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Bylaws - NORTHSTAR ELECTRONICS INC - 12-21-1999

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Bylaws - NORTHSTAR ELECTRONICS INC - 12-21-1999 Powered By Docstoc
					BYLAWS OF Northstar Electronics, Inc. (a Delaware Corporation) ARTICLE I STOCKHOLDERS 1. CERTIFICATES REPRESENTING STOCK. Certificates representing stock in the corporation shall e signed by, or in the name of, the corporation by the Chairman or Vice-Chairman of the Board of Directors, if any, or by the President or a Vice-President and by the Treasurer or an Assistant-Treasurer or the Secretary or an Assistant Secretary of the corporation. Any or all of the signatures on nay such certificate may be a facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent, or registrar at the date of issue. Whenever the corporation shall be authorized to issue more than one class of stock or more than one series of any class of stock, and whenever the corporation shall issue any shares of its stock as partly paid stock, the certificates representing shares of any such class or series or of any such partly paid stock shall set forth thereon the statements prescribed by the General Corporation Law. Any restrictions on the transfer or registration of transfer of any shares of stock of any class or series shall be noted conspicuously on the certificate representing such shares. The corporation may issue a new certificate of stock or uncertificated shares in place of any certificate therefore issued by it, alleged to have been lost, stolen, or destroyed certificate, or his legal representative, to give the corporation a bond sufficient to indemnify the corporation against any claim that may be made against on account of the alleged loss, theft, or destruction of any such certificate or the issuance of any such new certificate or uncertificated shares. 2. UNCERTIFICATED SHARES. Subject to any conditions imposed by the General Corporation Law, the Board of Directors of the corporation may provide, by resolution or resolutions that some or all of any or all classes or series of the stock of the corporation shall be uncertificated shares. Within a reasonable time after the issuance or transfer of any uncertificated shares, the corporation shall send to the registered owner thereof any written notice prescribed by the General Corporation Law. 3. FRACTIONAL SHARE INTERESTS. The corporation may, but shall not be required to , issue fractions of a share. If the corporation does not issue fractions of a share, it shall (1) arrange for the disposition of fractional interests by those entitled thereto, (2) pay in cash the fair value of fractions as a share as of the time when those entitled to receive such fractions are determined, or (3) issue scrip or warrants in registered form (either represented by a certificate or uncertificated) or bearer form (represented by a certificate) which shall entitle the holder to receive a full share upon the surrender of such scrip or warrants aggregating a full share. A certificate for a fractional share or an uncertificated fractional share shall, but scrip or warrants shall not unless otherwise provided therein, entitle the holder to exercise voting rights, to receive dividends thereon, and to participate in any of the assets of the corporation in the event of liquidation. The Board of Directors may cause scrip or warrants to be issued subject to the conditions that the shares for which scrip or warrants are exchangeable may be sold by the corporation and the proceeds therefore distributed to the holders of scrips or warrants, or subject to any other conditions which the Board of Directors may impose. 4. STOCK TRANSFERS. Upon compliance with provisions restricting the transfer or registration of transfer of shares of stock, if any, transfers or registration of transfers of shares of stock of the corporation shall be made only on the stock ledger of the corporation by the registered holder thereof, or by his attorney thereunto

authorized by power of attorney duly executed and filed with the Secretary of the corporation or with a transfer agent or a registrar, if any, and, in the case of shares represented by certificates, on surrender of the certificate or certificates for such shares of stock properly endorsed and the payment of all taxes due thereon. 5. RECORD DATE FOR STOCKHOLDERS. In order that the corporation may determine the stockholders entitled to notice of or to a vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty or less than ten days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to a vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to a vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. In order that the corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, the record date for determining the stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by the General Corporation Law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by the General Corporation Law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action. In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any right in respect of any change, conversion or exchange of stock, or for the purpose of any lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall not be more than sixty days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of the business on the day on which the Board of Directors adopts the resolution relating thereto. 6. MEANING OF CERTAIN TERMS. As used herein respect of the right to notice of a meeting of stockholders or a waiver thereof or to participate or vote thereat or to consent or dissent in writing in lieu of a meeting, as the case may be, the term `share' or `shares' or `shares of stock' or `stockholder' or `stockholders' refers to an outstanding share or shares of stock and to a holder or holders of record of outstanding shares of stock when the corporation is authorized to issue only one class of shares of stock, and said reference is also intended to include any outstanding share or shares of any class which or upon whom the certificate of incorporation confers such rights where there are two or more classes or series or shares of stock or upon which or upon whom the certification of incorporation confers such rights where there are two or more classes or series of shares of stock or upon which or upon whom the General Corporation Law confers such rights notwithstanding that the certificate of incorporation may provide for more than one class or series of shares of stock, one of which are limited or denied such rights thereunder; provided, however, that no such right shall vest in the event of an increase or a decrease in the authorized number of shares of stock of any class or series which is otherwise denied voting rights under the provisions of the certificate of incorporation, except as any provision of law may otherwise require.

7. STOCKHOLDER MEETINGS. TIME. The annual meeting shall be held on the date at the time fixed, from time to time, by the directors, provided, that the first annual meeting shall be held on a date within thirteen months after the date of the preceding annual meeting. A special meeting shall be held on the date and at the time fixed by the directors. PLACE. Annual meetings and special meetings shall be held at such place, within or without the State of Delaware, as the directors may, from time to time fix. Whenever the directors shall fail to fix such place, the meeting shall be held at the registered office of the corporation in the State of Delaware. CALL. Annual meetings and special meetings may be called by the directors or by any officer instructed by the director to call the meeting. NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall be given, stating the place, date, and hour of the meeting and stating the place within the city or other municipality or community at which the list of stockholders of the corporation may be examined. The notice of an annual meeting shall state that the meeting is called for the election of directors and for the transaction of other business which may properly come before the meeting, and shall (if any other action which could be taken at a special meeting is to be taken at such annual meeting) state the purpose or purposes for which the meeting is called. The notice of any meeting shall also include, or be accompanied by, any additional statements, information, or documents prescribed by the General Corporation Law. Except as otherwise provided by the General Corporation Law, a copy of the notice of any meeting shall be given, personally or by mail, not less than ten days nor more than sixty days before the date of the meeting, unless the lapse of the prescribed period of time shall have been waived, and directed to each stockholder at his record address or at such other address which he may have furnished by request in writing to the Secretary of the corporation. Notice by mail shall be deemed to be given when deposited with postage thereon prepaid in the United States mail. If a meeting is adjourned to another time, not more than thirty days hence, and/or to another place, and if an announcement of the adjourned time and/or place is made at the meeting, it shall not be necessary to give notice of the adjourned meeting unless the directors, after adjournment, fix a new record date for the adjourned meeting. Notice need not be given to any stockholder who submits a written waiver of notice signed by him before or after the time stated therein. Attendance of a stockholder at a meeting of stockholders shall constitute a waiver of notice of such meeting, except when the stockholder attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of stockholders need be specified in any written waiver of notice. STOCKHOLDER LIST. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period at least ten days prior to the meeting, either at a place within the city or other municipality or community where the meeting is to be held, which place shall be specified in the notice of this meeting, or if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by this section or the books of the corporation, or to vote at any meeting of stockholders. CONDUCT OF MEETING. Meetings of the stockholders shall be presided over by one of the following officers in the order of seniority and if present and acting - The Chairman of the Board, if any, the Vice-Chairman of the Board, if any, the President, a Vice-President, or, if none of the foregoing is in office and present and acting, by a chairman to be chosen by the stockholders. The secretary of the corporation, or in his absence, an Assistant Secretary, shall act as the Secretary of every meeting, but if neither the Secretary, nor an Assistant Secretary is present the Chairman of the meeting shall appoint a Secretary of the meeting. PROXY REPRESENTATION. Every stockholder may authorize another person or persons to act for him by proxy in all matters in which a stockholder is entitled to participate, whether by waiving notice of any meeting, voting, participating at a meeting, or expressing consent or dissent without a meeting. Every proxy must be signed

by the stockholder or by his attorney-in-fact. No proxy shall be voted or acted upon after three years form its date unless such proxy provides for a longer period. A duly executed proxy shall be irrevocable and, if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may be made irrevocable regardless of whether the interest with which it was coupled is an interest in the stock itself or an interest in the corporation generally. INSPECTORS. The directors, in advance of any meeting, may, but need not, appoint one or more inspectors of election to act at the meeting or any adjournment thereof. If an inspector or inspectors are not appointed, the person presiding at the meeting may, but need not, appoint one or more inspectors. In case any person who may be appointed as an inspector fails to appear or act, the vacancy may be filled by appointment made by directors in advance of the meeting or at the meeting by the person presiding thereat. Each inspector, if any, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspectors at such meeting with strict impartiality and according to the best of his ability. The inspectors, if any, shall determine the number of shares of stock outstanding and the voting power of each, the shares of stock represented at the meeting, the existence of a quorum, the validity and effects of proxies, and shall receive votes, ballots, or consents, hear and determine all challenges and questions arising in connection with the right to vote, count, and tabulate all votes, ballots or consents, determine the result, and do such acts that are proper to conduct the election or vote with fairness to all stockholders. On request of the person presiding at the meeting, the inspector or inspectors, if any, shall make a report in writing of any challenge, question, or matter determined by him or them and execute a certificate of any fact found by him or them. Except as otherwise required by subsection (e) of Section 231 of the General Corporation Law, the provisions of that section shall not apply to the corporation. QUORUM. The holders of a majority of the outstanding shares of stock shall constitute a quorum at a meeting of stockholders of the transaction of any business. The stockholders present may adjourn the meeting despite the absence of a quorum. VOTING. Each share of stock shall entitle the holder thereof to one vote. Directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. Any other action shall be authorized by a majority of the votes cast except where the General Corporation Law prescribes a different percentage of votes and/or a different exercise of voting power, and except as may be otherwise prescribed by provisions of the certificate of incorporation and these Bylaws. In the election of directors, and for any other action, voting need not be by ballot.

STOCKHOLDER ACTION WITHOUT MEETINGS. Any action required by the General Corporation Law to be taken at any annual or special meeting of stockholders, or any action which may be taken at any annual or special meeting of stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize to take such action at a meeting at which all shares entitled to vote thereon were presented and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. Action taken pursuant to this paragraph shall be subject to the provisions of Section 228 of the General Corporation Law. ARTICLE II DIRECTORS FUNCTIONS AND DEFINITION. The business and affairs of the corporation shall be managed by or under the direction of the Board of Directors of the Corporation. The Board of Directors shall have the authority to fix the compensation of the members thereof. The use of the phrase "whole board" herein refers to the total number of directors which the corporation would have if there were no vacancies. QUALIFICATIONS AND NUMBER. A director need not be a stockholder, a citizen of the United States, or a resident of the State of Delaware. The initial Board of Directors shall consist of _3___ persons. Thereafter the number of directors constituting the whole board shall be at least one. Subject to the foregoing limitation and except for the first Board of Directors, such number may be fixed from time to time by action of the stockholders or of the directors, or, if the number is not fixed, the number shall be, __7__. The number of directors may be increased or decreased by action of the stockholders or of the directors. ELECTION AND TERM. The first Board of Directors, unless the members thereof shall have been named in the certificate of incorporation, shall be elected by the incorporator or incorporators and shall hold office until the first annual meeting of stockholders and until their successors are elected and qualified and until or until their earlier resignation or removal. Any director may resign at any time upon written notice to the corporation. Thereafter, directors who are elected at an annual meeting of stockholders, and directors who are elected in the interim to fill vacancies and newly created directorships , shall hold office until the next annual meeting of stockholders and until their successors are elected and qualified or until their earlier resignation or removal. Except as the General Corporation Law may otherwise require, in the interim between annual meetings of stockholders or of special meetings of stockholders called for the election of directors and/or for the removal of one or more directors and for the filling of any vacancy in that connection, newly created directorships and any vacancies in the Board of Directors, including unfilled vacancies resulting from the removal of directors for cause or without cause, may be filled by the vote of a majority of the remaining directors then in office, although less than a quorum, or by the sole remaining director. MEETINGS. TIME. Meetings shall be held at such time as the Board shall fix, except that the first meeting of a newly elected Board shall be held as soon after its election as the directors may conveniently assemble. PLACE. Meetings shall be held at such place within or without the State of Delaware as shall be fixed by the Board. CALL. No call shall be required for regular meetings for which the time and place have been fixed. Special meetings may be called by or at the Direction of the Chairman of the Board, if any, the Vice-Chairman of the Board, if any, of the President, or of a majority of directors in the office. NOTICE OR ACTUAL OR CONSTRUCTION OF WAIVER. No notice shall be required for regular meetings for which the time and place have been fixed. Written, oral, or any other mode of notice of the time and place shall be given for special meetings in sufficient time for the convenient assembly of directors thereat. Notice need not be given to any director or any member of a committee of directors who submits a written waiver of notice signed by him before or after the time stated therein. Attendance of any such person at a meeting shall constitute waiver of notice of such meeting, except when he attends a meeting for the express purpose of

objecting, at the beginning of a meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transact at, nor the purpose of, any regular or special meeting of the directors need to be specified in any written waiver of notice. QUORUM AND ACTION. A majority of the whole Board shall constitute a quorum except when a vacancy or vacancies prevents such majority, whereupon a majority of the directors shall constitute a quorum, provided, that such majority shall constitute at least one-third of the whole Board. A majority of the directors present, whether or not a quorum is present, may adjourn a meeting to another time and place. Except as herein otherwise provided by the General Corporation Law, the vote of the majority of directors present at a meeting at which a quorum is present shall be the act of the Board. The quorum and voting provisions therein stated shall not be construed as conflicting with any provisions of the General Corporation Law and these Bylaws which govern a meeting of directors held to fill vacancies and newly created directorships in the Board or action of disinterested directors. Any member or members of the Board of Directors or of any committee designated by the Board, may participate in a meeting of the Board, or any such committee, as the case may be, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if present or acting, shall preside at all meetings. Otherwise, the Vice-Chairman of the Board, if any and if present and acting, or the President, if present and acting, or any other director of the Board, shall preside. REMOVAL OF DIRECTORS. Except as may otherwise be provided by the General Corporation Law, any director or entire Board of Directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors. COMMITTEES. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of any member of any such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board, shall have and may exercise the powers of authority of the Board of Directors in the management of the business and affairs of the corporation with the exception of any authority the delegation of which is prohibited by Section 141 of the General Corporation Law, and may authorize the seal of the corporation to be affixed to all papers which may require it. WRITTEN ACTION. Any action required or permitted to be taken at any meeting of the Board of Directors or any committee thereof may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee.

ARTICLE III OFFICERS The officers of the corporation shall consist of a President, a Secretary, a Treasurer, and, if deemed necessary, expedient or desirable by the Board of Directors, a Chairman of the Board, or Vice-Chairman of the Board, an Executive Vice-President, one or more other Vice-Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers, and such other officers with such titles as the resolutions of the Board of Directors choosing them shall designate. Except as may be otherwise provided in the resolution of the Board of Directors choosing him, no officer other than the Chairman or Vice-Chairman of the Board, if any, need be a director. Any number of offices may be held by the same person, as the directors may determine. Unless otherwise provided in the resolution choosing him, each officer shall be chosen for a term which shall continue until the meeting of the Board of Directors following the next annual meeting of stockholders and until his successor shall have been chosen and qualified. All officers of the corporation shall have such authority and perform such duties in the management and operation of the corporation as shall be prescribed in the resolutions of the Board of Directors designating and choosing such officers and prescribing their authority and duties, and shall have such additional authority and duties as are incident to their office except to the extent that such resolutions may be inconsistent therewith. The Secretary or an Assistant Secretary of the corporation shall record all of the proceeds of all the meetings and actions in writing of stockholders, directors, and committees of directors, and shall exercise such additional duties as the Board shall assign to him. Any officer may be removed, with or without cause, by the Board of Directors. Any vacancy, in any office, may be filled by the Board of Directors. ARTICLE IV CORPORATE SEAL The corporate seal shall be in such form as the Board of Directors shall prescribe. ARTICLE V FISCAL YEAR The fiscal year of the corporation shall be fixed, and shall be subject to change, by the Board of Directors.

ARTICLE VI CONTROL OVER BYLAWS Subject to the provisions of the certificate of incorporation and the provisions of the General Corporation Law, the power to amend, alter, repeal these Bylaws and to adopt new Bylaws may be exercised by the Board of Directors or by the stockholders. I hereby certify that the foregoing is full, true and a correct copy of the Bylaws of _Scientific Technologies__, a Delaware corporation as in effect on the date hereof. Dated: May 11, 1998 Insert signature.

STATE OF DELAWARE CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION Scientific Technologies, Inc. a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware. DOES HEREBY CERTIFY: FIRST: That at a meeting of the Board of Director of Scientific Technologies, Inc. resolution were dully adopted setting forth a proposed amendment of the Certificate of Incorporation of said corporation, declaring said amendment to be advisable and calling a meeting of the stockholders of said corporation for consideration thereof. The resolution setting forth the proposed amendment is as follows: RESOLVED, that the Certificate of Incorporation of this corporation be amended by changing the Article thereof numbered "1" so that, as amended, said Article shall be and read as follows: THE NAME OF THIS CORPORATION IS `NORTHSTAR ELECTRONICS, INC. SECOND: That thereafter, pursuant to resolution of its Board of Directors, a special meeting of the stockholders of said corporation was dully called and held upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware at which meeting the necessary number of shares a required by statue were voted in favor of the amendment. THIRD: That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.FOURTH: That the capital of said corporation shall not be reduced under or by reason of said amendment. IN WITNESS WHEREOF, Said Corporation has caused this certificate to be signed by Wilson Russell, an Authorized Officer, This 19 day of August, 1999.
BY: /s/ Wilson Russell NAME: Wilson Russell Title: President/Directors Witnessed By: /s/Frank Power Name: Frank Power Title: Director.

State of Delaware: time stamp Secretary of State Division of Corporations Filed 09:00AM 08/26/1999 #991360794-2480085

November 3, 1999 Northstar Electronics, Inc. Suite 1455 - 409 Granville Street Vancouver, B.C. V6C 1T2 Re: Registration Statement on Form SB-1 Dear Sirs: You have requested that I provide an opinion of counsel with respect to the issuance of certain common shares of Northstar Electronics, Inc. (the "Company") for inclusion in your filing with the Securities and Exchange commission("SEC") of the Registration Statement Form SB-1 ("SB-1"). More specifically, you have asked that I provide an opinion as to whether the shares registered in the SB-1 are, or will be deemed validly issued, fully paid and non-assessable. I have been retained as outside counsel by the Company only to render the above noted opinion and have not provided the Company with other services in connection with the preparation and filing of the SB-1. In preparing my opinion, I have reviewed the SB-1 document filed with the SEC, the Articles of Incorporation and By-Laws of the Company, applicable Minutes of the Board of Directors of the Company, and various other documents incident to the issuance of said shares. Based on the foregoing, and assuming the accuracy and completeness of all information supplied by the Company, and having regard for the legal considerations which I deem relevant, I am of the opinion that (1) the Company is a corporation duly organized and validly existing under the laws of the state of Delaware; (2) the Company has taken all requisite corporate action and all action required by laws of the state of Delaware with respect to the authoriaztion, issuance, and sale of the Company's common stock to be registered by its Registration Statement Form SB-1; (3) the 200,000 shares issued in January, 1999, under an exemption to registration under Reg-S, and intended to be registered in the current SB-1 filing, have been validly authorized and issued, and are fully paid and non-assessable; and (4) the 800,000 shares to be offered under the SB-1 registration at an offering price of $1.00 per share, when issued and distributed pursuant to the offering statement, will be validly authorized and issued, and fully paid and non-assessable shares of the common stock of the Company. I hereby consent to the filing of this opinion with the Securities and Exchange Commission as Exhibit 3.2 to the Registration Statement on Form SB-1 and to any referance to my services in the prospectus. Yours truly,
/s/ Jeffrey A. Nichols Jeffrey A. Nichols 388 Market St. Suite 500 San Francisco, CA 94111 Phone: 415/433-1178 Fax: 415/433-1182

MANAGEMENT'S DISCUSSION OF FINANCIAL STATEMENTS Northstar's wholesale revenues were US $168,736 for nine months ending December 31, 1998 and US $171,770 for seven months ending July 31, 1999. The gross profit was 48% for the nine months ended December 31, 1998 and 58% for the seven months ending July 31, 1999. Northstar's assets as of July 31,1999 totaled US $885,184. Long-term debt of US $489,739 consists of government interest-free loans and a loan of US $160,000 payable to Pathfinder Enterprises, Inc., a company controlled by a shareholder of Northstar, with monthly interest payments only to July 2002, secured by a floating charge debenture. There are shareholder loans of US $159,113 with no fixed terms of repayment. Northstar has an accumulated deficit of US $609,939 as of July 31,1999.

Index to Financials i) Northstar Electronics, Inc. for period of 7 months ending July 31, 1999 Consolidated and unaudited. ii) Northstar Technical, Inc. audited financials for period ending December 31,1998 includes auditors report. iii) Northstar Technical unaudited financial statements for period ending July 31, 1999. iv) Northstar Technical unaudited financial statments for period ending September 30, 1999. i) NORTHSTAR ELECTRONICS, INC.

(FORMALLY SCIENTIFIC TECHNOLOGIES, INC.) INTERNAL CONSOLIDATED BALANCE SHEET (Unaudited) FOR THE 7 MTHS ENDED JULY 31, 1999
ASSETS Current Bank and term deposit Receivables Inventory Prepaid Expenses US$ 45,456.60 153,358.07 83,860.14 2,549.06 ========== 285,223.87

Capital Assets Deferred development costs Netmind/contract

24,759.53 575,201.06 599,960.59 ========== 885,184.46

LIABILITIES Current Payables and accruals Loans payable (Note 2)

73,187.01 13,779.80 ========== 86,966.81

Long term debt ( Note 3) Loans payable to Cabot Management Limited, no set terms of repayment Loans payable to shareholders, no set terms of payment

489,738.61 79,225.70 79,887.91 ========== 648,852.22

SHAREHOLDERS' EQUITY Share Capital (Note 4) Earnings (loss) for period Deficit 971,335.44 (212,030.52) (609,939.49) ========== 149,365.43 885,184.46

NORTHSTAR ELECTRONICS, INC. (FORMALLY SCIENTIFIC TECHNOLOGIES, INC.) INTERNAL CONSOLIDATED INCOME STATEMENT

(Unaudited) FOR THE 7 MONTHS ENDED JULY 31, 1999 US$ Revenue Sales Interest Income 171,769.89 652.93 ========== 172,422.83 72,812.34 99,610.49

Less cost of goods sold

Expenses Business Development Business Tax Commissions Depreciation Dues and fees Exchange Insurance Interest and Bank Lab Expenses Management Fees Marketing Misc. Office Expenses Professional Fees Rent Salaries/Wages/employee benefits

Less:

allocation to Deferred Technology

1,277.16 128.05 30,866.67 54,407.64 3,234.33 (9,005.94) 1,047.37 20,553.57 84,662.08 36,666.67 1,492.81 928.18 27,445.49 32,553.77 16,792.09 49,732.57 ---------352,782.53 (41,141.52) ========== 311,641.01 (212,030.52)

Earnings (loss) NOTES: NORTHSTAR ELECTRONICS, INC. (FORMALLY SCIENTIFIC TECHNOLOGIES, INC.) NOTES TO INTERNAL INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) JULY 31, 1999 . Accounting treatment This internal interim consolidated balance sheet has been prepared by combining the July 31st, 1999 internal non-consolidated balance sheet of Scientific Technologies Inc. and the internal balance sheet of NTI. On consolidation all intercompany receivable and payable balances have been eliminated. . Short term loans 9% TD Select Line of credit Short term loan Eastern Meridian per specific terms, (repaid in full October, 1999)

$ 3,400 $10,379 ======= $13,779

. Long Term Debt 10% loan payable to Pathfinder Enterprises Inc. in monthly interest payments only to July 5, 2002 ACOA (Federal Government Agency) interest free loan repayable in sixty monthly and consecutive installments of $2,170. ACOA (Federal Government Agency) interest free loan repayable in twenty-four monthly and consecutive installments of $4,167 10% loan payable to Enterprise Newfoundland and Labrador in monthly

$160,000 $130,221

$100,000

interest payments plus principal amount payable on demand. (cont.) NORTHSTAR ELECTRONICS, INC. (FORMALLY SCIENTIFIC TECHNOLOGIES, INC.) NOTES TO INTERNAL INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) JULY 31, 1999 . Long Term debt (cont.) ACOA (Federal Government Agency) interest free loan repayable in 36 monthly and consecutive installments of $4,373 beginning when full loan draw down is received. Secured by postponements on Cabot Management Limited's loan of $87,224 and a shareholders' loan $12,707

$ 12,841

$ 86,676 ======== $489,738 . Capital Stock Authorized 20,000,000 preferred shares at $0.0001 par value 100,000,000 common shares at $0.0001 par value . Issued and outstanding 7,614,493 common shares Additional paid in capital

761 970,574 ======== $971,335

ii) NORTHSTAR TECHNICAL INC. St. John's, Newfoundland FINANCIAL STATEMENTS Audited December 31, 1998 SULLIVAN, LEWIS AND WHITE-Charter Accountants AUDITORS' REPORT-To the Shareholders of NTI We have audited the balance sheet of NTI as of December 31, 1998 and the statements of loss and deficit and changes in cash resources for the nine months then ended. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these financial statements present fairly, in all material respects, the financial position of the company as at December 31, 1998 and the results of its operations and the changes in its cash resources for the nine months then ended in accordance with generally accepted accounting principles. The accompanying financial statements have been prepared assuming the company will continue as a going concern. To date the company's operations are mainly in the development stages and has not established revenues sufficient to cover its operating costs. It is management's opinion that the company's main NETMIND division and the new contract manufacturing division will generate future revenues sufficient to cover all costs and result in annual net incomes. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
St. John's, Newfoundland July 14, 1999 NORTHSTAR TECHNICAL INC. BALANCE SHEET DECEMBER 31, 1998 /s/ Sullivan, Lewis and White Chartered Accountants

ASSETS Current Bank Receivables (Note 2) Work in progress Inventory Prepaid expenses

December 31, 1998 $1,238 148,583 3,688 52,591 2,269 208,369

March 31, 1998 $3,829 228,052 7,101 88,356 4,127 331,465 27,733 824,744 82,305 $1,266,247

Capital assets (Note 3) Deferred development costs (Note 4) Deferred charges (Note 5)

25,523 768,311 110,287 $1,112,490

LIABILITIES Current Payables and accruals Loans payable (Note 6) Long term debt payable within one year (Note 7)

$212,038 158,815 10,716 381,569

$199,556 138,790 127,340 465,686 588,006

Long term debt (Note 7) Loans payable to Cabot Management Limited, no set terms

704,630

of repayment (Note 8) Loans payable to shareholder, no set terms of repayment

138,339 120,370 1,344,908 =========

136,530 83,602 1,273,824 =========

Contingent liability (Note 9) SHAREHOLDERS' DEFICIENCY Share capital (Note 10) Deficit 622,453 (854,871) (232,418) $1,112,490 605,372 (612,949) (7,577) $1,266,247

ON BEHALF OF THE BOARD:
___/s/Dr. Wilson Russell __/s/Mr. Frank Power Director Director

The accompanying notes are an integral part of these financial statements.

SULLIVAN, LEWIS AND WHITE NORTHSTAR TECHNICAL INC. 3. STATEMENT OF LOSS AND DEFICIT NINE MONTHS ENDED DECEMBER 31, 1998
Nine Months Ended December 31, 1998 Year Ended March 31, 1998

Revenue Direct costs Gross profit Other income

$252,565 147,155 105,410 8,231 113,641

$272,631 140,891 131,740 13,934 145,674

Expenses Amortization of capital assets Amortization of deferred development costs Bank charges and interest Contract manufacturing division (Note 11) Heat and light Insurance Interest on loans Management and marketing fees Marketing/Market Research costs Municipal taxes Miscellaneous Office operating 6,992 72,224 15,608 72,341 1,905 1,838 43,911 4,992 3,606 1,249 5,194 10,240 15,917 87,621 16,196 126,008 10,343 2,027 55,963 16,235 5,742 2,960 3,855 18,859

Professional fees Rent Repairs and maintenance Telephone Travel Wages and benefits Write off obsolete inventory stock Less: Allocation to deferred development costs

17,138 32,435 2,423 9,590 3,739 50,138 355,563

35,296 37,685 4,693 11,184 6,865 66,992 14,405 (149,808) 389,038 (243,364) (351,303) (594,667)

Net loss (Note 12) Deficit, beginning of period

(241,922) (612,949) (854,871)

Dividends paid on preference shares Discount earned on redemption of Class A preference shares

-

(42,282)

-

24,000

Deficit, end of period

$(854,871) ==========

$(612,949) ==========

The accompanying notes are an integral part of these financial statements. SULLIVAN, LEWIS AND WHITE NORTHSTAR TECHNICAL INC. 4. STATEMENT OF CHANGES IN CASH RESOURCES NINE MONTHS ENDED DECEMBER 31, 1998
Nine Months Ended December 31, 1998 Cash provided by (used in) Operations Net loss Amortization Net change in non-cash working capital items $(241,922) 104,667 153,012 15,757 Financing Proceeds from long term debt Proceeds from issuance of common shares Advances from Cabot Management Limited Advances from shareholder Repayment of long term debt Discount on redemption of preference shares Redemption of preference shares Payment of dividends on preference shares Conversion of Class C preference shares 17,081 1,809 36,768 55,658 Investments Increase in deferred charges - net Increase in deferred development cost - net (53,433) (15,791) (102,881) (152,496) 130,015 595,287 5,694 70,043 (30,000) 24,000 (84,000) (42,282) (287,333) 381,424 $(243,364) 124,114 10,434 (108,816) Year Ended December 31, 1998

Purchase of capital assets, net of investment tax credits

(4,782) (74,006)

(11,304) (266,681) 5,927 (2,098) $3,829 ========

Net change in bank position Bank position, beginning of period Bank position, end of period

(2,591) 3,829 $1,238 ========

The accompanying notes are an integral part of these financial statements. SULLIVAN, LEWIS AND WHITE NORTHSTAR TECHNICAL INC. 5. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 1. Significant accounting policies a. Capital assets Capital assets are recorded at cost less any government assistance and are being amortizated over their estimated useful lives using the rates and methods set out below:
Computer equipment Computer software Office furniture and equipment Leasehold improvements 20% 30% 20% 20% on on on on a a a a declining balance basis declining balance basis declining balance basis straight line basis

b. Deferred development costs All costs, including share of overhead costs, associated with the development of the NETMIND System have been capitalized in these financial statements as deferred development costs. These costs are being amortized against income on a straight line basis over a period of ten years. If it becomes evident in a given year that the sales market for this technology declines , then the remaining costs will be amortized over a shorter period. The company acquired the initial technology for the NETMIND System from the receiver of National Petroleum and Marine Consultants Limited and Altair Marine Systems Limited for the sum of $ 1. Prior to going into receivership, these two companies had spent approximately $ 1,740,408 on the development of this technology. To date NTI has spent $ 1,847,795 on this technology, including overhead costs of $ 621,430, which has been reduced by various assistance and tax credits totalling $ 879,546 as referred to in Note 4. c. Deferred charges Deferred charges consist of initial planning, startup and overhead costs related to contract manufacturing in association with Lockheed Martin - Federal Systems Inc. These costs amounted to $ 156,314 at December 31, 1998, as referred to in Note 5, and are being amortized on a straight line basis over a five year term. d. Inventory The company's inventory is valued at the lower of cost and net realizable value. e. Investment tax credits Investment tax credit refunds arising from the incurrence of qualifying research and development expenditures have been recorded in these financial statements as a reduction of the applicable deferred development costs.

f. Government assistance The company has been awarded assistance under government programs. Amounts received or receivable under these programs are recorded as a reduction in the cost of capital assets or as a reduction of the applicable deferred development costs. NORTHSTAR TECHNICAL INC. 5a. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998
2. Receivables ============================================================ December 31, 1998 Trade Government assistance Investment tax credit refunds $20,200 128,383 $148,583 ======== March 31, 1998 $137,701 22,486 67,865 $228,052 ========

3. Capital assets
============================== December 31, March 31, 1998 1998 -------------------------------------------Accumulated Net Book Net Book Amortization Value Value $3,170 5,681 16,906 14,488 $40,245 ======= $3,484 3,211 17,444 1,384 $25,523 ======= $4,099 3,945 17,286 2,403 $27,733 =======

Cost

Computer equipment Computer software Furniture and equipment Leasehold improvements

$6,654 8,892 34,350 15,872 $65,768 =======

4. Deferred development costs
December 31, 1998 Wages and benefits Materials and other costs Subcontractors Overhead $693,362 173,736 359,267 621,430 1,847,795 March 31, 1998 $608,461 165,160 359,267 621,430 1,754,318

Less: Government assistance Other assistance Investment tax credits

380,133 61,685 437,728 968,249

362,965 61,685 377,210 952,458 127,714 $824,744

Less:

Amortization

199,938 $768,311

NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998

5.

Deferred charges - Contract Manufacturing Division

============================================================ December 31, 1998 Planning and start up costs Overhead costs (Note 10) $28,951 127,363 156,314 Less: Amortization of deferred charges 46,027 $110,287 ======== March 31, 1998 $28,951 73,930 102,881 20,576 $82,305 ========

6. Loans payable ============================================================ December 31, 1998 10% loan payable to Enterprise Newfoundland and Labrador in monthly interest payments plus principal amount payable on demand 12% loan payable to Eastern Meridian Mining Corporation including accrued interest, to be repaid in full by March 1, 1999, secured by the personal guarantee of Wilson Russell Loan payable to Toronto-Dominion bank, secured by the personal guarantee of Wilson Russell. This loan was repaid in full on September 24, 1998 Loan payable to Brian Gamberg repaid in full on April 15, 1998 March 31, 1998

$20,473

$22,451

83,036

75,939

0

20,000

0

20,400

Loan payable to Dr. Carl Wesolowski 7.Long Term Debt

55,306 $158,815 ========

0 $138,790 ========

============================================================ December 31, 1998 ACOA 7.5% loan with monthly principal repayments of $ 3,256 commencing June 1, 2000 ACOA 10.9 % loan with monthly principal repayments of $ 1,786 beginning July 1, 1999 10% loan payable to Pathfinder Enterprises Inc. in monthly interest payments only to July 5, 2002, secured by a floating charge debenture ACOA 6.25% loan repayable in 72 monthly consecutive instalments of $ 3,280 beginning July 1, 2000 if full loan draw down is received. Secured by postponements on Cabot Management Limited's loans of $ 130,836 and shareholders' loan of $ 19,060 March 31, 1998

$195,331

$195,331

150,000

150,000

240,000

240,000

130,015

130,015

715,346

715,346

Less: Long term debt payable within one year

10,716 $704,630 ========

127,340 $588,006 ========

8. Loans payable - Cabot Management Limited Cabot Management Limited, an associated company, has the option to convert their interest free loans, totalling $ 138,339 at December 31, 1998, to common shares of Scientific Technologies Inc. (See Note 13)

9. Contingent liability The company is presently involved in a dispute with their distributing agent, whose contract has now been terminated due to non-payment for NETMIND systems sold to them. This termination has lead to court action, the outcome of which is unknown as at the financial statements date.

10. Share capital ============================================================ December 31, 1998 Authorized An unlimited number of Class A common shares with no par value An unlimited number of Class A preference shares with no par value An unlimited number of 10% redeemable, retractable, cumulative, non-voting, participating Class B preference shares with no par value An unlimited number of 10% redeemable, retractable, cumulative, non-voting, participating Class C preference shares with no par value Issued and outstanding 14,704,440 Class A common shares March 31, 1998

$622,453

$605,372

11. Contract Manufacturing Division Nine Months Ended December 31, 1998 Amortization of deferred charges (Note 5) Contract labor Operating expenses Salaries and benefits Less: Direct costs on contract with Lockheed Martin - Federal Systems, Inc. Wage subsidy/NRC funding $25,451 0 1,199 105,667 0 (6,543) 125,774 Less: Allocation to deferred charges (Note 5) (53,433) $72,341 ======== Year Ended December 31, 1998 $20,576 25,000 63,356 136,038 (25,133) (19,899) 199,938 (73,930) $126,008 ========

12. Income taxes The company has losses carried forward totalling $ 1,531,226 which have not been recognized in these financial statements. These losses carried forward can be applied against otherwise taxable income and if unused will expire in the following years:

December 31, 1999 December 31, 2001 December 31, 2002 -

$3,811 $37,523 $94,492

December 31, 2003 - $512,179 December 31, 2004 - $367,846 December 31, 2005 - $515,375 Also the company's book values of deferred development costs and deferred charges exceeds their income tax values by $ 878,598 as at December 31, 1998. The net deferred income taxes debit related to both of these items have not been reflected in these financial statements. 13. Subsequent event On January 26, 1999 the merger between NTI and Scientific Technologies Inc. was completed which resulted in Northstar Technical Inc. becoming a wholly owned subsidiary of Scientific Technologies Inc., a US public trading company. On January 15, 1999 and January 26, 1999 the shareholders of Northstar Technical Inc. exchanged their 14,704,440 common shares for 4,901,480 common shares in Scientific Technologies Inc. on the basis of three Northstar shares for every one share of Scientific. SULLIVAN, LEWIS AND WHITE

iii) Northstar Technical Inc. St. John's, Newfoundland Internal Unaudited Financial Statements July 31,1999 Northstar Technical Inc. Balance Sheet As at July 31, 1999 Unaudited
Current Balance Assets Current Bank Accounts Receivable Inventory 28,275.60 230,037.10 125,790.21 ----------387,926.50 1,237.72 148,582.94 56,279.65 ---------208,368.34 Year Ended Dec. 31, 1998

Fixed Assets, Net of Accumulated Depreciation Computer Equipment St. John's Accum Deprec. Computer SA Computer Equipment Vancouver Computer Software St. John's Accum Deprec. Software SJ Accum Deprec. Computer SJ Furniture and Equipment St. John's Accum Deprec. Furn St. John's Furniture and Equipment Vancouver Accum Deprec. Furn & Equip VA Lab Equipment Leasehold Improvements SA Amortization St. John's Total Fixed Assets Deferred Technology Costs Deferred Technology Costs Amortization Deferred Tech. Total Deferred Technology Costs 1,186,275.77 (323,474.18) -----------862,801.59 -----------1,287,867.39 ============ 1,124,563.49 (245,965.21) -----------878,598.28 -----------1,112,489.42 ============ 6,637.49 (3,274.47) 1,808.16 9,137.86 (6,258.10) (261.38) 33,575.99 (16,518.87) 3,759.64 (2,462.07) 11,369.97 15,163.31 (15,538.23) -----------37,139.30 6,142.51 (2,908.51) 511.38 8,891.88 (5,680.88) (261.38) 30,590.09 (14,650.29) 3,759.64 (2,255.64) 0.00 14,488.23 (14,488.23) -----------25,522.80

Total Assets

Northstar Technical Inc. Liabilities and Shareholders' Equity As at July 31, 1999 Unaudited Liabilities

Current Balance Current Payables and Accruals Trade Payables Total Current Liabilities Short Term Loan Accounts Payable adventure A/P Eastern Meridian Mining Loan Payable (TD 32101169)

Year Ended Dec. 31, 98

47,185.18 49,376.33 96,561.51

80,567.36 128,415.22 208,982.58

0.00 15,569.54 5,100.16

55,305.76 83,036.27 0.00

Total

20,669.70

138,342.03

Long Term Liabilities Adventure Capital Acoa Provisonally Repayable Acoa Action Loan Cabot Management Accounts Payable Enl Due to STI Shareholders Loans Russel Total Long Term Liabilities Equity Shareholders Equity Common W. E. Russel Common Adventure Capital Common J. Radford Class A Common Shareholders Total Shareholders' Equity Retained Earnings Profit (Loss) For period Total Total Liabilities and Equity Northstar Technical Inc. Accounts Receivable As at July 31, 1999 Unaudited

240,000.00 325,346.00 150,000.00 118,838.55 19,261.91 679,024.85 64,831.87 1,597,303.18

240,000.00 325,346.00 150,000.00 138.338.55 20,473.23 3,055.40 120,369.55 997,582.73

80.00 10,000.00 5.00 612,368.31 622,453.31 (854,871.23) (194,249.08) (1,287,867.39) 1,287,867.39

80.00 10,000.00 5.00 612,368.31 622,453.31 (854,871.23) 0.00 (854,871.23) 1,112,489.42

Current Balance Accounts Receivable

Year Ended Dec. 31, 1998

Accounts Receivable Control A/R Employee Advances A/R HST A/R SR&ED A/R Other Total Receivable

148,665.04 500.00 20,206.12 60,517.54 148.40 230,037.10

20,051.40 0.00 0.00 128,382.54 149.00 148,582.94

Northstar Technical Inc. Consolidated Departments Statements of Earnings 7 Periods Ended July 31, 1999 Unaudited

Current Month Revenue: Sales/Contract/Misc Revenue Revenue Cost of goods sold Cost of goods sold Total cost of goods sold Gross Profit

Current YTD

220.17 220.17

257,654.84 257,654.84

552.37 552.37 (332.20)

109,218.51 109,218.51 148,436.33

Add Government support Total Total Expenses: Lab Expenses Business Tax Depreciation Interest Office Expenses Salaries/wages/Emp/ Benefits Professional Fees Rent Insurance Marketing Less: Allocation to deffered Technology Cost Earnings (Loss) Earnings (Loss) Before Income Taxes Net Earnings (Loss) For Period Government Support 0.00 (332.20) 0.00 148,436.33

24,597.02 (428.91) 67,421.07 4,618.52 2,277.50 11,284.39 2,645.00 3,633.75 274.34 525.00 (61,712.28) 55,135.40 (55,467.60) (55,467.60) (55,467.60)

126,993.12 192.08 81,611.46 30,350.25 38,327.26 74,598.86 23,326.24 25,188.14 1,571.06 2,239.22 (61,712.28) 342,685.41 (194,249.08) (194,249.08) (194,249.08)

iv) NORTHSTAR ELECTRONICS INC INTERIM CONSOLIDATED FINANCIAL STATEMENTS (U.S. Dollars) (Unaudited) September 30, 1999 CONTENTS
Interim Consolidated Balance Sheet Interim Consolidated Income Statement Interim Consolidated Statement of Shareholders' Equity Page 1 2 3

Interim Consolidated Statement of Changes in Cash Resources4 Notes to Interim Consolidated Financial Statements 5 NORTHSTAR ELECTRONICS, INC. INTERIM CONSOLIDATED BALANCE SHEET (U.S. Dollars) (Unaudited) September 30, 1999
ASSETS (Note 4) Current Cash Receivables Inventory Prepaid expenses $13,471 275,229 83,029 4,393 376,122 Capital Assets 25,431 $401,553 LIABILITIES Current Payables and accruals Loans payable $86,784 27,026 113,810 $167,541 116,039 283,580 $2,231 99,055 37,519 1,513 140,319 17,016 $157,335

September 30, 1999

December 31, 1998

Long term debt ( Note 2) Loans payable to Cabot Management Limited Loans payable to shareholder Contigent liabilites (Note 5) Total Liabilites SHAREHOLDERS' EQUITY Share Capital (Note 3) Deficit

526,061 77,959 63,740 -0781,570

476,897 92,226 80,246 -0932,949

1,003,069 (1,383,086) (380,017) $401,553

440,069 (1,215,684) (775,615) $157,334

NORTHSTAR ELECTRONICS, INC. INTERIM CONSOLIDATED INCOME STATEMENT (U.S. Dollars) (Unaudited) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(Note 4) Nine Months Ended December 31, 1998

Nine Months Ended September 30, 1999

Sales Cost of goods sold Gross profit Expenses Business Development Business Tax Commissions Depreciation Dues and fees Exchange Insurance Interest and bank charges Lab Expenses Marketing Misc. Office Expenses Professional Fees Rent Salaries/Wages/employee benefits Organizational cost Commitment fees Research and development cost Contract manufacturing cost

$321,013 112,862 208,151

$168,377 98,103 70,274

1,430 271 46,300 3,517 5,010 2,400 1,410 23,081 15,958 4,592 1,392 69,490 62,119 21,015 117,568 375,553

833 4,662 1,226 39,287 2,482 5,061 27,573 11,425 10,898 75,030 38,000 10,000 10,527 35,622 272,626 (202,352) (1,013,332) $(1,215,684) $(0.09)

Net loss Deficit, beginning of period Deficit, end of period Net loss per share Weighted average number of common shares outstanding

(167,402) (1,215,684) $(1,383,086) $(0.02)

6,971,244

2,140,000

NORTHSTAR ELECTRONICS INC.

