of the Company or of any of its Subsidiaries (collectively “ Representatives ”), or otherwise, and shall not permit any such Person to:

(a)

solicit, initiate, encourage or otherwise facilitate (including by way of furnishing or providing copies of, access to, or disclosure of, any confidential information, properties, facilities, books or records of the Company or any Subsidiary or entering into any form of agreement, arrangement or understanding) any inquiry, proposal or offer that constitutes or may reasonably be expected to constitute or lead to, an Acquisition Proposal;

(b)

enter into or otherwise engage or participate in any discussions or negotiations with any Person (other than the Purchaser or any of its affiliates) regarding any inquiry, proposal or offer that constitutes or may reasonably be expected to constitute or lead to, an Acquisition Proposal, it being acknowledged and agreed that the Company may communicate with any Person for purposes of advising such Person of the restrictions in this Agreement or advising such Person that their Acquisition Proposal does not constitute a Superior Proposal or is not reasonably expected to constitute or lead to a Superior Proposal;

(c)

make a Change in Recommendation;

(d)

accept, approve, endorse or recommend, or publicly propose to accept, approve, endorse or recommend, or take no position or remain neutral with respect to, any publicly announced or otherwise publicly disclosed Acquisition Proposal (it being understood that taking no position or a neutral position with respect to a publicly announced or otherwise publicly disclosed Acquisition Proposal for a period of no more than five (5) Business Days following the announcement or disclosure of such Acquisition Proposal will not be considered to be in violation of this Section 5.1 provided the Board has rejected such Acquisition Proposal and affirmed the Board Recommendation before the end of such five (5) Business Day period); or

(e)

enter into or publicly propose to enter into any agreement, understanding or arrangement in respect of an Acquisition Proposal (other than a confidentiality and standstill agreement permitted by and in accordance with Section 5.3 ).

(2)

The Company shall, and shall cause its Subsidiaries and its Representatives to, immediately cease and terminate, and cause to be terminated, any solicitation, encouragement, discussion, negotiations, or other activities commenced prior to the date of this Agreement with any Person (other than the Purchaser or its affiliates) with respect to any inquiry, proposal or offer that constitutes, or may reasonably be expected to constitute or lead to, an Acquisition Proposal, and in connection with such termination shall no longer provide access to any data room or provide any new disclosure of information, or access to properties, facilities, books and records of the Company or any of its Subsidiaries outside the Ordinary Course.

(3)

The Company represents and warrants that since January 1, 2016, the Company has not waived any standstill or similar agreement to which the Company is a party, and covenants and agrees that (i) the Company shall take all necessary action to enforce each confidentiality, standstill or similar agreement or restriction to which the Company or any of its Subsidiaries is a party, and (ii) neither the Company, nor any of its Subsidiaries nor any of their respective Representatives will, without the prior written consent of the Purchaser (which may be withheld or delayed in the Purchaser’s sole and absolute discretion), release any Person from, or waive, amend, suspend or otherwise modify such Person’s obligations respecting the Company, or any of its Subsidiaries, under any confidentiality, standstill or similar agreement or restriction to which the Company or any of its Subsidiaries is a party (it being acknowledged by the Purchaser that the automatic termination or release of any standstill restrictions of any such agreements as a result of entering into and announcing this Agreement shall not be a violation of this Section 5.1(3) ).

Section 5.2

Notification of Acquisition Proposals

Section 5.3

Responding to an Acquisition Proposal

(1)

Notwithstanding Section 5.1 , if at any time, prior to obtaining the approval by the Company Shareholders of the Arrangement Resolution, the Company receives a written Acquisition Proposal, the Company may engage in or participate in discussions or negotiations with such Person regarding such Acquisition Proposal, and may provide copies of, access to or disclosure of confidential information, properties, facilities, books or records of the Company or its Subsidiaries, if and only if:

(a)

the Board first determines in good faith, after consultation with its financial advisors and its outside legal counsel, that such Acquisition Proposal constitutes or could reasonably be expected to constitute or lead to a Superior Proposal (disregarding for such determination any due diligence or access condition);

(b)

such Person was not restricted from making such Acquisition Proposal pursuant to an existing standstill or similar restriction;

(c)

the Company has been, and continues to be, in compliance with its obligations under Article 5 ;

(d)

prior to providing any such copies, access, or disclosure, the Company enters into a confidentiality and standstill agreement with such Person having terms that are not less onerous than those set out in the Confidentiality Agreement and any such copies, access or disclosure provided to such Person shall have already been (or simultaneously be) provided to the Purchaser; and

(e)

the Company promptly provides the Purchaser with, prior to providing any such copies, access or disclosure, a true, complete and final executed copy of the confidentiality and standstill agreement referred to in Section 5.3 (d).

(2)

Nothing contained in this Agreement shall prevent the Board from complying with Section 2.17 of National Instrument 62-104 – Takeover Bids and Issuer Bids and similar provisions under Canadian Securities Laws relating to the provision of a directors’ circular in respect of an Acquisition Proposal.

Section 5.4

Right to Match

(1)

If the Company receives an Acquisition Proposal that constitutes a Superior Proposal prior to the approval of the Arrangement Resolution by the Company Shareholders, the Board may authorize the Company to, subject to compliance with Section 8.2 , enter into a definitive agreement with respect to such Superior Proposal, if and only if:

(a)

the Person making the Superior Proposal was not restricted from making such Superior Proposal pursuant to an existing standstill or similar restriction;

(b)

the Company has been, and continues to be, in compliance with its obligations under Article 5;

(c)

the Company has delivered to the Purchaser a written notice of the determination of the Board that such Acquisition Proposal constitutes a Superior Proposal and of the intention of the Board to enter into such definitive agreement with respect to such Superior Proposal, together with a written notice from the Board regarding the value and financial terms that the Board, in consultation with its financial advisors, has determined should be ascribed to any non-cash consideration offered under such Superior Proposal (the “ Superior Proposal Notice ”);

(d)

the Company has provided the Purchaser a copy of the proposed definitive agreement for the Superior Proposal;

(e)

at least five (5) Business Days (the “ Matching Period ”) have elapsed from the date that is the later of the date on which the Purchaser received the Superior Proposal Notice and the date on which the Purchaser received a copy of the proposed definitive agreement for the Superior Proposal from the Company;

(f)

during any Matching Period, the Purchaser has had the opportunity (but not the obligation), in accordance with Se ction 5.4(2), to offer to amend this Agreement and the Arrangement in order for such Acquisition Proposal to cease to be a Superior Proposal;

(g)

if the Purchaser has offered to amend this Agreement and the Arrangement under Se ction 5.4(2), the Board has determined in good faith, after consultation with the Company’s outside legal counsel and financial advisers, that such Acquisition Proposal continues to constitute a Superior Proposal compared to the terms of the Arrangement as proposed to be amended by the Purchaser under Section 5.4(2) ;

(h)

the Board has determined in good faith, after consultation with the Company’s outside legal counsel that it is appropriate for the Board to enter into a definitive agreement with respect to such Superior Proposal; and

(i)

prior to entering into such definitive agreement the Company terminates this Agreement pursuant to Section 7.2(1)(c)(ii) and pays the Termination Fee pursuant to Section 8.2 .

(2)

During the Matching Period, or such longer period as the Company may approve in writing for such purpose: (a) the Board shall review any offer made by the Purchaser under Section 5 .4(1)(f) to amend the terms of this Agreement and the Arrangement in good faith, after consultation with the Company’s outside legal counsel and financial advisers, in order to determine whether such proposal would, upon acceptance, result in the Acquisition Proposal previously constituting a Superior Proposal ceasing to be a Superior Proposal; and (b) the Company shall negotiate in good faith with the Purchaser to make such amendments to the terms of this Agreement and the Arrangement as would enable the Purchaser to proceed with the transactions contemplated by this Agreement on such amended terms. If the Board determines that such Acquisition Proposal would cease to be a Superior Proposal, the Company shall promptly so advise the Purchaser and the Company and the Purchaser shall amend this Agreement to reflect such offer made by the Purchaser, and shall take and cause to be taken all such actions as are necessary to give effect to the foregoing.

(3)

Each successive amendment or modification to any Acquisition Proposal shall constitute a new Acquisition Proposal for the purposes of this Section 5.4 , and the Purchaser shall be afforded a new five (5) Business Day Matching Period from the later of the date on which the Purchaser received the new Superior Proposal Notice and the date on which the Purchaser received a copy of the proposed definitive agreement for the new Superior Proposal from the Company.