INTERIM CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (U.S. Dollars) (Unaudited) NINE MONTHS ENDED SEPTEMBER 30, 1999
Common Number Balance, December 31, 1998 Common shares issued for cash for $1.00 per share January 25, 1999 January 29, 1999 January 29, 1999 June 29, 1999 Common shares on exchange (Note 3a) Balance, September 30,1999 100,000 200,000 63,000 200,000 10 20 6 20 99,990 199,980 62,994 199,980 2,140,000 Shares Amount $214 Additional Paid-In Capital $439,855 Total Shareholders Equity $(775,615)

Deficit

$(1,215,684)

4,901,493

490

(490)

7,604,493

$760

$1,002,309

$(1,383,086)

$(380,017)

NORTHSTAR ELECTRONICS INC. INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS (U.S. Dollars) (Unaudited) NINE MONTHS ENDED SEPTEMBER 30, 1999
(Note 4) Nine Months Ended December 31, 1998

Nine Months Ended September 30, 1999 Cash provided by (used in) Operations Net loss Depreciation Net change in non-cash working capital items $(167,402) 3,517 (394,333) (558,218) Financing activities Proceeds from issuance of common shares Proceeds from long term debt Advances (to) from Cabot Management Limited Advances (to) from shareholder Repayment of long term debt 563,000 50,355 (14,267) (16,506) (1,191) 581,391 Investing activities Purchase of capital assets Increase in cash Cash, beginning of period Cash, end of period (11,933) 11,240 2,231 $13,471

$(202,352) 4,662 138,352 (59,338)

36,487 1,206 24,512 62,205

(3,189) (322) 2,553 $2,231

NORTHSTAR ELECTRONICS INC. 5.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) September 30, 1999 1. Basis of presentation These unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States for interim financial information. These financial statements are condensed and do not include all disclosures required for annual financial statements. The organization and business of the Company, accounting policies followed by the Company and other information are contained in the notes to the Company's audited consolidated financial statements filed as part of the Company's Registration Statement Form SB-1. In the opinion of the Company's management, these financial statements reflect all adjustments necessary to present fairly the Company's consolidated financial position at September 30, 1999 and the consolidated results of operations and the consolidated statement of cash flows for the nine months ended September 30, 1999. The results of operations for the nine months ended September 30, 1999 are not necessarily indicative of the results to be expected for the entire fiscal year. 2. Long term debt
September 30, 1999 10% loan payable to Pathfinder Enterprises Inc. in monthly interest payments only to July 5, 2002 December 31, 1998

$160,000

$160,000

ACOA (Federal Government Agency) interest free loan repayable in sixty monthly and consecutive installments of $ 2,170

130,221

130,221

ACOA (Federal Government Agency) interest free loan repayable in twenty-four monthly and consecutive installments of $ 4,167

98,809

100,000

ACOA (Federal Government Agency) interest free loan payable in 36 monthly and consecutive installments of $ 4,373 beginning when full loan draw down is received. Secured by postponements on Cabot Management Limited's loan of $ 87,224 and a shareholders' loan of $ 12,707.

137,031

86,676

$526,061

$476,897

NORTHSTAR ELECTRONICS INC. 5a. NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) September 30, 1999 3. Capital stock
September 30, 1999 Authorized December 31, 1998

20,000,000 preferred shares at $ 0.0001 par value 100,000,000 common shares at $ 0.0001 par value Issued and outstanding 7,604,493 common shares (1998 - 2,140,000) Additional paid in capital $760 1,002,309 $1,003,069 $214 439,855 $440,069

a) On January 15, 1999 and January 26, 1999 the shareholders of Northstar Technical Inc. exchanged their 14,704,479 common shares for 4,901,493 common shares of Northstar Electronics Inc. on the basis of three Northstar Technical shares for every one share of Northstar Electronics Inc. The value of these shares were $ 414,969. b) Also during January, 1999 the company completed offerings for 363,000 shares of its common stock at $ 1.00 per share. Proceeds from these offerings were $ 363,000. c) On June 29, 1999 the company completed an offering for 200,000 shares of its common stock at $ 1.00 per share. Proceeds from this offering was $ 200,000. 4. Comparative figures The comparative figures were for the nine months ended December 31, 1998 as the nine months ended September 30, 1998 were not readily available and there would be no material differences in these comparatives. 5. Contingent liability The company is a defendant in a lawsuit commenced against them by their former master distributor. The former distributor has alleged that the company has interfered with the ability of the former distributor to selll products. The company has filed a counterclaim for monies owing by the former distributor to the company. An adverse outcome to the lawsuit could have an adverse material impact upon the company and the range of possible loss could be from $ 0 to $ 1,300,000.

Purchase Order No.: 198422 Date: October 18, 1999 Seller: Northstar Technical, Inc. 687 Water Street St. Johns NF A1C 6J9 Attn: Wilson Russell PARTIES/TYPE OF CONTRACT This `Firm Fixed Priced' Purchase Order between Lockheed Martin Corporation (LMC) acting through its Underseas Systems business unit (LMUSS) (hereinafter referred to as "Buyer") located at 9500 Godwin Drive, Manassas, VA 20110 and NTI (hereinafter referred as "Seller") located at 687 Water Street, St. Johns, New Foundland, Canada is placed on the basis set forth herein. The Buyer's procurement representative is the only person authorized to approve changes to the terms and conditions or the requirements of the Purchase Order. If the Seller complies with any order, direction, interpretation, approval, or disapproval, conditional approval, or determination (written or oral) from someone other than the Buyer's procurement representative, it shall be at Seller's own risk and Buyer shall not be liable for any increased cost or delay in performance in accordance with the requirements set forth herein. The Seller shall ensure that all Seller's personnel are aware of this provision. Buyer is a signatory to the Defense Industry initiatives on Business Conduct and Ethics (DII). PRODUCT/SERVICES Seller shall furnish the necessary personnel, materials, equipment, and services required to accomplish the build, assembly, and test of the Fire Control Consoles (FCC) in accordance with the requirements of Statement of Work No. INT-98-001 dated March 10, 1998. Price for all hardware and services will be in accordance with Schedule "A". REQUIREMENTS/DATA Work is to be performed in accordance with the following requirements data: Attachment A: Multi-Function Work Station Statement of Work No. INT-98-001 dated 3/10/98 (Pages 1-42) and Appendix (38 Pages). Attachment B: Schedule "A" Payment Schedule & Milestone Dependencies (2 pages). Attachment C: Lockheed Martin Corporation General Provisions, for International Commercial Subcontracts/Purchase Orders (CORPDOC 1 INT dated 3/99) (6 pages including coversheet). Attachment D: Subcontract No. 198422 Prime Contract Flowdowns dated 10/4/99 (39 pages including coversheet). Attachment E: Material Inspection and Receiving Report for Victoria Class Submarine Fire Control System (2 pages including coversheet). Attachment F: Certificate of Milestone Completion. (2 pages including coversheet) Attachment G: Public Works and Government Services Canada Loan Agreement (6 pages including coversheet). Attachment H: Vendor Shipping Procedural Instructions for Shipments to the United States, Revision B, dated 9/02/99 (19 pages including coversheet).

: LMUSS Property Loan Agreement No. 198422-001 (4 pages). All drawings, specifications or other documents referenced in this Purchase Order but not attached are incorporated and made a part by this reference. PERIOD OF PERFORMANCE AND/OR DELIVERY SCHEDULE All articles, services and/or data shall be delivered in accordance with Schedule A. Early delivery of completed milestones is acceptable.

SHIPPING INSTRUCTIONS All shipments should be sent to one (1) of the following addresses as directed in writing by the LMUSS Procurement Representative: Lockheed Martin Underseas Systems 9500 Godwin Drive Manassas, VA 20110 Attn: Traffic 001/030 Base Commander W0100 Canadian Forces Base Halifax Bldg 6, Willow Park Windsor Street Halifax, Nova Scotia B3X 2X0 Shipping Terms: INCOTERMS 1990 DDP (Manassas, VA). Delivery shall be to the locations specified above. The acceptance point of the hardware is the NTI Facility in Newfoundland, Canada. Customs Import Broker All shipments to the LMUSS Facility will be cleared through the following customs import broker and subject to the following document: Emery Customs Broker 44901 Falcon Place, Suite 104 Sterling, VA 20166 Vendor Shipping Procedural Instructions for Shipments to the United States, Revision B, dated 9/02/99. Deliverables will be released for shipment using a Certificate of Milestone Completion and Material Inspection and Receiving Report for Victoria Class Submarine Fire Control System and will be prepared by the Subcontractor and, when properly completed and signed, be distributed via facsimile to the following address and point of contact: Lockheed Martin Undersea Systems 9500 Godwin Drive Manassas, VA 20110 Attention: David Batz CONSIDERATION AND PAYMENT BUYERS TOTAL LIABILITY/OBLIGATED FUNDS: This Purchase Order is fully funded for the negotiated price. Therefore, the total commitment of this Purchase Order is $ 1,910,848 (U.S. Dollars). AUTHORIZATION TO PROCEED Seller is not authorized to procure any material or hardware listed on the Bill of Materials until receipt of written authorization from the LMUSS Procurement Representative, David Batz. INSPECTION AND ACCEPTANCE FCC (10 EACH) MATERIAL RECEIVED LESS PROCESSORS: Final Acceptance occurs when LMUSS and the Canada Department of National Defense (DND) Design Authority approves Seller furnished documents verifying receipt of acceptance material less processors. LMUSS and the DND Design Authority shall provide written determination of its findings within 10 days of receipt of the documents. After Final Acceptance, these items will be made available to the Seller as Government Furnished

Equipment (GFE). FCC (10 EACH) PROCESSORS RECEIVED: Final Acceptance occurs when LMUSS and the DND Design Authority approves Seller furnished documents verifying receipt and acceptance of processors. LMUSS and the DND Design Authority shall provide written determination of its findings within 10 days of receipt of the documents. After Final Acceptance, these items will be made available to the Seller as GFE. COMPLETE FIRE CONTROL CONSOLE (10 EACH): The FCC's will be completed and presented for final acceptance. Inspection for Final Acceptance shall be conducted in accordance with the Fire Control Console Factory Acceptance Test (FAT) Procedures to be supplied as customer furnished equipment by LMUSS. The FAT shall be conducted at the Seller's facility in Canada. LMUSS and the DND Design Authority, at its option, may witness FAT. Final Acceptance occurs when LMUSS and the DND Design Authority approves Seller furnished documents verifying successful completion of FAT. The DND Design Authority shall provide written determination of its findings within 10 days of receipt of the documents. ORDER OF PRECEDENCE In the event of an inconsistency in this Purchase Order, unless otherwise provided herein, the inconsistency shall be resolved by giving precedence in the following order. A) Subcontract 198422 Including Special Provisions B) Schedule "A" Payment Schedule & Milestone Dependencies C) Lockheed Martin Corporation General Provisions D) Subcontract No. 198422 Prime Contract Flowdowns E) Multi-Function Work Station Statement of Work No. INT-98-001 F) All other documents

ACCEPTANCE This Purchase Order is the entire agreement between Buyer and Seller. It supersedes all prior agreements, oral or written and all other communications relating to the subject matter of this Purchase Order. Any terms contained in Seller invoices, acknowledgments, shipping instructions or other forms that are inconsistent with or different from this Purchase Order shall be void and of no effect. This Purchase Order is executed in duplicate originals as of the date specified on page one. Please sign and return this Purchase Order to Buyer within ten (10) working days after receipt. Lockheed Martin Corporation
/s/ By: David W. Batz

Title: Sr. Subcontract Administrator Date: October 18, 1999

Northstar Technical Inc.
/s/ By: Title: Date: Wilson E. Russell President & CEO October 18, 1999

ATTACHMENT A Multi-Function Work Station Statement of Work Gage code #52088 Number INT 98-0001 March 10, 1998 1. SCOPE This Statement of work (SOW) defines the subcontractor's effort required to fabricate, test and deliver of the Muiti-Function Work Station (MEWS) The Multi-Function Work Station is a form, fit and function equivalent replacement for the MK1 Fire Control Console. This console is used to evaluate to operational suitability of a new generation Fire Control Consoles used on open architecture and the use of COTS components. 2. Supplies and Services The subcontractor shall furnish the necessary personnel, materials, equipment. and services requirements to accomplish the development of the Multi-Function Work Station in accordance with requirements of this SOW. The supplies/services to be provided shall be as follows: 1) Equipment/manufacturing design-as defined in section 3.1 2) Multi-function work station-as defined in section 3.2 3) Project Management-as defined in section 3.3 4) Configuration Management-as defined in section 3.4 5) Test and Evaluation-as defined in section 3.5 3. Description of Items This section contains the description and requirements far the item, specified in Section 2. The subcontractor shall implement and adhere to the plans identified in this section. Any significant deviations from these plans shall be described and justified to LMPS. 3.1 Equipment Manufacturing Design (Item 1) The high level packaging requirements for the Multi-Function Work Station Unit are specified in sections 4.1.1 and 4.1.3. These requirements. which define the form, fit and function equivalent replacement for the MK1 Fire Control Console, are mandatory requirements that must be met. The subcontractor shall redesign, modify, or use "as is" these drawings to support the manufacture and fabrication of these units. 3.2 Multi-Function Work Station Consoles (item 2) The subcontractor shall fabricate, test and deliver 10 Multi-Function Work Stations in accordance with the requirements as specified in section 4 of this SOW. These units shall be bulit to best commercial practices. The first unit shall be delivered 6 month. After Receipt of Order (ARO) The other 9 units shall be delivered 9 months (ARO). Five units shall be delivered to LMFS-Manassas. The other five units shall be delivered to sites in Canada that will be specified after the award of contract. Costs of the units shall include all hardware, manuifacturing, and software licensing costs3.3 Project Management (Item 3) The subcontractor shall establish a Project (program) Management activity that coordinates and controls all program activities. The project management shall schedule, control, monitor, and report program activities, 3.4 Configuration Management (Item 4) The subcontractor shall establish and maintain a program for configuration management. The program stall include configuration management of the Multi-Function Work Station, the special test and inspection equipment and associated software used for Factory Acceptance Test (PE.

3.5 Test & Evaluation (item 5) The subcontractor shall plan, implement, conduct, and document all testing of the Multi-Function Work Station to demonstrate that it is 'built to print'.The subcontractor shall provide the test facility, test equipment, and personnel for testing of the Multi-Function work Stations. 3.5.1 Contractor Furnished Items: IMES-Manassas shall provide the items as listed in section to support test and evaluation of the Multi-Function Work Station. The following Items will be funinshed by LMPS-Manassas to suppon Factory Acceptance Tcsting/work Stations. 1. Personal Computer (DND Furnished Equipment) 2. LWK-20 a)ND Furnished Equipment) 3. All unit external cabling. 4. FAT procedures 5. FAT software 4. Multi-Function Work Station unit Description 4.1 Functional Description The Multi-Function Work station is a format and function replacement for the existing ANEGYO-5O1 FCC based on an open architecture and use of COTS components. The enclosure of the work station is of welded aluminum construction and designed to meet the requirements of MIL-STD 901 as mitigated by the shock isolated platforms. The enclosure houses two state of the an flat panel displays and aruggedized standard 15 slot VMS card cage. 6 out of the 15 slots are populated with commercial off the shelf VME cards. The card set consists of 1 DY-4 PDM'er PC, 2 Sliver Graphics modules, 2 NTDS modules, and a Digital IEO module. A desk assembly is added to the enclo sure to support Human to Machine interface. The desk assembly consists of a bullnose housing a 486 DX CPU, a 6 inch diagonal AMLC display with touch screen, and 6 input devices. 4.1.1 Console Form Factor The critical dimensions of the Multi-Function Work Station are shown in Figure 1 "Console" and Figure 2 "Connector Plate". These drawings define the unit form factor needed for "drop in" replacement for the existing AN/GYE5O1 FCC. The subcontractor shall not deviate from these dimensions without approval from LMFS-Manassae. 4.1.2 Unit Functional Block Diagram The funcional block diagram of the Multi-Function Work Station is shown in Figure 3 "System Block Diagram". This diagram shows the functional interface between various electronic components within the Multi-Function Work Station 4.1.3 Environmental requirements The Multi-Function Work Station enclosure is designed and manufactured to meet the special environmental conditions as specified in MIL-SID- 901. To assure that the console will meet tbe environment requirements, the subcontactor shall not modify the enclosure design without approval from LMFS-Manassas. Furthermore, the enclosure manufacturer as specified in the parts list The same constraint shall also apply to the flat panel displays. 4.1.4 Manufacturing Drawings Sets of manufacturing drawings and cabling lists are attached with this document. These drawings are for reference use only. The subcontractor shall modify use 'as is', or redo these drawings to support manufacturing of the Multi-Function Work Station. Attachment B SUBCONTRACT # 198422

Schedule A Schedule A- Payment schedule and Milestone Dependences- This remains propriatary and sensisity material. Attachment C- Subcontract # 198422 GENERAL PROVISIONS LOCKHEED MARTIN CORPORATION GENERAL PROVISIONS INTERNATIONAL COMMERCIAL SUBCONTRACTS/PURCHASE ORDERS 1 Acceptance of Contract/Terms and Conditions. 2 Applicable Laws 3 Assignment 4 Changes 5 Communication with Lockheed Martin Customer 6 Contract Direction 7 Default 8 Definitions 9 Disputes 10 Ecusable Delay 11 Export Control 12 Extras 13 Furnished Property 14 Gratuities/Kickbacks 15 Importer of Record 16 Independent Contractor Relationship 17 Information of Lockheed Martin 18 Information of Seller 19 Inspection and Acceptance 20 Insurance/Entry on Lockheed Martin's Property 1. ACCEPTANCE OF CONTRACT/TERMS AND CONDITIONS (a) This Contract integrates, merges,and supersedes any prior offers, negotiations and agreements concerning the subject matter hereof and constitutes the entire agreement between the parties (b) SELLER'S acknowledgment, acceptance of payment or commencement of performance shall constitute SELLER's unqualified acceptance of this Contract. (c) Additional or differing terms or conditions proposed by SELLER or included in SELLER's acknowledgment hereof are hereby objected to by LOCKHEED MARTIN and have no effect unless expressly accepted in writing by LOCKHEED MARTlN. 2. APPLICABLE LAWS (a) This Contract shall be governed by and construed in accordance with the law of the State within the United States from which this Contract is issued, excluding its choice of law rules. b) SELLER agrees to comply with all applicable laws, orders, rules, regulations and ordinances of the United States and the country where SELLER will be performing the Contract. The provisions of the "United Nations Convention on Contracts for International sale of Goods" shall not apply to this contract. c) If the Work is to be shipped to, or performed in the United States: (i) SELLER represents that each chemical substance constituting or contained in Work transferred to LOCKHEED MARTIN hereunder is on the list of chemical substances compiled and published by the Administrator of the Environmental Protection Administration pursuant to the Toxic Substances Control Act(l5 U.S.C. Sec. 2601 et seq.) as amended. (ii) SELLER shall provide to LOCKHEED MARTIN with each delivery any Material Safety Data Sheet applicable to the Work in conformance with and containing such information as required by the occupational

Safety and Health Act of 1970 and regulations promulgated thereunder, or its State approved counterpart. 3. ASSIGNMENT Any assignment of SELLER's contract rights or delegation of duties shall be void, unless prior written consent is given by LOCKHEED MARTIN. 4. CHANGES (a) The LOCKHEED MARTIN Procurement Representative may at any time, by written notice, and without notice to sureties or assignees, make changes within the general scope of this Contract in any one or more of the following: (I) drawings, designs or specifications;(ii) method of shipping or packing; (iii) place of inspection, acceptance or point of delivery; and (iv) delivery schedule. (b) If any such change causes an increase or decrease in the cost of, or the time required for, performance of any part of this Contract, LOCKHEED MARTIN shall make an equitable adjustment in the Contract price and/or delivery schedule, and modify the Contract accordingly. Changes to the delivery schedule will be subject to a price adjustment only. (c) Any claim for an equitable adjustment by SELLER must be submitted in writing to LOCKHEED MARTIN within 30 days agree in writing to a longer period. d) Failure to agree to any adjustment shall be resolved in accordance with the "Disputes' clause of this Contract. However, nothing contained in this "Changes" clause shall excuse SELLER from proceeding without delay in the performance of this Contract as changed. 5. COMMUNICATION WITH LOCKHEED MARTIN CUSTOMER (a) LOCKHEED MARTIN shall be solely responsible for all liaison and coordination with the LOCKHEED MARTIN customer, as it affects the applicable prime contract, this Contract, and any related contract. (b) Unless otherwise directed in writing by the authorized LOCKHEED MARTIN PROCUREMENT Representative, all documentation requiring submittal to, or action by, the LOCKHEED MARTIN customer shall be routed to, or through, the LOCKHEED MARTIN Procurement Representative, or as otherwise permitted by this contract. 6. CONTRACT DIRECTION (a) Only the LOCKHEED MARTIN Procurement Representative, has authority to amend this Contract. Such amendments must be in writing. (b) LOCKHEED MARTIN engineering and technical personnel may from time to time render assistance or give technical advice or discuss or effect an exchange of information with SELLER's personnel concerning the Work hereunder. Such actions shall not be deemed to be a change under the "Changes" clause of this Contract and shall not be the basis for equitable adjustment. (c) Except as otherwise provided herein, all notices to be furnished by the SELLER shall be sent to the LOCKHEED MARTIN Procurement Representative. 7. DEFAULT (a) LOCKHEED MARTIN, by written notice, may terminate this contract for default, in whole or in part, if SELLER fails to comply with any of the terms of this Contract, fails to make progress as to endanger performance of this Contract, or fails to provide adequate assurance of future performance. SELLER shall have ten ([0) days (or such longer period as LOCKHEED MARTIN may authorize in writing) to cure any such failure after receipt of notice from LOCKHEED MARTIN. Default involving delivery schedule delays shall not be subject to the cure provision.

(b) LOCKHEED MARTIN shall not be liable for any Work not accepted; however, LOCKHEED MARTIN may require SELLER to deliver to LOCKHEED MARTIN any supplies and materials, manufacturing materials, and manufacturing drawings that SELLER has specifically produced or acquired for the terminated portion of this Contract. LOCKHEED MARTIN and SELLER shall agree on the amount of payment for these other deliverables. (c) SELLER shall continue all Work not terminated. (d) If under termination under paragraph(a), it is later determined that SELLER was not in default, such termination shall be deemed a Termination for Convenience. 8. DEFINITIONS The following terms shall have the meanings set forth below: (a) "Work" means all required articles, materials, supplies, goods, and services constituting the subject matter of this Contract. (b) "SELLER" means the party identified on the face of the contract with whom LOCKHEED MARTIN is contracting. (c) "LOCKHEED MARTIN", means LOCKHEED MARTIN CORPORATION, acting through its companies, or business units, as identified on the face of the Contract. If a subsidiary or affiliate of Lockheed Martin Corporation is identified on the face of the Contract than "LOCKHEED MARTIN" means that subsidiary, or affiliate. (d) "LOCKHEED MARTIN Procurement Representative" means the person authorized by LOCKHEED MARTIN's cognizant procurement organization to admister and/or execute this Contract. (e) "Contract" means the instrument of contracting, such as "PO". "Purchase Order, or other such type designation, including all referenced documents, exhibits and attachments. If these terms and conditions are incorporated into a "master" agreement that provides for releases, (in the form of a purchase order or other such document) the term "Contract" shall also mean the release document for the Work to be performed. (f) "PO" or "Purchase Order" as used in any document constituting part of this contract shall mean this contract. 9. DISPUTES All disputes under this Contract which are not disposed of by mutual agreement may be decided by recourse to an action at law or in equity exclusively in a United States Court of competent jurisdiction located in the State from which this contract is issued. Until final resolution of any dispute, SELLER shall diligently proceed with the performance of this Contract as directed by LOCKHEED MARTIN 10. EXCUSABLE DELAY (a) Subject to (b) and wben mutually agreed by the parties, SELLER shall be excused from, and shall not be liable for, failure of performance due to one or more of the following qualifying events (such list being exclusive): (i) war; warlike operation; insurrection; riot; fire, explosion, accident, governmental act; material control regulations or orders; act of God; act of the pubfic enemy; epidemic; and quarantine restriction; and if (ii) Such event was beyond Seller's control and not occasioned by its negligence or default. The contract will be extended for that period of time attributable to such event. (b) In order to be excused from performance under (a) Seller shall submit, within ten (10) calendar days of the start of the qualifying event, a written notice stating a complete and detailed description of such event, the date of commencement, an estimate of the probable period of delay. and explanation indicating how such event was beyond the control of the SELLER and not due to Its negligence rr fault and what efforts SELLER will make to minimize the length of delay. SELLER shall submit within ten (10) calendar days of the end of the event a written

notice stating the impact to the schedule and evidence justifying the length of the delay. If the delay extends for thirty (3O) days or more this Contract may be terminated by LOCKHEED MARTIN without additional cost. (c) Failure of the United States Government to issue any required export license, or withdrawal/termination or a required export license by the United States Government shall relieve LOCKHEED MARTIN of its obligations under this Contract, and shall relieve SELLER of its' corresponding obligations. 11. EXPORT CONTROL (a) Seller agrees to comply with all applicable United Statas export control laws and regulations. Without limiting the foregoing, Seller agrees that it will not transfer any export controlled item, data or service, to include transfer to foreign nationals employed by or associated with, or under contract to SELLER or SELLER'S lower-TIER supplier, without the authority of an Export License or applicable license exception. (b) SELLER agrees to notify LOCKHEED MARTIN if any deliverable work under this Contract is restricted by export control laws or regulations. 12. EXTRAS Work shall not be supplied in excess of quantities specified in the Contract. SELLER shall be liable for handling charges and return shipment costs for any excess quantities. 13. FURNISHED PROPERTY (a) LOCKHEED MARTIN may provide to SELLER property owned by either LOCKHEED MARTIN or its customer (Furnished Property). Furnished Property shall be used only for the performance of this Contract. (b) Title to Furnished Property shall remain in LOCKHEED MARTIN or its customer. SELLER shall clearly mark (if not so marked) all Furnished Property to show its ownership. (c) Except for reasonable wear and tear, SELLER shall be responsible for, and shall promptly notify LOCKHEED MARTIN of any loss or damage. Without additional charge, SELLER shall manage, maintain, and preserve Furnished Property in accordance with good commercial practice. (d) At LOCKHEED MARTIN'S request, and/or upon completion of this Contract the SELLER shall submit, in an acceptable form, inventory lists of Furnished Property and shall deliver or make such other disposal as may be directed by LOCKHEED MARTIN. 14. GRATUITIES/KICKBACKS No gratuities (in the form of entertainment, gifts or otherwise) or kickbacks shall be offered or given by SELLER to any employee of LOCKHEED MARTIN with a view toward securing favorable treatment as a supplier. 15. IMPORTER OF RECORD (Applies only if the Contract involves importation of Work into the United States.) (a) If elsewhere in the Contract LOCKHEED MARTIN is indicated as importer of record, SELLER warrants that all sales hereunder are or will be made at no loss than fair value under the United States Anti-Dumping Laws (19 U.S.C. l673 et seq.). (b) If elsewhere in the Contract LOCKHEED MARTIN is not indicated as importer of record, then SELLER agrees that: (i) LOCKHEED MARTIN will not be a party to the importation or Works, the transaction(s) represented by this contract will be consummated after importation, and SELLER will neither cause nor permit LOCKHEED MARTIN'S name to be shown as "Importer Of Record" on any customs declaration; and (ii) Upon request and where applicable, SELLER will provide to LOCKHEED MARTIN Customs Form 7501 entitled "Customs Entry", properly excecuted.

16. INDEPENDENT CONTRACTOR RELATIONSHIP (a) SELLER is an independant contractor in all its operations and activities hereunder. The employees used by SELLER to perform Work under this Contract shall be SELLER's employees exclusively without any relation whatsoever to LOCKHEED MARTIN. (b) SELLER shall be responsible for any costs or expenses including attorneys' fees, all expenses of litigation and/or settlement, and court costs, arising from any act or omission of SELLER, its officers, employees, agents, suppliers, or subcontractors at any tier, in the performance of any of its obligations under this Contract. 17. INFORMATION OF LOCKHEED MARTIN Information provided by LOCKHEED MARTIN to SELLER remains the property of LOCKHEED MARTIN. SELLER agrees to comply with the terms of any Proprietary Information Agreement with LOCKHEED MARTIN and to comply with all Proprietary Information markings and Restrictive Legends applied by LOCKHEED MARTIN to anything provided hereunder to SELLER. SELLER agrees not to use any LOCKHEED MARTIN provided information for any purpose except to perform this Contract and agrees not to disclose such information to third parties without the prior written consent of LOCKHEED MARTIN. 18. INFORMATION OF SELLER SELLER shall not provide any propietary information to LOCKHEED MARTIN without prior execution by LOCKHEED MARTIN of a proprietary information agreement. 19. INSPECTION AND ACCEPTANCE (a) LOCKHEED MARTIN and its customer may inspect all Work at reasonable times and p1aces, including, when practicable, during manufacture and before shipment. SELLER shall provide all information, facilities, and assistance necessary for safe and convenient inspection without additional charge. (b) No such inspection shall relieve SELLER of Its obligations to furnish all Work in accordance with the requirements of this Contract. LOCKHEED MARTIN's final inspection and acceptance shall be at destination. (c) If SELLER delivers non-conforming Work, LOCKHEED MARTIN may: (i) accept all or part of such Work at an equitable price reduction; (ii) reject such Work; or (iii) make, or have a third party make all repairs, modifications, or replacements necessary to enable such Work to comply in all respects with Contract requirements and charge the cost incurred to SELLER. (d) SELLER shall not re-tender rejected Work without disclosing the corrective action taken. 20. INSURANCE/ENTRY ON LOCKHEED MARTIN'S PROPERTY In the event that SELLER, its' employees' agents, or subcontractors enter LOCKHEED MARTIN's or its' customer's premises for any reason in connection with this Contract, SELLER, its subcontractors and lower-tier subcontractors, shall procure and maintain worker's compensation, comprehensive general liability, bodily injury and property damage insurance in reasonable amounts, and such other insurance as LOCKHEED MARTIN may require and shall comply with all site requirements. SELLER shall indemnify and hold harmless LOCKHEED MARTIN, its officers, employees, and agents from any losses, costs, claims, causes of action, damages, liabilities, and expenses, including attorney's fees, all expenses of litigation and/or settlement, and court costs, by reason of property damage or personal injury to any person caused in whole or In part by the actions or omissions of SELLER, its officers, employees agents, suppliers, or subcontractors at any tier. SELLER shall provide LOCKHEED MARTIN thirty days advance written notice prior to the effective date of any cancellation or change in the term or coverage of any of SELLER's required insurance. If requested, SELLER shall send a "Certificate of Insurance" showing SELLER'S compliance with these requirements. SELLER shall name LOCKHEED MARTIN as an additional insured for the duration of this Contract. Insurance maintained pursuant to this clause shall be considered primary as respects the interest of LOCKHEED MARTIN and is not contributory with any insurance which LOCKHEED MARTIN may cary. 21. INTELLECTUAL PROPERTY

(Subparagraph (a) is NOT applicable for commercial off-the-shelf purchases.) (a) SELLER agrees that LOCKHEED MARTIN shall be the owner of all inventions, technology, designs. works of authorship, mask works, technical information, computer software, business information and other information conceived, developed or otherwise generated in the performance of this Contract by or on behalf of SELLER. SELLER hereby assigns and agrees to assign all right title and interest in the foregoing to LOCKHEED MARTIN, including without limitation all copyrights, patent rights and other intellectual property rights therein and further agrees to execute, at LOCKHEED MARTIN's request and expense, all documentation necessary to perfect title therein in LOCKHEED MARTIN. SELLER agrees that it will maintain and disclose to LOCKHEED MARTIN written records of, and otherwise provide LOCKHEED MARTIN with full access to, the subject matter covered by this and that all such subject matter will be deemed information of LOCKHEED MARTIN and subject to the protection provisions of the clause entitled 'Information of Lockheed Martin". SELLER agrees to assist LOCKHEED MARTIN, at LOCKHEED MARTIN's request and expense, in every reasonable way, in obtaining, maintaining, and enforcing patent and other intellectual property protection on the snbject matter covered by this Clause. (b) SELLER warrants that the Work performed and delivered under this Contract will not infringe or otherwise violate the intellectual property rights of any third party in the United States or any foreign country. SELLER agrees to defend, indemnity and hold harmless LOCKHEED MARTIN and its customers from and against any claims, damages, losses costs and expenses, including reasonable attorney's fees, arising out of any action by a third party that is based upon a claim that the Work performed or delivered under this Contract infringes or otherwise violates the intellectual property rights of any person or entity. 22. LANGUAGE AND STANDARDS All reports; correspondence, drawings, notices, marking, and other communications shall be in the English language. The English version of the Contract shall prevail. Unless otherwise providcd in writing all documentation and work, shall employ the units of United States Standard weights and measures. 23. NEW MATERIALS The Work to be delivered hereunder shall consist of new materials, not used, or reconditioned, or of such age as to impair its useflness or safety). 24. OFFSET/CREDIT CORPORATION All offset or countertrade credit value resulting from this Contract shall accrue solely to the benefit of LOCKHEED MARTIN. SELLER agrees to coorperatewith LOCKHEED MARTIN in the fullfilment of any foreign offset/countertrade obligations. 25. PACKING AND SHIPMENT (a) Unless otherwise specified, all Work is to be packed in accordance with good commercial practice. (b) A complete packing list shall be enclosed with all shipments. SELLER shall mark containers or packages with necessary lifting, loading, and shipping information, including the LOCKHEED MARTIN contract number, item number, ddates of shipment, and the names and addresses of consignor and consignee. Bills of lading shall include this Contract number. (c) Unless otherwise specified, delivery shall be DDP LOCKHEED MARTIN's facility named on the face of the Contract, in accordance with INCOTERMS 1990. 26. PAYMENTS, TAXES, AND DUTIES (a) Unless otherwise provided, terms of payment shall be net 30 days from the latest of the following: (i) LOCKHEED MARTIN's receipt of the SELLER's proper invoice; (ii) Scheduled delivery date of the work; or (iii) Actual delivery of the Work. LOCKHEED MARTIN shall have a right of setoff against payments due or at issue under this Contract or any other contract between the parties.

(b) Payment shall be deemed to have been made as of the date of mailing LOCKHEED MARTIN's payment or electronic funds transfer. (c) Unless otherwise specified, prices include all applicable federal, state and lcal taxes, duties, tariffs, and similar fees imposed by any government. all of wluch shall be listed separately on the invoice. (d) All taxes, assessments and similar charges levied with respect to or upon any such products or work owned by LOCKHEED MARTIN while in SELLER's possession or control, and for which no exemption is available, shall be born by SELLER. (e) The prices stated in the Contract are firm, fixed prices in United States dollars. 27. PRECEDENCE Any inconsistencies in this Contract shall be resolved in accordance with the followinf descending order of precedence:(1) Face of the Purchase Order, Release document or Schedule, (which shall include continuation sheets),as applicable, including any Special terms and conditions; (2) Any master-type agreement (such as corporate, sector or blanket agreements); (3) these General Provisions; (4) Statement of Work. 28. QUALITY CONTROL SYSTEM Unless this Contract contains other specific quality requirements: (a) SELLER shall provide and maintain a quality control system to an industry recognized Quality Standard for the Work covered by this Contract. (b) Records of all quality control inspection Work by SELLER shall be kept complete and available to LOCKHEED MARTIN and its customers. 29. RELEASE OF INFORMATION Except as required by law, no public release of any information, or confirmation or denial of same, with respect to this Contract or the subject matter hereof, will be made by SELLER without the prior written approval of LOCKHEED MARTIN. 30. STOP WORK ORDER (a) SELLER shall stop Work for up to ninety (90) days in accordance with the terms of any writen notice received from LOCKHEED MARTIN, or for such longer period of time as the parties may agree and shall take all reasonable steps to minimize the incurrence of costs allocable to the Work covered by this Contract during the period of Work stoppage. (b) Within such period, LOCKHEED MARTIN shall either terminate or continue the Work by written order to SELLER. In the event of a continuation, an equitable adjustment in accordance with the principles of the "Changes" clause, shall be made to the price, delivery schedule, or other provision affected by the Work stoppage, if applicable, provided that the claim for equitable adjustment is made within thirty (30) days after such continuation 31. SURVIVABILITY If this Contract expires, is completed or terminated, SELLER shall not be relieved of those obligations contained in this Contract for the following provisions: Applicable Laws, Clause#2 Export Control, Clause#10 Independent Contractor Relationship, Clause#16 Information of Lockheed Martin, Clause #17 Insurance/Entry on Lockheed Martin's Property, Clause#20 Intellectual Property, Clause#21 Release of Information, Clause#29

Warranty, Clause#35 Year 2000 Compliance, Clause#36 32. TERMINATION FOR CONVENIENCE (a) For specially performed Work: LOCKHEED MARTIN may terminate part or all of this Contract for its convenience by giving written notice to SELLER, LOCKHEED MARTIN's only obligation shall be to pay SELLER a percentage of the price reflecting the percentage of the Work performed prior to the notice of termination, plus reasonable charges that SELLER can demonstrate to the satisfaction of LOCKHEED MARTIN, using generally accepted accounting principles, have resulted from the termination. SELLER shall not be paid for any Work performed or costs incurred which reasonably could have been avoided. (b) In no event shall LOCKHEED MARTIN be liable for lost or anticipated profits. or unabsorbed indirect costs or overheed, or for any turn in excess of Ow total Contract EcL SELLER's termination claim shall be submined within 90 days ItOrn The Effective date 0f the tertnitttiE (c)For other than specially performed Work. LOCKHEED MARTIN may terminate part or all of this contract for Its convenience by giving written notice to SELLER and LOCKHEED MARTIN'S only obligation to SELLER shall be payment of a mutually agread-upon restocking or service charge (d)SELLER shall continue all Work not terminated, 33. TIMELY PERFORMANCE (a) SERLLER's timely performance is a critical element of this Contract (b) Unless advance shipment has been authorized in writing by LOCKHEED MARTIN, LOCKHEED MARTIN mau store at SELLER's expense, or return, shipping charges collect, all Work received in advance of the scheduled delivery date. (c) If SELLER becomes aware of difficulty in performing the Work, SELLER shall timely notify LOCKHEED MARTIN, in writing, giving pertinent details. This notification shall not change any delivery schedule. (d) In the event of a termination for convenience or change, no claim will be allowed for any manufacture or procurement in advance of SELLER'S normal flow time unless there has been prior written consent by LOCKHEED MARTIN. 34. WAIVER, APPROVAL, AND REMEDIES (a) Failure by LOCKHEED MARTIN to enforce any of to provision(s) of this Contract shall not be construed as a waiver of the requirement(s) of such provision(s), or as a waiver of the right of LOCKHEED MARTIN thereafter to enforce each and every such provision(s). (b) LOCKHEED MARTIN's approval of documents shall not relieve SELLER from complying with any requirements of this Contract. (c) The rights and remedies of LOCKHEED MARTIN in this Contract are cumulative and in addition to any other rights and remedies provided by law or in equity. 35. WARRANTY SELLER warrants that all Work furnished pursuant to this Contract shall strictly conform to applicable specifications, drawings, samples, and descriptions, and other requirements of this Contract and be free from defects in design, material and workmanship. The warranty shall begin upon final acceptance and extend for a period of one year or the manufacturer's warranty period, whichever is longer. If any non- conformity with Work appears within that time, SELLER, at LOCKHEED MARTIN'S option, shall promptly repair, replace, or reperform the Work. Transportation of replacement Work and return of non-conforming Work and repeat performance of Work shall be at SELLER's expense. If repair or replacement or reperformance of Work Is not timely, LOCKHEED MARTIN may elect to return the non-conforming Work or repair or replace

Work or reprocure the Work at SELLER's expense. All warranties shall run to LOCKHEED MARTIN and its customer(s). 36. YEAR 2000 COMPLIANCE (a) Year 2000 compliant, as used in this clause, means that with respect to information technology, that the information technology accurately processes date/time data (including but not limited to, calculating, comparing, and sequencing)from, to, and between the twentieth and twenty-first centuries, and the years 1999 and 2000 tna leap year calculations, to the extent that other information technology, used in combination with the information technology being acquired, properly exchanges date/time data with it. (b) Any and all Work provided hereunder will be Year 2000 compliant at the time of delivery to LOCKHEED MARTIN. including but not limited to accuratel inputting, storing, manipulating, comparing, calculating, updating, displaying, outputting, and transferring such dates and data unless otherwise expressly provided herein by LOCKHEED MARTIN. (c) This provision takes precedence over all other provisions of this Contract with respect to being Year 2000 compliant. In the event of a discovery of any non-compliance, either before, concurrent with, or subssequent to delivery of a good or service under this Contract, the discovering party shall notify the other party within five(5) business days. If the defective good or service is being presented for acceptance or has already been delivered, at LOCKHEED MARTIN'S option, the defective good or service shall be repaired or replaced within ten (10) business days notice at no cost to LOCKHEED MARTIN. (d) Nothing in this provision shall be construed to limit any other rights under this Contract, at law or in equity that LOCKHEED MARTIN may have with respect TO Year 2000 compliance. Attachment E SUBCONTRACT No.198422 MATERIAL INSPECTION AND RECEIVING REPORT (2 pages) Material Inspection and Receiving Report For Victoria Class Submarine Fire Control System Page 1 of 1 Prime Contract Administered By Public Works and Government W8472-8-OO12/OO1/QF Lockheed Martin Corporation Lockheed Martin Undersea Systems Services Canada (PWGSC) Aerospace, Marine and LMUSS Subcontract Number Business Unit (LMUSS) Electronic Systems (AMES) 9500 Godwin Drive Electronic Systems Group, QC Manassas, VA 20110 Section Quality Assurance Representative - Canada DND
Subcontract Number: (Procurement Instrument) Seller Northstar Technical Inc. 687 Water Street St.Johns NF AIC 6JQ Canada Shipped From Northstar Technical Inc. Date Shipped Shipment Number Invoice

Number

FOB Destination

Invoice will be mailed to:

687 Water Street St Johns NF A1C 6J9 Canada *Shipped To/Mark For Unclassified Data Deliverable to LMUSS Lockheed Martin Corporation Lockheed Martin Undersea Systems 9500 Godwin Drive Manassas, VA 20110

0 Hardware to LMUSS Lockheed Martin Corporation Lockheed Martin Undersea Systems. 9500 Godwin Drive Manassas VA 20110 Windsor Street

0 Hardware To CFB, Halifax Base commander WO1OO Canadian forces Base Halifax Bldg 6, Willow Park Halifax, Nova Scotia Attn: B3X2X0

Line Item Description of Contract Line Item(s)Shipped Quantity Unit Unit Price (USD) Amount(USD) Attachment F SUBCONTRACT No.198422 CERTIFICATE 0F MILESTONE COMPLETION Certificate of Milestone Completion - No. This certificate, when signed & dated by NTI below, certifies that Milestone #___ entitled: was completed by NTI. All items identified below have been completed in full conformance with the subcontract requirements: It is mutually understood that acceptance of this milestone certificate by LMUSS is deemed to acknowledge substantial completion of the identified milestone tasks and shall not in any manner be construed as a waiver of LMUSS' rights under the subcontract to full and complete performance of all subcontract requirements. To the extent of any deficiencies identified below, acceptance of this certificate by LMUSS is conditional and it is accordingly mutually understood that LMUSS may withdraw acceptance of this certificate if NTI fails to make timely and satisfactory correction of the deficiencies. Deficiencies: Signatures: Submitted on behalf of NTI by: Accepted on behalf of LMUSS by: Larry Fox - Program Manager Date: Date: Attachment G SUBCONTRACT No.198422 PUBLIC WORKS AND GOVERNMENT SERVICES CANADA LOAN AGREEMENT (6pages)

Loan Agreement Covering loan of Department of National Defence equipment through Department of Supply and Services. Instructions to Contractor 1. Submit original and four copies to the contracting officer, Department of Supply and Services and two copies to the cognizant DND Technical Services Detachment. The contracting officer shall forward the Loan Agreement to Production Assets Management Services for processing. 2. The equipment to be listed in Schedule B may include machine tools, special tools test equipment tooling and ground handling equipment, but not the following: consumable materials, prototypes, sealed samples, models or equipment for catering contractors. Schedule A Terms ot Loan Agreement Terms applicable to Canadian and Foreign Defence Work 1. The equipment is to be used for the purpose of performing the defence work identified in this Agreement or such other defence work as may be authorized in writng by DSS from time to time. 2. Commercial work shall not be carried out using the equipment. 3. The Contractor shall ensure that at all times each item of equipment bears a clearly visible identification number corresponding to that shown on the Notice to Ship, or other issue document issued in respect thereof. and shall be responsible for making any changes n that number that may be notified from time to time by DSS. 4. The Crown's representatives shall have the right to inspect the equipment at any time and the contractor shall provide any reasonable assistance required therefore 5. Unless DSS otherwise authorizes the contractor in writing, the Contractor shall return the equipment to the destination designated in writing by DSS upon the completion of its use in performing the defence work. In the absence of such designation in writing, the Contractor shall request instructions from DSS. When equipment is ready to be returned to DND, the Contractor shall prepare a condition report and arrange for the cognizant DND Technical Services Detachment to inspect and evaluate the condition of the equipment. In cases where a Technical Services Detachment is not available the Contractor shall request DSS to arrange for inspection. 6. DSS may terminate the loan or any part thereof at any time. and recal1 the equipment concerned with that termination. 7. The Contractor shall indemnify and save harmless the Crown, its ministers, officers, servants, agents, employees, and members of the Canadian Forces from and against all claims, demands, damages, loss costs, expense, actions, causes of action, suits or other proceedings by whomsoever made, arising out of any injury to persons (including injuries resulting in death) or loss of or damage to property of others that may be caused by or suffered as a result of the operation, use or transportation of the equipment by the Contractor or any action taken or things done by virtue of this loan. Terms Applicable to Canadian Defence Work 8. No rent shall be payable by the Contractor to the Crown in respect of equipment loaned for Canadian defence work. 9. The Department of National Defence will pay or reimburse the Contractor for reasonable and proper costs incurred by the contractor in taking possession of the equipment and moving it to and from the Contractors plant or other location authorized by DSS, including the cost of labor and materials in connection with the packaging and transportation of the equipment.

10. The Contractor shall take reasonable and proper care of the equipment, including the maintenance thereof during the term of this loan and shall be responsible for any loss or damage resulting from its failure to do so other than loss or damage caused by fire or by ordinary wear and tear. The maintenance of the equipment shall be in accordance with OND Standards, a copy of which the Contractor acknowledges to have in its possession. In the event of loss or damage and where the Minister so directs, the Contractor shall repair or replace or have repaired or replaced the equipment to the satisfaction of the Minister. or reimburse the Crown to the full value of the equipment as indicated in Schedule S. l1. The Contractor may insure the equipment against loss or damage by fire or supplemental perils or any other risks while the equipment is in its care, custody or control but no portion of the premium cost will be assumed by the Crown. 12. Should the equipment consist of or include one or more vehicles. the contractor shall obtain vehicle liability insurance with respect to each such vehicle in an aggregate amount of not less than $500,000 for each occurence against claims arising from loss of life, bodily injury and property damage. Should the equipment be an aircraft, the Contractor shall carry aircraft liability insurance in an aggregate amount of not less than $1,000,000 for each occurrence against claims arising from loss of life, bodily injury and property damage. The vehicle or aircraft insurance policy shall include a cross liability clause naming the Crown as an insured party. Schedule A (continual) Terms of Loan Agreement Terms Applicable to Foreign Defence Work 13. Canadian defence work must be given prionty over foreign defence work. 14. No rent shall be payable by the Contractor in respect of the loan of the equipment for foreign defence work provided that benefit of such rent-free use is reflected in the price charged to the purchaser. 15. The Contractor shall submit to DSS statements showing the costs incurred and profits realized from such foreign defence work, provided however, that the Minister may in his/her discretion, cause audits to be conducted at any time in order to determine such profits. In the event it has been determined that the Contractor has received profits in excess of an amount which the Minister considers reasonable such excess profits shall be recover by the Minister. 18. The Contractor shall be responsible for all cost's incurred in taking possession of, returning, transferring, insuring, maintaining and servicing the equipment and in no event will such costs be chargeable to the Crown either directly or indirectly. 17. The Contractor shall take reasonable and proper care of the equipment, including the maintenance thereof, during the term of this loan and shall be responsible for any loss or damage resulting from the failure to do so other than loss or damage caused by ordinary wear and tear. The maintenance of the equipment shall be in accordance with DND Standards, a copy of which the Contractor acknowledges to have in its possession. In the event of loss or damage and. where the Minister so directs, the Contractor shall repair or replace or have repaired or replaced the equipment to the satisfaction of The Minister, or reimburse the Crown to the full value of the equipment as indicated in Schedule S. Attachment D Section 1 Canadian Government Clause Flowdowns 9/29/99 (Canadian Government Clauses ID 9601 and ID 9403 negotiated) Date ID Title Status Usage 1998/02116 9601 General Conditions- Long Form Active MODIFIED AS ANNOTATED FOR APPLCABILITY TO LMUSS SUBCONTRACT TO NTI 960100 (16/02/98) General Conditions - Long Form

Public Works and Government Services Canada Ol Interpretaion 02 Powers of the Minister 03 Status of the Contractor 04 Amendments and Waivers O5 Conduct of the Work 06 Compliance with Applicable Laws 07 Specifications 08 Subcontracting 09 Replacement of Personnel 10 Assignment 11 Time of the Essence 12 Excusable Delay 13 Security and Protection of the Work 14 Payment 15 Interest on Ovcrdue Accounts 16 changes in Taxes and nudes 17 Discounts, Wastes and Spoilage 18 Inspection of the Work 19 Title 20 Warranty 21 Government Properly 22 Indemnity Against Third-Party Claims 23 Royalties and Infringement 24 Copyright 25 Suspension of the Work 26 Default by the Contractor 27 Termination for Convenience 28 Accounts and Audit 29 Notice

30 Members of the House of Commons 31 Conflict of Interest 32 No Bribe 33 Survival 34 Severability 35 Successors and Assigns 36 Entire Agreement 37 Certification - Contingency Fees This document reflects certain Canadian Government prime contract clauses that Lockheed Martin Undersea Systems (LMUSS), the first tier subcontractor for the Victoria Submarine Fire Control Modification (SFCM) Contract, is required to include in its subcontract with Northstar Technical Inc. (NTI). For clarification purposes,identification of the contracting parties in certain clauses is changed as set out below. a) The term "Contract" means "Subcontract" and the term "Contractor" means "NTI", b) The terms "Representative of the Minister", Authority", "Technical Authority" and Canada refers to LMUSS except were the context would require a different construction. c) The terms "Party", "Parties," or Contracting Parties" Subcontract. 9601 Ol (16/02/98) Interpretation 1. In the Contract, unless the context otherwise requires, "Canada", "Crown", "Her Majesty" or "the Government" means Her Majesty the Queen in right of Canada; "Work" means the whole of the activities. services, materials, equipment, software, matters and things reqnirnd to be done, delivered or performed by the Contractor in accordance with the terms of the Contract. "Contract" means the written agreement between the Parties, these general conditions, any Supplemental General Conditions specified in the written agreement, and every other document specified or referred to in any of them as forming part of the Contract, all as amended by agreement of the Parties from time to time; "Contracting Authority" means the person designated as such in the Contract, or by notice to the Contractor, to act as the representative of the Minister in the management of the Contract; "Contractor" means the person or entity whose name appears on the signature page of the written agreement and who is to supply goods or services to Canada under the Contract; "Contract Price" means the amount expressed in the Contract to be payable to the Contractor for the Work; "Cost" means cost determined in accordance with Contract Cost Principles DSS-MAS 1031-2 as revised to the date of the bid solicitation; "Government Property" means all materials, parts, components, specifications, equipment, software, articles and things supplied to the Contractor by or on behalf of Canada for the purposes of performing the Contract and anything acquired by the Contractor in any manner in connection with the Work the cost of which is paid by Canada under the Contract and, without restricting the generality of the foregoing, includes Government Issue as defined in the Defence Production Act, R.S.C 1985, c. D-1, Government Furnished Equipinent and Government Supplied Materiel; "Inspection Authority" means the person designated as such in the Contract, or by notice to the Contractor, to act as the representative of the minister for whose department or agency the Work is being carried out in matters

concerning the inspection of the Work, and for purposes of section 18 (Inspection of the Work) includes a Quality Assurance Authority if such an authority is mentioned in the Contract; "Minister" means the Minister of Public Works and Government Services and any other person duly authorized to act on behalf of that Minister; "Moral Rights" has the same meaning as in the Copyright Act, RES.C. 1985, c. C-42; "Party" means Canada or the Contractor or any other signatory to the Contract and "Parties" means all of them; "Specifications" means the functional or technical description of the Work set out or referred to in the Contract, including drawings, samples and models, and funher includes, except to the extent inconsistent with anything set out or referred to in the Contract, any such description set out or referred to in any brochure, product literature or other documentation furnished by the Contractor in relation to the Work or any part thereof; "Subcontract" includes a Contract let by any subcontractor at any tier for the performance or supply of a part of the Work, and includes a purchase referred to in paragraph 2 (a) of section 8 at any such tier, and the derivatives of the word shall be construed accordingly: "Technical Audiority" means the person designated in the Contract, or by notice to the Contractor, to act as the representative of the Minister for whose department or agency the Work is being carried out in matters concerning the technical aspects of the Work; 2. The headings used in these general conditions are inserted for convenience of reference only and shall not affect their interpretation. 3. If the Contract is a defence Contract within the meaning of the Defence Production Act, R.S.C. 1985. c. D-1, it is subject to that Act and shall be governed accordingly. 4. In the Contract, words importing the singular number include the plural and vice versa, and words importing the masculine gender include the feminine gender and the neuter. 9601 02 (04/01/94) Powers of the Minister Evcry right, remedy, power and discretion vested in or acquired by Canada or -the Minister under the Contract or by law shall be cumulative and nonexclusive. 9601 03 (04101194) Status of the Contractor The Contractor is engaged as an independent Contractor for the sole purpose of performing the Work. Neither the Contractor nor any of its personnel is engaged as an employee, servant or agent of Canada. The Contractor is responsible for all deductions and remittances required by law in relation to its employees including those required for Canada or Quebec Pension Plans, unemployment insurance, workers' compensation, or income tax. 9601 04 (04/01/94) Amendments and Waivers 1. No design change, modification to the Work, or amendment to the Contract shall be binding unless it is incorporated into the Contract by written amendment or design change memorandum executed by the authorized representatives of the Minister and of the Contractor and the Contractor and Subcontractor agree to and execute a subcontract modification which incorporates these changes. 2. While the Contractor may discuss any proposed changes or modifications to the scope of the Work with the Technical Authority, Canada shall not be liable for the cost of any such change or modification until it has been incorporated into the Contract in accordance with subsection 1. 3. No waiver shall be valid, binding or affect the rights of the Parties unless it is made in writing by) in the case of a waiver by Canada. the Contracting Authority and, in the case of a waiver by the Contractor, the authorized representative of the Contractor. 4. The waiver by a Party of a breach of any term or condition of the Contract shall not prevent the enforcement

of that term or condition by that Party in the case of a subsequent breach, and shall not be deemed or construed a waiver of any subsequent breach. 9601 05 (04/01/94) Conduct of the Work 1 The Contractor represents and warrants that: (a) it is competent to perform the Work; and (b) it has the necessary qualifications. including knowledge, skill and experience, to perform the Work, together with the ability to use those qualifications effectively for that purpose. 2. Except for Government Property specifically provided for in the Contract, the Contractor shall supply everything necessary for the performance of the Work, including all the resources, facilities, labour and supervision, managernent, services, equipment1 materials, drawings, technical data, technical assistance, engineering services, inspection and quality assurance procedures, and planning necessary to perform the Work. 3. The Contractor shall: (a) carry out the Work in a diligent and efficient manner, (b) apply as a minimum quality assurance tests, inspections and controls consistent with those in general usage in the trade and that are reasonably calculated to ensure the degree of quality required by the Contract; and (c) ensure that the Work: (1) is of proper quality, material and workmanship; (2) is in full conformity with the Specifications; and (3) meets all other requirements of the Contract. 4. The Contractor agrees to accept and be bound by the Inspection or Quality Assnrance Authority's interpretation of the Specifications, insofar as such an interpretation is not inconsistent with any other part of the Contract. 9601 08 (04/01/94) Subcontracting 1. Unless otherwise provided in the Contract, the Contractor shall obtain the consent of the Minister in writing prior to Subcontracting or permitting (he Subcontracting of any portion of the Work at any tier. The Minister shall not unreasonably withhold consent. 2. Notwithstanding subsection 1, the Contractor may, without prior consent of the Minister: (a) purchase "off-theEsbelf' items and software and such standard articles and materials as arc ordinarily produced by manufacturers in the normal course of business; (b) Subcontract for the provision or such incidental services as might ordinarily be subcontracted in performing the Work; (c) in addition to purchases and services referred to in paragraphs (a) and 0,) subcontract any part or parts of the Work to one or more subcontractors up to a total value in the aggregate of 40 percent of the Contract Price; and (d) permit its subcontractors at any tier to make purchases or subcontract as permitted in paragraphs (a), (b) and (c) A Subcontract at any tier may not be let without consent, under paragraph (b), (c) or (d), where the Subcontractor would obtain title to intellectual property developed as part of the Work.

3. In any Subcontract other than a Subcontract referred to in paragraph 2 (a), the Contractor shall, unless the Minister otherwise consents in writing, ensure that the subcontractor is bound by terrns and conditions compatible with and, in the opinion of the Minister, not less favourable to Canada than the terms and conditions of the Contract. Deviations in any Subcontract from the terms of the Contract, including any right of termination of the Contract, shall be entirely at the risk of the Contractor. 4. The Contractor is not obliged to seek consent to subcontracts speciflcaly authorized in the Contract. 5. Any consent to a Subcontract shall not relieve the Contractor from its obilgations under the Contract or be construed as authorizing any flability on the part of Canada or the Minister to a subcontractor. 9601 09 (04/01/94) Replacement of Personnel I. When specific persons have been named in the Contract as the persons who must perform the Work, the Contractor shall provide the services of the persons so named unless the Contractor is unable to do so for reasons beyond its control. 2. If at any time the Contractor is unable to provide the services of any specific person named in the Contract, it shall provide a replacement person with similar qualifications and experience. The Contractor shall, as soon as possible, give notice to the Minister of: (a) the reason for the removal of the named person from the Work; (b) the name, qualifications and experience of the proposed replacement person; and (c) proof that the person has the required security clearance granted by Canada, if applicable. 3. The Minister may order the removal from the Work of any such replacement person and the Contractor shall immediately remove the person from the Work and shall, in accordance with subsection 2, secure a farther replacement. 4. The fact that the Minister does not order the removal of a replacement person from the Work shall not relieve the Contractor from its responsibility to meet the requirements of the Contract. 960110 (04/01/94) Assignment 1. The Contract shaH not be assigned, in whole or in part, by the Contractor without the prior consent in writing of the Minister and any purported assignment made without that consent is void and of no effect. However, the subcontractor may reassign to any of its successor organizations as a result of re-organizations, consolidations, divestitures, mergers or any similar organization changes. 2. No assignment of the Contract shall relieve the Contractor from any obligation under the Contract or impose any liability upon Canada or the Minister1 unless otherwise agreed to in writing by the Minister. 960112 (04/01/94) Excusable Delay 1. A delay in the performance by the Contractor of any obligation under the Contract which is caused solely by an event that (a) was beyond the reasonable control of the Contractor, (b) could not reasonably have been foreseen, (c) could not reasonably have been prevented by means reasonably available to the Contractor, and (d) occurred without the fault or neglect of the contractor1 subsections 2, 3 and 4, constitute an "Excusable Delay" Contractor invokes this section by notice under subsection 4.

2. If any delay in the Contractor's performance of any obligation under the Contract is caused by a delay of a Subcontractor. such a delay may constitute an-Excusable Delay for the Contractor, but only if the delay of the Subcontractor meets the criteria set out in this section for an Excusable Delay by the Contractor and only to the extent that the delay has not been contributed to by the Contractor. 3. Notwithstanding subsection I, any delay caused by lack of financial resources of the Contractor or an event that is a round for termination provided for in subsection 26(2) (Default by the Contractor). or any delay in the Contractor fulfilling an obligation to deliver a bond, guarantee, letter of credit or other security relating to performance or the payment of money, shall not qualify as an Excusable Delay 4. The Contractor shall not benefit from an Excusable Delay unless the Contractor has: (a) used its reasonable efforts to niinimize the delay and recover lost time; (b) advised the Minister of the occunence of the delay or of the likelihood of a delay occurring as soon as the Contractor has become aware of it; (c) within 15 working days of the beginning of a delay or of the likelihood of a delay coming to the attention of the Contractor. advised the Minister of the full facts or matters giving rise to the delay, and provided to the Minister for approval (which approval shall not be unreasonably withheld) a clear "work-around" plan indicating in detail the steps that the Contractor proposes to take in order to minimize the impact of the event causing the delay; this plan shall include alternative sources of materials and labour, if the event causing the delay involves the supply of them; and (d) carried out the work-around plan approved by the Minister. 5. In the event of an Excusable Delay, any delivery date or other date that is directly affected shall be postponed for a reasonable time not to exceed the duration of the Excusable DCIBy. The Parties shall, negotiate and amend all affected areas of the Contract, as appropriate, to reflect any such change in dates. 6. Notwithstanding subsection 5, the Minister may, after an Excusable Delay has continued for 30 days or more, in the Minister's absolute discretion terminate the Contract. In such a case, the Panics agree that neither will make any claim against the other for damages, costs, expected profits or any other loss arising out of the termination or the event that gave rise to the Excusable Delay. The Contractor agrees to repay immediately to Canada the portion of any advance payment that is unliquidated at the date of the termination. Subsections 26(4), (5) and (6) (Default by the Contractor) apply in the event of a termination... under this subsection. 7. Except to the extent that Canada is responsible for the delay for reasons of failure to meet an obligation under the Contract, Canada shall uot be iabie for any costs or charges of any nature incurred by the Contractor or any of its Subcontractors or agents as a result of an Excusable Delay. 960113 (16/02198) Security and Protection of the Work 1. The Contractor shall keep confidential all information provided to the Contractor by or on behalf of Canada in connection with the Work and all information developed by the Contractor as part of the Work title to which vests in Canada under the Contract, and shall not disclose any such information to any person without the written pennission of the Minister, except that the Contractor may disclose to a Subcontractor authorized in accordance with section 8 (Subcontracting) information necessary to the performance of the Subcontract. 2. Subject to the Access to Information Act, R.S.C. 1985, c. A-I and to any right of Canada under this Contract, Canada shall not release or disclose outside the Government of Canada any information delivered to Canada under the Contract that is proprietary to the Contractor or a Subcontractor. The Prime Contractor and the Canadian Government shall abide by all US Security and export regulations. 3. The obligations of the Parties set out in this section do not apply to any information where the same information: (a) is publicly available from a source other than the other Party; or

(b) is or becomes known to a Party from a source other than the other Party, except any source that is known to be under an obli8ation to the other Party not to disclose the information, or (c) is developed by a Party without use of the information of the other Patty. 4. wherever practical, the Contractor shall mark or identify any proprietary information delivered to Canada under the Contract as "Property of (Contractor's name), permitted Oovcrnrncnt uses derined under Dcp&tmcnt of Public Works and Government Services EWGSC) Contract No. (fill in Contract number)tt, and Canada shall not be liable for any unauthorized use or disclosure of information that conid have been so marked or Identified and was not. 5. When the Contract, the Work, or any information referred to in subsection 1 is idenfified as TOP SECRET, SECRET, CONFIDENTrAL, or PROThCTED by Canada, the Contractor shall at all times take all measures reasonably necessary for the safeguarding of the material so identified, including those set out in the PWOSC Industrial Security Manual and its supplements and any other instructions issued by the Minister. 6. Without limiting the generality of subsections I and 2, when the Contract, the Work. or any information referred to in subsection I is identified as TOP SECRET, SECRET. CONFIDENTIAL", or PROTECThD by Canada, the Minister shall be entitled to inspect the Contractor's premises and the premises of a Subcontractor at any tier for security purposes at any time during the term of the Contract, and the Contractor shall comply with, and ensure that any such subcontractor complies with, all written instructions issued by the Minister dealing with the material so identified, including any requirement that employees of the Contractor or of any such subcontractor execute and deliver declarations relating to reliability screenings, security clearances and other procedures. Notwithstanding the above, subcontractor shall abide by US Security regulations and. as such, passage of classified data shall be on a government to government basis. 7. Any proposed change in the security requirements after the effective date of the Contract that would involve a significant increase in cost to the Contractor shall require an amendment to the Contract under the provisions of section 4 (Arnendritents and Waivers). 9601 18 (04/01/94) bispection of the Work 1. The Work and any and all parts thereof shall be subject to such inspection as the Technical or Inspection Authority determines to be appropriate, consistent with the relevant provisions of the Contract, if any, prior to acceptance by Canada. The Contracting Authority and the Technical or Inspection Authority) or their representatives, shall have access to the Work at any time during working hours where any part of the Work is being carried out and may make examinations and such tests of the Work as they may think fit. Should the Work or any part thereof not be in accordance with the requirements of the Contract, the Technical or Inspection Authority shall have the right to reject the Work and require its correction or replacement at the Contractor's expense. The Technical or Inspection Authority. as the case may be, shall inform the Contractor of the reasons for any such rejection. 2. The Contractor shall provide reasonable assistance and facilities, test pieces. samples and documentation that the Technical or Inspection Authority may reasonably require for the carrying out of any such inspection, and the Contractor shall forward such test pieces and examples to such person or location as the Technical, Inspection or (DND) Contracting Authority may direct. Inspection by the Technical or The Inspection Authority shall not relieve the Contractor from responsibility to meet the requirements of the Contract 3. No part of the Work shall be submitted for acceptance or delivery until it has been inspected and approved by the Contractor and, wherever practicabe, marked with an approval stamp satisfactory to the Technical or Inspection Authority. The Contractor shall keep accurate and complete inspection records which shall, upon request, be made available to the Technical or Inspection Authority, who may make copies thereof and take extracts therefrom during the performance of the Contract and for any period of time thereafter provided for in the Contract. 960119 (04(01/94) Title 1. Except as otherwise provided in the Contract including the intellectual prope fly provisions, and except as provided in subsection 2, tide to the Work or any part thereof shall vest in Canada upon delivery and acceptance

thereof by or on behalf of Canada. 2. Except as otherwise provided in the intellectual property provisions of the Contract, upon any payment being made to the Contractor for or on account of materials, parts. work-in-process or finished work, either by way of progress payments or accountable advances or otherwise, title in and to all materials, parts, work-in-process and finished work so paid for shall vest in and remain in Canada unless already so vested under any other provision of the Contract. 3. Notwithstanding any vesting of title referred to in this section and except as otherwise provided in the Contract, the risk of loss or damage to the materials, parts, work-in-process or finished work or part thereof so vested shall remain with the Contractor until their delivery to Canada in accordance with the Contract. For purposes of this dause, all deliveries, including items delivered under the subcontract and items that 'nay later be returned to the Subcontractor for repair or replacement under warranty are FOB at the Subcontractor's facility. The Contractor shall he liable for any loss or damage to any part of the Work caused by the Contractor or any subcontractor after such delivery. 4. Any vcsting of title referred to in subsection 2 shall not constitute acceptance by Canada of the materials, parts. work-in- process or finished work, and shall not relieve the Contractor of its obligation to perform the Work in accordance with the Contract. 5. where tide to any materials, pans, workEin-process or finished work becomes vested in Canada, the Contractor shall, upon the Minister's request, establish to the Minister's satisfaction that the tide is free and clear or all claims. liens, attachments, charges or encumbrances and shall execute such conveyances thereof and other instruments necessary to perfect that title as the Minister may request. 6. if the Contract Is a defence Contract within the meaning of the Defencc Production Act, R.S.C. 1985. c. D-l, title to the Work or to any materials, parts, work-in-process or finished work shall vest in Canada free and clear of all claims, lions, attachments, charges or encumbrances, and the Minister shall be entitled at any time to remove, sell or dispose of it or any part of it in accordance with section 20 of that Act. 9601 20 (O4E0lI94) Warranty 1. Notwithstanding inspection and acceptance of the Work by or an behalf of Canada and without restricting any other provision of the Contract or any condition, warranty or provision implied or imposed by law, the Contractor warrants that, for a period of 12 months from the date of deivery, or if acceptance takes place on a later date, the date of acceptance, or for such other period as may be specified in the written agreement between the Parties, the Work shall be free from all defects in design1 materials or workmanship, and shall conform with the requirements of the Contract, provided that with respect to Government Property, the Contractor's warranty shall extend only to its proper incorporation into the Work. 2. In the event of a defect or non-conformance in any part of the Work during the warranty period defined in subsections I and 5, the Contractor, at the request of the Minister to do so, shall as soon as possible repair, replace or otherwise make good at its own option and expense the part of the Work found to be defective or not in conformance with the requirements of the Contract. 3. The Work or any part thereof found to be defective or non-conforming shall be returned to the Contractors plant for replacement. repair or making good; provided that, when in the opinion of the Minister it is not expedient to remove the Work from its location, the Contractor shall carry out any necessary repair or making good of the Work at that location, and shall he paid the fair and reasonable cost (including reasonable travelling and living expenses) incurred in so doin8, with no allowance therein by way of profit, less an amount equal to the cost of rectifying the defect or non-conformance at the Contractor's plant. 4. Canada shall pay the transportation cost associated with returning any work or part thereof to the Contractor's plant pursuant to subsection 3, and die Contractor shall pay the transportation cost associated with forwarding the replacement or returning the Work or part thereof when rectified to the delivery point specified in the Contract. or such lesser cost as may be required to transport the Work or part thereof to another location directed by the Technical Authority. 5. The warranty period act out in subsection 1 shall be extended by the duration of any period or periods during the life of the warranty, including any such extension, in which the Work is unavailable for use or cannot be used

because of a defect or non conformance referred to in this section, less the duration of any delay by Canada in informing the Contractor or the defect or nonconformance or in returning the Work or part thereof to the ContractorE plant. Upon returning the Work or part thereof to Canada, the Contractor shall advise the Minister in writing of the warranty period remaining, including any such extension. 6. The warranties set out in subsection 1 shall apply to any part of the Work repaired replaced or otherwise made good pursuant to subsection 2, for the greater of: (a) warranty period remaining under subsection 5.; or, (b) 90 days or such other period as may be specified for that purpose in the written agreement between the parties. MI of the provisions of subsections 2 to 6 of this section incusIve apply, with such minimum changes as the context may require, to any such part of the Work that is found during that period to be defective or not in conformance with the Contract. 9601 21 (04101194) Government Property I. Unless otherwise provided in the Contract, all Government Property shall be used by the Contractor solely for the purpose of the Contract and shall remain the property of Canada, and the Contractor shall maintain adequate accounting records of all Government Property, and, whenever feasible, shall mark the same as being the property of Canada. 2. The Contractor shall take reasonable and proper care of all Government Property while the same is in, on, or about the plant and premises of the Contractor or otherwise in its possession or subject to its control, and shall be responsible for any loss or damage resulting from its failure to do so other than toss or damage caused by ordinary wear and tear. 3. All Government Property. except such as is installed or incorporated into the Work, shall, unless otherwise specifically provided in the Contract. be returned to Canada on demand. 4. All scrap and all waste materials, articles or things that are Government Property shall, unless otherwise provided in the Contract, remain the property of Canada and shall be disposed of only as directed by the Minister.. 5. At the time of completion of the Contract, and if requested by the Contracting Authority, the Contractor shall provide an inventory of all Government Property relating to the Contract to both the Contracting Authority and the Technical Authority. Th8 provisions of the Loan Agreement between Canada and the Subcontractor shall, except as agrecd herein, 8ovem the requirements of the loan agreement. 9601 22 (04101/94) Indemnity Against Third-party Claims 1. The Contractor shall indemnify and save harmless Canada, the Minister and their servants and agents from and against any damages, costs or expenses or any claim, action1 suit or other proceeding which they or any of them may at any time incur or suffer as a result of or arising out of (a) any injury to persons (including injuries resulting in death) or loss of or damage to property of others which may be or be alleged to be caused by or suffered as a result of the performance of the Work or any part thereof, except that Canada and the Minister shall not claim indemnity under this section to the extent that the injury, loss or' damage has been caused by Canada, and (b) any liens, attachments, charges or other encumbrances or claims upon respect of any materials, parts, workin-process or finished work furnished in respect of which any payment has been made by, Canada. 2. The Minister shall give notice to the Contractor of any claim, action, suit or proceeding referred to in subsection I and the Contractor shall. to the extent requested by the Anorney General of Canada, at its own

expense participate in or conduct the defence of any such claim, action, suit or proceeding and any negotiations for settlement of the same, but the Contractor shall not be liable to indemnify Canada for payment of any settlement UnleSS it has consented to the setfiement. 9601 23 (04/01/94) Royalties and Infringement 1. In this section, "Royalties" includes (a) license fees and all other payments analogous to royalties for. and also claims for damages based upon, the use or infringement of any patent, registered industrial design, trade mark, copyrighted work, trade secret, or other intellectual property right, and (b) any costs or expenses incurred as a result of the exercise by any person of Moral Rights. 2 Subject to subsection 4, the Contractor shall indemnify and save harmless Canada, the Minister and their servants and agents against any claim, action, suit or other proceeding for the payment of Royalties, that results from or is alleged to result from the carrying out of the Contract or the use or disposal by Canada of anything furnished by the Contractor under the Contract. 3 Canada shall indemnify and save harmless the Contractor and its servants and agents against any claim, action, suit or other proceeding for the payment of Royalties, that results from or is alleged to result from (a) the use by the Contractor in perforating the Contract of equipment, Specifications or other information not prepared by the Contractor and supplied to the Contractor by or on behalf of Canada, or (b)the Contractor complying with production drawings not prepared by the Contractor and supplied by or on behalf of Canada which direct an alteration of or modification to the Work, provided that the Contractor notifies the Minister immediately of any such claim, action, suit or other proceeding, but Canada shall not be liable to indemnify or save harmless the Contractor for payment of any settlement unless Canada has consented to the settlement. 4. The Minister shall give notice to the Contractor of any claim, action, suit or proceeding referred to in subsection 2 and the Contractor shall, to the extent requested by the Attorney General of Canada, at its own expense participate in or conduct the defence of any such claim1 action, suit or proceeding and any negotiations for settlement of the same, but the Contractor shall not be liable to indemnify or save harmless Canada for payment of any seulement unless it has consented to the settlement. 5. The Contractor shall notify the Minister of all Royalties which it or any of its subcontractors will or may be obligated to pay or propose to pay in respect of carrying out the Contract, and the basis thereof, and the parties to whom the same are payable, and shall promptly advise the Minister of any and all claims which would or might result in further or different payments by way of Royalties being made by the Contractor or any of its subcontractors. 6. Where and to the extent that the Minister so directs, the Contractor shall not pay and shall direct its subcontractors not to pay any Royalties in respect of the carrying out of the Contract. 7. After the giving of any direction provided for in subsection 6, and subject to compliance by the Contractor with the foregoing provisions, Canada shall indemnify the Contractor and its subcontractors from and against all claims, actions, suits or proceedings for payment of such Royalties as are covered by the direction. 8. The Contractor shall not be entitled to any' payment in respect of any Royalties included in the Contract Price to which the indemnity provided in subsection 7 applies. 9601 25 (04101194) Suspension of the Work I. The Minister may at any timeE by written notice, order the Contractor to suspend or stop all or part of the Work under the Contract for a period of up to 180 days. The Contractor shall irrirnediately comply with any such order in the manner that minimizes (he cost of so doing. While such an order is in effect, the Contractor shall not remove any part of the Work from any premises without the prior written consent of the Contracting Authority. At any time prior to the expiration of the 180 days, the Minister shall either rescind the order or