(4)

At the Purchaser’s request, the Board shall promptly reaffirm the Board Recommendation by press release after the Board determines that an Acquisition Proposal is not a Superior Proposal or the Board determines that a proposed amendment to the terms of this Agreement as contemplated under Section 5 .4(2) would result in an Acquisition Proposal no longer being a Superior Proposal. The Company shall provide the Purchaser and its outside legal counsel with a reasonable opportunity to review the form and content of any such press release and shall make all reasonable amendments to such press release as requested by the Purchaser and its outside legal counsel.

(5)

If the Company provides a Superior Proposal Notice to the Purchaser on or after a date that is less than 10 Business Days before the Company Meeting, the Company shall either proceed with or shall postpone the Company Meeting, as directed by the Purchaser acting reasonably, to a date that is not more than 10 Business Days after the schedule d date of the Company Meeting but before the Outside Date, to the extent permitted by Law.

Section 5.5

Breach by Subsidiaries and Representatives

Section 6.1

Mutual Conditions Precedent

(1)

Arrangement Resolution. The Arrangement Resolution has been approved and adopted by the Company Shareholders at the Company Meeting in accordance with the Interim Order.

(2)

Interim and Final Order. The Interim Order and the Final Order have both been obtained on terms consistent with this Agreement, and have not been set aside or modified in a manner unacceptable to either the Company or the Purchaser, each acting reasonably, on appeal or otherwise.

(3)

Purchaser Shares . The Consideration Shares to be issued pursuant to the Arrangement and any Purchaser Shares issuable upon conversion of Convertible Debentures shall have been included on the Listing of Additional Shares Notification Form provided to NASDAQ as of the Effective Date and the Purchaser shall have not received a NASDAQ Delisting Notification or similar notification concerning the Consideration Shares or Purchaser Shares issuable upon conversion of Convertible Debentures.

(4)

Securities Law Exemptions.

(a)

The distribution of Consideration Shares shall be exempt from the prospectus requirements of Canadian Securities Laws and shall be exempt from the registration requirements of the U.S. Securities Act pursuant to the Section 3(a)(10) Exemption.

(b)

The Consideration Shares shall not be “restricted securities” within the meaning of Rule 144 under the U.S. Securities Act, and subject only to restrictions on transfers applicable solely as a result of the holder being, or within the last 90 days having been, an “affiliate” (as defined in Rule 405 under the U.S. Securities Act) of the Purchaser.

(5)

Articles of Arrangement. The Articles of Arrangement to be sent to the Director under the CBCA in accordance with this Agreement shall be in a form and content satisfactory to the Company and the Purchaser, each acting reasonably.

(6)

Illegality. No Law is in effect that makes the consummation of the Arrangement illegal or otherwise prohibits or enjoins the Company or the Purchaser from consummating the Arrangement.

Section 6.2

Additional Conditions Precedent to the Obligations of the Purchaser

(1)

Representations and Warranties. The representations and warranties of the Company set forth in: (i) Sections (1) [ Organization and Qualification ] and (2) [ Corporate Authorization ] of Schedule C shall be true and correct in all respects as of the date of this Agreement, and as of the Effective Time as if made as at and as of such time; (ii) the representations and warranties of the Company set forth in Section (6) [ Capitalization ] of Schedule C shall be true and correct in all respects (except for de minimis inaccuracies) as of the date of this Agreement; and (iii) all other representations and warranties of the Company set forth in Schedule C shall be true and correct in all respects (disregarding for purposes of this Section 6.2(1) any materiality or Company Material Adverse Effect qualification contained in any such representation or warranty) as of the date of this Agreement, and as of the Effective Time as if made at and as of such time (except that any such representation and warranty that by its terms speaks specifically as of the date of this Agreement or another date shall be true and correct in all respects as of such date), except in the case of this clause (iii) where the failure to be so true and correct in all respects, individually and in the aggregate, has not had or would not reasonably be expected to have a Company Material Adverse Effect, and the Company has delivered a certificate confirming same to the Purchaser, executed by two (2) senior officers of the Company (in each case without personal liability) addressed to the Purchaser and dated the Effective Date.

(2)

Performance of Covenants . The Company has fulfilled or complied in all material respects with each of the covenants of the Company contained in this Agreement to be fulfilled or complied with by it on or prior to the Effective Date, and has delivered a certificate confirming same to the Purchaser, executed by two (2) senior officers of the Company (in each case without personal liability) addressed to the Purchaser and dated the Effective Date.