terminate the Contract, in whole or in part, under section 26 (Default by the Contractor) or section 27 (Termination for Convenience). 2. When an order is made under subsection 1, unless the Minister terminates the Contract by reason of default by the Contractor or the Contractor abandons the Contract, the Contractor shall be entided to be paid its additional costs incurred as a result of the suspension plus a fair and reasonable profit thereon. 3. when an order is made under subsection 1 and is rescinded: (a) the Contractor shall as soon as practicable resume work in accordance with the Contract; (b) if the suspension has affected the Contractor's ability to meet any delivery date under the Contract, the date for the performance of that part of the Work affected by the suspension shall be extended for a period equal to the period of suspension plus a period, if any, which in the opinion of the Minister following consultation with the Contractor is reasonably necessary for the Contractor resume the Work; and (c) subject to section 4 (Amendments and Waivers), an adjustment shall be made as necessary to affected terms and conditions of the Contract. 9601 26 (04/01/94) Default by the Contractor 1. Where the Contractor is in default in carrying out any of its obligations under the Contract, the Minister may, upon giving written notice to the Contractor, terrainate for default the whole or any pan of the Contract, either immediately, or at the expiration of a cure period specified in the notice if the Contractor has not cured the default to the satisfaction of the Minister within that cure period. 2. Where the Contractor becomes bankrupt or insolvent, makes an assignment for the benefit of creditors, or takes the beneflt of any statute rclating to bankrupt or insolvent debtors, or where a receiver is appointed under a debt instrument or a receiving order is made against the Contractor, or an order is made or a resolution passed for the winding up of the Contractor, the Minister may, to the extent permined by the laws of Canada, upon giving notice to the Contractor, immediately terminate for default the whole or any part of the Contract. 3. Upon the giving of a notice provided for in subsection 1 or 2, the Contractor shall have no claim for further payment other than as provided in this section, but shall be liable to Canada for any amounts, including milestone payments, paid by Canada and for all losses and damages which may be suffered by Canada by reason of the default or occtrrrence upon which the notice was based, including any increase in the cost incurred by Canada in procuring the Work from another source. The Contractor agrees to repay immediately to Canada the portion of any advance payment that is unliquidated at the date of the termination. Nothing in this section affects any obligation of Canada under the law to mitigate damages. 4. Upon termination of the Contract under this section, the Minister may require the Contractor to deliver to Canada, in the manner and to the extent directed by the Minister, any completed parts of the Work which have not been delivered and accepted prior to the termination and any materials, parts, plant. equipment or work-inprocess which the Contractor has acquired or specifically in the fulfilment of the Contract. 5. Subject to the deduction of any claim that Canada may have against the Contractor arising under the Contract or out of the termination, Canada shall pay or credit to the Contractor the value, determined on the basis of the Contract Price including the proportionate part of the Contractor's profit or fee included in the Contract Price, of all completed parts of the Work delivered to Canada pursuant to a direction under subsection 4 and accepted by Canada, and shall pay or credit to the Contractor the cost to the Contractor that the Minister considers reasonable in respect of all materials, parts, plant. equipment or work-in- process delivered to Canada pursuant to a direction under subsection 4 and accepted by Canada, but in no event shall the aggregate of the amounts paid by Canada under the Contract to the date of termination and any arnounts payable pursuant to this subsection exceed the Contract Price. 6. Title to all materials, parts, plant, equipment, work-in- process and finished work in respect of which payment is made to the Contractor shall, upon such payment being made, pass to and vest in Canada unless already so vested under any other provision of the Contract, and such materials, parts. plant, equipment, work4n-process and finished work shall be delivered according to the order of the Minister, but Canada will not accept and will

not pay for materials, pans, plant, equipment or work-in- process that would not have been required to perform the Work or that exceed what would have been required to perform the Work. 7. Where. subsequent to issuance of a notice pursuant to subsection 1, the Minister is satisfied that grounds did not exist for a termination under this section, the notice shall be deemed a notice of termination for convenience issued under subsection 27(1) Crermination for Convenience). 9601 27 c04/01194) Termination for Convenience 1. Notwithstanding anything contained in the Contract, the Minister may, at any time prior to the completion of the Work, by giving notice to the Contractor (in this section sometimes referred to as a "termination notice"), terminate the Contract as regards all or any part of the Work not completed. Upon a termination notice being given, the Contractor shall cease work (including the manufacture and procuring of materials for the fulfilment of the Contract) in accordance with and to the extent specified in the notice, but shall proceed to complete such part or parts of the Work as are not affected by the termination notice. The Minister may, at any time or from time to time, give one or more additional termination notices with respect to any or all parts of the Work not terminated by any previous termination notice. 2. In the event of a termination notice being given pursuant to subsection 1, the Contractor shall be entitled to be paid, to the extent that costs have been reasonably and properly incurred for purposes of performing the Contract and to the extent that the Contractor has not already been so paid or reimbursed by including the unliquidated portion of any advance payment: (a) on the basis of the Contract Price, for all completed work that is inspected and accepted in accordance with the Contract1 whether completed before, or after and compliance with the instructions contained in, the termination notice; (b) the cost to the Contractor plus a fair and reasonable profit thereon, for all work terminated by the termination notice before completion, the cost to the Contractor being determined in accordance with the terms of the Contract and with Subcontract cost Principics customarily used in US Government Contracts; (c) the amount of any capital expenditures actually incurred only if they were specifically authorized under the Contract or approved in writing by the Minister for the purpose of the Contract, less any depreciation in respect thereof already taken into account in determining cost, to the extent that the capital expenditures are properly apportionable to the performance of the Contract; (d) if the Contract is exclusively for the making of capital expenditures in respect of additional equipment or plant additions, in lieu of the amounts described in paragraphs (a) to (c) inclusive, the reasonable and proper cost to the Contractor of: (1) all additional equipment that, prior to the giving of the termination notice, has been purchased. acquired or manufactured by the Contnctor or contracted for and for which the Contractor is obligated to make payment, and (2) all additional equipment in process of manufacture by the ContractorEat the date of giving of the termination notice and all work in connection with the construction of the plant additions to that date, including the cost of materials and parts Contracted for by the Contractor for the purpose of such manufacture or construction and for which the Contractor is obligated to make payment; and (e) all costs of and incidental to the termination of the Work or part thereof, including the cost of cancellation of obligations incurred by the Contractor with respect to the terminated Work or part thereof, the cost of and incidental to the taking of an inventory of materials, components, work-in- process and finished work on hand related to the Contract at the date of the termination, and the cost of preparation of necessary accounts and statements with respect to work performed to the effective date of the termination and commitments made by the Contractor with respect to the terminated portions of the Work; but not including the cost of severance payments or damages to employees whose services are no longer required by reason of the termination except wages that the Contractor is obligated by statute to pay them and except for reasonable severance payments or damages paid to employees hired to perform the Contract whose hiring was expressly required by the Contract or approved in writing by the Minister for the purpose of tne Contract.

3. In paragraphs 2(c) and (d), 1'capital expenditures" includes the entry into leases of real property and equipment. 4. Tbe Minister may reduce the payment in respect of any of the Work to the extent that, upon inspection, it is deficient in meeting the requirements of the Contract. 5. Notwithstanding anything in subsection 2, the total of the amounts to which the Contractor is entitled under paragraphs 2 (a) to (d) inclusive, together with any amounts paid or due or becoming due to the Contractor under other provisions of the Contract, shall not exceed the Contract Price or the portion thereof that is applicable to the pan of the Work that is terminated, and shall not exceed the proportion of the price quoted by the Contractor for all of the Work that is reasonably attributable to the proportion of the Work performed to the effective date of the termination. 6. In the procuring of materials and parts required for the performance of the Contract and in the subcontracting of any of the Work, the Contractor shall, unless otherwise authorized by the Minister, place purchase orders and subcontracts on terms that will enable the Contractor to terminate the same upon terms and conditions similar in effect to those provided in this section, and generally the Contractor shall co-operate with the Minister and do everything reasonably within its power at all times to minimize the amount of Canad?s obligations in the event of a termination under this section. 7. Tide to all materials, parts, plant, equipment, work-in- process and finished work in respect of which payment is made to the Contractor shall, upon such payment being made, pass to and vest in Canada unless already so vested under any other provision of the Contract, and such materials1 parts, plant, equipment, work-in-process and finished w9rk shall be delivered according to the order of the Minister, but Canada will not accept and will not pay for materials, parts, plant, equipment or work-in-proceSs that would not have heen required to perform the Work or that exceed what would have been required to perform the Work. 8. The Contractor shall have no claim for damages, compensation. loss of profit, allowance or otherwise by reason of, or directly or indirectly arising out of, any action taken or termination notice given by the Minister under this section. except to the extent that this section expressly provides. 9601 28 (04/01/94) Accounts and Audit 1. The Contractor shall keep proper accounts and records of the cost to the Contractor of the Work and of all expenditures or commitments made by the Contractor in connection therewith, and shall keep all invoices, receipts and vouchers relating thereto. The Contractor shall not, without the prior written consent of the Minister, dispose of any such accounts, records, invoices, receipts or vouchers until the expiration of 6 years after final payment under this Contract, or until the settlement of all outstanding claims and disputes. whichever is later. 2. All such accounts and records as well as any invoiCes, receipts and vouchers shall at all times during the retention period referred to in subsection 1 be open to audit, inspection and examination by the authorized representatives of the Minister, who may make copies and take extracts thereof The Contractor shall provide facilities for such audits and inspections and shall furnish all such information, within reason, as the representativeS of the Minister may from time to time require with respect to such accounts, records, invoices, receipts and vouchers. 3, Notwithstanding the above, detailed Subcontract proposed pricing data which may include competition sensitive rates and factors will not be audited by Canada, if this level of audit is required, Canada will arrange for assist audit services direcfly with DCAA and the Subcontractor shall provide the detailed pricing data to US Defense Contract Audit Agency ECAA) for use in their independent audit of Subcontractor's proposal to Canada. DCAA audits shall be to verify that the rates and factors proposed on US Government contracts were applied to Subcontractor's proposal for corresponding cost elements. Only Canada's contracting officer may receive DCAA audit findings. Pricing data. including rates received shall not be used for any purpose other than to evaluate Subcontractor's proposal nor will it be disclosed to any other Party or individual.. 9601 29 (04101/94) Notice Any notice shall he in writing and may be delivered by hand or by courier, by registered mail, or by facsimile or other electronic means that provides a paper record of the text of the notice, addressed to the Party for whom it

is intended at the address in the Contract or at the last address of which the sender has received notice in accordance with this section. Any notice shall be deemed to be effective on the day it is received at that address. 9601 30 (04/01/94) Members of the House of Commons No member of the House of Commons shall be admitted to any share or part of the Contract or to any benefit arising from the Contract. 9601 31 (01105/96) Conflict of Interest The Contractor agrees that it is a term of the Contract that no person who is not in compliance with the provisions of the Conflict of Interest and Post-Employment Code for Public Office Holders or the Conflict of Interest and Post-Employment Code for the Public Service, shall derive any direct benefit from this Contract. 9601 32 (01106194) No Bribe The Contractor represents and covenants that no bribe, gift, benefit, or other inducement has been or will be paid, given1 promised or offered directly or indirectly to any official or employee of Canada or to a member of the family of such a person, with a view to influencing the entry into the Contract or the administration of the Contract. 9601 33 (04/01/94) Survival All of the Contractor's obligations of confidentiality and all of the Contractor's representationS and warranties set out in the Contract as well as the provisions concerning specificafions, warranty, Government Propefly. indemnity against third-party claims. royalties and infringement, intellectual property rights and accounts and audit shall survive the expiry of the Contract or the termination of the Contract for default, for convenience, pursuant to subsection 12(6) (Excusable Delay), or by mutual consent, as shall any other provision of the Contract which, by the nature of the rights or obligations set out therein, might reasonably be expected to be intended to survive. 9601 34 (04/01/94) Severability if any provision of the Contract is declared by a court of competent jurisdiction to be invalid, illegal or unenforceable, such provision shall be severed from the Contract and all other provisions of the Contract shall remain in full force and effect. 9601 35 (04/01/94) Successors and Assigns The Contract shall enure to the benefit of, and shall be binding upon, the successors and permitted assignees of Canada and of the Contractor. 9601 36 (04/01/94) Entire Agreement The Contract constitutes the entire and sole agreement between the parties with respect to the subject matter of the Contract and supersedes all previous negotiations. communications and other agreementS, whether written or oral, relating to it, unless they are incorporated by reference in the Contract. There are no termS, covenants, representations, statements or conditions binding on the parties other than those contained in the Contract. 9601 37 (06/06/94) Certification - Contingency Fees 1. The Contractor certifies that it has not directly or indirectly paid or agreed to pay and covenants that it will not directly or indirectly pay a contingency fee for the solicitation, negotiation or obtaining of this Contract to any person other than an employee acting in the normal course of the employee's duties. 2. All accounts and records pertaining to payments of fees or other compensation for the solicitation, obtaining or negotiation of the Contract shall be subject to the Accounts and Audit provisions of the Contract. 3. if the Contractor certifies falsely under this section or is in default of the obligations contained therein, the Minister may either terminate this Contract for default in accordance with the termination for default provisions of the Contract or recover from the Contractor by way of reduction to the Contract Price or otherwise the toll

amount of the contingency fee. 4. In this section: "contingency fee" means any payment or other compensation that is contingent upon or is calculated upon the basis of a degree of success in soliciting or obtaining a government Contract or negotiating the whole or any part of its tcnns; "employee" means a person with whom the Contractor has an employee to employee relationship; 'tperson" includes an individual or group of individuals, a corporation. a partnership- an organization and an association and, without restricting the generality of the foregoing, includes any individual who is required to file a return with the registrar pursuant to section 5 of the Lobbyist Registration Act R.S. 1985 c.44 (4th Supplement) as the same may he amended from time to time. SUPPLEMENTAL GENERAL CONDTIONS - CANADIAN GOVERNMENT CLAUSE FLOWDOWNS A.4 Defence Contract This subcontract is in support of a Canadian defence contract within the meaning of the Defence Production Act and shall be read accordingly. A.6 Title to Property This subcontract in support of a Canadian defence Contract within the meaning of the Defence Production Act. In accordance with the provisions of section 20 of the ActE title to any Government Issue (as defined in that Act) furnished or made available to the Contractor, or obtained or constructed by the Contractor with money proved by Canada, remalns vested or vests in Canada free and clear of all claims, liens, charges and encumbrances and notwithstanding any law in force in any province of any territory of Canada but subject to the provisions of the Contract. Canada is entitled at any time to remove, sell or dispose of the Government Issue. B.1 1 Government Furnished Equipment a. "Government Furnished Equipment" or "OFE" means any equipment, other than Government Supplied Material (OSM), which is the property of tbe Government and which the Government has agreed under the Contract to deliver or have delivered, or make available or have made available, to the Contractor for the Contractor's use in performing the Work as described in the Statement Of Work. b. Conditions for the provision of Government Furnished Equipment to the Contractor include the following: 1, that the Contractor shall have submitted a request, in writing to the Contracting Authority, ii, that the Department of National Defence shall have agreed to provide the requested OFF, and iii. that the Contractor shall have submitted properly certified loan agreements(s). c. GEE will be loaned to the Contractor using, and upon the terms and conditions set out in form DSS-MAS 7118' The Contractor shall prepare and sign the loan agreement form and forward the original and four (4) copies to the Contracting Authority and two copies to the local CFQAR representative. d. The Contractor shall be responsible for packaging, packing and niarking of GEE when it is returned to the Government. e. DND loaned equipment shall be properly maintained by the Contractor in accordance with terms detailed in the General Conditions and in the Loan Agreement (Form DSS 7118). The exercise of such responsibility is subject to verification by the Quality Assurance Representative (QAR) who will also authorize. as necessary, repair andlor modifications to such equipment as a charge to the Contract. B. 14 special Prodnetion Tooling and Test Equipment

1. The Contractor shall provide the production tooling and test equipment required to perform the Work under this contract. The Coniractor shall submit a list of the tooling and test equipment that is to be procured or manufactured for this contract within 90 days from the Contract award date. 2. The Contract shall take reasonable and proper care of the tooling. During the course of the contract, maintenance and replacement shall be at the Contractor's expense. 3. Title to the tooling and any replacement shall vest in Canada and shall remain so vested at all times. 4. The Contractor shall give written notice to Production Assets Management Services, Aerospace. Marine and Electronics Systems Sector, Department of Public Works and Government Services, Ottawa, Ontario, IClA 055 at least sixty (60) days before the date when the tooling will no longer be required for use in the performance of any contract with Canad& if the tooling at no direct cost to Canada for a period of ninety (90) days from the contract completion date. if inhibiting, packaging and crating charges are Involved, then these will be the subject of a new contract with this Department. 5. Each item of production tooling shall be identified as Canada property by affixing a plate) or by etching or stamping. Such plate or marking shall include reference to the Department of Public Works and Government Services File Number and Contract Number as well as tool number to identify the individual item. 6. As a prerequisite to payment for the tooling, the Contractor shall submit an inventory of the tooling verified by Statutory Declaration made before a Notary Pubic or a Commissioner for Authority, which shall contain the following particulars: (a) the Contractor's name; (b) date and reference numbers of the contract; (c) supplies or components in the manufacture of which the tooling is used; quantity, tool or item number (reference subsection 5 above), production part number to which the tool relates and a brief description of the tool; and, (d) price of each item of production tooling, where available, and the total amount. 7. The original two (2) copies of the tooling inventory (verified as provided above) are to be subrnitted tot he Production Assets Management Services, Aerospace. Marine and Electronics Systems Sector, Department of Public Works and Government Services. Ottawa, Ontario, KIA 0SF, and one (I) copy is to be forwarded to the Contracting Authority. D.3 Dangerous goods/Hazardous Products 1. Dangerous goods/Hazardous Products - material which is classified as dangerous/hazardous shall be marked: (a) shipping container- in accordance with the Transportation of Dangerous Goods Act: and (b) Immediate product container in accordance with the Hazardous Products Act. 2. Bilingual Material Safety Data Sheets (2 copies) indicating the NATO Stock Number shall be provided as follows (a) one (1) copy to be enclosed with the shipment, and (b) one (1) copy to be mailed to: National Defense Headquarters Mgen George R. Pearks Building 101 Colonel By Drive Ottawa, Ontario KIA 0K2 Attn.: D Sup 24-6 3. It is the responsibility of the Contractor to ensure proper labeling and packaging in the supply and shipping or hazardous and dangerous goods to the Government of Canada. 4. All merchandise labels are to be clearly marked with the percentage of volume that is a hazardous item. Failure to do so will result in the Contractor being held responsible for damages caused in the movement of goods by

government vehicles or government personnel. 5 Canada shall not be held liable for any damages caused by improper packaging labelling or carriage of goods/products. 6. Suppliers must ensure they adhere to all levels of regulations regarding dangerous goodslhazardous products as set forth by federal, provincial and municipal laws, by-laws and acts of Parliament. 7. suppliers of dangerous goods must contact the consignee (i.e. Supply Depot Traffic Section) at least 48 hours prior to shipping in order to schedule a receiving time. F.1 International Sanctions 1. Persons and companies in Canada are bound by economic sanctions imposed by Canada be regulafions passed pursuant to the United Nations Act, R.S.C 1985. C. U-2, the special Economic Measures Act, SEC. 1992, c. 17, or the Export and Import Permits Act, R.S.C. 1985. c EEl9. As a result, the Government of Canada cannot accept delivery of goods or services that originate, either directly or indirectly. from the countries subject to economic sanctions At the time of contract award the following regulation implernent economic sanctions: (a) United Nations Iraq Regulations; (b) United Nations Libya Regulations; (c) United Nations Federal Republic of Yugoslavia (Serbia and Montenegro) Regulations. 2. It is a condition of this Contract that the Contractor not supply to the Government of Canada any &oods or services which are subject to economic sanctions as described in paragraph 1. above. 3. During the performance of the Contract should the additional of a country to the list of sanctioned countries or the additions of a good or service to the list of sanctioned goods or services cause an impossibility of performance for the Contractor, the situation will be treated by the Parties as a force majeure. The contractor shall forthwith inform Canada of the situation; the procedures applicable to force majeure shall then apply. F.2 Y2O0O Warranty - Goods I. The Contractor warrants that: a) all hardware,, software andlor firmware products delivered individually, or b) hardware. software and firmware products delivered in combination as an integrated system under this Contract, as the case may be, shall meet the contractual requirement so as to accurately and automatically process any and all date and date-related data including, but not limited to calculating, comparing, and sequencing and that such date-related processing will take into consideration leap year calculations when used in accordance with the documentation provided by the Contractor and accepted by Canada. 2. To that end, the contractor also warrants that date-related processing will not in any way, prevent hardware, software or firmware from conforming to the requirement of the contract prior to, during, or after the year 2000. Canada may; at no additional cost, require the Contractor, at time of acceptance, to demonstrate compliance andlor compliance techniques and test procedures it intends to follow in order to comply with all of the obligations contained herein. 3. The obligations contained herein apply to the products delivered by the Contractor an its subcontractor(s) involved in the performance of this Contract. 4. The warranties contained herein are separate and discrete from any other warranties specified in this Contract, and are not subject to any disclaimer of warranty which may be specified in this Contract, its appendices, its schedules, its annexes or any document incorporated in this Contact by reference. The warranties contained herein are subject to any limitation of the Contractor9s liability specified in the Contract. 5. The warranties contained herein shall not apply where a modification has been made to a deliverable provided under this Contract by a party other than the Contractor or a subcontractor or a party approved in writing by

either of them. 6. Notwithstanding the foregoing. the provtsions set out In the applicabte Supplemental General Conditions, if any, under the section entItled "Warranty" apply 7 The warranties contained herein shall have a term extending either: (a) to June 30,2000, or, (b) for a period of six months following acceptance of the hardware, software and/or firmware, whichever is later date Attachment D Section 2 Prime Contract flow Asides of Agreement 9.0 QUALITY ASSURANCE 9.1 MI work shall be subject to Government Quality Assurance (GQA) at the Subcontractor's facility or that of the subcontractor(s) and at the installation site by the Director General Quality Assurance, Department of National Defence, MOen George R. Pcarkes Building, 101 Colonel By Drive, Ottawa, Ontario KIA OKI or an .. other designated Canadian Government Quality Assurance Representative. hereinafter referred to as the QAR. 9.2 Agency or QAR with whom the Subcontractor mast make arrangements for OQA. This will normally be the Agency/QAR performing GQA in the Subcontractor's facility or area. if the Subcontractor has not been contacted within 45 working days of award of this subcontract, the Subcontractor shall notify the Contracting Authority. 9.3 The Subcontractor is responsible for perforating, or having, performed, all inspections and tests necessary to substantiate that the material or service provided conforms to the subcontract requirements. 9.4 The Subcontractor shall provide, at no additional cost to the price of the Subcontract, applicable test data, subcontractor technical data, test pieces and samples as may reasonably he required for the QAR to verify conformance to the subcontract requirements. The subcontractor shall forward at its own expense such technical data, test data, test pieces and samples to up to one location as the QAR may direct. 9.5 Quality Control. Inspection, and Test Records that substantiate conformance to the specified requirements, including records of Corrective actions, shall be retained by the Subcontractor for three (3) years from the date of completion or termination of the Subcontract and shall be made availabe to the DND/QAR upon request. 10.0 QUALTTY CONTROL Assistance for Government Quality Assurance (OQA) The Subcontractor shall provide the Quality Assurance Representative (QAR) with the accommodation and facilities required for the proper accomplishments of OQA and shall provide any assistance required by the QAR for evaluation, verification. validation, documentation or release of product. The QAR shall have the right of access to any area of the Subcontractor's or itssubcontractor's facilities where any part of the Work is being pedo anal. The QAR shall be afforded unrestricted opportunity to evaluate and verify Subcontractor compliance with Quality System procedures and to validate produdt conformance with the Subcontract requirements. The Subcontractor shall make available for reasonable use by the QAR the equipment necess&y for all validation purposes. Subcontractor personnel shall he made available for operation of such equipment as required. When the QAR determines that GQA is required at a subcontractor's facilities, the Subcontractor shall provide for this in the purchasing document and forward copies to the QAR, together with relevant technical data as the QAR may request. The Subcontractor shall notify the QAR of non-conforming product received from a subcontractor when the product has been subject to GQA. 11 GOA AT SOURCE/RELEASE DOCUMENTS Material is to he released for shipment using the release

documents as documented in the Subcontractor's proposal which include letters of Acceptance (endorsed by the Canadian Government) and letters of Verification, both properly endorsed by the Subcontractor's Quality Assurance Representative. Material is to be released for shipment using these forms as long, as these documents contain the same information as would be provided in a DD 250 and if it is acceptable to the QAR. Release document(s) shall be prepared by the Subcontractor. 12 STANDARDS SPECIFICATIONS AND DRAWINGS Copies of Canadian Standards. Specifications and Drawings required are available from the Contractor. 13. MILITARY NOMENCLATURE AND DENTIFICATION PLATES The Subcontractor shall prepare nomenclature data (or confirm existing data) in accordance with DND Specification D-O1-()()0-2O()ISF4)()l, or ML-STD-196D, for System #1. Boat and SOIT Modiflcation Kits and the new Fire Control Consoles. To ensurt timely processing necess&Y documentation should be submitted at the earliest opportunity, but in any event not later than ninety (90) days prior to the delivery of the equipment. The Subcontractor shall arrange for the design and manufacture of identification plates, in accordance with DND Standard 1, for System No. I, Boat and SOTT Modification Kits. and the new Fire Control Consoles and all units thereof. These plates arc required to be affixed prior to delivery of the equipment. Identification plate drawings are to be submitted for approval prior to production. Any queries, drawings and documentation regarding nomenclature and identification plates are to be referred to the Contractor. venfication by government audit, at the Minister's discretion1 before or after payment is made to the Subcontractor under the terms and conditions of the Subcontract. if the said audit demonstrates that the certification is in error, it is agreed that the Subcontractor shall make repayment to Canada in the amount found to be in excess of the lowest price. Attachment H SUBCONTRACT 198422 Vendor Shipping Procedural Instructions For Shipments to the United States INTRODUCTION The Shipping Procedural Instructions (SF1) provides instructions to non-U.S. vendors on how to prepare shipments and documents for Importing into the United States. OVERALL RESPONSEBILITIES The SPI contains information on invoice preparation. Other documentation required, case marking, hazardous materials, Lockheed Martin Corporation (LMC) authorized U.S. import brokers, authorized routings to the United States, billings, etc. Following the instructions in the SPI will ensure that importation of goods will be as effortless and timely as possible. About this Document: Do not use these shipping Instructions Lockheed Martin Corporation Manassas or supported by Manassas are not the Importer at Record. This document contains instructions for non-U.S. vendors who are shipping their goads to a U.S, Lockheed Martin Corporation purchasing location and/or vendor location. Use these instructions only if Lockheed Martin Corporation is the Importer of Record. The Import of Record is in the "Invoice-to" area of an invoice. The Importer of Record is responsible for paying for the goods an/or the import charges.)

If Lockheed Martin Corporation is the Importer of Record, import all goods (regardless of value) through a Lockheed Martin Corporation authorized Import broker and route these goods through the ports. If the seller is the Importer of Record, send the shipment to the appropriate U.S. representative. The representative will arrange the shipments delivery and handle the importing costs and responsibilities. If you need additional information, use one of the following references * For information about shipping goods - contact an international trade organization (such as the International Chamber of Commerce), your government authorities, or the nearest U.S. Consulate. * The Lockheed Martin Corporation ordering location. 1.10 Non-U.S Vendor SPI This document provides information related to shipping goods to a U.S. Lockheed Martin Corporation purchasing location. The six topics Included in this document are: * Section 1.20 * Marking of Goods country of Origin * Section 1.3O * Handling an Assist * Section 1.40 * Packing the Goods * Section 1.50 Insuring the Goods * Section 1.60 * Shipping the Goods * Section 1.70 * Temporary Import Bond 1.20 Marking of Goods -Country of Origin U.S. Customs regulations require every article of foreign origin (or its container) imported into the United States be marked in a conspicuous place, as legibly, indelibly and permanently as the nature of the, article (or its container) will permit, in such manner as to indicate to the "ultimate purchaser' in the U.S.the English name of the article's country of origin at the time of importation into the customs territory of the U.S. The "ultimate purchaser" is generally the last person in the U.S. who will receive the article in the form in which ii was imported. Reference Title 19 CFR 134.1 Country of origin marking requirements are described below: * Finished products must be marked using the phrase "Made in ________ "Assembled in _________ or similar wording. Finished products include: - Machines (whether imported as a machine type or parts) - Supplies (ribbons, diskfiles, cartridges, etc.) - Major peripheral equipment (displays. keyboards. conssoiles, etc.) - Software - Publications * Sub-products must be marked with the country of origin on either the article itself or on the immediate container. The immediate container is the package. bag, box, carton, etc., closest to the sub-product. sub-products include: - Modules Pans - Components Sub-assemblies Note: Normally, the country lo origin is marked on the sub-product or on the sub-product's immediate container. However, in special aftuations, the country Of origin can be marked on a higher level of packaging. For example, if you were shipping modules that were packed in reusable plastic tubes, the tubes would not be suitable as shipping containers. So, you would ship the tubes in a white box and print the pan number and quantity' on the box. In this situation. the country of origin could be marked on the white box. The

marking on the box must state the "Contents made in Containers made in ______ or similar wording to identify the country of origin of the modules and the reusable tubes. If you can not mark the country of origin on a sub-product or its container. contact the Lockheed Martin Corporation receiving location for guidance. - - Non-produdion goodsBecause of an exception in the U.S, Customs regulations, non-production goods for use or consumption within Lockheed Martin Corporation do not have to be marked with country of origin. Crhis includes the article itself. its immediate package, or its container.) Non-production goods are articles that Lockheed Martin Corporation Is not in the business of selling to others (such as tools, test equipment, cleaning supplies, office supplies, etc.). Note, even though Lockheed Martin consumes the material internally, if the material is TSCA regulated Lockheed Martin is still considered the importer of record and all appropriate paperwork is still required. Contact the procurement agent for additional information. The country of origin must appear on the invoice. The shipper must ensure that the country of origin on the invoice is the same as the country of origin marked on an article (or the container). 1.30 Handling an Assist Reference Title 19 CFR 152.102 An "assist' means any of the following, it supplied directly or indirectly (either tree of charge or at a reduced cost) by the buyer of imported merchandise for use in connection with the production or the sale of merchandise for export to the United states. 1. Materials, components, parts, and similar items incorporated in the imported merchandise 2. Tools, die molds, and similar items used in the production of the imported merchandise 3. Merchandise consumed in the production of the imported merchandise 4. Engineering, development, artwork. design work, and plans and sketches that are undertaken outside of the U.S. and are necessary for the production to the Imported merchandise Do not treat any service or work in this category as an assist if that service or work meets all three of the following crtteria: * The service or work is performed by an individual domiciled in the U.S. * The service or work is performed by that individual while acting as an employee or agent of the buyer of the irriponed merchandise * The service or work is incidental to other engineering, development, artwork, design work, or plans or sketches that are undertaken in the U.S. When any of these assists are provided and not included in the Invoice price of the goods, you must declare the assist to U.S Customs as a separate flne flern on the commercial invoice. Records to substantiate assist must be kept by the invoicing vendor. Notes: * Treat money given to a vendor for buying any of these items as an assist. * when a Lockheed Martin Corporation engineer travels to a foreign country for engineering or development work, the foreign travel may qualify as an assist. (See the description about engineering in the list above.) Assist Value Reference Title 19 CER 152.103 - 152.108 In determining the value of an assist, the following general rules

apply: * The value is either: - The cost of acquiring the assist - if acquired by the location providing the assist - The cost of producing the assist - if produced by the location providing the assist * The value includes all costs of transporting the assist to the place of productionE and the duty incurred on an assist when it arrives in the foreign location (If the UES. location providing the assist pays for the freight charges and duty'). * The value should reflect depreciation of the assists that were used by the importer before being shipped abroad or on the other hand. the value should reflect the enhancement if the assist were modified or repaired resulting in an increase in value. Assists. which can depreciate or increase in value. are tangible items such as tools, dies, molds, test equipment, and other. related items. * In the case of engineering, development. artwork, design works, and plans and sketches undertaken outside at the U.S the value is determined by; - The cost of obtaining copies of the assist provided the assist is publicly available. - The cost of the purchase of the lease, if the assist was bought or leased by the importer from an unrelated party. - The value added outside the U.S., is a joint effort involving the U.S. and one or more foreign countries, existed in the production of the assist. Declaring the Assist on the First Shipment Declaring the assist on the first shipment is the preferred method. It is acceptable to Customs and it is easy to track and control. * The U.S. Lockheed Martin Corporation location giving the assist has the responsibility to notify the shipping country with the following information: - Assist number - Assist value (normally in U.S. dollars but may be in non-U AS. currency) - Assist purchase order (P0) number or intercompany agreement (ICA) number that the assist was given on * include all of the assist information on a separate line of your first export invoice and dollar the total assist for the part number. The following must be included on the assist declaration. - Assist value - Assist Poor CA number If you plan to declare an assist and you do not have all of this assist information, contact the person who placed the order. If this information is not on the export invoice, your goods will be held at the UES. port of entry. A few guidelines about the export invoice are: The assist value should normally be expressed in U.S. dollars (unless the U.S. location requests the value be stated in a different currency). Always use the assist value given by the U.S. location. Do not list the assist value in two different currencies (e.g., U.S. dollars and yen). If you think that the U.S. location has given you an incorrect assist value, contact the person who placed the order. - Do not declare supplemental payments as an assist. Prorating the Assist Value Prorating the assist value means taking me assist value and declaring the value over multiple shipments rather than declaring it in a lump sum on the first invoice. This method of assist declaration requires prior approval by U.S. Customs. You should only prorate an assist if so instructed by the U.S. location, and the value should be notated on the invoice as instructed by the U.S. location. The assist value (prorated) and the assist PO/ICA number are still required on your export invoice. Note: Component assists may be declared as they are used instead of lump sum declaration. This is not considered prorating the assist and does not require U.S. Custom's approval.

For any questions or concerns about the U.S. assist process, contact the ordering location. 1.40 Packing the Goods This section contains information about package labels and package documentation. If you need specific packing instructions, contact the U.S. Lockheed Martin corporation receiving location for guidance. Package Labels The following sections provide detailed information about the labels that are used on a package that is exported to the United States. These labels include: shipping labels, and carton labels. Shipping Labels An example of a shipping label is shown in Frigure 4, A shiping label is sometimes called an 'address label". TO: Lockheed Martin Corporation do Emery Customs Brokers 44901 ralcon Place, Suite 104 Sterling, Va. 2016$ FOR: Lockheed Martin corporation 9500 Godwin Dr. Dock B Manassas, VA. USA 20110 ATTENTlON: John Doe Figure 4. Shipping Label Example The areas shown in figure 4 are described below: TO: FOR: ATTENTION TO: The address of the appropriate broker (see Temporal Broker? on pagel2). The address of the final U.S. receiving location. The name of the person receiving the goods. Place the shipping label on the front of the case. Include the complete shiping to address from the commercial invoice on the shipping label. Carton Labels Each carton must have a carton label that identities the contents of the carton. A carton label is also called a "package label." Figure 5 shows an example of a canon label. Lockheed Martin Corporation Part number 1876578 E/C level 776123 Package quantity' Country of Origin United Kingdom Package Documentation Reference, Title 19 CFR 141.81-141.92 Each package must contain speoific documentation. The requirements for this documentation are explained in the following sections. General Requirements This section describes the documents that are required in each package. II any documents are missing or incorrect, U.S. Customs will hold your shipment at the port of entry. Some general documentation guidelines are:

* Prepare all documents in English. * For truck and air shipments - Place all documents in an envelope addressed to the consignee specified in "1.60 Shipping the Goods". Attach the envelope to the truck bill folding or air waybill that is sent with the shipment. * For ocean shipments - Send all documents by Express airmail to the consignee specie in "1.60 Shipping the Good? on page 11. The documentation requirements for each package are explained below: * commercial Invoice - S copies (no exception). See "Commercial Invoice Requirements" on page Sort detailed information about commercial invoices. * Packing List - 1 original. The packing list must be in an envelope and attached to (or inside) the first package or case for each purchase order. If the placing list is inside a package or case, stamp the outside the "PACKING LIST ENCLOSED.Use any accepted format to list the content and quantities of each package or case without prices. Include all of the information on the oommercial invoice except cost. If the commercial invoice does not itemize the contents of each package, include 3 copies of the packing slip with the other documents. Certificate roiling- 1 original and a copies are required. For shipments from Canada Reference Title 19 CPA 141.81- 141E92 * Hazardous Materials certificate- For hazatdous materials, give the required original documents to the carrier and send I copy of the certificate with the other shipping documents. Air waybill- 2 copies for air shipments e Ocean Bill of Lading - 2 originals. and 2 copies Truck Bill of Lading - I original for truck shipments from Canada and Mexico only * U.S. Government documentaion - Obtain any necessary Food and Drug Administration (FDA) or Federal Communications Commission (FCC) documents (if applicable). If 'you have any questions, contact the Lockheed Martin Corporation buying location. - Shipments of Electronic Products - For ah shipmehts of electronic products built as a subassembly or final product. Reference Title 19 CFR 12.90 & 12.91 FDA: Shipments of Laser and flails Products - For products that could emit hazardous electromagnetic or particle radiation, you are required to file regulatory affidavits with the USE. FDA's Center for Devices and Radiological Health. These affidavits are required for color and monochrome computer displays, television receivers, lasers and laser products, x-ray devices and other products that could emit hazardous radiations (by nature of high voltage, high energy, or coherent light properties). - Before shipping these products, notify the person placing the order with flight detail and consignee information. If you have any questions, contact the Lockheed Martin Corporation buying location. Reference Title 19 CFR 12.118 - 12.127 for Chemicals * chemicals - For all chemical shipmentsA include a complete and accurate Toxic Substance Certification Act (OATS) Certificate with the shipment documents. All questiqns regarding whether or not a shipment contains or is a chemical, please contact the Lockheed Martin corporation buying location. This includes epoxies, solders,chemical kits of all kinds, cleaning supplies, touch paints, etc. * ARTICLES CONTAINING ANODE MANUFACTURED WITH OZONE DEPLETING SUBSTANCES: U.S. Regulations require that articles entered into the U.S. Commerce as of May 15,1993 and mahufactured using an Ozone Depleting Substance be labeled accordingly. 40 CFR Part 82 specifies that such products or their associated containers or documents mustcontain the statement:. Consult with your contact at the Lockheed Martin Corporation importing location for details on compliance with this requirement. The site may have requirements that are in addition to U.S. Regulation. Commercial Invoice Requirements

You may use any accepted international document format for international commercial transactions. Notes: * The commercial invoice sent with the shiprnent slum be the same as the invoice sent for payment. * An INVOICE-TO and SHIP-TO code are required on all invoices. * If the bill in currency is different than the payment currency, show both curnencies. Country Home: United States The fields of the invoice shown in urger S are described below: INVOICE TO The complete name and address of the location to be billed INVOICE DATE The date of the invoice (day, month, year) INVOICE TYPE The type of the invoice - Charge, No Charge, or Charge/No Charge INVOICE # U/M The number of the invoice (usually pre-printed) The unit of measure of the product - two-digit numeric code (e.g., each; pair). Some items (such as chemicals and scalps) equire additional measurement in information ( TOY The quantity of the product UNIT COST The cost of each unit (in U.S. dollars) AMOUNT The total cost of each line item - Quantity x Unit Cost (in U.S. dollars) TOTAL VALUE The total value of the items on the invoice (in U.S. dollars) The purchasing location must supply the information for these fields of the invoice: SHIP TO The codes for the country and location where the goods will be received. PART NO.The terms of delivery (e.g., Ex-factory, FOB, etc.) The description of the product. Provide a complete, accurate, and detailed description of each item. Use complete names. Do not use acronyms. The pan number of the product. Provide either an Lockheed Martin Corporation pan number (example: 7362487) or an Lockheed Martin Corporation machine type/model number- If you are using a machine type/model number, list it as follows: * Machines with a serial number: 8565 001 (serial number) * Machines without a serial number: Add a 'E" prefix to the machine type: ES565 001. If available, use the toplevel part number instead of the machine type (model). Do not list items identified by machine (model) on the same invoice as items identified by part number. * Non-Lockheed Martin Corporation product number or vendor part number. Add a "VEND prefix to the number to identify that the number is a non-Lockheed Martin Corporation number. Measurement Information Chemicals (dry) Chemicals (liquid) Unit Measurement Kilograms Liters Kilograms Kiloarams Carats bid meters a. 5.5, 8Eo Meters Kilograms Meters Optical fiber cables Length Paper products Weight Kilograms Photographic film and plates Clause area Square meters Plastic plate and films Surface area Square meters Plastics weight Kilograms - -- Plastics Adhesive Tapes Surface area Square meters weight Kilograms Precious metals Radioactive isotopes V-belts - vldeotape Figure 7 Measurement Information 1.50 Insuring the Gods Do not insure shipments going to a Lockheed Martin Corporation location. Lockheed Martin Corporation has its own insurance for international shipments. If one of the following circumstances applies to your goods, contact the Lockheed Final Corporation buying location before shipping them:

* The value of an invoice(s) shipped on a conveyance exceeds $100,000,000 us. dollars * An ocean shipment bill of lading that an invoice value of $100,000,000 or more U.S. dollars 1.60 Shipping the Goods send the shipment by the mode of transport (air, ocean, or truck) specified in the purchase order or other instructions from Lockheed Martin Corporation. Do not mail, or use courier service. Contact the Lockheed Martin Corporation buying location if you can not comply with the mode of transport specified in the purchase order. Mode at Transport The requirements for transportation to supplies and orders by sea for applicable military contracts is identified in the Department of Defense Federal Acquisition Regulations (FADS) clauses 252.247-7022. 252.247-7023. and 252.247-7024 (with reference to OAF clause 247.573 and Federal Acqusition Regulation (FAR) clause 47.500). Generally, these clauses require U.S.-flag vessels to transport any supplies by sea under the appropriate military contract. In certain situations, you can forward a request to the Contracting Officer for authorization of a foreignflag vessel. Note: Any routing or carriage contrary to these Federal regulations could result in tines and/or penalties to Lockheed Martin Corporation. If Lockheed Martin Corporation is the Importer of Record (the invoice shows that Lockheed Martin Corporation is paying for the goods and/or the Import charges), you are required to import the items through a Lockheed Martin Corporation authorized import broker. See "Import Brokers" Figure 12 for a listing of authorized brokers. Import Brokers The following is a list of Lockheed Martin approved Forwarders and Brokers with Power of Attorney. Only a company from this approved list can be used. Contact the Broker directly for the correct location closest to the deliver to site. Contact the ordering location for updated Brokers list or if help is needed in determining the correct Broker. Emery Customs Brokers 44901 Falcon Place, Suite 104 Sterling, VA. 20166 1-800-443-6379 www.emervworld.com DHL World wide Express 8528 Toy Road Vienna, VA. 22182 1-800-225-5345 wwwvw.dht.com SAND Corp. 22900 Wash Road Set it 9, Vs. 20166 www.danzas.oom Nippon Express U.& A., Inc. 281 Pickets Line Newport News, A. 23603 1-800-438-1934 www.nipponexDressusa.com Figure 12. Import Brokers

Product Information Circle International 22660 Venue Drive Suite 110 Sterling, A 20168 www.circIeintl.com suntan A Cargo 1457 Miller Store Road Fetus 101-A Virginia Beach, A 23465 1-800864-7827 www, unistaraicargo. corn MASS Cargo www.rnsas-corn Reference: Harmonized Tariff Schedule (HTS) Harmonized Tariff Product Information numbers are required on the invoice when shipping products to U.S. Lockheed Martin Corporation locations. If you need additional information, see the harmonized tariff schedule or cant the Lockheed Martin Corporation ordering location. Invoice Details for Special Conditions In specific situations, additional information is required on the commercial invoice. These situations are; . Articles exported from the US, and returned * American goods returned: not advanced in value or improved in condition * Returned non-American goods: not conforming to sample or specification The invoice information required in these situations is described in the following section. Articles Exported from the U.S. and Returned The commercial invoice must state whether or not the article was originally exported from the United States to your country for temporary use. If the shipment was registered when it was exported from the United States, include the registration number and the port where the goods were registered. American Goods Returned: Not advanced in Value or improved in Condition In addition to the U.S. export details, invoices for American goods returned must contain the statement "American Goods Returned." The value of the returned articles exceeds $1000, the invoice must also contain a declaration that the articles listed on the invoice has an American origin and has not been improved while abroad. The declaration must be written as follows: ____________ declare that to the best of my knowledge and belief, the articles herein specified are products of the U.S., that they are returned without having been advanced in value or improved in condition by any process of manufacture or other means. Si9nature Date____________ Returned Non-American Good: Not conforming to Sample or Specificatlon Goods of nouns. non that were exported from the United states and are being returned to the U.S. may be entered duty-free under the following conditions: * The articles wore exported within 3 years flare they were imported * While abroad. the articles were not advanced in value or improved in condition by any manufacturing process

or other means * The articles did not conform to sample or specification. Lockheed Martin Corporation originally imported the goods and then exported them. The goods were exported without the advantage of duty drawback. In addition to U.S. pelf details, the invoice must include the statement "Returned Goods - Do Not conform to Sample or Specification and have the following Description: I declare that the (description of article) was received by me from (name and address to U.S. exporter). that they have not been advanced in value or improved in condition by any process of manufacture or other means and are being returned to (name and address of the consignee in the U.S.) because they do not croon to replans or specification for the following reasons: (State reason why the goods do not meet your specifications). Signature Date____________ Goods Returned After Being Used Temporarily Goods that are returned after they are used temporarily may be entered without duties (regardless of country of origin), if they were used for the following purposes: . Exhibition. examination, or experimentation for scientific or educational purposes . Exhibition at any public exposition. fair or conference The following conditions are required for duty-free entry: * The goods must be registered when exported from the USE. * The invoice must include: The U.S. export details, including the registration number and U.S. port where they were registered - The statement "Goods returned after temporary use matador - The following Description: ________________(Place and Date) I, _____________ declare that the articles herein were received by me from (name and address of U.S. exporter): that the said articles were used solely for temporary scientific or educational purposes and for no other use abroad than air exhibition, examination or experimentation; that they are being returned without having been changed in condition in any manner except by reason of their bona fide use as follows: (Describe change in condition.) Signature Date___________ Articles Returned After Repairs or Alterations Articles exported from the U.S. to be repaired or altered are bisect to duty on the cost or value of the repairs or alterations. The requirements for these articles * The goods must be registered when exported from the U.S. * The invoice must include: - The U.S. export details, including registration runner and the port verve registered - The repair cost and full value of the sod. This value must be shown even if the repair was done on a changer basis. - The statement 'Goods returned to the U.S. after being repaired or altered abroad (KTS 9802.40.40 Program)" The following Declaration: _____________ (Place and DAte) I, ___________ declare that Hi article herein specified are the articles which, in the condition they ware exported from the US, were received by me (us) on (date) from (name and address of owner or exporter in the U.S.); that they were received by me (us) for the sole purpose of being repaired or altered; that only the repairs or alterations described below were performed by me (us); that the full cost or fair market value of such repairs or alterations are correctly stated below;. and the no substitution whatever has been made to replace any of the articles originally received by me (us) from the owner or exporter thereof mentioned above.

(Give brief description of repairs/alterations.) Signature Date_____________ Metal Articles Exported for Processing and returned to the U.S. for Further Processing Metal articles that have been exported for processing and are being returned to the US for further processing are subject to duty on the cost or value of the processing performed abroad. The following requirements apply to these articles: * The goods must be registered when exported from the U.S. * The invoice for the processed goods must show: - The U.S. export details Including the registration number and the port where registered - The processing cost and full value of the goods. This value must be shown even if the processing was done on a no-charge basis. - The statement "Matte articles returned to the U.S. after being processed abroad (HTS 9802.06.60 Program) The following declaration: _______________(Place and Date) ____________ declare that the article herein specified are the articles which, in the condition they were exported from the U.S., were received by me (us) on (date) from (name and address of owner or exporter in the US-): that they wore received by me (us) for the sole purpose of being processed: Hit only the processing described below was performed by me (us); that the full cost or (when no charge is made) fair market value of such processing is correctly stated below; and that no substitution whatever has been made to replace any of the articles originally received by me (us) from the owner or exporter thereof mentioned above. (Give a brief description of processing) American Goods Assembled Abroad Articles assembled abroad (in whole or in pair) from components produced in the USE may be eligible for reduced duty under the following conditions: * When the components were exported, they were ready for assembly without further processing. * The U.S. components have not lost their physical identity by change in form, shape, or otherwise. * The U.S. components have not been advanced in value or improved in condition abroad except by being assembled and except by operations incidental to the assembly process such as cleaning, lubrication, and painting. Duty is paid on the full value of the article less the value of the U.S. components. The invoice must include the following information: * The full value of the assembled article The value of the U.S. components, using the following statement: 9802.00.80 Program: American Goods Assembled Abroad Value of U.S. Components: $X.XX times Quantity - $X.XX Can a copy of the Declaration of Assembly to the invoice. List all of the U.S. components and their value on the Declaration of Assembly. Note: Before the first shipment of the assembled articles, give a copy of the Declaration of Assembly to U.S. Customs for approval * A copy of the Declaration of Assembly must be attached to all shipments. 1.70 Temporary Import Bond Reference Title 19 CFR 10.31

Only use a BIT if instructed by the Lockheed Martin Corporation buying location. If you have any questions, contact that location. Merchandise imported into the US for test, evaluation, or exhibition, and subsequently re-exported within one (1) year without being altered in function or improved in value while in the U.S., are entered duty free. Any article imported under ITS provision cannot be considered for sale or for sale on approval. The value of the duty paid should be compared to the cost of implementing the BIT (i.e. customs brokers fees etc.) It may be more cost effective to pay the duty than to implement a BIT. Attachment H SUBCONTRACT 198422 Vendor Shipping Procedural Instructions For Shipments to the United States INTRODUCTION The Shipping Procedural Instructions (SF1) provides instructions to non-U.S. vendors on how to prepare shipments and documents for Importing into the United States. OVERALL RESPONSIBILITIES The SPI contains information on invoice preparation. Other documentation required, case marking, hazardous materials, Lockheed Martin Corporation (LMC) authorized U.S. import brokers, authorized routings to the United States, billings, etc. Following the instructions in the SPI will ensure that importation of goods will be as effortless and timely as possible. About this Document: Do not use these shipping Instructions Lockheed Martin Corporation Manassas or supported by Manassas are not the Importer at Record. This document contains instructions for non-U.S. vendors who are shipping their goads to a U.S, Lockheed Martin Corporation purchasing location and/or vendor location. Use these instructions only if Lockheed Martin Corporation is the Importer of Record. The Import of Record is in the "Invoice-to" area of an invoice. The Importer of Record is responsible for paying for the goods an/or the import charges.) If Lockheed Martin Corporation is the Importer of Record, import all goods (regardless of value) through a Lockheed Martin Corporation authorized Import broker and route these goods through the ports. If the seller is the Importer of Record, send the shipment to the appropriate U.S. representative. The representative will arrange the shipments delivery and handle the importing costs and responsibilities. If you need additional information, use one of the following references * For information about shipping goods - contact an international trade organization (such as the International Chamber of Commerce), your government authorities, or the nearest U.S. Consulate. * The Lockheed Martin Corporation ordering location. 1.10 Non-U.S Vendor SPI This document provides information related to shipping goods to a U.S. Lockheed Martin Corporation purchasing location. The six topics Included in this document are: * Section 1.20 * Marking of Goods country of Origin * Section 1.3O * Handling an Assist

* Section 1.40 * Packing the Goods * Section 1.50 Insuring the Goods * Section 1.60 * Shipping the Goods * Section 1.70 * Temporary Import Bond 1.20 Marking of Goods -Country of Origin U.S. Customs regulations require every article of foreign origin (or its container) imported into the United States be marked in a conspicuous place, as legibly, indelibly and permanently as the nature of the, article (or its container) will permit, in such manner as to indicate to the "ultimate purchaser' in the U.S.the English name of the article's country of origin at the time of importation into the customs tertittory of the U.S. The "ultimate purchaser" is generally the last person in the U.S. who will receive the article in the form in which ii was imported. Reference Title 19 CFR 134.1 Country of origin marking requirements are described below: * Finished products must be marked using the phrase "Made in ________ "Assembled in _________ or similar wording. Finished products include: - Machines (whether imported as a machine type or parts) - Supplies (ribbons, diskfiles, cartridges, etc.) - Major peripheral equipment (displays. keyboards. conssoiles, etc.) - Software - Publications * Sub-products must be marked with the country of origin on either the article itself or on the immediate container. The immediate container is the package. bag, box, carton, etc., closest to the sub-product. sub-products include: - Modules Pans - Components Sub-assemblies Note: Normally, the country lo origin is marked on the sub-product or on the sub-product's immediate container. However, in special aftuations, the country Of origin can be marked on a higher level of packaging. For example, if you were shipping modules that were packed in reusable plastic tubes, the tubes would not be suitable as shipping containers. So, you would ship the tubes in a white box and print the pan number and quantity' on the box. In this situation. the country of origin could be marked on the white box. The marking on the box must state the "Contents made in Containers made in ______ or similar wording to identify the country of origin of the modules and the reusable tubes. If you can not mark the country of origin on a sub-product or its container. contact the Lockheed Martin Corporation receiving location for guidance. - - Non-produdion goodsBecause of an exception in the U.S, Customs regulations, non-production goods for use or consumption within Lockheed Martin Corporation do not have to be marked with country of origin. Crhis includes the article itself. its immediate package, or its container.) Non-production goods are articles that Lockheed Martin Corporation Is not in the business of selling to others (such as tools, test equipment, cleaning supplies, office supplies, etc.). Note, even though Lockheed Martin consumes the material internally, if the material is TSCA regulated Lockheed Martin is still considered the importer of record and all appropriate paperwork is still required. Contact the procurement agent for additional information.

The country of origin must appear on the invoice. The shipper must ensure that the country of origin on the invoice is the same as the country of origin marked on an article (or the container). 1.30 Handling an Assist Reference Title 19 CFR 152.102 An "assist' means any of the following, it supplied directly or indirectly (either tree of charge or at a reduced cost) by the buyer of imported merchandise for use in connection with the production or the sale of merchandise for export to the United states. 1. Materials, components, parts, and similar items incorporated in the imported merchandise 2. Tools, die molds, and similar items used in the production of the imported merchandise 3. Merchandise consumed in the production of the imported merchandise 4. Engineering, development, artwork. design work, and plans and sketches that are undertaken outside of the U.S. and are necessary for the production to the Imported merchandise Do not treat any service or work in this category as an assist if that service or work meets all three of the following crtteria: * The service or work is performed by an individual domiciled in the U.S. * The service or work is performed by that individual while acting as an employee or agent of the buyer of the irriponed merchandise * The service or work is incidental to other engineering, development, artwork, design work, or plans or sketches that are undertaken in the U.S. When any of these assists are provided and not included in the Invoice price of the goods, you must declare the assist to U.S Customs as a separate flne flern on the commercial invoice. Records to substantiate assist must be kept by the invoicing vendor. Notes: * Treat money given to a vendor for buying any of these items as an assist. * when a Lockheed Martin Corporation engineer travels to a foreign country for engineering or development work, the foreign travel may qualify as an assist. (See the description about engineering in the list above.) Assist Value Reference Title 19 CER 152.103 - 152.108 In determining the value of an assist, the following general rules apply: * The value is either: - The cost of acquiring the assist - if acquired by the location providing the assist - The cost of producing the assist - if produced by the location providing the assist * The value includes all costs of transporting the assist to the place of productionE and the duty incurred on an assist when it arrives in the foreign location (If the UES. location providing the assist pays for the freight charges and duty'). * The value should reflect depreciation of the assists that were used by the importer before being shipped abroad or on the other hand. the value should reflect the enhancement if the assist were modified or repaired resulting in an increase in value. Assists. which can depreciate or increase in value. are tangible items such as tools, dies, molds, test equipment, and other. related items. * In the case of engineering, development. artwork, design works, and plans and sketches undertaken outside at the U.S the value is determined by; - The cost of obtaining copies of the assist provided the assist is publicly available. - The cost of the purchase of the lease, if the assist was bought or leased by the importer from an unrelated party. - The value added outside the U.S., is a joint effort involving the U.S. and one or more foreign countries, existed

in the production of the assist. Declaring the Assist on the First Shipment Declaring the assist on the first shipment is the preferred method. It is acceptable to Customs and it is easy to track and control. * The U.S. Lockheed Martin Corporation location giving the assist has the responsibility to notify the shipping country with the following information: - Assist number - Assist value (normally in U.S. dollars but may be in non-U AS. currency) - Assist purchase order (P0) number or intercompany agreement (ICA) number that the assist was given on * include all of the assist information on a separate line of your first export invoice and dollar the total assist for the part number. The following must be included on the assist declaration. - Assist value - Assist Poor CA number If you plan to declare an assist and you do not have all of this assist information, contact the person who placed the order. If this information is not on the export invoice, your goods will be held at the UES. port of entry. A few guidelines about the export invoice are: The assist value should normally be expressed in U.S. dollars (unless the U.S. location requests the value be stated in a different currency). Always use the assist value given by the U.S. location. Do not list the assist value in two different currencies (e.g., U.S. dollars and yen). If you think that the U.S. location has given you an incorrect assist value, contact the person who placed the order. - Do not declare supplemental payments as an assist. Prorating the Assist Value Prorating the assist value means taking me assist value and declaring the value over multiple shipments rather than declaring it in a lump sum on the first invoice. This method of assist declaration requires prior approval by U.S. Customs. You should only prorate an assist if so instructed by the U.S. location, and the value should be notated on the invoice as instructed by the U.S. location. The assist value (prorated) and the assist PO/ICA number are still required on your export invoice. Note: Component assists may be declared as they are used instead of lump sum declaration. This is not considered prorating the assist and does not require U.S. Custom's approval. For any questions or concerns about the U.S. assist process, contact the ordering location. 1.40 Packing the Goods This section contains information about package labels and package documentation. If you need specific packing instructions, contact the U.S. Lockheed Martin corporation receiving location for guidance. Package Labels The following sections provide detailed information about the labels that are used on a package that is exported to the United States. These labels include: shipping labels, and carton labels. Shipping Labels An example of a shipping label is shown in Frigure 4, A shiping label is sometimes called an 'address label". TO: Lockheed Martin Corporation do Emery Customs Brokers

44901 ralcon Place, Suite 104 Sterling, Va. 2016$ FOR: Lockheed Martin corporation 9500 Godwin Dr. Dock B Manassas, VA. USA 20110 ATTENTlON: John Doe Figure 4. Shipping Label Example The areas shown in figure 4 are described below: TO: FOR: ATTENTION TO: The address of the appropriate broker (see Temporal Broker, on pagel2). The address of the final U.S. receiving location. The name of the person receiving the goods. Place the shipping label on the front of the case. Include the complete shiping to address from the commercial invoice on the shipping label. Carton Labels Each carton must have a carton label that identities the contents of the carton. A carton label is also called a "package label." Lockheed Martin Corporation Part number 1876578 Package quantity Country of Origin United Kingdom Package Documentation Reference, Title 19 CFR 141.81-141.92 Each package must contain speoific documentation. The requirements for this documentation are explained in the following sections. General Requirements This section describes the documents that are required in each package. II any documents are missing or incorrect, U.S. Customs will hold your shipment at the port of entry. Some general documentation guidelines are: * Prepare all documents in English. * For truck and air shipments - Place all documents in an envelope addressed to the consignee specified in "1.60 Shipping the Goods". Attach the envelope to the truck bill folding or air waybill that is sent with the shipment. * For ocean shipments - Send all documents by Express airmail to the consignee specie in "1.60 Shipping the Good The documentation requirements for each package are explained below: * commercial Invoice - S copies (no exception). See "Commercial Invoice Requirements" on page Sort detailed information about commercial invoices. * Packing List - 1 original. The packing list must be in an envelope and attached to (or inside) the first package or case for each purchase order. If the placing list is inside a package or case, stamp the outside the "PACKING LIST ENCLOSED.Use any accepted format to list the content and quantities of each package or case without prices. Include all of the information on the oommercial invoice except cost. If the commercial invoice does not itemize the contents of each package, include 3 copies of the packing slip with

the other documents. Certificate roiling- 1 original and a copies are required. For shipments from Canada Reference Title 19 CPA 141.81- 141E92 * Hazardous Materials certificate- For hazatdous materials, give the required original documents to the carrier and send I copy of the certificate with the other shipping documents. Air waybill- 2 copies for air shipments e Ocean eiEI or Lading - 2 originals. and 2 copies Truck Sill of Lading - I original for truck shipments from Canada and Mexico only * U.S. Government documentaion - Obtain any necessary Food and Drug Administration (FDA) or Federal Communications Commission (FCC) documents (if applicable). If 'you have any questions, contact the Lockheed Martin Corporation buying location. - Shipments of Electronic Products - For ah shipmehts of electronic products built as a subassembly or final product. Reference Title 19 CFR 12.90 & 12.91 FDA: Shipments of Laser and flails Products - For products that could emit hazardous electromagnetic or particle radiation, you are required to file regulatory affidavits with the USE. FDA's Center for Devices and Radiological Health. These affidavits are required for color and monochrome computer displays, television receivers, lasers and laser products, x-ray devices and other products that could emit hazardous radiations (by nature of high voltage, high energy, or coherent light properties). - Before shipping these products, notify the person placing the order with flight detail and consignee information. If you have any questions, contact the Lockheed Martin Corporation buying location. Reference Title 19 CFR 12.118 - 12.127 for Chemicals * Chemicals - For all chemical shipmentsA include a complete and accurate Toxic Substance Certification Act (OATS) Certificate with the shipment documents. All questions regarding whether or not a shipment contains or is a chemical, please contact the Lockheed Martin Corporation buying location. This includes epoxies, solders, chemical kits of all kinds, cleaning supplies, touch paints, etc. * ARTICLES CONTAINING ANODE MANUFACTURED WITH OZONE DEPLETING SUBSTANCES: U.S. Regulations require that articles entered into the U.S. Commerce as of May 15,1993 and manufactured using an Ozone Depleting Substance be labeled accordingly. 40 CFR Part 82 specifies that such products or their associated containers or documents must contain the statement:. * Consult with your contact at the Lockheed Marlin Corporation importing location for details on compliance with this requirement. The site may have requirements that are in addition to U.S. Regulation. Commercial Invoice Requirements You may use any accepted international document format for international commercial transactions. See Figure 8 on page 9 for a sample of a commercial invoice. Include 5 copies of the commercial invoice with your shipment. Notes: * The commercial invoice sent with the shiprnent slum be the same as the invoice sent for payment. * An INVOICE-TO and SHIP-TO code are required on all invoices. * If the bill in currency is different than the payment currency, show both currencies. Harmonized Tariff Product Information numbers are required on the evince when shipping products to U.S. Lockheed Martin Corporation locations. If you need additional information, see the harmonized tariff schedule or cant the Lockheed Martin Corporation ordering location. Invoice Details for Special Conditions In specific situations, additional information is required on the commercial invoice. These situations are; *Articles exported from the US, and returned * American goods returned: not advanced in value or improved in condition * Returned non-American goods: not conforming to sample or specification. The invoice information required in these situations is described in the following section.

Metal Articles Exported for Processing and returned to the U.S. for Further Processing Metal articles that have been exported for processing and are being returned to the US for further processing are subject to duty on the cost or value of the processing performed abroad. The following requirements apply to these articles: * The goods must be registered when exported from the U.S. * The invoice for the processed goods must show: - The U.S. export details Including the registration number and the port where registered - The processing cost and full value of the goods. This value must be shown even if the processing was done on a no-charge basis. - The statement "Matte articles returned to the U.S. after being processed abroad (HTS 9802.06.60 Program) The following declaration: _______________(Place and Date) ____________ declare that the article herein specified are the articles which, in the condition they were exported from the U.S., were received by me (us) on (date) from (name and address of owner or exporter in the US-): that they wore received by me (us) for the sole purpose of being processed: Hit only the processing described below was performed by me (us); that the full cost or (when no charge is made) fair market value of such processing is correctly stated below; and that no substitution whatever has been made to replace any of the articles originally received by me (us) from the owner or exporter thereof mentioned above. (Give a brief description of processing) Attachment I SUBCONTRACT 198422 Northstar Technical, Inc. 667 Water Street St. Johns NF A1C 6J9 Attention: Wilson Russell Subject: LMUSS Property Loan Agreement No. 196422-001 Dear Mr. Russell: This letter agreement constitutes a no charge Property Loan Agreement between Lockheed Martin Corporation (LMC) acting through ties Business Unit (hereinafter referred to as LO") and Northstar Technical, Inc. (hereinafter referred to as "Cells') sets forth the basic requirements to be observed by the Seller to maintain and control property listed in Purchase Order No.198422, dated October 8,1999 refered herto and made a part hereof by reference. The effective date of this letter agreement is October 8,1999 and shall remain in effect until such time as the property is recalled at LMC's request or is otherwise properly disposed of at LMC's direction. The parties agree as follows: 1. Seller acknowledges that the listed items of tooling and equipment, hereinafter called "equipment", in Sellers possession, together with all drawings and other documentation with respect thereto, hereinafter called documentation'l, are theproperty of LMC. The equipment has been marked with an LMC identification number. Seller shall not mortgage, pledge or encumber the equipment in any way. 2. Whenever requested by LMC, Seller shall return any or all equipment and documentation to LMC without cost except that transportation charges shall be billed collect. In such cases, LMC will pay for reasonable special packing charges where.appropClate. If for any reason Seller should fail to comply promptly with such a request, LMC shall have the right to enter Sellers premises to remove the equipment and documentation, and Seller

expressly waives any rights or remedies it has with regard to the LO equipment and documentation, including but not limited to any right Seller has to notice and a hearing or to a bond, undertaking, or surety before a writ of repine, order of seizure, or similar writ or order will be issued or become enforceable. 3. During the time the equipment and documentation are in its possession, Seller at its own expense shall: 3.1 Develop and maintain the expertise to operate the equipment independent of LMC and ensure that the equipment complies at all times with all federal, state and local governmental safety and other requirements (including OHS regulations). If Seller determines that equipment received from LMC tails to comply with any such requirements, Seller shall notify LMC, and LMC shall either replace the equipment or instruct Seller to modify the equipment so that complies, at LMC's expense. 3.2 Replace or repair all items lost, damaged or destroyed except to the extent Seller proves to LMC that such loss, damage or destruction is caused by circumstances beyond Seller's control. All replacement equipment and documentation shall become LMC property and shall be subject to all the terms and conditions of this agreement. 3.3 Seller shall indemnify LMC for, and save LMC harmless from, all liability and expense, causes of action, suits and claims of any nature, arising out of or in connection with Seller's possession, operation, or maintenance of the equipment or failure of the equipment to comply with any federal, state, or local governmental safety or other requirement. However, Seller's indemnity and save harmless obligation shall not extend to personal jury liability arising from LMC's own negligence in servicing or maintaining the equipment identified in Schedule 4. NO WARRANTIES OR REPRESENTATIONS ARE MADE BY LMC WITH RESPECT TO TH EQUIPMENT OR DOCUMENATATION, INCLUDING THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. 5.LMC reserves the right to inspect the equipment and documentation at all reasonable times. Seller shall not move the equipment or documentation to another manutacturing location or to a supplier's location without the prior written approval of LMC. 6.Seller shall not alter any equipment in any manner whatsoever ithout the priorwritten approval of LMC. Further, Seller shall not purchase, design or fabricate any additional or replacement equipment for LMC ownership without the prior written approval of LMC. 7. The equipment shall be used only for work being performed by Seller for LMC and shall not be used for any other purpose whatsoever without the prior written approval of LMC. 8. Upon request, Seller shall furnish LMC drawings, photographs, instructions or such other material as may be necessary for identification or operation of the equipment. 9.Seller shall inventory all such property at LMC's request. 10.If for any reaps Seller is unable to continue production. he shall notify LMC immediately and LMC shall have the right to enter Seller's premises to remove he equipment and documentation, and Seller expressly waives any right or remedies Seller has with regard to the LMC equipment and documentation,including but not limited to any right Seller has to notice and a hearing or to a bond, undertaking or surety before a writ of replebine, order of seizure, or similar writ or order will be issued or become enforceable. 11. If, in order to perform the work required by an LMC purchase order, Seller orders from its suppliers any parts, material or other goods that require the use of any of the equipment or documentation for their production. Seller shall be responsible as provided in this agreement for any of the equipment or documentation which Seller may loan to its suppliers. Seller shall enter into a loan agreement with Seller's suppliers that will not diminish rights nor enlarge LMC's responsibilties, as defined in this agreement, with respect to the equipment or documentation loaned by the Seller to its suppliers. 12.Seller shall place the following ownership statement on all design, process,technical or other documentation generated by Seller in the performance of work for LMFS relating to the design, build or use of the equipment: "This document is the property of LMC. Its use is authorized only for responding to a Request for Quotation or

for performance of work for LMC." 13. The terms and conditions of this agreement shall prevail and take precedence over any inconsistency with or conflicting provision in any other documents,except as may be specifically agreed to in writing by LMC. By acknowledgement of this letter agreement, Seller agrees that the scope of work required is understood by the Seller; that there are no informal commitments by LMC, the Seller or the Government that in any way affect the work under this agreement; that there are not open or unresolved issues related to this agreement except as explicitly stated herein: and that Seller, therefore, understands and agrees with this letter agreement. This agreement is executed in duplicate originals as of the effective date specified on page 1. This agreement must be signed and returned to LMC within ten (10) working days after receipt.
BY: /s/David w. Batz TITLE. Sr. Subcontract Administrator DATE:October 18, 1999

SELLER. Northstar Technical Inc. 687 Water Street St. Johns, NF A1C 6J9 Canada
BY:/s/ Wilson Russell TITLE: CEO DATE: October 19, 1999

ATLANTIC CANADA OPPORTUNITIES AGENCY Newfoundland Office AAP Project No. 600-4031828-1 April 6, 1995 Northstar Technical Inc. 223 Duckworth Street St. John's, Newfoundland A1C 1G8 Attention: James Radford Dear Sir: Re: ACOA Action Program- (AAP) In response to your application dated February 1, 1995, the Atlantic Canada Opportunities Agency ("the Agency), hereby offers to provide a term loan to Northstar Technical Inc. ("the Applicant") upon the following terms and conditions. 1.00 Basis of offer
1.01 The Agreement resulting from the acceptance of this offer ("this Agreement") is made pursuant to the ACOA Action Program. This offer embodies and is subject to the Action Loan Regulations made pursuant to the Atlantic Canada Opportunities Agency Act. This Agreement is that which is referred to as the "Action Loan Agreement" in those Regulations and should there be a conflict between the conditions included in this Agreement and the said Regulations the latter shall prevail. The basis of this Aqreernent is that the Agency will make a Loan to the Applicant in consideration of the Applicant repaying the Loan in a manner set out in this offer and also carrying out the Project consistent with the term's and conditions which are detailed in this offer. In this Agreement, financial terms, unless the context indicates otherwise, should be interpreted in accordance with "generally accepted accounting principles" as determined by the handbook, as amended from time to time, published by the Canadian Institute of Chartered Accountants.

1.02

1.03 In this Agreement the following definitions shall apply: Control Period: means the period beginning on and including the day on which the first disbursement of the Loan is made and ending on and including the day on which the Loan and any accrued interest is fully repaid, or until otherwise discharged, to the satisfaction of the Agency. "Loan", is as described in Clause 3 in this Agreement. "Project", is as described in Clause 2 in this Agreement. "Comnencement Date", means the date on which, in the opinion of the Agency, the first major commitment is made by the applicant to implement the Project. "Completion Date", means the date on which, in the opinion of the Agency, all eligible costs have been incurred and the work completed to the satisfaction of the Agency.

2.00 The project 2.01 The project is that which is described in Annex I which is attached to and forms part of this Agreement as though the Annex and its provisions were set out in this Agreement. 2.02 The Applicant shall commence the Project on or before June 30, 1995. 2.03 The Applicant shall complete the Project to the satisfaction of the Agency on or before june 30, 1996. 3.00 The Loan 3.01 The principal amount of the loan shall be $150,000. 3.02 Disbursements (a) The first disbursement of the loan shall take place at the discretion of the Agency but shall not be later than June 30, 1995. (b) At the discretion of the Agency, a disbursement, not exceeding 25% of the Loan, may be made to the Applicant for the purchase of eligible.assets or services as described in Annex I, without the presentation of quotations or invoices. In that event, the Applicant must demonstrate to the satisfaction of the Agency that the disbursement was exclusively used for the purchase of eligible assets or services before any further disbursement can be made. (c) Disbursements may be made on a reimbursernent basis upon presentation of invoices together with satisfactory proof of payment, for eligible assets or services as described in Annex I or may be made jointly to the Applicant and Supplier(s) for eligible assets or services upon presentation of quotations or invoices. 3.03 Repayment The repayment of principal shall be in 24 consecutive monthly instalments of $6,250 on the first day of each month beginning with the month following the third anniversary of the date of the first disbursement. 3.04 rnterest Pavable (a) The Loan shall be interest free for a period of 2 years commencing on the date of the first disbursement (b) Beginning on the day following the day of the expiry at the interest free period, interest on the unpaid balance of the Loan is payable for a period of one year at the lowest published base rate of interest charged on that day by the Federal Business Development bank plus two percent. (c) Beginning on a day one year following the day of the expiry of the interest free period, interest is payable for the remainder of the Control period at the lowest published base rate of interest charged on that day by the Federal Business Development Bank plus four percent. (d) The interest rate established in the applicable foregoing paragraph (b) or (a), expressed as a percent rate per annum, shall be known as the "Annual Interest Rate". Interest on the Loan is to be payable on the first day of each month, in arrears, and is to be calculated by multiplying one twelfth of the Annual Interest Rate by the trainimum principal balance outstanding during the month. For any period of less than one month, the interest shall be calculated by dividing the number of days in the period by three hundred sixty and multiplying the result by the Annual Interest Rate and the minimum principal balance during the period. (e) Notwithstanding the foregoing, in the event that published base rates of interest charged by the Federal Business Development flank are unavailable for the applicable day or days as specified in the foregoing paragraphs (b) and (c) the published base rates for the day of the approval of the Loan shall be used. 4.00 Special Conditions 4.01 Pre-disbursement

(a) The Applicant shall provide to the Agency, prior to disbursement, complete information on all liens, unpaid taxes, debts and obligations. (b) The Applicant shall obtain equity satisfactory to the Agency, in the total amount of $43,000 prior to the date of the first disbursement of the Loan. This level of equity shall be maintained until the end of the Control period. (c) The Applicant shall inform the Agency promptly in writing of any other federal, provincial or municipal assistance which has been received or is to be received for the Project, and the Agency shall have the right to adjust the amount of the Loan to take into account the amount of any such further assistance that is to be received. 4.02 After Disbursement (a) The proceeds of the Loan shall be exclusively used for the purchase or eligible assets and services as indicated in the Project as described in Annex I. (b) The Applicant shall submit to the Agency, within 90 days of the end or each fiscal year for which the Control period is in effect, a copy of its annual auditor-prepared financial statements signed by an authorized officer of the Applicant. (c) The Applicant shall, at the discretion of the Agency, submit to the Agency, within 43 days of the end of each fiscal quarter of each fiscal year during the Control period, a copy of its interim, internally prepared, financial statements including a Balance Sheet and a statement of Profit and Loss signed by an authorized officer of the applicant. The Applicant shall promptly submit other or more frequent information, satisfactory to the Agency whenever requested to do so by the Agency. (d) The Applicant shall immediately notify the Agency in writing of any material change occurring during the Control Period, with respect to liens, debts, obliqations, Lines of credit or Term Loans (e) The Applicant shall not make changes to the capital Structure without the prior approval of the Agency (i.e. Preferred or Common Shares1 Shareholder Loans, etc.). (f) The Applicant shall not use any assets financed under the terms of this Agreement as specified or general security for any other debt or obligation, until the end of the control Period except with the prior approval of the Agency. (g) The Applicant shall not provide any loans, loan guarantees, or investments to any company, organization or individual until the end of the Control period. (h) The Applicant shall not pay any dividends whatsoever, nor make payments, except payments which are made in the normal course of. business and which reflect fair market value, to a parent company or any of its affiliates without the prior approval of the Agency until the end of the Control Period. (i) The Applicant shall not increase the total management remuneration, including salaries, fees and other benefits, until the end of the Control Period, except with prior approval of the Agency (j) The Applicant shall ensure that any insurance policy or policies on the fixed assets or inventory specify the Agency as the loss payee subordinate only to secured creditors. (k) The Applicant shall comply with environmental protection measures in relation to the Project that satisfy the requirements of all regulatory bodies of appropriate jurisdiction. (1) The Applicant shall obtain all necessary licences and perutits in relation to the Project that satisfy the requirements of all regulating bodies of appropriate juriadiotion. 5.00 Events of Default 5.01 The following shall constitute events of default by the Applicant. (a) The Applicant fails to make a repayment as provided in

Section 3.03, or an interest payment as provided in Section 3.04, or both. (b) The Applicant fails to comply fully with any term or condition at this Agreement. (c) The Applicant becomes bankrupt or insolvent, goes into receivership, or takes the benefit of any statute from time to time in force relating to bankrupt or insolvent debtors. (d) An order is made or resolution passed for the winding up of the Applicant, or the Applicant is dissolved. (e) In the opinion of the Agency the Applicant ceases to carry on business (f) The Applicant has submitted false or rnisleadinq information to the Agency. (g) The Applicant makes a false or misleading statement concerning assistance by the Agency in a prospectus or other document related to raising funds. (h) The Applicant is not entitled to the Loan. (i) The amount of the Loan exceeds the amount to which the Applicant is entitled. (j) The Applicant is in default of any other agreement with the Agency. 6.00 Remedies on Default 6.01 Should any event of default as provided in clause 5.01 occur, then the Agency may upon a formal demand in writing, require the Applicant to repay the entire Loan together with accrued interest and the amount on the date of such formal demand shall constitute a debt due to Her Majesty in the flight of Canada and may be recovered as such. 7.00 General conditions 7.01 The general conditions attached to this Agreement and designed "General Conditions" shall form part of this Agreement and shall be of the same force and effect as if they were contained in the body of this document. 8.00 Other Conditions 8.01 Public Announcement (a) The Applicant consents to a public announcement of the Project, by or on behalf of the Atlantic Canada Opportunities Agency. The Agency shall inform the Applicant of the date on which the announcement is to be made and the Applicant shall keep this offer conf idential until such date. After official announcement of this project by the Agency, or 60 days after the applicant's acceptance of this offer, whichever is earlier, information appearing on the Fact Sheet will be considered to be in the public domain. (b) The Applicant will advise the Agency at least 30 days in advance of any special event, (official opening, ribbon cutting, sod-turning, etc), the Applicant wishes to organize in connection with the Project. A ceremony shall only be held on a date which is mutually acceptable to the Minister and the Applicant. Furthermore, the Applicant consents to having the Minister or his designate participate in any such ceremony. 8.02 Notice (a) Any notice or correspondence to the Agency, including the attached duplicate copy of this Agreement signed by the Applicant, shall be addressed to: Atlantic Canada Opportunities Agency P.O. Eox 1060, station C Suite 801, Atlantic Place 215 Water Street St. John's, Newfoundland

A1C 5M5 Attention: Ms. Karen Skinner Account Manager or to such other address as is designated by the Agency in writing. 8.03 Entire Contract This Agreement, including the statement or Work and General conditions constitute the entire contract between the parties with respect to its subject matter. No amendment shall be made to this contract unless confirmed in writing. ANNEX 1 THE PROJECT Statement of Work Applicant: Northstar Technical Inc. Project No.: 600-4031828-1 Project Location: St. John's, Newfoundland Purpose: The Applicant is requesting assistance to fund working capital requirements associated with the production. sales, and service of the NETMIND trawl management system. program and Financing: ACOA Action Proqram (AAP)
Costs: Working capital $200,0O0 Financing Action Loan Internally Generated Funds Total $150,000 50,000 $200,000

Total

$200,000

Estimated Project Start Date: June 30, 1995 Estimated Project completion Date: June 30, 1996 Form of Equity: Share capital, Subordinated Loans, Retained Earnings. Eligible costs: Eligible costs are $200,000 comprised of the following items: Equipment Internal Labour Sub-Contractors Rental Materials Communications Administration This offer will remain open for 40 daye from its date and will be considered to have been accepted on receipt of the duplicate copy of the offer, duly and unconditionally executed by the Applicant.