(3)

No Legal Action. There is no action or proceeding pending or threatened by any Person (other than the Purchaser) in any jurisdiction that is reasonably likely to:

(a)

cease trade, enjoin, prohibit, or impose any limitations, damages or conditions on, the Purchaser’s ability to acquire, hold, or exercise full rights of ownership over, any Company Common Shares, including the right to vote the Company Common Shares;

(b)

prohibit or restrict the Arrangement, or the ownership or operation by the Purchaser of a material portion of the business or assets of the Purchaser, the Company or any of the Company’s Subsidiaries, or compel the Purchaser to dispose of or hold separate any material portion of the business or assets of the Purchaser, the Company or any of the Company’s Subsidiaries as a result of the Arrangement; or

(c)

prevent or materially delay the consummation of the Arrangement, or if the Arrangement is consummated, have or be reasonably expected to have a Company Material Adverse Effect.

(4)

Company Material Adverse Effect. Since the date of this Agreement, there shall not have occurred, or have been disclosed to the public (if previously undisclosed to the public), any change, event, occurrence, effect or circumstance that, individually or in the aggregate with other changes, events, occurrences, effects or circumstances, has had or could reasonably be expected to have a Company Material Adverse Effect , and the Company has delivered a certificate confirming same to the Purchaser, executed by two (2) senior officers of the Company (in each case without personal liability) addressed to the Purchaser and dated the Effective Date.

(5)

Dissent Rights. Dissent Rights have not been exercised with respect to more than 5% of the issued and outstanding Company Common Shares.

(6)

Key Consents. Each of the Key Consents which was not given or obtained on or prior to the date of this Agreement, has been given or obtained on terms acceptable to the Purchaser, acting reasonably.

(7)

Employees. The Key Employee remains employed by the Company as of the Effective Date and individuals who, in the aggregate, represent at least 80 % of the Current R&D Employee Complement remain employed by the Company as of the Effective Date and the Company has delivered a certificate confirming each of same to the Purchaser, executed by two (2) senior officers of the Company (in each case without personal liability) addressed to the Purchaser and dated the Effective Date.

(8)

MoCA Transaction. The proceeds received by the Company in connection with the MoCA Transaction shall have been used by the Company only for (i) operating expenses (including any expenses incurred under the MoCA Transitional Services Agreement), (ii) the repayment of interest on outstanding company indebtedness in the Ordinary Course, (iii) the repayment of principal on outstanding debt owed under the Company Credit Agreement to the extent required by the terms of the Company Credit Agreement pursuant to adjustments to the borrowing base as a result of (A) the MoCA Transaction or (B) the operation of the Company’s business in the Ordinary Course of business, or (iv) the Transaction Costs, and the Company has delivered a certificate confirming same to the Purchaser, executed by two (2) senior officers of the Company (in each case without personal liability) addressed to the Purchaser and dated the Effective Date.

(9)

Convertible Debentures. The waivers, consents and amendments to, or in respect of, the terms of the Convertible Debentures Subject to Roll-over, in each case as entered into prior to or as of the date hereof by the Company with the holders of Convertible Debentures Subject to Roll-over, true and complete copies of which have been disclosed in the Data Room, shall be valid, in force and binding on all parties and in full force and effect, such waivers, consents and amendments shall not have been terminated prior to the Closing, and the holders of the Convertible Debentures shall not have exercised any of their recourses or remedies under the Convertible Debentures prior to Closing.

Section 6.3

Additional Conditions Precedent to the Obligations of the Company

(1)

Representations and Warranties. The representations and warranties of the Purchaser set forth in: (i) Sections (1) [ Organization and Qualification ] and (2) [ Corporate Authorization ] of Schedule D shall be true and correct in all respects as of the date of this Agreement, and as of the Effective Time as if made as at and as of such time; (ii) the representations and warranties of the Purchaser set forth in Section (6) [ Capitalization ] of Schedule D shall be true and correct in all respects (except for de minimis inaccuracies) as of the date of this Agreement; and (iii) all other representations and warranties of the Purchaser set forth in this Agreement shall be true and correct in all respects (disregarding for purposes of this Section 6.3(1) any materiality or Purchaser Material Adverse Effect qualification contained in any such representation or warranty) as of the date of this Agreement, and as of the Effective Time as if made at and as of such time (except that any such representation and warranty that by its terms speaks specifically as of the date of this Agreement or another date shall be true and correct in all respects as of such date), except in the case of this clause (iii) where the failure to be so true and correct in all respects, individually and in the aggregate, has not had or would not reasonably be expected to have a Purchaser Material Adverse Effect, and the Purchaser has delivered a certificate confirming same to the Company, executed by two (2) senior officers thereof (in each case without personal liability) addressed to the Company and dated the Effective Date.