If further information is required, please contact your Account Manager, Ms. Karen Skinner, at (709) 772-2753. Yours truly.
/s/Phonse Leonard Manager ACOA programs

Attachments: Annex 1 - The Project - Statement of Work The foregoing offer is hereby accepted this 7th day of April, 1995 Northatar Technical Inc. AAP Project No. 600-4031825-1
Per: /s/ Jim Radford Title: Vice-president

(Corporate seal)

NATIONAL RESEARCH COUNSIL Newfoundland and Labrador Region May 18,1995 Mr. J Redford Nortbstar Technical Inc 80 Glencoe Drive P.O Box 13488 St John's NF A1B 4B5 Dear Sir: RE: LETTER OF ARRANGEMENT Project: #03978E Title: Technology Enhancement of the NETMIND System, Distance Measuring Pair Date Received: May 9, 1995 We are pleased to advise you that your 1)roposaI for the above project has been approved for support under the NRC Industrial Research Assistance Program (IRAP). IRAP amount and timing of contribution is as shown in the following table:
Govt' Fiscal YEAR 1995/96 Internal Company COSTS $28,900 External Company COSTS $1,100 Total Contributions by NRC COST DATES $30,000 May 22/95 to 8/95

TOTAL.........................$30,000

Further details of IRAP contributions are given in the attached RDA-3 form. It is agreed that IRAP will contribute to research in support of the following objectives: (1)determine exact parameters (2)verify the parameters and, (3)minimize the negative implications of parameter choices. A Work Plan for the above project is attached A copy of your company's agreement with each consultant or subcontractor, employed on the project must be sent Mr. D.K. Bailey, IRAP Project Manager. Your company is requested to provide the IRAP project Manager with the following: -monthly invoices accompanied by a brief (1-2 page) status report outlining tasks accomplished and if is proceeding as planned, -final Project Technical Report and final invoice by September 8/95, which is considered as the Project Completion Date and, -Project Audit report by your company's duly appointed external auditors by December 8,1995 Please see attached "Instructions of External Auditors".

Any extension to the approved funding or to the project completion date will only be considered after receipt and acceptance of a report indicating satisfactory progress and an updated Work Plan by July 8, 1995. Would you please notify us of your acceptance of this assistance and of the attached "Conditions of Contributions" dated September 1993, by signing and returning one complete copy of this letter and the Conditions of Contribution to the address indicated on the first page. Please note in particular Condition No.4, regarding acknowledgement IRAP assistance in media announcments or technical publications(but not commercial literature), Condition No. 12, regarding the audit of the project, Condition No. 15, regarding invoicing, and Condition No.21, which deals with the ownership of the technology to be developed. This letter of Arrangement, along with the enclosed Work Plan, Form RDA-3, and Conditions of Contribution, when signed by an authorized official at your company and af the National Research Council, comprises your agreement with NRC/IRAP. As soon as we have received notice of your acceptaince of this support, we will send you the documentation required for claims against the NRC Contribution. Your truly,
/s/ David W. Rideout Regional Director attachments ACCEPTED: /s/ Wilson E. Russell-President Northstar Technical, Inc. signed at St. John's this 29th day May 1995.

October 23, 1995 Northstar Technical, Inc. 80 Glencoe Drive P.O. Box 13458 St John', N.F. A1B4B8 RE: Technology Enhancement of the NETMIND System, PC Based Deck Unit, RDA #04132E We are pleased to advise you that your proposal for the above-referenced project has been approved for support under the NRC Industrial Research Assistance Program (IRAP). You will find enclosed two copies of the Contribution Agreement. Please have a duly authorized officer of your Firm sign both copies and return one to: National Research Counci 136 Crosbie Pond St .Iohn's N.F. A1B 3K3 You will also find enclosed claim statement forms: For refernece purposes, the project no. 04132E should be used on all future correspondence relating to this project. For matters pertaining to this Agreement, please contact David K Bailey at (709)772-5228. Yours Sincerely,
/s/ David W. Rideout Regional Director Enclosures

CONDITIONS OF CONTRIBUTIONS: This Contribution Agreement is conditional upon the Firm's adherence to all conditions set out below. A breach of any of the following conditions, or a submission to NRC of falsr or misleading information is grounds for suspension or immediate termination of NRC's Financal assistance to the project, in addition to any other action permitted by law. NRC will notify the Firm, in writting, of any such suspension or termination. Failure on the part of NRC to act on any breach does not constitute a waiver of NRC's right to act on that or any other breach of the following conditions: 1. The Firm must undertake the project as described in the Statement of Work. Any significant of change proposed in relation to anything that is written in the Statementof Work or the Basis of Payment requires an amendment to this agreement signed by both the Firm and NRC. 2. The Firm must submit reports and claims to NRC as specified in the Basis of Payment. Payment of claims is contingent upon receipt of reports. 3. The Firm must notify NRC in writing if it seeks or receives financial assistance for the project from a government at any level, beyond that disclosed in the Firm's proposal for the project. In Such cases, NRC reserves ttne right to reduce the amount of its contribution to the project. 4.The Firm must maintain adequate records of the research conducted for the project and of direct and indirect costs incurred on the project. Upon reasonable written notice by NRC, the Firm must take such records available to authorized representatives at NRC for inspection, auditing, or copying, and must permit authorized

representatives of NRC to have access to the Firm's facilities and personnel for the purpose of inspection and interviewing. The Firm must obtain an audit of the project from an external auditor upon the request of NRC. The auditor is required to follow "Instructions for "External Auditors" which will be supplies by NRC. This clause 4 remains in effect for 2 years after the termination of the project. 5. inc tirm mus-, rtaintain data relating to the economic benefits traceable to the project for at least the first five years of their commercial significance to the Firm, and pro--ude NRC with such data upon recuest. 6. The Firm must demonstrate, to the satisfaction of NRC, acceptable performance of the project and capability of continuing the project. The Firm must permit NRC to inspect the facilities used by the Firm in connection with the project, and to discuss the project with IRAP-supported personnel. 7. The Firm must contributed its agreed portion of the total project costs. If the Firm has not contributed its share as agreed in the Basis of of Payment, or if the funds were not spent as intended, NRC shall be entitled to claim a refund up to the percentage by which the Firm's contribution has fallen short of the agreed amount. 8.The Firm must make reasonable efforts to protect intellectual property arising from the project, If a patent appears possible but tha Firm does not want to apply for it the Firm must offer to assign ownership of the invention to NRC, without charge. 9. The Firm must obtain prior written consent from NRC if, at any time during the project or within five years after the end of the project the Firm intends: (a) to enter into third party agreernents that would limit the Firm's control of the results derived from the project, (b) to do part of the project outside Canada, (c) to manufacture using the results of the project outside Canada, or (d) to sell, assign, transfer, or otherwise dispose of any rights to intellectual property arising out of the project to any person or organization Outside Canada, or to any government other than the Government of Canada. 10. The Firm must indicate in writing, or by a clear label, the confidentiality of any specific information which it wishes' to be treated as confidential by NRC. Protection from third-party access to confidential business information supplied to NRC is provided by the federal Access to information Act. 11.The Firm must provide to NRC the names of employees and major shareholders who were formerly employed in the federal public service at or above the Senior Manager Level, with a written confirmation of compliance with the post-employment provisions of the federal "Conflict of Interest and Post Employment Code", No member of the House of Commons shall be admitted to any share or part of this agreement or to any resulting benefit. 12.The Firm must maintain environmental protection measures in relation to the project that satisfy the requirement of all relevant regulatory bodies. The Firm must comply with protocols that have been established in relation to aspects of the project involving human subjects, animals, and biohazardous material. 13.This agreement terminates immediately if the Firm ceases operations, assigns its rights under this agreement, enters into receivership, or becomes insolvent or bankrupt. 14.The Firm must indemnify NRC in respect of any claim against NRC by a third party resulting directly or indirectly from the project. The Firm must not take action against NRC for failure or delay in performance caused by circumstances beyond NRC's reasonable control, nor for incorrectness of data supplied,advice given, or opinions expressed in relation to the project. 15.Either party may terminate this agreement for any reason, by giving the other party notice in writing. A notice given by NRC must allow at l least two months before the termination. The Firm shall have no obligation to NRC to work on the project after notice is given or received, and NRC shall not reimburse costs incurred subsequent to the termination date, nor any costs incurred at a rate greater than the typical rate before the notice was given. Any termination is without prejudice to the rights and obligations of the parties which have accrued before termination, and the obligations to protect intellectual property and submit reports continue. CONTRIBUTION AGREEMENT

Project Number: 04732E Between: National Research Council of Canada 136 Crosbie Road St. John's, NF A1B 3K3 AND: Northstar Technical Inc. 8O Glencoe Drive P.O. Box 13458 St. John's, NF A1B 4B5 (herein called the Firm) 1. This agreement comes into effect on the 25th day of September 1995 and terminates on the 12th day of March, 1996. 2. The NRC agrees to contribute up to a maximum of $36,500 for research and development undertaken by the Firm as described in the attached Statement of Work and in accordance with the attached Basis of Payment and Conditions of Contribution. 3. The Firm agrees to undertake the work described in the Statement of Work and understands and accepts all the Conditions of Contribution. 4 This agreement shall become null and void if not signed and returned to NRC within thirty (30) days ot the effective date. National Research Council of Canada
/s/ David Rideout Regional Director, Newfoundland

Date: Oct. 23, 1995

Firm Northstar Technical, Inc /s/ James Radford Operations Manager

Date: Oct. 23, 1995

TEAMING AGREEMENT Between Loral Librascope Corporation and Northstar Technical, Incorporated 1.0 PURPOSE 1.1 This Agreement, effective as of 15 November 1995 is betweenLoral Librascope Corporation (hereinafter "Loral") andNorthstar Technical Incorporated (hereinafter "you" or "your")and defines the parties' respective responsibilities relative to the Canadian submarine Capability Life Extension Program, proposal 5F-9025-W, (hereinafter "Program") . The obligations and commitments arising hereunder shall apply only to such units and Program and not to any other sector, group, division, subsidiary or affiliate of the parties, or any other program or opportunity respectively. 2.0 INTENT TO TEAM 2.1 Loral intends to prepare and submit a proposal for the Program prime contract. subject to your agreement as provided herein,and to receiving an acceptable cost and technical proposal,Loral intends to name your company as the proposed subcontractor for the Program for the following specific tasks: assemble and test ten multifunction workstations. Four command display consoles will be added if acceptance issues are resolved. Your company will also be strongly considered for the fabrication of cabinets for these workstations. 2.2 Loral agrees to recognize your contribution in the proposal and, if awarded a prime contract resulting from this proposal,will award a subcontract to your company for the specific areas of responsibility set forth in paragraph 2.1 to the extent they are included in Lorat's prime contract, provided: a) your cumulative performance under this Agreement has been satisfactory; b) the award of such subcontract will be acceptable to the customer; and c) we successfully negotiate mutually acceptable terms and conditions, including competitive prices, and other provisions required by law or regulations as well as terms or conditions consistent with the. prime contract which Loral deems necessary for efficient contract administration and/or prime contract compliance. 3.0 PROPOSAL PREPARATION 3.1 This proposal is being prepared at Loral's facility located at 811 Sonora Ave., Glendale, California 91201. Mr. L. F. Fox is acting as our Proposal Manager for this program and Interface Representative for this Agreement. The parties will work cooperatively and exert all reasonable efforts to produce a proposal which will cause the selection of Loral as the Prime contractor for the Program and the acceptance of your company as the subcontractor for the work identified in paragraph 2.1 You agree to supply in a timely fashion necessary liaison effort (if required) to draft and write that portion of the proposal within your specific area of responsibility and to furnish Loral with all information necessary for the submittal of the most responsible proposal practicable. It is anticipated that all effort as described above will be made available to Loral no later than December 21, 1995. In addition to performing the specific proposal activity associated with your anticipated work scope, you agree to perform the following activities or provide the following resources in support of the overall proposal effort: support liaison with Provincial companies and Governmental agencies. 3.2 Loral shall have the overall responsibility for final preparation and submittal of this proposal and shall be designated in the proposal as prime contractor and Northstar Technical as subcontractor. 4.0 ALLOCATION OF COSTS 4.1 Each party will perform all responsibilities under this Agreement at no cost to the other. 5.0 CONFIDENTIAL OBLIGATIONS 5.1 It is understood that during the course of this agreement, it will not be necessary for either party to disclose any company confidential proprietary information to the other - OR - During the term of this agreement, it may be

necessary foreither party to provide confidential information to the other.In such event, the disclosure and use of all confidential proprietary information shall be in accordance with a Confidential Disclosure Agreement. 5.2 Northstar Technical agrees not to use any confidential proprietary information, product or data of any third party in performance of this Agreement without the prior written consent of the third party. Such written consent shall be provided to Loral immediately upon receipt from such third party. 6.0 TERM OF AGREEMENT 6.1 This agreement shall remain in effect until the first of the following shall occur: a) Loral awards a subcontract to you pursuant to this Agreement or the parties are unable to agree to acceptable terms and conditions, including competitive price. b) Twelve months from the date of agreement. c) Award of a prime contract for this program to an organization other than Loral (unless Loral initiates a protest of such award, then until such protest is finally decided against Loral). d) Cancellation of the requirement by the customer. e) Disapproval by the customer of the award of a subcontract to you. f) The elimination or substantial reduction by the Government of the subcontract work to be performed by Northstar Technical. g) Written notice by Loral that it will not submit a proposal for the program. 7.0. FREEDOM TO MARKET AND EXCLUSIONS 7.1 Except as limited by paragraph 7.2., it is understood that neither party shall be precluded from its normal marketing efforts in connection with the sale of its products and/or services, including sales efforts to organizations submitting proposals competitive to that contemplated by this agreement. 7.2 Both Northstar Technical and Loral will be expending effort at their own expense with a view toward developing the best approach to the opportunity. In recognition thereof, except as limited by any Confidential Disclosure Agreement, both parties agree that the joint work product resulting from our combined efforts which is unique to the proposal contemplated by this Agreement will not knowingly be disclosed to anyone competing for this same program until such time as the award has been made, the opportunity is canceled or withdrawn, or this Teaming Agreement is no longer in effect. 7.3 Each party shall act as an independent contractor. No agency, partnership, joint venture or other joint relationship is created by this agreement or any reference to the parties operating as a "team" or as "team members". Neither party shall be liable to the other for any costs, expenses, risks or liabilities, including special, consequential, or incidental damages, arising out of the other company's efforts in connection with this agreement or the preparation and submission of any proposal for the Program. 8.0 INTELLECTUAL PROPERTY 8.1 The parties agree that during the course of the work called for by this Agreement, inventions shall be subject to the following understanding: a) Each invention, discovery, process, or improvement, whether patentable or not, (hereinafter referred to as "Invention") conceived or first actually reduced to practice, by one or more employees of one of the parties hereto and resulting directly from the exchange of information during the course of this Agreement, relative to work performed in carrying out effort contemplated by the Agreement, shall be the sole property of the party whose employee(s) made or conceived the Invention and shall be identified to the other party; provided however, that the other party hereto is hereby granted a non-exclusive irrevocable, nontransferable paid-up license throughout the world under such inventions; said license includes the right to make, have made, use, have used,

any Product and/or practice and have practiced any Method. All licenses granted shall include the right of a grantee to grant sublicenses to its parent corporation or subsidiaries with such sublicenses including the right of sublicensed parent or subsidiaries correspondingly to sublicense other subsidiaries. b) Any Invention conceived or first actually reduced to practice jointly by employees of both parties hereto, and resulting from the exchange of information during the course of this Agreement relative to work performed in carrying out the effort contemplated by this Agreement, shall be jointly owned by both parties hereto without accounting. Patent applications covering such joint inventions shall be filed by attorneys mutually acceptable to both parties hereto and the costs therefore shall be equally shared. c) Nothing herein is intended nor implied to affect the rights of the parties with respect to pre-existing patents or patent applications respectively held or made by the parties. Further, except as specifically provided in Subsection 8.1(a) and 8.1(b), nothing contained in this Agreement shall: 1) be deemed to grant either directly or by implication, estoppel, or otherwise, any license under any other patents or patent applications arising out of any other Inventions of either party; or 2) be construed as affecting the scope of any license or other right otherwise granted to a party under any other patent or patent application. 8.2 The parties do not contemplate that any joint development of code, modification of the other party's code, or the creation of other copyrightable work of significant commercial value will occur under this Teaming Agreement; however, any copyrightable works which are developed jointly by employees of both parties during the term of, and pursuant to, this Agreement shall be jointly owned, with each party having the right, subject to any applicable limitations on the disclosure of bid or other confidential information to freely use such joint works and derivatives thereof and to license others without accounting. 9.0 RIGHT OF WITHDRAWAL 9.1 If, during this relationship, there is a significant change in the requirement being addressed by the parties such that one or both no longer have the capability to satisfactorily address such requirements, either party may withdraw from this agreement by advising the other party in writing not less thanten (10) days prior to date of withdrawal. 9.2 If, during this relationship, there is a significant change in the ability of Northstar Technical to satisfactorily address the specific areas of responsibility set forth in Section 2.1,e.g., including but not limited to:debarment or the filing of a petition or bankruptcy or reorganization under the bankruptcy laws; the loss of strategically valuable employees and failure to provide replacement employees of comparable expertise within a reasonable time; the loss or material degradation of corporate capabilities which are essential to the program requirements; a violation of State or Federal laws or regulations and such violation in the reasonable judgment of Loral will adversely impact the likelihood of a prime contract award to Loral; conduct by the principal officers of Northstar Technical evincing moral turpitude; or, any other action which jeopardizes the likelihood of a prime contract to Loral, Loral may withdraw from this Agreement by advising Northstar Technical in writing not less than ten (10) days prior to the date of withdrawal. 9.3 In the event of any withdrawal, both parties are bound to honor the provisions of paragraph 5.0 covering confidential proprietary information. 10.0 TERMINATION FOR DEFAULT 10.1 This Agreement may be terminated for default by either party(hereinafter "the terminating party) in the event of the other party's material breach of any obligation, warranty or representation specified under this Agreement which is not a) it is capable pf performing all of its obligations under Program any work contemplatedEhereby without assistance from the other party hereto or any third party except as may be provided for herein or in the subcontract); b) it is not subject to any restriction, contractual or otherwise (except as provided herein), which limits in any manner its ability to perform any of its obligations under this Agreement or any subcontract arising out of this Agreement, including but not limited to any agreement, covenant, duty or understanding regarding any proprietary

information, product, or data of any third party to which it is a party or by the terms of which it may be bound; and c) it is a responsible contractor and has not been debarred or suspended from Government contracting by any agency of the United States Government or Canadian Government. 20.0 SIGNED AGREEMENT If the foregoing meets with your approval, please indicate your acceptance by having an authorized representative of your company sign one copy of this agreement in the space provided and return it to the above address. ACCEPTED: Northstar Technical Corporation
By:/s/ Wislon Russell Title: Chairman and CEO Date: 11/25/95

Loral Librascope Corporation
By: /s/ Edward J. Arnold Title:President Date: 11/22/95

ATLANTIC CANADA OPPORTUNITIES AGENCY Newfoundland Office St. John, NFLD. AAP Project No. 600-4024021-1 March 5, 1996 Northatar Technical Inc. 60 Glenoce Drive Donovan's Industrial Park St. John's, Newfoundland A1B 4B8 Attention. Mr. Wilson E. Russell Chairman/CEO Dear Sir: RE: ACOA Action Program (AAP) In response to your letter of February 22, 1996, requesting an amendment to our Letter of Offer dated June 9, 1993, as amended May 11, 1994, the Atlantic Canada Opportunities Agency (ACOA) has approved your request and hereby amends your contract. Accordingly, subsections 4.04 (b) and (c) are deleted and subsection 4.04(a) of the aforementioned Letter of offer is deleted and replaced as follows: 4.04 (a) The Applicant shall repay the Contribution to the Agency in 5 annual and consecutive installments beginning in May, 1997. In addition, Annex 1 and 2 have been amended as per the enclosed revised copies. All other terms and conditions of our Letter of Offer dated June 9, 1993, as amended May 11, 1994, remain unchanged. To signify your acceptance of this amendment, please return the second copy of this letter unconditionally accepted and duly executed by appropriate officials within 30 days from the date that appears on its face. should you have any questions concerning this matter, please contact Ms. Karen Skinner at (709) 772-2753 Yours truly,
/s/Richard Comerford Director Business Programs

Annexes: Annex 1 - The Project - Statement of Work Annex 2 - Project Fact Sheet for News Release The foregoing amendment is hereby accepted the 5th day of March, 1996. Northstar Technical Inc. ALP Projoct No. EOO-4024021-1
Per:/s/Wilson E. Russell Chairman and CEO (Corporate Seal)

ANNEX 1

THE PROJECT Statement of Work Applicant: Northatar Technical Inc. Project No.: 600-4024021-1 Project Location: St. John's, Newfonndland The Applicant will complete the development of their Trawl Manager System and bring it to full comercializatian including all field testing and final packaging. Program and Financing: ACOA Action Program
Cost: Project Costs $300,509 Financing AAP Repayable Contribution $195,331

Applicant $105,178 Total.........$300,509 Total........$300,509 Timing. Estimated Project Start Date: August 31, 1993 Estimated Project Completion Date: December 31, 1994 Form of Equity: Subordinated Shareholder Loans ANNEX 2 PROJECT FACT SHEET FOR NEWS RELEASE Program: Project No:600-4024021-1 ACOA Action Program Account Manager:Ms. Karen Skinner
Name & Addrens of Applicant: Northstar Technical Inc. 80 Glencoe Drive Donovan's Industrial Park St. John's, Newfoundland A1B 4B8 Project Location. St. John's. Newfoundland Industrial Sector: Manufacturing Product/service: Trawl Manager System Applicant Contact: Name: Wilson E. Russell Title: Chairman/CEO Telephone: (709) 745-6440

Project Type: Innovation

Project Description: The applicant will complete the developinent of their Trawl Manager System and bring it to full commercialization

including all field testing and final packaging. Estimated Total Costs:$300,509 Estimated Eligible Cost: $300,509 Authorized Assistance:$195,331 (65% repayable contribution) Impact on Jobs: create 6 Estimated Sales Resulting from Project : 1 million per year Estimated Project Start Date: Angust 31. 1993 Estimated Project Completion Date: December 31, 1994

NATIONAL RESEARCH COUNCIL Newfounland and Labrador Region NRC-CNRC 27 March 1997 Northstar Technical Inc. P.O. Box 13397 St- John's, NF Al B 4R7 Attention: Mr. Wilson Russell Amendment No.1 Re: Contribution Agreement for Project No. 04702E Project Title: Headline Height Project The above referenced Contribution Agreement is hereby amended follows: a) The completion date for this agreement has been changed from of January 1997 to 7th day of March 1997. b) Delete Basis of Payment 1.0 and replace with the revised version shown in bold italics on the attachment. All other terms and conditions remain unchanged. The amended version ot the Contribution Agreement is in effect starting on the 25th. day of November 1996. Please have a duly authorized officer of your firm sign both copies of this amendment and return one copy to: Dave Rideout Regional Director National Research Council 136 Crosbie Road St. John's, NF A1R 3K3 # 04702E - Amendment No.1 This amendment shall become null and void if not signed and returned to NRC within thirtv days of the date of the signature of the Regional Director. NATIONAL RESEARCH COUNCIL
/s/ David W. Rideout IRAP Regional Director NORTHSTAR TECHNICAL INC. /s/ Wilson Russell President Date: March 27, 1997 ' Date: March 27, 1997

# 04702E - Amendment No.1 1.0 NRC agrees to reimburse the Firm for work performed on the R&D project as follows: The actual direct costs incurred over the project period expended by the research iteam under this agreement up to a maximum of $35,500. Allowable direct cost under this agreement are: client direct labour, consultants direct labour. NATIONAL RESEARCH COUNCIL

Northstar Technical, Inc. P.O. Box 13397 St. John's, NF AIB 4B7 Dear Sir: RE: Headline Height Project We are pleased to advise you that your proposal for the above-referenced project has been approved for support under the NRC Industrial Research Assistance Program (IRAP). You will find enclosed two copies Of the Contribution Agreement. Please have a duly authorized officer of your Firm sign both copies and return one to: National Research Council 136 Crosbie Road St.John's, NF A1B 3K3 Under BASIS OF PAYMENT, Section 5.0, please take particular note of condition No.3. For reference purposes, the project no. 04702E should be used on all future correspondence relating to this project. You will also find enclosed claim statement forms. For matters pertaining to this agreement, Please contact: ITA David K. Bailey at #772-5228. Yours sincerely,
/s/ David Rideout, M. Eng Regional Director

CONTRIBUTION AGREEMENT This Agreement is made in duplicate Between: National Research Council of Canada 136 Crosbie Road St. John's, NF A1B 3K3 (herein called the NRC) Project Number: 04702E And: Northstar Technical Inc. P.O. BOX 13397 St. John's, NF AiB 4B7 (herein called the Firm) 1. This agreement comes into effect on the 25th day of November 1996 and terminates on the 31st day of January 1997. 2. The NRC agrees to contribute up to a maximum of $35,500 for research and development undertaken by the Firm as described in the attached Statement of Work and in accordance with the attached Basis of Payment and Conditions of Contribution.

3. The Firm agrees to undertake the work described in the Statement of Work and understandsand accepts all the Conditions of Contribution. 4. This agreement shall become null and void if not signed and returned to NRC within thirty (30) days of the signature date of the Regional Director. NATIONAL RESEARCH COUNCIL of CANADA
/s/ David Rideout Regional Director, Newfoundland

Date: December 19, 1996

NORTHSTAR TECHNICAL INC. /s/ Wilson Russell President Date January 15, 1997

NATIONAL RESEARCH COUNCIL Idustrial Research Assistance Program Newfoundland and Labrador Region November 28. 1997 Northstar Technical Inc. 80 Glencoe Drive P.O. Box 13397 St. John's. NF A1B 4B7 Dear Sir: Subject: Technology Development of the Netmind Systems Grid Sensor Project #O51OOE We are pleased to advise you that your proposal for the above-referenced project has been approved for support under the NRC Industrial Research Assistance Program (IRAP). You will find enclosed two copies of the Contribution Agreement. Please have a duly authorized officer of your Firm sign both copies and return one copy to: Mr. David W. Rideout Regional Director National Research Council 136 Crosbie Road St. John's, NF A1B 3K3 For reference purposes. the project No.05100E should be used on all future correspondence relating to this project. For matters pertaining to this Agreement. please contact David Bailey, ITA at 772-5228. Yours truly.
/s/ David W. Rideout, M. Eng Regional Director

Enclosures Industrial Research Assistance Program Contribution Agreement Project No: 05510E This Agreement is made in DuplicateBetween: National Research Council of Canada Kerwin Place, Memorial University Campus P.O. Box 12093, Ste. A St. John's, NF A1B 3T5 (herein called the NRC) And: Nortnstar Technical Inc 80 Glencoe Drive

St. John's. NF AlB 4B7 (herein called Firm) 1.This agreement comes into effect on tne 1st day of October 1997 and terminates on tne 15th day of May 1998 2.The NRC agrees to contribute up to a maximum of $90,300 for research and development undertaken by the Firm as described in the attached Statement of Work (SW) and in accordance with the attached Basis of Payment (BP) and Conditions of Contribution (CC). 3.The Firm agrees to undertake tne work described in the statement of Work and understands and accepts all the Conditions of Contribution. 4 This agreement shall become null and void it not signed and returned to NRC within thirty (30) days of the signature date of the authorized officer of the NRC National Research Council Canada
/s/ David Rideout Regional Director Date: Nov. 14, 1997

Northstar Tecnnical Inc /s/ Jim Hall Production Manager

Date: Nov. 28, 1997

NATIONAL RESEARCH COUNCIL CANADA Industrial Research Assistance Program Newfoundland and Labrador Region June 10,1998 Northstar Technical Inc. 597 Water Street St. John's, NF AiC 6J9 Attention: Jim Hall: Subject: Contribution Agreement No.300062 (previously O51OOE) Amendment No. 1 The above-referenced Contribution Agreement is hereby amended as follows: a) Under Article 1.0 of the Cover Page, change the termination date from May 15, 1998 to August 15,1998. b) Under the Statement of Work, change the following completion dates of the Task(s) named below to dates indicated: Task 4.24 Estimated completion date August15, 1998 c) Under the Basis of Payment, delete Article 4 and replace with: Final Report due: August 15, 1998; Project Follow-up form and Final invoice due: August 15, 1998. All other terms and conditions remain unchanged. The amended version of the Contribution Agreement is in effect starting May 15,1998.

Please have a duly authorized officer of your Firm sign both copies of this amendment and return one copy to: David W. Rideout National Research Council Industrial Research Assistance Program Kerwin Place, MUN Campus P.O. Box 12093 Stn. A St. John's, NE A1B 3K3 If not signed and returned to NRC within thirty days of This amendment shall becorne null and void the date of this letter. National Research Council
/s/ David W. Rideout Regional Director, Newfounland Northstar Technical Inc. /s/ Jim Hall Production Manager DATE: June 11, 1998

DATE: June 15, 1998

ATLANTIC CANADA OPPORTUNITIES AGENCY Newfoundland Office Project No.: 620-4032924-1 April 10, 1997 Northstar Technical Inc. P0. Box 13397 St. John's, Newfoundland AlE 4B7 Attention Mr Wilson Russell- President Dear Sir: Re: ACOA Business Development Program In response to your application dated December 3, 1996, the Atlantic Canada Opportunities Agency ("the Agency"), hereby offers to make a repayable contribution to Northstar Technical Inc. ("the Applicant") upon the following Terms and Conditions: 1.00 Contribution 1.01 Subject to all other provisions of this Agreement, the Agency will make a repayable contribution ("the Contribution") to the applicant to assist in the execution by the Applicant ofthe project as described and defined in Annex 1 (Statement of Work) calculated as the lesser of (a) and (b) as follows: (a) (1) 50% of eligible capital costs estimated to be $88,200; plus (2) 50% of working capital requirements estimated to be $197,000; plus (3) 75% of the fees to be incurred for the engagement of expertise estimated to be $60,000; plus (4) 75% of marketing related activities estimated to be $64,750; and (b) $236,163. 2.00 2.Ol Advance Payment At the discretion of the Agency and at the request of the Applicant, an advance payment not exceeding 40% of the Contribution, may be made to the Applicant based on a three (3) month forecast of cash requirements pertaining to eligible costs to be incurred in accordance with the Statement of Work Except where the Agency has given specific permission to the contrary, the Applicant must demonstrate to the satisfaction of the Agency that the advance was applied exclusively to the payment of eligible costs within six (6) months after the date of the disbursement. Progress Payments: At the request of the Applicant the Agency may make progress payments to the Applicant based on claims for eligible costs which have been incurred. Each claim shall be completed in accordance with instructions to be provided by the Agency to the Applicant. JointPayments: At the discretion of the Agency or at the request of the Applicant, the Agency may make a payment's Jointly to the Applicant and the supplier for eligible costs which have been incurred.

Final Payments: Notwithstanding the foregoing, 10% of the contribution will normally be reserved for a final payment to be based on a claim submitted by the Applicant at the time of Project Completion and normally after all eligible costs have been incurred and paid. 2.02 It is a requirement of this agreement that the Applicant shall keep the original invoices and proof of payment for all claimed costs readily available for examination by the Agency during any payment verification ot audit and until 36 months following the end of the Control Period. 3.00 Repayment Terms 3.01 The Applicant shall repay the Contribution to the Agency in thirty-six (36) consecutive monthly instalments of $6,560 each commencing on July 1, 1998 and ending on June 1, 2001 however, the last instalment will be adjusted to include all sums owing. 3.02 The Applicant shall, at the request of the Agency, on or before each Anniversary of the Project Completion Date, provide the Agency with post dated cheques or arrange pre-authorized payments for any repayments scheduled in the next twelve months. 3.03 The Applicant shall pay interest on overdue repayment instalments at rate 3% higher than the Bank Rate as determined by the Bank of Canada for the day the first disbursement on account of the repayable contribution was made to the Applicant. 3.04 The Applicant may, at any time, make prepayments on account of repayment instalments and each such prepayment will be applied first to interest owing and secondly to repayment instalments in reverse order of maturity. 4.00 Conditions 4.01 The Agency shall not contribute to any cost incurred by the Applicant prior to December 5, 1996. 4.02 As a condition of the Agency's assistance, (a) The Applicant shall ensure the Project commences on or before June 1,1997. (b) The Applicant shall ensure the Project is completed as described in the Statementof Work on or before June 1,1998. 4.03 The Applicant shall inform the Agency promptly in writing of any assistance from other federal, provincial or municipal sources which had been received or is to be received for the Project, the Agency shall have the right to adjust the amount of the assistance to take into account the amount of any such further assistance received. 4.04 The Applicant shall comply with environmental protection measures in relation to theProject that satisfy the requirements of all regulatory bodies of appropriate jurisdiction. 4.05 The Applicant shall attain equity, satisfictory to the Agency, in the total amount of $350,000 on or before the date of the first disbursement by the Agency to the Applicant. 4.06 Unless otherwise authorized by the Agency in writing, this level of equity shall be maintained until the end of the control period. 4.07 Prior to the end of the control penod, the Applicant shall not pay any dividends whatsoever, make payments to a parent Company or any of its affiliates, nor payoutshareholders loans without the approval of the Agency. 4.08 The Applicant, on or before the date of disbursement shall obtain the following financing: Additional Equity $75,000

5.01 From the date of Project Commencement until the Project Completion date, the Applicant shall submit, at the request of the Agency, status r reports on the progress and results of the Project in a form satisfactory to the Agency. 5.02 The Applicant shall submit to the Agency, within 90 days of the end of each fiscal year which commences before end of the Control Period, as defined in the attached general conditions, a copy of its unaudited financial statements. 6.00 NOTICE 6.01 Any notice or correspondence to the Agency, including the attached duplicate copy ofthis Agreement signed by the Applicant, shall he addressed to: Atlantic Canada Opportunities Agency P.O Box 1060, Station "C" Suite 801, Atlantic Place St. John's, Newfoundland A1C 5M5 Attention: Ms. Jocelyn Chaytor Account Manager or to such address as is designated by the Agency in writing. 7.00 Entire Contract 7.01 This offer, if accepted, including Annex I (Statement of Work), Sheet for News Release) and Annex 3 (General Conditions) will constitute the entire agreement between the parties with respect to its subject matter. No amendments shall be made to the resulting contract unless confirmed in writing. This offer is open for acceptance for 60 days from the date that appears on its race. The date of acceptance shall be the date the duplicate copy or this offer, unconditionally accepted and duly executed by the Applicant is received by the Agency. ANNEX I Statement of Work Applicant: Northstar Technical Inc. Project No: 620-4032924-1 Project Location: Mount Pearl, Newfoundland Project Description: The Applicant will create a Contracts Management Division) in parallel with the existing NETMIMD production facility, aimed primarily at manufacturing control consoles for submarines and surface ships, sonar arrays for navies and offshore petroleum seismic exploration, and contract work on Major Crown Projects. In addition, it will target contracts pertaining to other Canadian Government Procurement, Federal Department Operations and Maintenance, and U.S, Defence activities. Project and Financing: Business Development Program (BDP)
Total Cost Leasehold Improvements $ 2Q000 Machinery/Equipment 88,200 Office Equipment 9,900 Working Capital 326,000 Consultants 60,000 Internal Labor Training 27,500 Marketing 76,000 Financing ACOA Repayable Contribution $236,163 Cashflow 146,437 Additional Equity 225,000

Total.......................$607,600

Total.................$607,600

Timing: Estimated Project Commencement Date: June 1,1997 Estimated Completion Date: June 1,1998
Eligible Cost: Machinery/Equipment $ 88,200 Working Capital 197,000 Consultants 60,000 Marketing 64,750

Total................$409,950

ANNEX 2 PROJECT FACT SHEET FOR NEWS RELEASE Program: Project No: 620-4032924-1 Applicant Contact: ACOA Business Development Program Name & Address of AppIicaut.E Northatar Technical Inc. P.O. Box 13397 St. John's, Newfoundland AID 4B7 Project Location: Mqunt Pearl, Newfoundland Project Description: Name: Wilson Russell Tide: President Tdephone: (709) 745-6440 Project Type: Expansion The Applicant will create a Contracts Management Division) in parallel with the existing NETMIND production facility, aimed primarijy at manufacturing control consoles for submarines and surface ships, sonar arrays for navies and offshore petroleum seismic exploration, and contract work on Major Crown Projects. In addition, it will target contracts pertaining to other Canadian Government Procurement, Federal Department Operations and Maintenance, and USA Defence activities. Total Costs:$607,600 Eligible Costs: $409,950 Authorized Assistance: $236,163 Job Creation/Maintenance:Create 25 jobs, maintain 13 jobs Estimated Sales Resulting from Project (3 years): $16 825,000

Estimated Project Commencement Date: June 1 1997 Estimated Completion Date: June 1 1998 ANNEX 3 General Conditions (Revised February 1996) 1.The Agreement resulting from the acceptance of this ofler ('this Agreement") is made pursuant to the ACOA Business Development Program. This offer embodies and is subject to the Terms and Conditions of the Atlantic Canada Opportunities Agency Small business Development Program as approved by Treasury Board. ThisAgreement is that which is referred to as the "Contribution Agreement" in the Terms and Conditions, and should there be a conflict between the conditions included in this Agreement and the Terms and Conditions as approved by Treasury Board, the latter shall prevail. 2. In this Agreement, the following definitions shall apply: "Control Period" For commercial projects, this refers to the period beginning on the date of first disbursement and ending on the date on which all amounts due by the Applicant to the Agency under this Agreement have been paid in fill or until that obligation is otherwise discharged to the satisfaction of the Agency. For noncommercial projects, the Control period ends on the date of Project Completion. "Project Commencement Date" means the date on which, in the opinion of the Agency, the first major Commitment is made by the Applicant to implement the Project. "Project Completion Date" means the date on which, in the opinion of the Agency, all the eligible costs have beenincurred and the work completed to the satisfaction of the Agency. 3. The Applicant shall obtain the approval of the Agency before preparing any announcements, brochures, advertisements or other materials that will display the ACOA logo or otherwise make reference to the Agency. 4. The Applicant consents to a public announcement of the Project, by or on behalf of the Atlantic Canada Opportunities Agency. The Agency shall inform the Applicant of the date on which the announcement is to be made and the Applicant shall keep this offer confidential until such date. After official announcement of this Project by the Agency, or 60 days after the Applicants acceptance of this offer, whichever is earlier, information appearing on the Project fact sheet, as attached hereto, will be considered to be in the public domain 5. The Applicant will advise the Agency at least 30 days in advance of any special event, official opening, ribbon Cutting, sod-turning, etc), the Applicant wishes to organize in connection with die Project. A ceremony shall only be held on a date which is mutually acceptable to the Minister and the Applicant. Furthermore, the Applicant consents to having the Minister or designate participate in any such ceremony. 6. The Applicant consents to the P1acement of a site sign, at the start of construction, which recognizes federal participation in the Project. The sign, to be provided by the Agency. Shall be erected by the Applicant on or near the Project site, using a solid hacking made of plywood, presswood or similar material. The sign must be in a highly visible location where it can be easily seen by passing traffic and not be overshadowed by other signs. It shall be removed by the Applicant after construction is completel and a waill plaque will be provided by the Agency to be placed by the Applicant in a visible location inside the facility. 7. The Applicant shall not alter the scope of the Project without the prior written consent of tile Agency. 8. The Agency shall not contribute to any cost that is not a reasonable and proper direct cost of the Project, nor to any Cost which is not substantiated by satistactory supporting documentation. 9. The Applicant shall obtain the prior written consent of the Agency to any material change in the ownership, management, financing, location, size of iacijities, timing, job creation, federal,provincial or municipal assistance with respect to the Project 10. Upon request by the Agency, the Applicant shall provide elaboration of any report required under this Agreement, promptly and at no cost to the Agency.