(2)

Performance of Covenants. The Purchaser has fulfilled or complied in all material respects with each of its covenants contained in this Agreement to be fulfilled or complied with by it on or prior to the Effective Time and the Purchaser has delivered a certificate confirming same to the Company, executed by two (2) senior officers thereof (in each case without personal liability) addressed to the Company and dated the Effective Date.

(3)

No Legal Action. There is no action or proceeding pending or threatened by any Person (other than the Company or its Subsidiaries) in any jurisdiction that is reasonably likely to:

(a)

cease trade, enjoin, prohibit, or impose any limitations, damages or conditions on, the Purchaser’s ability to issue the Consideration Shares; or

(b)

prevent or materially delay the consummation of the Arrangement, or if the Arrangement is consummated, have or be reasonably expected to have a Purchaser Material Adverse Effect.

(4)

Purchaser Material Adverse Effect. Since the date of this Agreement, there shall not have occurred, or have been disclosed to the public (if previously undisclosed to the public) any change, event, occurrence, effect or circumstance that, individually or in the aggregate with other changes, events, occurrences, effects or circumstances, has had or could reasonably be expected to have a Purchaser Material Adverse Effect , and the Purchaser has delivered a certificate confirming same to the Company, executed by two (2) senior officers thereof (in each case without personal liability) addressed to the Company and dated the Effective Date.

Section 6.4

Satisfaction of Conditions

Section 7.1

Term

Section 7.2

Termination

(1)

This Agreement may be terminated prior to the Effective Time by:

(a)

the mutual written agreement of the Parties; or

(b)

either the Company or the Purchaser if:

(i)

the Required Approval is not obtained at the Company Meeting in accordance with the Interim Order, provided that a Party may not terminate this Agreement pursuant to this Section 7.2(1)(b)(i) if the failure to obtain the Required Approval has been caused by, or is a result of, a breach by such Party of any of its representations or warranties or the failure of such Party to perform any of its covenants or agreements under this Agreement;

(ii)

after the date of this Agreement, any Law is enacted, made, enforced or amended, as applicable, that makes the consummation of the Arrangement illegal or otherwise permanently prohibits or enjoins the Company or the Purchaser from consummating the Arrangement, and such Law has, if applicable, become final and non-appealable, provided the Party seeking to terminate this Agreement pursuant to this Section 7.2(1)(b)(ii) has used its commercially reasonable efforts to, as applicable, appeal or overturn such Law or otherwise have it lifted or rendered non-applicable in respect of the Arrangement; or

(iii)

the Effective Time does not occur on or prior to the Outside Date, provided that a Party may not terminate this Agreement pursuant to this Section 7.2(1)(b)(iii) if the failure of the Effective Time to so occur has been caused by, or is a result of, a breach by such Party of any of its representations or warranties or the failure of such Party to perform any of its covenants or agreements under this Agreement;

(c)

the Company if:

(i)

a breach of any representation or warranty or failure to perform any covenant or agreement on the part of the Purchaser under this Agreement occurs that would cause any condition in Section 6.3(1) [Purchaser Representations and Warranties Condition] or Section 6.3(2) [Purchaser Covenants Condition] not to be satisfied, and such breach or failure is incapable of being cured or is not cured on or prior to the Outside Date in accordance with the terms of Section 4.9(3) ; provided that the Company is not then in breach of this Agreement so as to cause any condition in Section 6.2(1) [Company Representations and Warranties Condition] or Section 6.2(2) [Company Covenants Condition] not to be satisfied;

(ii)

prior to obtaining the Required Approval, the Board authorizes the Company to enter into a definitive written agreement (other than a confidentiality and standstill agreement permitted by and in accordance with Section 5.3 ) with respect to a Superior Proposal, provided the Company is then in compliance with its obligations under Article 5 and that prior to or concurrent with such termination the Company pays the Termination Fee in accordance with Section 8.2 ; or

(iii)

any event occurs as a result of which the condition set forth in Section Sectio n 6.3(3) [No Purchaser Material Adverse Effect] is not capable of being satisfied by the Outside Date.

(d)

the Purchaser if:

(i)

a breach of any representation or warranty or failure to perform any covenant or agreement on the part of the Company under this Agreement occurs that would cause any condition in Section 6.2(1) [Company Representations and Warranties Condition] or Section 6.2(2) [Company Covenants Condition] not to be satisfied, and such breach or failure is incapable of being cured on or prior to the Outside Date or is not cured in accordance with the terms of Section 4.9(3) ; provided that the Purchaser is not then in breach of this Agreement so as to cause any condition in Section 6.3(1) [Purchaser Representations and Warranties Condition] or Section 6.3(2) [Purchaser Covenants Condition] not to be satisfied;

(ii)

(A) the Board or any committee of the Board fails to recommend or withdraws, amends, modifies or qualifies, publicly proposes or states its intention to do so, or fails to publicly reaffirm (without qualification) within five (5) Business Days after having been requested in writing by the Purchaser to do so, the Board Recommendation, or takes no position or remains neutral with respect to a publicly announced or otherwise publicly disclosed Acquisition Proposal for more than five (5) Business Days following the announcement or disclosure of such Acquisition Proposal (in each case, a “ Change in Recommendation ”), (B) the Company breaches Article 5 in any material respect, or (C) the Board or any committee of the Board resolves or proposes to take any of the foregoing actions; and  

(iii)

any event occurs as a result of which the conditions set forth in Section 6.2(4) [No Company Material Adverse Effect], Section 6.2(5) [Dissent Rights Condition ], Section 6.2(6) [Key Consents], or Section 6.2(7) [Employees], are not capable of being satisfied by the Outside Date.

(2)

The Party desiring to terminate this Agreement pursuant to this Section 7.2 (other than pursuant to Section 7.2(1)(a) ) shall give notice of such termination to the other Parties, specifying in reasonable detail the basis for such Party’s exercise of its termination right in accordance with Section 4.9(3) .

Section 7.3

Effect of Termination/Survival

Section 8.1

Amendments

(a)

change the time for performance of any of the obligations or acts of the Parties;

(b)

modify any representation or warranty contained in this Agreement or in any document delivered pursuant to this Agreement;

(c)

modify any of the covenants contained in this Agreement and waive or modify performance of any of the obligations of the Parties; and/or

(d)

modify any mutual conditions contained in this Agreement.

Section 8.2

Termination Fee

(1)

Despite any other provision in this Agreement relating to the payment of fees and expenses, including the payment of brokerage fees, if a Termination Fee Event occurs, the Company shall pay the Termination Fee to the Purchaser in accordance with Section 8.2(3) .

(2)

For the purposes of this Agreement, “ Termination Fee ” means $2,100,000 and “ Termination Fee Event ” means the termination of this Agreement:

(a)

by the Purchaser, pursuant to Section 7.2(1)(d)(ii) [Change in Recommendation or Breach of Article 5] ;

(b)

by the Company pursuant to Section 7.2(1)(c)(ii) [Superior Proposal] ; or

(c)

by the Company or the Purchaser pursuant to Section 7.2(1)(b) (i) [Failure of Shareholders to Approve] or Section 7.2(1)(b)(iii) [Effective Time not prior to Outside Date] , or by the Purchaser pursuant to Section 7.2(1)(d)(i) [Breach of Representations and Warranties or Covenants by Company] if:

(i)

prior to such termination, an Acquisition Proposal is made or publicly announced by any Person other than the Purchaser or any of its affiliates or any Person (other than the Purchaser or any of its affiliates) shall have publicly announced an intention to do so; and

(ii)

within 6 months following the date of such termination, (X) an Acquisition Proposal (whether or not such Acquisition Proposal is the same Acquisition Proposal referred to in clause (i) above) is consummated, or (Y) the Company or one or more of its Subsidiaries, directly or indirectly, in one or more transactions, enters into a contract in respect of an Acquisition Proposal, and such Acquisition Proposal is later consummated (whether or not within 6 months after such termination).

(3)

The Termination Fee shall be paid by the Company as follows, by wire transfer of immediately available funds:

(a)

if a Termination Fee Event occurs due to a termination of this Agreement described in Section 8.2(2)(a) , within two (2) Business Days of the occurrence of such Termination Fee Event;

(b)

if a Termination Fee Event occurs due to a termination of this Agreement described in Section 8. 2(2)(b), concurrently with such termination;

(c)

if a Termination Fee Event occurs due to a termination of this Agreement described in Section 8.2(2)(c) , on the consummation of the Acquisition Proposal referred to in Section 8.2(2)(c) .