11. The Applicant shall obtain insurance coverage on assets acquired for the Project, satisfactoiy to the Agency, and maintain this insurance until the end of the control period. 12. The Applicant shall not, prior to the end of the control period, cease to use, sell or otherwise dispose of eligibleassets without the written consent of the Agency except where the assets disposed of are immediately replaced by Comparable assets of equal or greater value and used in the assisted facility. Any lunds recovered by the Agency pursuant to the sale or disposal of assisted assets, will be applied first to interest owing and secondly to repayment instalments in reverse order of maturity. 13. For a period of 36 months after end of the Control Period, the representative of the Agency reasonable access to its premises to: and 2) to audit the books, accounts, and records of the costs of the project 14. (a) The following constitute Events of Default: (i) The Applicant becomes bankrupt or insolvent, goes into receivership, or takes the benefit of any statute from time to time in force relating to bankrupt or insolvent debtors; (ii) an order is made or resolution passed for the winding up of the Applicant or the Applicant is dissolved; (iii) in the Opinion of the Agency the Applicant ceases to carry on business; (iv) the Applicant has submitted false or misleading information to the Agency; (v) the Applicant makes a false or misleading statement concerning assistance by the Agency in a prospectus or other document related to raising funds; (vi) the Applicant has not met or satisfied a term or condition to which the Contribution is subject. (b) if an Event of Default has occured or in the opinion of the Agency is likely to occur, the Agency may exercise either or both of the following remedies: (i) terminate any obligation by the Agency to contribute or continue to contribute to tile costs of the Project, including any obligation to pay an amount owing prior to the date of such termination; (ii) require the Applicant to repay part of or all of the Contribution forthwith to the Agency, and that amount is a debt due to Her Majesty in right of Canada and may be recovered as Such. (c) The Applicant acknowledges the policy objectives served by the Minister's agreement to make the Contribution, that the Contribution comes from the public monies, and that the amount of damages sustained by the Crown in an event of default is difficult to ascertain and therefore that it is fair and reasonable that the Minister be entiled to exercise any or all of their remedies provided for in this Agreement and to do so in the manner provided for in this Agreement if an event of default occurs. 15. The Applicant shall, no later than 60 days following the Project Completion, submit to the Agency a satisfactory claim for an eligible project costs peflaining to goods received, or services performed prior to the Project Completion Date and which have not already been claimed. Any costs not claimed in accordance with the foregoing shall be deleted from the authorized project costs. 16. The Applicant must repay to the Agency any amount of the Contribution which exceeds the amount to which the Applicant is entitled, within thirty days of written notification by the Agency. 17. The Applicant shall pay, in addition to any amount payable as a result of an Event of Default, interest on such amount which interest (or the rate thereof) shall be equal to three (3%) higher than the Bank Rate as determined by the Bank of Canada for the day the first disbursement on account of the contribution was made. 18. When any payment is received from the Applicant on account of a repayable contribution or an Event of Default, tile Agency shall apply that payment first to reduce any accrued interest owing and then, if any part or the payment remains, to reduce the outstanding principal balance.

19. Any notice required to be given with respect to this Agreement shall be in writing and shall be effectively given if delivered or if sent by ordinary or registered wail, telegram, fax or telex addressed to the party for whom the notice is intended. Any notice shall be deemed to have been received on delivery; any notice sent by telegram, fax or telex shall be deemed to have been received one working day after being sent; any notice mailed shall be deemed to have leeen neceived eight calendar days after being mailed. 20. This Agreement shall not be assigned by the Applicant without the prior written consent of the Agency. 21. No member of the House of Commons of Canada or the Senate of Canada shall be admitted to any share or part of this Agreement or to any benefit to arise therefrom. 22 This Agreement is binding on the Applicant and its Successors and assigns. 23. The Agency and Applicant declare that nothing in this Agreement shall be construed as creating a partnership, joint venture or agency relationship between the Agency and the Applicant, 24. Any payment by the Agency under this Agreement is subject to there being an appropriation for the fiscal year in which the payment is to be made. (a) Should general reductions be applied to operating /contribution budgets at ACOA by the Treasury Board, proportional reductions to the Applicant's contribution will be negotiated. ACOA will provide notice to the Applicant as early as possible regarding such reductions (b) Retroactive adjustments may apply to payments made under this agreement if the Treasury Board reduction applies to Operating/contributions which have already been disbursed. 25. The Applicant shall obtain all necessary licenses and peimits in relation to the Project that satisfy the requirements of all regulating bodies of appropriate jurisdiction 26 The Applicant declares that no contingency fee for the solicitation, negotiation or obtaining Of this agreement has been paided agreed to be paid or will be paid directly or indirectly to any person other than to an employee of the Applicant acting within the scope of their employment 27 The Agency may, at any time, by thirty days notice to the Applicant, cancel this agreement if in the Agency's Opinion, the Statement Of Work has not been executed in a satisfactory manner, or if the progress and objectives outlined in the contract have not been met 28. The Applicant shall indemnify and save harmless, ACOA from and against all claims, losses, damages, costs and expenses relating to any injury to, or death of; a person or loss or damage to properly caused or alleged to be caused by the Applicant or its servants or agents in carrying out die Applicant's activities. 29. The Applicant shall proceed in a good and workmanlike manner and using qualified personnel to carry out the Project described in the Statement of Work. 30. All information obtained by ACOA from the Applicant pursuant to an application or during tile course of this Agreement will be kept confidential unless otherwise required by law. If further information is required, please contact your Account Manager, Ms. Jocelyn Chaytor, at (709) 7723539 Yours truly,
/s/Richard J.Cornerford Director Business Programs

Attachments: * Annex I - The Project - Statement of work

* Annex 2 - Project Fact Sheet fbr News Release * Annex 3 - General Conditions * Costing Memorandum The foregoing offer is hereby accepted this 15th day of April, 1997 Northstar Technical Inc. Project No. 6ZO-4O3292E1
Per :/s/ Wilson E Russel Chairman and CEO

Corporate seal

National Oceanic and Atmospheric Administration. Host Agency serving: Economic Development Administration International Trade Administration Minority Business Development Agency Bureau of Export Administration U.S. DEPARTMENT OF COMMERCE Western Administrative Support Center 7800 Sand Point Way N.E. BIN C15700 Seattle, Washington 98115-0070 September 22, 1999 Wilson E. Russell Northstar Technical, Inc. 687 Water Street St. Johns, NF, Canada A1E 1C2 Reference: NOAA Solicitation No. 52ABNF900059, Acoustic Wireless Trawl Net Management System Dear Mr. Russell: I am very pleased to inform you that Northstar Technical has been selected for award of the contract resulting from the above referenced solicitation. The fully executed contract documments are enclosed. Incorporated into the award of the basic contract is our first order for supplies. The amount of this order is $134,263.00. Mr. Russell E. Nelson Jr. is appointed as my Technical Representative for this contract. Mr. Nelson can be reached by phone, at (206) .526-4103. His mailing address is the same as the "Deliver To" address included in Block 15 of the contract cover page (standard Form 1449). Technical and delivery questions should be addressed to Mr. Nelson. Finally, I've enclosed a payment information form, and ask that you complete and return it at your earliest convenience. This form will speed up the payment prosess by allowing us to make a direct deposit to your bank account. Again, congratulations on your selection for award of this contract. If you have any questions about this notice or the enclosed documentation, please call Don Wadhams at (206) 526-6036. Sincerely,
/s/ Heide Sickles Heide Sickles Contracting officer

PART I SERVICES AND PRICES/COSTS 1.1 COMMERCIAL ITEM ACQUISITION: This is a commercial item acquisition which will use Federal Acquisition Regulations (FAR) Part 12 and the special simplified acquisition procedures for the acquisition of supplies as set forth in FAR, PART 13.5. 1.2 INDEFINITE DELIVERY/ INDEFINITE QUANTITY TYPE CONTRACT for Acoustic, wireless trawl

net management/mensuration system/components for the Department of Commerce, National Oceanic and Atmospheric Administration CNOAA) National Marine Fisheries Service (NMFS), Alaska Fisheries Science Center, Seattle, WA. All supplies shall conform to contract specifications and shall be delivered in accordance with the terms and conditions, and provisiona contained in this contract and as specified in each individual delivery order. 1.3 EFFECTIVE PERIOD OF THE CONTRACT: The effective period of this contract shall commence with the date the contract is executed by the Government Contracting Officer and extend through September 30, 2000. 1.4 MINIMUM AND MAXIMUM CONTRACT AMOUNTS: During the period specified in the ORDERING clause (FAR 52.216-18), the Government shall place orders totaling a minimum of $25,000. The amount of all orders may not exceed $350,000. The stated minimum is for information purposes only and is not intended to imply that the minimum stated is an exact indication at the total quantities that will be required. The actual requirements will be established by individual order(s). 1.5 SCHEDULE: The Contractor shall provide the items specified at the prices listed, in strict accordance with the Statement of Work and all other terms and conditions of the contract. ITEM ESTIMATED* UNIT EXTENDED No. DESCRIPTTON QUANTITY UNIT PRICE PRICE 0l Receiver/Processor Unit 9 Each $ $ 02 Headrope Sensor 12 Each $ $ (with batteries) O3 Door/Wing Sensor (Master and slave unit pair with batteries) 12 Each $ ________ $ 04 Towed hydrophone 12 Each $ _________ $ (With 45 meter cable)

MORGUARD REAL ESTATE INVESTMENT TRUST Landlord - and NORTHSTAR ELECTRONICS, INC Tenant LEASE OF OFFICE SPACE MULTI-TENANT OFFICE PROJECT PROJECT: Suite 1455, 409 Granville Street Vancouver, British Columbia INDEX
SECTION TERM SHEET ARTICLE 1.00- DEFINITIONS 1.01 Definitions ARTICLE 2.00- GRANT OF LEASE AND GENERAL COVENANTS 2.01 Grant 2.02 Landlord's General Covenants 2.03 Tenant's General Covenants ARTICLE 3.00- TERM AND POSSESSION 3.01 3.02 3.03 3.04 Term Early Occupancy Delayed Possession Acceptance of Leased Premises PAGE 1 3 3 3 3 3 3 4 4 4 4 4 4

ARTICLE 4.00- RENT 4.01 4.02 4.03 4.04 4.05 4.06 4.07 4.08 4.09 4.1O

Rent 4 Security Deposit 4 Intent 5 Payment of Rent - General 5 Partial Month 5 Payment of Tenant's Occupancy Costs 5 Estimates of Indirect Expenses and Resolution of Disputes 6 Area Determination 7 Vacancy 7 Method of Payment 7 7 7 7 8 8 8 8 9 9 9 9 9 9 9 10

ARTICLE 5.00-USE AND OCCUPATION 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08 5.09 5.10 5.11 5.12 5.13 5.14 Use of Leased Premises Compliance with Laws Prohibited Uses Common Elements Hazardous Use Security Interest Rules and Regulations Permitted Signs Prohibited Signs Window Coverings Parking Authorization of Enquiries Records Overloading

ARTICLE 6.00- SERVICES. MAINTENANCE. REPAIR AND ALTERATIONS BY THE LANDLORD

10

6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09

Operation of Project Building Services and Facilities Maintenance, Repair, and Replacement Alterations/Renovations by Landlord Access by Landlord Energy Conservation Supervision and Extended Services Landlord's Work Control by the Landlord

10 10 10 11 11 11 11 12 12

ARTICLE 7.00- PAYMENT4EOR SERVICES AND MAINTENANCE. REPAIR AND ALTERATIONS BY THE TENANT 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10 Utilities Lights Heating, Ventilation and Air Conditioning Alterations by Tenant Tenant's Trade Fixtures and Personal Property Maintenance and Repair Inspection Failure to Maintain Liens Roof

12 12 12 12 13 13 13 13 14 14 14 14 14 14 15 15 15 15 15 15 16 17 17 17 18 18 18 18 19 19 19 19 19 19 20 20 21 21 22 22 22

ARTICLE 8.00- TAXES 8.01 8.02 8.03 8.04 8.05 8.06 Taxes Payable by Landlord Taxes Payable by Tenant Tax Increases Attributable to Tenant GST Landlord's Election Right to Contest

ARTICLE 9.00- INSURANCE. LIABILITY AND ENVIRONMENTAL 9.01 9.02 9.03 9.04 9.05 Landlord's Insurance Tenant's Insurance Placement of Tenant's Insurance by Landlord Limitation of Landlord's Liability Environmental Issues

ARTICLE 10.00-DAMAGE AND DESTRUCTION 10.01 10.02 10.03 10.04 10.05 10.06 Limited Damage to Leased Premises, Access or Services Major Damage to Leased Premises Damage to Building No Abatement Notify Landlord Expropriation

ARTICLE 11.00- DEFAULT 11.01 11.02 11.03 11.04 11.05 11.06 11.07 11.08 11.09 Interest Costs of Enforcement Performance of Tenant's Obligations Events of Default Remedies on Default Availability of Remedies Waiver Waiver of Exemption and Redemption Companies' Creditors Arrangement Act

ARTICLE 12.00-ASSIGNMENT. SUBLETTING AND OTHER TRANSFERS 12.01 12.02 12.03 12.04 12.05 12.06 12.07 Request for Consent Basis for Consent Terms and Conditions Relating to Consents Subsequent Transfers Profit Rents upon Transfers Advertising Grant of Security Interest by Assignee or Sub-tenant

22 22 22 23 24 24 24 24 24

ARTICLE 13.00 TRANSFER BY LANDLORD

13.01 13.02 13.03 13.04 13.05 13.06

Sale, Conveyance and Assignment Effect of Transfer Subordination Attornment Effect of Attornment Repurchase

24 24 24 24 24 24 25 25 25 25 25 25 25 26 26 26 26 26 26 26 26 27 27 27 27 27 27 27 27 27 27 27 27 27 28 28 28 28 28 28 28

ARTICLE 14.00 - SURRENDER 14.01 Possession and Restoration 14.02 Tenant's Trade Fixtures and Personal Property 14.03 Overholding ARTICLE 15.O0 - GENERAL 15.01 15.02 15.03 15.04 15.05 15.06 15.07 15.08 15.09 15.10 15.11 15.12 15.13 15.14 15.15 15.16 15.17 15.18 15.19 15.20 15.21 15.22 15.23 15.24 15.25 15.26 15.27 15.28 15.29 15.30 Estoppel Certificates Entire Agreement No Registration of Leases or Notices ... Project Name and Trademarks Demolition I Substantial Renovation ... Relocation "For Lease" Signs Unavoidable Delays Limitation of Recourse Notice Delegation of Authority Relationship of Parties Governing Law Amendment or Modification Legal and Administration Costs Construction Captions and Headings Interpretation Time of the Essence Successors and Assigns Counterparts Further Schedules Independent Legal Advice No Offer Landlord's Security Interest Survival of Covenants and Indemnities Exculpatory Provisions Brokerage Commissions Covenants to be Performed at Landlord's Radiation

TERM SHEET - FORMING PART-OF LEASE OF OFFICE SPACE, MULTI-TENANT 1. LANDLORD: Morguard Real Estate Investment Trust ADDRESS: 1650 - 409 Granville Street Vancouver, British Columbia V6C 1T2

TELEPHONE: 681-9474 FAX NUMBER:685-0161 Landlord's "Environmental Contact" Manager. Environmental Affairs Attention: Senior Vice-President. Operations United Kingdom Building Limited holds registered title to the Project as nominee for the Landlord. 2. TENANT: ADDRESS: NORTHSTAR ELECTRONICS, INC. Suite 1455, 409 Granville Street Vancouver, British Columbia V6C 1T2 United Kingdom Building 409 Granville Street Vancouver, British Columbia

3. PROJECTNAME: MUNICIPAL ADDRESS OF PROJECT:

V6C lT2 4. LEASED PREMISES:

Attached as Schedule A to the Lease is a plan of the Project showing the Leased Premises by a distinguishing outline. The Leased Premises are designated as unit(s) 1455. 5. RENTABLE AREA OF LEASED PREMISES: 1,775 square feet subject to adjustment in accordance with the definition of Rentable Area and Section 4.08.
6. (i) SECURTIY DEPOSIT: $3,089.00 (Section 4.02) (ii) OTHER DEPOSIT: $3,305.23 (Schedule E)

7. TERM: Three (3) Years (i) FIRST DAY OF TERM: January 1, 2000

(ii) LAST DAY OF TERM: December 31, 2002 8. BASIC RENT: For the said Term commencing on the 1st day of January, 2000, and ending on the 31st day of December, 2002, the Basic Rent shall be Nineteen Thousand Five Hundred Twenty Five Dollars ($19,525.00) per annum, in equal monthly instalments of One Thousand Six Hundred Twenty Seven Dollars and Eight Cents ($1,627.08) each and payable on the first day of each month. 9. USE OF LEASED PREMISES: The premises shall be used for no purpose other than as general office space. The Tenant will be responsible for obtaining all necessary approvals, including zoning, development and business permits, for its intended use of the premises and will submit all applications for such approvals to the Landlord for its consent prior to making application. Notwithstanding the Landlord's consent to an application, the Tenant will indemnify and defend the Landlord and save it harmless from and against any and all expenses, losses or damages incurred or suffered by the Landlord.directly or indirectly arising out of the Tenantfs application for such approvals and permits or the resulting approvals and permits with respect to the use, intended or otherwise, of the premises, whether such expenses, losses or damages are in respect of the premises or in respect of the building or buildings of which the premises form a part. The Landlord makes no representations or warranties, express or implied, respecting the use or intended use of the premises by the Tenant or respecting whether or not necessary approvals can be obtained for the Tenant's use or intended use. 10. ENVIRONMENTAL ISSUES: LEASE SECTION 9.05: Applies X Does not apply RIDER 1 (SECTION 9.05): Applies Does not apply X 11.N/A Additional Covenants, Agreements and Conditions (if any) listed here are more particularly set out in Schedule E. - DEPOSIT - LIMITATIONS LEASE OF OFFICE SPACE MULTI-TENANT OFFICE BUILDING This LEASE is made as of the 21st day of September, 1999

BETWEEN:

MORGUARD REAL ESTATE INVESTMENT TRUST (the "Landlord") NORTHSTAR ELECTRONICS INC., a Company duly incorporated Delaware, USA (the "Tenant")

AND:

IN CONSIDEERATION of the mutual covenants contained herein, the Landlord and Tenant hereby agree as follows: ARTICLE l.00 DEFINITIONS 1.01 Definitions - In this Lease the terms defined in Schedule B shall have the meanings designated therein respectively. ARTICLE 2.00- GRANT OF LEASE AND GENERAL COVENANTS 2.01 Grant - The Landlord hereby leases to the Tenant and the Tenant hereby leases from the Landlord the Leased Premises, to have and to bold during the Term, subject to the terms and conditions of this Lease. 2.02 Landlord's General Covenants - The Landlord covenants with the Tenant: (a) subject to the provisions of this Lease, for quiet enjoyment of the Leased Premises so long as the Tenant shall observe and perform all the covenants and obligations of the Tenant herein; and (b) to observe and perform all the covenants and obligations of the Landlord herein. 2.03 Tenant's General Covenants - The Tenant covenants with the Landlord; (a)to pay Rent without any deduc4on, abatement or set-off whatsoever; and (b)to observe and perform all the covenants and obligations of the Tenant herein. ARTICLE 3.O-TERM AND POSSESSION 3.01 Term - The Term of this Lease shall begin on the Commencement Date and end on the date set out in Item 7(b) of the Term Sheet unless terminated earlier as provided in this Lease. 3.02 Early Occupancv - The Tenant may, with the Landlord's prior written consent, use and occupythe Leased Premises or portions thereof before the Commencement Date. In the event of early occupancy, the Tenant shall pay to the Landlord on the date of occupancy a rental for the period from the date the Tenant begins to use or occupy the Leased Premises or portions thereof to the Commencement Date, which rental shall be that proportion of the Rent for the first calendar year of the Term which the number of days in such period is of 365, multiplied by that proportion that the part of the Leased Premisesused and occupied from time to time by the Tenant prior to the Commencement Date is of the total area of the Leased Premises. Except where clearly inapplicable, all provisions of this Lease shall apply during such period. 3.03 Delayed Possession - If the Landlord is unable to deliver possession of all or any portion of the Leased Premises by the Commencement Date, this Lease shall remain in full force and effect and the Tenant shall take possession of the Leased Premises on the date when the Landlord delivers possession of all of the Leased Premises, which date shall be conclusively established by notice in writing from theLandlord to the Tenant at least 10loss, damage or inconvenience resulting from any delay in d deleveringpossession of the Leased Premises but, unless the delay is caused by or attributable to the Tenant, its servants, agents or independent contractors,no Rent shall be payable by the Tenant for the period prior to the date on which the Landlord can deliver possession of all of the Leased Premises,unless the Tenant elects to take possession of a portion of the Leased Premises, in which case Rent shall be payable in respect thereof from the date such possession is so taken. Despite anything contained to the contrary in this Section 3.03, if the Landlord is of the opinion that it is unable to deliver possession of all or any part of the Leased Premises by the expiration of 6 months from the Commencement Date, the Landlord shall have the right to terminate this Lease upon written notice to the Tenant,whereupon neither party shall have any liability to the other.

3.04 Acceptance of Leased Premises - Taking possession of all or any portion of the Leased Premises by the Tenant shall be conclusive evidence as against the Tenant that the Leased Premises or such portion thereof and the Common Elements are in satisfactory condition on the date of taking possession, subject only to latent defects and to deficiencies (if any) listed in writing in a notice delivered by the Tenant to the Landlord not more than 10 days after the date of taking possession. ARTICLE 4.00- RENT 4.01 Rent - The Tenant shall pay to the Landlord as Rent for the Leased Premises the aggregate of: (a) Basic Rent in respect of each year of the Term, payable in advance and without notice or demand in monthly instalments as set out in Item 8 of the Term Sheet commencing on the Commencement Date and on the first day of each calendar month thereafter during the Term; (b) Tenant's Occupancy Costs, which shall include Tenant's Proportionate Share of Taxes, during the Term, payable in monthly instalments at the times and in the manner provided in Section 4.06; and (c) all amounts (other than payments under Subsections 4.01 (a)and(b) payable by the Tenant to the Landlord under this Lease, at the times and in the manner provided in this Lease or, if not so provided, as reasonably required by the Landlord. 4.02 Security Deposit - The Landlord acknowledges receipt on or before the Commencement Date of the amount set out in Item 6(a) of the Term Sheet (the "Security Deposit") to be held by the Landlord,without any liability whatsoever on the part of the Landlord for the payment of interest thereon, as a security deposit for the faithful performance by the Tenant of the terms, covenants and conditions of this Lease during the Term hereof and not to be applied on account of Rent except as otherwise provided in this Section 4.02. The Security Deposit will not be a limitation on the Landlord's damages or other rights and remedies available under this Lease or at law or equity, nor shall the Security Deposit be either a payment of liquidated damages or an advance payment of Rent. The Landlord shall have no fiduciary responsibilities or trust obligations whatsoever with regard to the Security Deposit and shall not assume the duties of a trustee for the Security Deposit. The Security Deposit shall not be mortgaged, assigned or encumbered by the Tenant and the Landlord shall not be bound by any such mortgage, assignment or encumbrance. It is understood and agreed between the parties that any portion of the Security Deposit may, at the Landlord's option, be applied toward the payment of overdue or unpaid Rent and may also be applied as compensation to the Landlord for any loss or damage sustained with respect to the breach on the part of the Tenant of any terms, covenants and conditions of this Lease, provided in all cases, however, that the Tenant's liability hereupder is not limited to the amount of the Security Deposit. If during the Term any portion of the Security Deposit is so applied, then the Tenant shall on written demand deliver to the Landlord a sufficient amount iflEash or by certified cheque to restore the Security Deposit to the original sum deposited. The Landlord shall refund to the Tenant after the expiry date of this Lease any portion of the Security Deposit not used by the Landlord after application by the Landlord to any damage incurred by the Landlord by reason of the default of the Tenant under the terms of this Lease. It is further provided that the Landlord will be discharged from all liability to the Tenant with respect to the Security Deposit to the extent that it is transferred to any purchaser of the Landlord's interest in the Leased Premises. 4.03 Intent - It is the stated pumose and intent of the Landlord and the Tenant that this Lease and the Rent shall be fully net to the Landlord. 4.04 Payment of Rent - General - All amounts payable by the Tenant to the Landlord pursuant to this Lease shall be deemed to be Rent and shall be payable and recoverable as Rent in the manner herein provided and the Landlord shall have all rights against the Tenant for default in any such payment as in the case of arrears of Rent. Rent shall be paid to the Landlord in lawful money of Canada, without deduction, abatement or set-off, at the local address of the Landlord set out in ltem.1 of the Term Sheet or to such other Person or such other address as the Landlord may from time to time designate in writing. The Tenant's obligation to pay Rent shall survive the expiration or earlier termination of this Lease. Any Rent or other sum received or accepted by the Landlord and paid by anyone other than the Tenant, on behalf of the Tenant, shall not release or in any way affect the covenants of the Tenant set out in this Lease and is not to be construed by the Tenant as the Landlord's consent to a Transfer under Article 12.00. Any Rent or other sum received by the Landlord from or for the account of the Tenant while the Tenant is in default under this Lease may be applied at the Landlord's option to the satisfaction

in whole or in part of any of the obligations of the Tenant then due under this Lease in such manner as the Landlord sees fit regardless of any designation or instruction of the Tenant to the contrary. 4.05 Partial Month - If the Commencement Date is a day other than the first day of a calendar month, the instalment of Rent payable on the Commencement Date shall be that proportion of annual Rent payable as of the Commencement Date which the number of days from the Commencement Date to the last day of the month in which the Commencement Date falls is of 365. If the Term ends on a day other than the last day of a calendar month, the instalment of Rent payable on the first day of the calendar month in which the last day of the Term falls shall be that proportion of annual Rent then payable which the number of days from the first day of such last calendar month to the last day of the Term is of 365. 4.O6 Payment of Tenant's Occupancy Costs (1) Estimate and Payment (a) The Landlord shall deliver to the Tenant a written estimate or a written revised estimate of:(i) Tenant's Occupancy Costs for each Fiscal Year; and (ii) Tenant's Proportionate Share of those Taxes that are imposed against the Project or any part of it including the Common elements. The Tenant shall pay to the Landlord the amount so estimated in equal monthly instalments (except as otherwise required in this Section 4.06 with respect to Property Taxes) in advance over that Fiscal Year simultaneously with the Tenant's payments on account of Basic Rent. If the Landlord does not deliver to the Tenant such an estimate, the Tenant shall continue to pay Tenant's Occupancy Costs and Tenant's Proportionate Share of Taxes based on the last such estimate delivered by the Landlord until a further estimate is delivered by the Landlord and the next payment on account of Tenant's Occupancy Costs or Taxes shall be adjusted to take into account any over or under payment in the preceding instalments paid in the Fiscal Year to which the estimate or revised estimate relates. Notwithstanding the foregoing, as soon as bills for all or any portion of amounts included in Operating Costs (including, without limitation, Taxes) as so estimated are received, the landlord may bill the Tenant for the Tenant's Proportionate Share thereof and the Tenant shall pay the Landlord such amounts so billed (less all amounts previously paid on account by the Tenant on the basis of the Landlord's estimate as aforesaid) as Rent within 5 days following demand therefore. (b) Within a reasonable time after the date in each calendar year when the final instalment of Property Taxes is due in respect of commercial properties generally in the municipality in which the Project is located (the "Final Payment Date"), the Landlord shall deliver a statement (the "Tax Statement") to the Tenant that (I) specifies the Tenant's Proportionate Share of Taxes for the Property Tax Year and (ii) sets out the total (the "Prepayment Total") of amounts payable under this Section 4.06(b) that have been paid by the Tenant between the final Payment Date in the previous Property Tax Year and the Final Payment Date of the current Property Tax Year. If the Prepayment Total, less anyE amounts that were previously credited to the Tenant, and any amounts paid for arrears in respect of previous Property Tax Years, (the "Net Prepayment Total") is less than the Tenant's Proportionate Share of Taxes specified in the Tax Statement, the Tenant shall pay the deficiency with the next monthly payment of Basic Rent If the Net Prepayment Total exceeds the Tenant's Proportionate Share of Taxes specified in the Tax Statement, the Landlord shall, unless the Tenant is then in default under this Lease, credit the excess to the Tenant on account of the next succeeding payments of Tenant's Occupancy Costs. The Landlord may estimate Property Taxes for the Property Tax Yeai+llowing the then current Property Tax Year, and the Tenant shall continue after the FinaL Payment Date is to make monthly payment in advance, in amounts determined by the Landlord, for periods determined by the Landlord. The monthly payments paid by the Tenant after the Final Payment Date shall be credited against the Tenant's proportionate Share of Taxes for the subsequent Property Tax Year. (c) Any portion of the Tenant's Proportionate Share of Taxes accrued with respect to the Term or any part thereof paid by the Landlord prior to the Commencement Date shall be reimbursed by the Tenant to the Landlord on the Commencement Date or on demand thereafter. Subject to Sections 8.03 and 8.05, the Tenant shall pay the Tenants Proportionate Share of any Property Taxes or of the Landlord's reasonable estimate thereof monthly in advance in the same manner as for payment of Tenant's Occupancy Costs. Notwithstanding the foregoing, the Landlord shall always have the right: (i) to revise the amount of instalments on account of Property Taxes payable by theTenant to an amount that allows the Landlord to collect all Property Taxes payable by the Tenant by the final due date of Property Taxes

for the calendar year; and/or (ii) to schedule and require payment by the Tenant of instalments on account of Property Taxes payable by the Tenant such that by the final due date of Property Taxes for any calendar year, the Tenant shall have paid to the Landlord the full amount of Property Taxes payable by the Tenant for such calendar year, which arrangement may include payment of instalments by the Tenant in a calendar year on account of Property Taxes payable by the Tenant for the next calendar year; and/or (iii) (but not the obligation) to allocate Taxes among categories of rentable premises in the Project on the basis of such factors as the Landlord determines to be relevant, such as, by way of example, the types of business or activity carried on therein, the locations in the Project, costs of construction, relative benefits derived by rentable premises, relative assessment values, non-public school support designations and vacancies. The Landlord shall be entitled to adjust the Tenant's Proportionate Share of Taxes, having regard to the category in which the Tenant is placed by the Landlord. In determining the share of Taxes whieh is payable by the Tenant pursuant to this Lease,Taxes shall include such additional 'amounts as would have formed part of the Taxes had the Project been fully assessed during the whole of the relevant period as fully without taking into account any acEual or potential reduction of Taxes or change of assessment category or class for rentable premises within the Project which are vacant. (2) Annual Statement and Adjustment - The Landlord shall deliver to the Tenant within 120 days after the end of each Fiscal Year or as soon after that date as the same shall be prepared by or for the Landlord, a written statement setting out in reasonable detail the amount of Operating Costs and Tenant's Occupancy Costs for such Fiscal Year. If the total of monthly instalments of Tenant's Occupancy Costs actually paid by the Tenant to the Landlord during that Fiscal Year differs from the amount of Tenants Occupancy Costs payable for that Fiscal Year under Section 4.01(b), the Tenant shall pay to the Landlordor, if the Tenant is not in default, the Landlord shall credit to the Tenant on account of the next succeeding payments of Tenant's Occupancy Costs, as the case may be, the difference,without interest, within 30 days after the date of delivery of the statement. (3) Disputes - If the Tenant disputes the Landlord's statement setting out Operating Costs and Tenant's Occupancy Costs or the Tax Statement for any Fiscal Year, the Tenant shall provide notice thereof in writing to the Landlord within 60 days of delivery of the statement in respect of that Fiscal Year. Notwithstanding delivery of such notice, the Tenant shall continue to pay Rent in accordance with the terms of this Lease. In the event of a dispute, the determination of Operating Costs and Tenant's Occupancy Costs or Tenants Proportionate Share of Taxes as made by the Landlord's auditors shall be conclusive and binding upon both the Landlord and the Tenant. All costs of obtaining such determination shall be included in Operating Costs; provided that if the Landlord's auditors confirm the Landlord's calculations within a variance of 5%, the Tenant shall be solely responsible for the entire cost of such determination and shall pay such costs to the Landlord forthwith upon demand. If the Tenant and anyone or more of the other tenants in the Project are responsible to pay such costs, the Tenant shall be jointly and severally liable with such other tenant or tenants. 4.07 Estimates of Indirect Expenses and Resolution of Disputes - Any expense not directly incurred by the Landlord but which is included in Operating Costs may be estimated by the Landlord onwhatever reasonable basis the Landlord may select if and to the extent that the Landlord cannot ascertain the actual amount of the expense from the party who incurred it. In the event of any disagreement as tothe amount or propriety of any amount included in Operating Costs, a certificate of the auditor of theLandlord, acting reasonably, shall be conclusive as to the amount of Operating Costs for any period which such certificate relates. 4.08 Area Determination - The LandlotEEinay from time to time, as it deems necessary, cause the Rentable Area of the Leased. Premises, the Building or any part thereof to be recalculated or remeasured and the cost thereof shall be included in Operating Costs (except as otherwise provided in this Section 4.08). Upon any such recalculation or remeasurement, Rent (including without limitation Basic Rent) shall be adjusted accordingly. If any calculation or determination by the Landlord of the Rentable Area of any premises (including the Leased Premises) is disputed or called in question, it shall be calculated or determined by the Landlord's architect or surveyor from time to time appointed for that purpose, whose certificate shall be conclusive and binding upon the parties hereto. The cost of such calculation or determination shall be included In Operating Costs; provided that if the Tenant disputes the Landlord's calculation or determination and the calculation or determination by the Landlord's architect or surveyor agrees with the Landlord's calculation or determination within a 2% variance, the Tenant shall pay the full cost of such calculation or determination forthwith upon demand. If the Tenant and any

one or more of the other tenants in the Project are responsible to pay such costs, the Tenant shall be jointly and severally liable with such other tenant or tenants. If any error shall be found in the calculation of the Rentable Area of the Leased Premises or in the calculation of Tenant's Proportionate Share, Rent (including without limitation Basic Rent) shall be adjusted for the Fiscal Year in which that error is discovered and for the Fiscal Year preceding the Fiscal Year in which the error was discovered, if any, and thereafter but not for any prior period. 4.09 Vacancy - If any part of the Building available for leasing is not occupied, the Landlord shall have the right, in respect of amounts forming part of Operating Costs which vary with occupancy, to include in Operating Costs a larger amount of costs, which larger amount shall be based on a reasonable estimate of the actual cost which would have been incurred if the unoccupied parts of the Building available for leasing were occupied, it being intended hereby that the Landlord shall obtain, to the extent reasonably possible, full reimbursement of Operating Costs attributable to or in respect of occupied premises, and not that (a) the Tenant shall subsidize Operating Costs incurred by the Landlord attributable to or in respect of vacant premises; or (b) the Landlord shall recover more than actual Operating Costs. 4.10 Method of Payment (1) Unless the Landlord advises otherwise in writing, the Tenant shall provide to the Landlord on or before the Commencement Date and thereafter on cir before the beginning of each Fiscal Year during the Term and within 10 days after the delivery of the Landlord's estimate of any payment constituting Rent, postdated cheques in the amount of Rent for each month during that Fiscal Year. (2) At the Landlord's mquest, the Tenant shall paijticipate in a preauthorized payment plan whereby the Landlord will be authorized to debit the Tenant's bank account each month or from time to time for Rent payable on a monthly basis, and any amount payable provisionally on an estimated basis. The Tenant hereby undertakes to execute and deliver such documents as may reasonably be required to give full force and elect to this Subsection 4.iO(2) within 5 days of presentation. ARTICLE 5.00-USE AND OCCUPATION 5.O1 Use of Leased Premises - The Tenant shall use and occupy only the usable part of the Leased Premises and only for office purposes to carry on the business set out in Item 9 of the Term Sheet and shall not use or permit the Leased Premises or any part thereof to be used or occupied for any other purpose or business, except as otherwise expressly permitted under this Lease or by any Person other than the Tenant. The Tenant shall be responsible for obtaining at its expense all necessary approvals, licences and permits, including but not limited to zoning, development, building, occupancy and business approvals, licences and permits, for its intended use of the Leased Premises and shall submit all applications for such approvals, licences and permits to the Landlord for its consent (which consent, if the application pertains to the zoning applicable to the Project or may adversely affect the value or use of the Project or any part thereot may be arbitrarily withheld by the Landlord) prior to making application. Notwithstanding the Landlord's consent to an application, the Tenant shall indemnify and defend the Landlord and save it harmless from and against any and all Claims incurred or suffered by the Landlord directly or indirectly arising out of the Tenant's application for such approvals,licences or permits or the resulting approvals, licences and permits with respect to the use, intended or otherwise, of the Leased Premises whether such Claims are in respect of the Leased Premises or in respect of the Building or the Project. The Landlord makes no representation whether or not necessary approvals can be obtained for the Tenant's use or intended use. The Landlord makes no representations or warranties, express or implied, that the present or future use of the Leased Premises, if such use is anything other than office use, is legally fit for the intended use, or complies with any law, by-law or regulation governing the use of the Leased Premises. 5.02 Compliance with Laws - The Tenant shall promptly and at its own cost comply with all present and future laws, regulations and orders relating to, and obtain and maintain in force all approvals, permits, licences and registrations required for, any of the following: (a) the occupation or use of and the conduct of any business in or from the Leased Premises; (b) the condition of the LeaseholcEknprnvements, fixtures, furniture and equipment installed therein; (c) Pollutants and the protection of the environment so far as those laws, regulations and orders or any of them relate to the Project; and

(d) the making by the Tenant of any repairs, changes or improvements in or to the Project; and the Tenant shall immediately give written notice to the Landlord of the occurrence of any event in the Leased Premises constituting an offence thereunder or being in breach thereof and if the Tenant shall, either alone or with others, cause the happening of any such event, the Tenant shall immediately give the Landlord notice to that effect and thereafter give the Landlord from time to time written notice of the extent and nature of the Tenant's compliance with the foregoing provisions of this Section. The Tenant agrees that if the Landlord determines in its sole discretion that the Landlord, its property, its reputation or the Leased Premises or any one or more of the foregoing is placed in any jeopardy, as determined by the Landlord, by the requirements for any work required to ensure compliance with the foregoing provisions of this Section 5.02, or the Tenant is unable to fulfil its obligations under this Section, the Landlord may itself undertake such work or any part thereof at the cost and expense of the Tenant. The Tenant shall, at its own expense, remedy any damage to the Leased Premises caused by such event or work or by the performance of the Tenant's obligations under this Section. If altemtions or impmvements to the Leasehold Improvements or to the Leased Premises are necessary to comply with any of the foregoing provisions of this Section or with the requirements of insurance carriers, the Tenant shall forthwith complete such work, complying always with the applicable provisions of this Lease, to the extent that it can be done within the Leased Premises and in any event shall pay the entire cost of alterations and improvements so required. In the event that structural repairs or upgrading of the Building, including but not limited to seismic upgmding, is required to permit the Tenantts use, the Landlord may, at its sole discretion, terminate the Lease. 5.03 Prohibited Uses - The Tenant shall not commit, cause or permit any nuisance in or about or any damage to the Leased Premises or any part thereof, the Building or any of the Leasehold Improvements or goods or fixtures therein, any overloading of the floors of the Leased Premises or any use or manner of use causing annoyance to other tenants or occupants of the Project. Without limiting the generality of the foregoing, the Tenant shall not use or permit rndE use of any portion of the Leased Premises for any dangerous, illegal, noxious, odorous or offensive trade, business or occurrence. The Tenant shall keep the Leased Premises free of debris, Pollutants and anything of a dangerous, noxious, odorous or offensive nature or which could create a fire hazdrd (through undue load on electrical circuits or otherwise) or vibration, heat or noise detectable outside the Leased Premises in the sole discretion of the Landlord. The Tenant shall not use equipment in the Leased Premises in a manner that results in its being seen or heard outside the Leased Premises. 5.04 Common Elements - The Tenant and its employees and invitees shall be entitled to use, in common with others entitled thereto, for purposes for which they are intended and only during such hours as the Landlord may designate from time to time, the Common Elements. The Tenant and its employees and invitees shall not obstmct the Common Elements or use the Common Elements other than for their intended purposes and then only in accordance with the rules and regulations set by the Landlord from time to time. 5.05 Hazardous Use - The Tenant shall not do, omit to do or permit to be done anything which will cause or may have the effect of causing the cost of the Landlord's insurance in respect of the Project or any part thereof to be increased at any time during the Term or any policy of insurance on or relating to the Project to be subject to cancellation. Without waiving or limiting the foregoing prohibition, the Landlord may demand and the Tenant shall pay to the Landlord upon demand, the amount of any increase in the cost of insurance caused by anything so done or omitted or permitted to be done. The Tenant shall forthwith upon the Landlord's request comply with the requirements of the Landlord's insurers, cease any activity complained of and make good any circumstance which has caused any increase in insurance premiums or the cancellation or threatened cancellation of any insurance policy. In determining the amount of increased premiums for which the Tenant is responsible, a schedule or statement issued by the Person who computes the insurance rates for the Landlord showing the components of the rate shall be conclusive evidence of the items that make up the rate. If any policy of insurance in respect of the Project or any part thereof is cancelled or becomes subject to cancellation by reason of anything so done or omitted or permitted to be done, the Landlord may without prior notice terminate this Lease and rEenter the Leased Premises. 5.06 Security Interest - The Tenant shall not, without the Landlord's prior written consent, create a security interest in Leasehold Improvements installed by the Tenant or the Landlord in the Leased Premises.