(4)

The Company acknowledges that the agreements contained in this Section 8.2 are an integral part of the transactions contemplated by this Agreement, and that without these agreements the Purchaser would not enter into this Agreement, and that the amount set out in this Section 8.2 represents liquidated damages which are a genuine pre-estimate of the damages, including opportunity costs, which the Purchaser will suffer or incur as a result of the event giving rise to such damages and resultant termination of this Agreement, and is not a penalty. The Company irrevocably waives any right it may have to raise as a defence that any such liquidated damages are excessive or punitive.

(5)

The Company agrees that the payment of the Termination Fee pursuant to this Section 8.2 is in addition to any damages or other payment or remedy to which the Purchaser may be entitled under Section 8.6 .

(1)

Except as provided in Section 8.2 , all out-of-pocket third party transaction expenses incurred in connection with this Agreement and the Plan of Arrangement, including all costs, expenses and fees of the Company incurred prior to or after the Effective Date in connection with, or incidental to, the Plan of Arrangement, shall be paid by the Party incurring such expenses, whether or not the Arrangement is consummated.

(2)

The Company confirms that other than the fees disclosed in Section 4.1(3) of the Company Disclosure Letter, no broker, finder or investment banker is or will be entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement.

(a)

to the Company at:

(b)

to Purchaser at:

(1)

Except as provided in Section 4.10 , which, without limiting its terms, is intended as stipulations for the benefit of the third Persons mentioned in such provisions (such third Persons referred to in this Section 8.7 as the “ Indemnified Persons ”) , the Parties intend that this Agreement will not benefit or create any right or cause of action in favour of any Person, other than the Parties and that no Person, other than the Parties, shall be entitled to rely on the provisions of this Agreement in any action, suit, proceeding, hearing or other forum.

(2)

Despite the foregoing, the Purchaser acknowledges to each of the Indemnified Persons their direct rights against it under Section 4.10 of this Agreement, which is intended for the benefit of, and shall be enforceable by, each Indemnified Person, his or her heirs and his or her legal representatives, and for such purpose, the Company confirms that it is acting as trustee on their behalf, and agrees to enforce such provision on their behalf. The Parties reserve their right to vary or rescind the rights at any time and in any way whatsoever, if any, granted by or under this Agreement to any Person who is not a Party, without notice to or consent of that Person, including any Indemnified Person.

(1)

This Agreement becomes effective only when executed by the Company and the Purchaser. After that time, it will be binding upon and enure to the benefit of the Company and the Purchaser and their respective successors and permitted assigns.

(2)

Neither this Agreement nor any of the rights or obligations under this Agreement are assignable or transferable by any Party without the prior written consent of the other Party, provided however that the Purchaser (or any permitted assign of the Purchaser) may, at any time, assign its rights and obligations under this Agreement without such consent to an affiliate of the Purchaser if such assignee delivers an instrument in writing confirming that it is bound by and shall perform all of the obligations of the assigning party under this Agreement as if it were an original signatory and provided further that the assigning party shall not be relieved of its obligations hereunder.

(1)

This Agreement will be governed by and interpreted and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.

(2)

Each Party irrevocably attorns and submits to the non-exclusive jurisdiction of the Ontario courts situated in the City of Toronto and waives objection to the venue of any proceeding in such court or that such court provides an inconvenient forum.

(3)

The Purchaser hereby irrevocably designates Stikeman Elliott LLP (in such capacity, the “ Process Agent ”), with an office at 5300 Commerce Court West, 199 Bay Street, Toronto, Ontario, Canada M5L 1B9 as its designee, appointee and agent to receive, for and on its behalf, service of process in the Province of Ontario in any legal action or proceedings with respect to this Agreement or the transactions contemplated hereby, and such service shall be deemed complete upon delivery thereof to the Process Agent; provided that in the case of any such service upon the Process Agent, the Party effecting such service shall also deliver a copy thereof to the other Parties in the manner provided in Section 8.4 . The Purchaser shall take all such action as may be necessary to continue such appointment in full force and effect or to appoint another agent so that it shall at all times have an agent for service of process for the above purposes in the Province of Ontario. In the event of the transfer of all or substantially all of the assets and business of the Process Agent to any other entity by consolidation, merger, sale of assets or otherwise, such other entity shall be substituted hereunder for the Process Agent with the same effect as if named herein in place of Stikeman Elliott LLP. Nothing herein shall affect the right of any Party to serve process in any manner permitted by applicable Law.

1.1

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