5.07 Rules and Regulations - The Tena#f shall observe and cause its employees, servants, agents, invitees, customers, subtenants, licencees and others over whom the Tenant can reasonably be expected to exercise control to observe the rules and regulations attached as Schedule C hereto and such further and other reasonable rules and regulations and amendments and additions thereto as may be made by the Landlord and notified to the Tenant by mailing a copy thereof to the Tenant or by posting same in a conspicuous place in the Building. All such rules and regulations now or hereafter in force shall be read as forming part of this Lease; pmvided that if there is a conflict between the rules and regulations and this Lease, the terms of this Lease shall prevail. The Landlord shall not be responsible to the Tenant for the nonobservance of any mle or regulation or the terms of anyElease or agreement to lease by any other tenant of the Project. 5.08 Permitted Signs - The Tenant shall use only such identification signs as are prescribed by the Landlord from time to time and as comply with all applicable by-laws, regulations and codes as to size, location, arrangement, type of lettering, colour, appearance and design for uniform use by office tenants in the Eullding. Such signs shall contain only the name under which the Tenant carries on business. 5.09 Prohibited Signs - Except with the prior written consent of the Landlord, which consent may be arbitrarily withheld or rescinded in the Landlord's sole discretion, or as provided in Section 5.08, the Tenant shall not paint, display, inscribe, place or affix any sign, symbol, notice, advertisement,display or direction of any kind anywhere outside the Leased Premises or on the interior of any glass, windows or doors or elsewhere within the Leased Premises so as to be visible from the outside of the Leased Premises. 5.1O Window Coverings - Without the prior written consent of the Landlord, the Tenant shall not install any blinds, drapes, curtains or any other window coverings in the Leased Premises and shall not remove, add to or change the blinds, curtains, drapes or other window coverings installed by the Landlord from time to time. The Tenant shall keep all window coverings open or closed at various times as the Landlord may from time to time direct by the rules and regulations or otherwise. 5.11 Parking - Any parking area or facility provided by the Landlord shall at all times be subject to the exclusive control and management of the Landlord or those whom the Landlord may designate from time to time. The Landlord shall have the right from time to time to establish, modify and enforce reasonable rules and regulations with respect to any parking area or facility and shall have the right from time to time: (a) to expand, reduce, or change the area, level, location and arrangement of the parking area or facility and to construct any parking facility; (b) to enforce parking charges with appropriate provisions for free parking ticket validating by tenants of the Building; (c) to close all or any portion of the parking area or facility to such extent as may, in the Lajidlord's opinion, be legally sufficient to prevent a dedication thereof or the accrual of rights to any Person or the public; (d) to obstruct or close off all or any part of the parking area or facility for the purpose of maintenance or repair; and (e) to do and perform such other acts in and to the parking area or facility as, in the judgment of the Landlord, shall be advisable with a view to the improvement of the convenience of and use of the Building by tenants, their employees and invitees. The Landlord will operate and maintain the parking area or facility in such manner as the Landlord in its sole discretion shall determine from time to time. Without limiting the scope of such discretion, the Landlord shall have the sole right to employ all personnel and make all rules and regulations pertaining to and necessary for the proper operation and maintenance of the parking area or facility. The Tenant shall participate in any free parking or other ticket validation system established by the Landlord and abide by all rules and regulations pertaining thereto and the Tenant shall pay to the Landlord monthly, together with payments on account of Basic Rent, all parking charges attributable to the Tenant as evidenced by parking tickets validated by the Tenant in accordance with any system established by the Landlord. 5.12 Authorization of Enquiries - The Tenant hereby authorizes the Landlord to make enquiries from time to time of any government or municipality or governmental or municipal agency with respect to the Tenanrs compliance

with any and all laws and regulations pertaining to the Tenant or the business conducted in the Leased Premises including, without limitation, laws<End regulations pertaining to Pollutants and the protectionEof the environment; and the Tenant covenants and agrees that the Tenant shall from time to time provide to the Landlord such written authorization as the Landlord may reasonably require in order to facilitate the obtaining of such information. 5.13 Records - The Tenant shall keep on the Leased Premises or at the Tenanrs head office complete records of all goods stored on, or processed, manufactured, packaged or used in any process in the Leased Premises by the Tenant and by any other occupant of the Leased Premises or any part thereof. Such records shall include all parff&ulars which the Landlord may require. The Landlord may examine such records and the Tenant shall provide extracts from or copies thereof all as required by the Landlord from time to time. This requirement to maintain such records shall survive the expiry or earlier termination of the Term. 5.14 Overloading - The Tenant shall not install or permit the installation of equipment that in the opinion of the Landlord's engineer overloads the capacity of any utility or of any electrical or mechanical facility in the Project or which may exceed the load-bearing capacity of the floors of the Project. If damage is caused to the Leased Premises or to the Project as a result of any installation in contravention of this Section, the Tenant shall repair the damage or, St the Landlord's option, pay to the Landlord on demand the cost of repairing the damage incurred by the Landlord. ARTICLE 6.00-SERVICES, MAINTENANCE, REPAIR AND ALTERATIONS BY THE LANDLORD 6.01 Operation of I'roiect - During the Term, and so long as no Event of Default shall exist, and so long as no event shall occur which, with the passage of time or the giving of notice or both, would constitute an Event of Default, the Landlord shall operate and maintain the Project in accordance with applicable laws and regulations and with standards from time to time prevailing for similar projects in the area in which the Project is located and, subject to payment by the Tenant of Rent, shall provide the Services set out in this Article 6.00; provided that the Landlord shall not be responsible for providing those Services or operating, maintaining, repairing or replacing the systems, facilities or equipment for the provision of such Services to the extent that such Services, operation, maintenance, repair or replacement are specifically stated in this Lease to be the responsibility of the Tenant. 6.02 Building Services and Facilities- The Landlord shall provide: (a) washrooms accessible to the Leased Premises for the use of the Tenant, its employees and invitees in common with other persons entitled thereto; (b) domestic mnning water to the building standard washrooms in the Leased Premises, if any, and to washrooms available for the Tenant's use in common with others entitled thereto; (c) access to and egress from the Leased Premises for use by the Tenant, its employees and invitees in common with other persons tentitled thereto, provided that the Landlord may restrict access for security purposes or require that all persons seeking access produce identification; (d) heating, ventilation and air conditioning to the Building, including the Leased Premises, to a level sufficient to maintain therein conditions of reasonable temperature and comfort provided that, unless otherwise agreed by the parties, a full standard of interior climate control shall only be maintained during those hours and on those days established by the Landlord as being operating periods for the Building, having reasonable regard to energy conservation; (e) lighting and electrical power to the Common Elements as reasonably required; (f) electrical power to the Leased Premises for lighting and for standard office equipment capable of operating from the voltage circuits available and then standard for the Building; {g) janitorial services to the Leased Premises and Common Elements to a standard consistent from time to Ume with similar buildings in the area in which the Building is located; (h) a directory board located in the Common Elements providing identification of the tenants in the Building in such manner and containing such information as the Landlord may determine; and

(i) appropriate ducts for bringing telephone services to the Leased Premises. 6.03 Maintenance. Repair and Replacement - Subject to payment by the Tenant of Rent, the Landlord shall operate, maintain, repair and replace the systems, facilities and equipment necessary for the proper operation of the Project and for provision of the Landlord's Services set out in Section 6.02 (except as may be installed by or be the property of the Tenant) and shall maintain and repair the foundations, stmcture and the roof of the Building and repair damage to the Building which the Landlord is obligated to insure against under Article 9.00, provided that: (a) if all or part of the systems, facilities and equipment are destroyed, damaged or impaired, the Landlord shall have a reasonable time within which to complete the necessary repair or replacement and, during that time, shall onW be required to ma.intain such Services as are reasonably possible in the circumstances; (b) the Landlord may temporarily discontinue such Services or any of them at such times as may be reasonably necessary; (c) the Landlord shall use reasona6fEEdiligence in carrying out its obligations under this Section 6.03, but shall not be liable under any circumstances for any consequential damages, whether direct or indirect, to any Person or property for any failure to do so; (d) no reduction or discontinuance of Services under this Section 6.03 shall be construed as a breach of the Landlord's covenant therefor or as an eviction of the Tenant or, except as specifically provided otherwise in this Lease, release the Tenant from any obligation under this Lease; (e) the Landlord shall not be liable under any circumstances for any damage caused by interruption or failure of any utility, wiring, elevator or escalator; (f) the Landlord shall have no responsibility for any inadequacy of performance of any systems within the Leased Premises if the Leased Premises or the use thereof depart from the design criteria for such system as established by the Landlord for the Building; and (g) nothing contained herein shall derogate from the provisions of Article 10.00. 6.04 AlterationsiRenovations bv Landlord - During the Term or any renewal or extension thereof, it is understood and agreed that if the Landlord intends to make changes, additions or improvements to or renovate the Project or any part thereof, of which the Leased. Premises form a part (the "Renovation Work"), notwithstanding anything contained in this Lease to the contrary, the Landlord, its servants, agents, contractors and representatives may proceed with the Renovation Work without further consent or approval of the Tenant and the Tenant hereby irrevocably grants to the Landlord its consent to the carrying out of the Renovation Work; provided that the Renovation Work shall not materially interfere with or adversely affect the business of the Tenant carried on in the Leased Premises. It is specifically understood and agreed that there shall be no compensation paid tb the Tenant nor shall there be any abatement of Rent in connection with the Renovation Work. In exercising its rights pursuant to this Section 8.04, the Landlord shall be entitled to: (a) enter the Leased Premises from time to time to make changes or additions to the structure, systems, facilities and equipment in the Leased Premises where necessary to serve the Leased Premises or other parts of the Building; (b) limit from time to time as may be necessary by reason of the Renovation Work, ingress to and egress from the Leased Premises and/or the Project; (c) change, add to, diminish, demolish, dedicate for public purposes part or parts of, improve or alter any part of the Project not in or forEing part of the Leased Premises; and (d) change, add to, diminish, improve or alter the location and extent of Common Elements. The Landlord agrees to give to the Tenant 10 days' prior written notice of its intention to proceed with the Renovation Work. Provided that notice is given as aforesaid, the Tenant shall cooperate with the Landlord in order to allow the Renovation Work to be completed as expeditiously as possible. It is specifically agreed by the

Landlord and the Tenant that the Landlord shall not, by reason of exercising its rights pursuant to this Section 6.04, be in default or be deemed to be in default of any covenant. 6.05 Access by Landlord - The Tenant shall permit the Landlord to enter the Leased Premises at any time outside normal business hours in case of an emergency, either real or perceived, and otherwise during normal business hours where such entry will not unreasonably disturb or interfere with the Tenant's use of the Leased Premises or operation of its business, to examine, inspect and show the Leased Premises for purposes of leasing, sale or financing, to provide Services or make repairs, replacements, changes or alterations as provided for in this Lease and to take such steps as the Landlord may deem necessary for the safety, improvement or preservation of the Leased Premises or the Project. The Landlord shall, whenever possible, consult with or give reasonable notice to the Tenant prior to entry but no such entry shall constitute an eviction or a breach of the Landlord's covenant for quiet enjoyment or entitle the Tenant to any abatement of Rent. 6.06 Energy Conservation - The Landlord shall be deemed to have observed and performed its obligations under this Lease, including those relating to the provision of utilities and Services, if in so doing it acts in accordance with a directive, policy or request of an authority having jurisdiction in the field of energy conservation, security or environmental matters. 6.07 Supervision and Extended Services - The Landlord, if it shall from time to time so elect, shall have the right to supervise the moving of furniture or equipment of the Tenant and (in addition to supervising the Tenants work as provided for in this Lease) to supervise the making of repairs conducted within the Leased Premises and the exclusive right to supervise or make deliveries to the Leased Premises. In addition, and by arrangement with the Tenant, the Landlord may provide extended cleaning or other Services to the Tenant in addition Ethose normally supplied and referred to in this Lease. In each case, the Landlord's costs and expensesincurred with respect thereto together with a reasonable administration fee shall be paid to the Landlord by the Tenant from time to time promptly upon receipt of invoices from the Landlord. 6.08 Landlord's Work - The Tenant agrees that it has entered into this Lease on the express understanding that the Landlord's Work in respect of the Leased Premises is limited to the scope delineated as Landlord's Work in Schedule D and all other improvements to the Leased Premises shall be performed at the sole expense of the Tenant in accordance with the terms of this Lease, including but not limited to Section 7.04 of this Lease. 6.09 Control by the Landlord - The Tenant agrees that the Landlord shall have control of the Project and, without limiting the generality of anything contained elsewhere in this Lease, the Landlord may make such use of the Common Elements and permit others to make such use of the Common Elements as the Landlord may from time to time determine subject, in the case of use by others, to such terms and conditions and for such consideration as the Landlord may in its discretion determine, provided that such uses do not materially obstruct access to the Leased Premises and the Landlord may close all or any part or parts of the Project to such extent as may, in the opinion of the Landlord or any Consultants engaged by the Landlord in that regard, be legally sufficient to prevent a dedication thereof or the accrual of rights therein to any Person or the public. ARTICLE 7.00- PAYMENT FOR SERVICES AND MAINTENANCE. REPAIR AND ALTERATIONS BY THE TENANT 7.01 Utilities - In addition to the payment of Tenant's Occupancy Costs and notwithstanding Sections 6.01 and 6.02, the Tenant shall be responsible for the cost of all utilities including electricity supplied to the Leased Premises. The Tenant shall not, without the prior written approval of the Landlord, which may be arbitrarily withheld, install or cause to be installed in the Leased Premises any equipment that will require additional utility usage in excess of that normally required for office premises. If with the Landlord's approval such additional equipment is installed, the Tenant shall be solely responsible for such excess utility usage. If utilities are supplied to the Tenant through a meter common to other tenants in the Project (there being no obligation on the Landlord to install separate meters), the Landlord shall pay the cost of the utilities and apportion the cost pro rata iamong the tenants supplied through the common meter, based on all relevant factors including, but not limited to, the hours of use, number and types of lights and electrical equipment and the proportion of each tenant's Rentable Area to the Rentable Area of all tenants to which the common meter relatest Upon receipt of the Landlord's statementof apportionment, the Tenant shall promptly reimburse the Landlord for all amounts apportioned to the Tenant by the Landlord provided that the Landlord may elect by notice to the Tenant to estimate the amount which will be apportioned to the Tenant and require the Tenant to pay that amount in monthly instalments in advance simultaneously with the Tenant's payments of Basic Rent. Notwithstanding the foregoing, and whether the Leased

Premises are separately metered or not, the Landlord may purchase in bulk from the utility supplier the aggregate utility requirements of the Project at the applicable rates determined by a single meter on the Project and may, in billing the Tenant for its share of such utility, apply a scale of rates not greater than the current scale of rates at which the Tenant would from time to time be purchasing the whole of its utilities required and consumed in respect of the Leased Premises if the Tenant were purchasing directly from the utility supplier. The Tenant shall upon the Landlord's request install a separate utility meter or meters in the Leased Premises at the Tenant's expense. In addition to the payments to the Landlord required by this Article 7.00, the Tenant shall pay all rates, charges, costs and expenses as may be assessed or levied by any supplier of utilities to the Tenant other than those supplied by the Landlord. 7.02 Lights - In addition to the payment of Tenant's Occupancy Costs and notwithstanding Sections 6.01 and 6.02, the Tenant.shall pay to the Landlord monthly in advance, with its payments of Basic Rent, a reasonable amount as determined by the Landlord in respect of replacement of building standard fluorescent tubes, light bulbs and ballasts in the Leased Premises on a periodic basis or as required from time to time and the costs of cleaning, maintaining and servicing of the electrical light fixtures in the Leased Premises. 7.03 Heating, Ventilation and Air Conditioning - In addition to the payment of Tenant's Occupancy Costs and notwithstanding Sections 6.01 and 6.02, the Tenant shall be responsible for the cost of all heating, ventilation and air conditioning required in the Leased Premises or any part thereof in excess of that required to be provided by the Landlord under Section 6.02(d). If at any time during the Term the Landlord shall determine that the cost of the heating, ventilation and air conditioning required in the Leased Premises or any part thereof is in excess of that normally required in other parts of the Building which are used for normal office purposes, the Landlord may deliver to the Tenant a statementin writing setting out the cost of the excess and upon receipt of the statement from time to time the Tenant shall promptly reimburse the Landlord for the amount shown in the statement as attributable to the Leased Premises. 7.04 Alterations by Tenant - The Tenacy from time to time at its own expense make changes, additions and improvements.to the Leased Premises to better adapt the same to its business, provided that any change, addition or improvement shall: (a) comply with the requirements of the Landlord's insurers and any governmental or municipal authority having jurisdiction; (b) be made only after detailed plans and specifications therefor have been submitted to the Landlord and received the prior wriflen consent of the Landlord, and the Tenant acknowledges that the Landlord's consent does not mean that any alterations made by the Tenant to the Leased Premises pursuant to this Section 7.04, comply with any municipal byH laws or any other applicable laws, by-laws, codes or requirements. All costs incurred with respect to such approval shall be at the expense of the Tenant. Any changes, additions and/or improvements affecting the Building's electrical, mechanical and/or structural components shall only be performed by contractors selected by the Landlord (the "Landlord's Contractors"). A list of the Landlord's Contractors is available upon request; (c) equal or exceed the then current standard for the Building; (d) be carried out in a good and workmanlike manner and only by Persons selected by the Tenant and appmved in writing by the Landlord who shall, if required by the Landlord, deliver to the Landlord before commencement of the work, performance and payment bonds as well as proof of workers1 compensation and public liability and property damage insurance coverage, with the Landlord and the Landlord's agent and nominee (if any) named as additional insureds, in amounts, with companies and in a form reasonably satisfactory to the Landlord, which shall remain in effect during the entire period in which the work will be carried out; and (e) be made only after the Tenant has provided to the Landlord evidence of all requisite permits and licences and any other information reasonably required by the Landlord. Upon completion of such change, addition or improvement, the Tenant shall provide to the Landlord as-built drawings and/or a CAD disk of same. 7.05 Tenants Trade Fixtures and Personal Property- The Tenant may install in the Leased Premises its usual trade fixtures and personal property in a proper manner; provided that no installation or repair shall interfere with

or damage the mechanical or electrical systems or the structure of the Building. If the Tenant is not then in default hereundet, the trade fixtures and personal property installed in the Leased Premises by the Tenant may be removed by the Tenant from time to time in the ordinary course of the Tenant's business or in the course of reconstrution renovation or alteration of the Leased Premises by the Tenant, subject to the provisions of Article 14.00 of this Lease, and provided that the Tenant promptly repairs at its own expense any damage to the Leased Premises and the Building resulting from the installation and removal and provided further that in the event of removal of trade fixtures the Tenant shall promptly replace such trade fixtures with trade fixtures of equal or greater quality and value, subject to the provisions of Section 14.01. 7.06 Maintenance and Repair - Except to the extent that the Landlord is specifically responsible therefor under this Lease, the Tenant, at its cost, shall maintain, repair and replace the Leased Premises, all Leasehold Improvements and all apparatus therein in good order and condition, and in compliance with the requirements of all authorities having jurisdiction including without limitation: (a) keeping the Leased Premises and the immediate surrounding area in a clean and tidy condition and free of debris and garbage; (b) repainting and redecorating the Leased Premises and cleaning and maintaining drapes and carpets at reasonable intervals as reasonably requiredby the Landlord; (c) making repairs and replacements as needed to the Leased Premises including, without limitation, to glass, plate glass, doors, hardware, partitions, walls, fixtures, lighting and plumbing fixtures, wiring, piping, ceilings, floors and thresholds in the Leased Premises; and (d) keeping the Leased Premises in such condition as to comply with the requirements of any authority having jurisdiction. 7.07 Inspection - The Landlord and its Consultants may from time to time enter upon the Leased Premises: (a) to inspect the Leased Premises and its condition; and (b) to inspect any work being done by the Tenant both during the course of such work and following completion thereof. If the Landlord or its agents shall determineA hat the work being done by the Tenant is in breach of this Lease or fails to comply with the requirements of this Lease in any respect, the Tenant shall forthwith remedy such breach or failure to comply and shall desist from continuing the same. The Tenant shall, at its own cost, make good any deficiency in such work and remedy any failure to comply with the requirements of this Lease. 7.08 Failure to Maintain - If the Tenant fails to perform any obligation under this Article 7.00, then on not less than 5 days' notice to the Tenant, the Landlord may enter the Leased Premises and perform the obligation without liability to the Tenant for any loss or damage thereby incurred. The Tenant shall promptly after receiving the Landlord's invoice therefor reimburse the Landlord for all costs incurred by the Landlord in performing the obligation plus 20% of the costs for overhead and supervision. 7.09 Liens - The Tenant shall: (a) pay promptly when due all costs for work done or caused to be done or goods affixed by the Tenant in the Leased Premises which could result in any lien or encumbrance on the Landlord's interest in the Project or any part thereof, or the filing or registration of any security interest or notice thereof: (b) keep the title to the Project, including every part thereof and the Leasehold Improvements, free and clear of any lien, encumbrance or security interest or notice thereof; and (c) indemnify and hold harmless the Landlord against any Claims arising out of the supply of goods, materials, services or labour for the work. The Tenant shall immediately notify the Landlord of any lien, encumbrance, claim of lien, security interest, or notice thereof or other action of which it has, or reasonably should have, knowledge and which affects the title to

the Project including the Leased Premises or any part thereof and, except for those contemplated by Section 15.25, shall cause the same to be removed within 5 business days (or such additional time as the Landlord may consent to in writing), failing which the Landlord may take such action as the Landlord deems necessary to remove same and the entire cost thereof shall immediately become due and payable by the Tenant to the Landlord. The Tenant shall not affix or cause to be affixed to the Project any goods acquired under conditional sale or with respect to which any lien, encumbrance or security interest exists. The Landlord may from time to time post such notices in such places on the Leased Premises as the Landlord considers advisable to prevent or limit the creation of any liens upon the Project orany part thereof 7.10 Roof - The Tenant shall not be entitled to install upon the roof of the Building any equipment except as consented to in writing by the Landlord, whi9h consent may be arbitrarily withheld, but if given shall be subject to whatever conditions the Landlord, in its sole discretion, deems necessary in the cirdumstances. ARTICLE 8.00- TAXES 8.01 Taxes Payable by Landlord - The Landlord covenants and agrees to pay all Taxes assessed against the Landlord or the Project on account of its ownership when due (except for Taxes payable directly to the taxing authority by the Tenant under Subsection 8.02(c)) and subject to the provisions hereinafter contained in this Article 8.00. Provided however, that the Landlord may defer payment of any such Taxes or defer compliance with any statute, law, by-law, regulation or ordinance in connection with the levy of such Taxes in each case to the fullest extent permitted by law as long as it shall diligently prosecute any contest or appeal of such Taxes. 8.02 Taxes Pavable bv Tenant - The Tenant shall pay promptly when due to the taxing authority or the Landlord at the Landlord's direction every Tax upon or on account of the following: (a) Property Taxes in respectEof the Leased Premises; (b) Tenant's Proportionate Share of the amount assessed as Property Taxes for the Common Elements if separately identified and if not separatelyidentified than as may be reasonably attributed or allocated by the Landlord; and (c) any Taxes imposed or assessed against or in respect of the personal property and Leasehold Improvements of the Tenant in the Leased Premises or in respect of any business operations carried on or in respect of the use or occupancy thereof by the Tenant or by any subAenant or licensee, if levied or assessed separately from Taxes upon the remainder of the Land and Building and referred to herein as "Business Taxes". The Tenant agrees to provide to the Landlord within 3 days of receipt thereof, an original or duplicate copy of any separate Tax bill. In the event that there shall not be a sepahifli assessment and separate tax bill for Property Taxes or Business Taxes levied in respect of the Leased Premises, the Tenant shall pay at the same time as Basic Rent, Tenant's Proportionate Share of Taxes which may be assessed, levied, rated or imposed against the Project. The Tenant shall deliver promptly, upon request of the Landlord, receipts for all such payments and will furnish such other information as the Landlord may require. 8.03 Tax Increases Attributable to Tenant - If any Taxes in respect of the Leased Premises or Project are greater than they otherwise would have been by reason of the constitution or ownership of the Tenant, the use of the Leased Premises by the Tenant, the' school support of the Tenant, or any other reason peculiar to the Tenant, the portion of such Taxes in each year attributable to such reason, as determined by the Landlord, shall be paid by the Tenant to the Landlord at least 15 days prior to the due date for payment thereof by the Landlord, and in addition to Property Taxes and other Taxes otherwise payable by the Tenant under this Lease. 8.04 GST - The Tenant shall pay to the Landlord the amount of all GST accruing due with respect to Rent at the time the Rent is due and payable to the Landlord under this Lease. The Tenant's obligation to pay GST under this Section shall not be limited or precluded by any limitation contained in this Lease upon the Landlord's right to recover or receive payment from the Tenant of taxes upon Landlord's income or profits or otherwise. 8.06 Landlord's Election - Notwithstanding that any Taxes (including without limitation, any of the foregoing payable by the Tenant under

Section 8.02) may be separately imposed, levied, assessed or charged by the appropriate authority for or in respect of the Leased Premises and other portions of the Project, the Landlord may elect that such Taxes shall be added to Operating Costs and the Landlord may in its absolute discretion allocate such amount among tenants of the Building and the amount allocated to the Tenant shall form part of Tenant's Occupancy Costs. 8.06 Right to Contest - Each of the Landlord and the Tenant (provided the Tenant is legally entitled to do so) shall have the right to contest in good faith the validity or amount of any Taxes which, in the case of the Landlord, the Landlord is responsible to pay under this Article 8.00. and which, in the case of the Tenant, the Tenant is responsible to pay under Section 8.02 and for which it is separately assessed. Notwithstanding anything to the contrary herein, the Tenant may, upon notice to the Landlord, defer payment of any amount payable by it pursuant td Section 8.02 for which it is separately assessed,to the extent permitted by law; provided that no contest by the Tenant shall involve the possibility of forfeiture, sale or disturbance of the Landlord's interest in the Leased Premises or the imposition of any penalty or interest, charge or lien and that, upon the final determination of any contest by the Tenant, the Tenant shall immediately pay and satisfy the amount fQund to be due, together with any costs; penalties and interest. It as a result of any contest by the Tenant, any tax, rate, levy, assessment, fee or other charge is increased, the Tenant shall be responsible for the full amount of such increase in respect of the period to which the contest relates and to any subsequent tax periods which commence during the Term. The Tenant shall not contest any amount payable by it under Section 8.02 or appeal any assessment therefor except as follows: (a) the Tenant shall deliver to the Landlord any notices of appeal or other like instrument and obtain the Landlord's consent thereto, which consent shall not be unreasonably withheld, before filing the same, (b) the Tenant shall deliver whatever security the Landlord reasonably requires; (c) the Tenant shall promptly and diligently prosecute the contest or appeal at its sole expense; and (d) the Tenant shall keep the Landlord fully informed thereof. ARTICLE 9.00- INSURANCE, LIABILITY AND ENVIRONMENTAL 9.01 Landlord's Insurance - During the Term, the Landlord shall place insurance coverage on and with respect to the Project excluding the area(s)to be insured by the Tenant as set out in Section 9.02, which coverage shall include the following, if available at reasonable cost in the opinion of the Landlord: (a) all risks insurance for the full reconstruction value of the Project, excluding Leasehold Improvements, as determined by the Landlord; (b) as an extension to the insurance maintained pursuant to Subsection 9.01(a), insurance on the rental income derived by the Landlord from the Project on a gross rental income form with a period of indemnity of not less than the period as estimated by the Landlord from time to time which would be required to rebuild and, if necessary, to re-tenant the Project in the event of the complete destruction thereof; (c) boiler and machinery insurance,Eluding repair or replacement and rental income coverage, if applicable; (d) plate glass insurance (not including plate glass fronting or within the Leased Premises) if deemed appropriate by the Landlord; (e) bodily injury and property damage liability insurance; and (f) such other insurance which is or may become customary or reasonable for owners of projects similar to the Project to carry in respect of loss of, or damage to, the Project or liability arising therefrom. The insurance referred to in this Section shall be carried in amounts determined reasonably by the Landlord. The insurance shall be written in the name of the Landlord with loss payable to the Landlord and to any mortgagee (including any tmstee under a deed of trust and mortgage)of the Project from time to time. The policies of insurance referred to in Subsections 9.01(a),(b),(c)and(d) shall contain a waiver of the insurer's right of subrogation as against the Tenant. The Landlord hereby waives its right of recovery against the Tenant, its

employees and those for whom the Tenant is in law responsible with respect to occurrences required to be insured against by the Landlord hereunder. Notwithstanding any contribution by the Tenant to insurance premiums as provided for in this Lease, no insurable interest is conferred upon the Tenant under policies carried by the Landlord. Except as specifically provided in this Lease, the Landlord shall in no way be accountable to the Tenant regarding the use of the insurance proceeds arising from any Claims. 9.02 Tenants Insurance - At its own expense the Tenant shall take out and thereafter maintain in force at all times during the Term insurance policies as follows: (a) all risks insurance on Leasehold Improvements and on all other property of every description, nature and kind owned by the Tenant or for which the Tenant is legally liable, which is installed, located or situate within the Leased Premises or elsewhere in the Project, including without limitation, all inventory or stock-inArade in an amount not less than the full replacement cost thereof without deduction for depreciation; such insurance shall be subject to a replacement cost endorsement and shall include a stated amount co-insurance clause and a breach of conditions clause; (b) comprehensive or commercial general boEily injury and property damage liability insurance to respond to any and all incidents occurring in the Leased Premises in the minimum amount of $3,000,000 including the following exteEsions: owners and contractors protective; limited pollution coverage endorsement; products and completed operations; personal injury; occurrence basis property damage; blanket contractual and non-owned automobile liability; such insurance shall include the Landlord and the Landlord's agent and nominee (if any) as addflional named insureds, and shall protect the Landlord and the Landlord's agent and nominee (if any) in respect of Claims by the Tenant as if the Landlord and the Landlord's agent and nominee(if any) were separately insured; such insurance shall include cross liability and severability of interest clauses; (c) boiler and machinery insurance, if applicable, including repair or replacement endorsement in an amount satisfactory to the Landlord and providing coverage with respect to all objects introduced into the Leased Premises by or on behalf of the Tenant or otherwise constituting Leasehold Improvements; (d) plate glass insurance on all internal and external glass within or fronting the Leased Premises; however, notwithstanding the foregoing, the Tenant may elect to self-insure for the insurance described in this Subsection (d); (e) business interruption insurance on the profit form providing all risks coverage with a period of indemnity of not less than 12 months and subject to a stated amount co-insurance clause; and (f) any other form of insurance in such amounts and against such risks as the Landlord may from time to time reasonably require. The Tenant acknowledges and agrees that it shall be solely responsible for insuring the Leasehold Improvements, its equipment and stock and any other property owned dr brought into the Leased Premises by the Tenant whether affixed to the Building or not. The insurance policies referred to in this Section shall be subject to such higher limits as the Tenant, or the Landlord acting reasonably, or any mortgagee of the Landlord's interest in the Project may require from time to time. The policies of insurance referred to in Subsections 9.02(a),(c), (d), (e), and (f) shall contain a waiver of the insurer's right of subrtgation as against the Landlord. The Tenant hereby waives its right of recovery against the Landlord; its employees and those for whom the Landlord is in law responsible with respect to occurrences required to be insured against by the Tenant hereunder. Any and all deducubles in the Tenanfs insurance policies shall be borne solely by the Tenant and shall not be recovered or attempted to be recovered from the Landlord. In addition, all such policies shall be non-contributing with, and will apply only as primary and not excess to, any insurance proceeds available to the Landlord. The Tenant shall provide to the Landlord at the commencement of the Term and at least 30 days prior to the renewal of all insurance referred to in this Section 9.02, and promptly at any time upon request, a certificate of insurance evidencing the insurance coverage maintained by the Tenant in accordance with this Section 9.02. The delivery to the Landlord of a certificate of insurance or any review thereof by or on behalf of the Landlord shall not limit the obligation of the Tenant to

provide and maintain insurance pursuant to this Section 9.02 or derogate from the Landlord's rights if the Tenant shall fail to fully insure. All policies shall provide that the insurance shall not be cancelled or changed to the prejudice of the Landlord without at least 30 days' prior written notice given by the insurer to the Landlord. All policies of insurance shall be placed with a company licensed to sell commercial insurance in Canada. The Tenant acknowledges and agrees that, if it fails to obtain and maintain in force any of the insurances set out in this Section 9.02, then the Tenant shall indemnify the Landlord in respect of any losses arising therefrom. 9.03 Placement of Tenants Insurance bv Landlord - If the Tenant fails to place or maintain all or any of the insurance coverage referred to in Section 9.02, the Landlord may, at its option, place all or any part of such insurance in the name of or on behalf of the Tenant and the Tenant shall pay to the Landlord upon demand all costs incurred by the Landlord in so dbing including, without limitation, the premium or premiums for such insurance together with the Landlord's administrative fee of 15% of such premium. 9.04 Limitation of Landlord's Liability - The Landlord, its agents and employees and any Person for whom it is in law responsible shall not be liable under any circumstances for any damage caused by anything done or omitted to be done by any other tenant of the Project or any damage resulting from the exercise of the Landlord's control over the Project or any part thereof. 9.05 Environmental Issues (1) Landlord's Requirements - The Tenant shall not bring into or allow to be present in the Leased Premises or the Project any Pollutants except such as are disclosed in Schedule H hereto. If the Tenant shall bring or create upon the Project, including tije Leased Premises, any Pollutants, then such Pollutants shall be and remain the sole property of the Tenant and the Tenant shall remove same at its sole cost at the expiration or sooner termination of the Term or sooner if so directed by any governmental authority or if required to effect compliance with any Environmental Laws or if required by the Landlord. (2) Governmental Requirements - If any governmental authority shall require the clean-up of any Pollutant: (a)held in, released from, abandoned in, or placed upon the Leased Premises or the Project by the Tenant or its employees or those for whom it is in law responsible; or (b)released or disposed of by the Tenant or its employees or those for whom it is in law responsible; then the Tenant shall, at its own expense, carry out all required work, including preparing all necessary studies, plans and approvals and providing all bonds and other security required and shall provide full inforrnation with respect to all such work to the Landlord provided that the Landlord may, at its option, perform any such work at the Tenant's sole cost and expense1 payable on demand as additional Rent. (3) Environmental Covenants - In addition to and without restricting any other obligations or covenants herein, the Tenant covenants that it will: (a)comply in all respects with all Environmental Laws relating to the Leased Premises or the use of the Leased Premises; (b)promptly notify the Landlord in writing of any notice by any governmental authority alleging a possible violation of or with respect to any other matter involving any Environmental Laws relating to operations in the Leased Premises or relating to any Person for whom it is in law responsible or any notice from any other party concerning any release or alleged release of any Pollutants; and (c)permit the Landlord to: (i) enter and inspect the Leased Premises and the operations conducted therein; and (ii) conduct tests and environmental assessments or appraisals; and

(iii) remove samples from the Leased Premises; and (iv) examine and make copies of any documents or records relating to the Leased Premises and interview the Tenant's employees as necessary; and (d)promptly notify the Landlord of the existence of any Pollutant in the Project. (4) Environmental Indemnification - The Tenant shall indemnify and hold the Landlord harmless at all times from and against any and all losses, damages, penalties, fines, costs, fees and expenses (including legal fees on a solicitor and client basis and Consultant's fees and expenses) resulting from: (a) any breach of or non-compliance with the foregoing environmental covenants of the Tenant; and (b) any legal or administrative action commenced by, or claim made or notice from, any third party, including, without limitation, any governmental authority, to or against the Landlord anti pursuant to or under any Environmental Laws or concerning a release or alleged release of Pollutants at the Leased Premises into the environment and related to or as a result of the operations of the Tenant or those acting under its authority or control at the Leased Premises, and any and all costs associated with air quality issues, if any. [It Rider 1 (Section 9.05) is attached to this Lease this Section will be deleted and initialled and the terms and conditions stated on Rider 1 will govern the relationship between the Landlord and the Tenant with respect to environmental issues. ARTICLE 10.00- DAMAGE AND DESTRUCTION 10.01 Limited Damaae to Leased Premises, Access or Services - If during the Term, the Leased Premises or any part thereof, or other portions of the IBuilding providing access or Services essential to the Leased Premises, shall be destroyed or damaged by any hazard against which the Landlord is obligated to insure pursuant to Section 9.01, the Landlord, if permitted by law so to do, shall proceed with reasonable diligence to rebuild and restore or repair the Leased Premises or comparable premises or such access routes or Service systems, as the case may be, in conformance with current laws to the extent of insurance proceeds received. The covenants of the Tenant to repair shall not include any repairs of damage required to be made by the Landlord under this Section 10.01. Rent payable by the Tenant shall abate from the date of such damage or destruction to the date of substantial completion of the Landlord's work as determined by the Landlord's architect or engineer or restoration of access or Services, as the case may be. If less than all of the Leased Premises is destroyed or damaged as contemplated in this Section 10.01, Rent payable by the Tenant shall abate from the date of such damage ordestruction to the date of substantial completion of the Landlord's work in the same proportion as the Rentable Area of the Leased Premises so damaged or destroyed is of the total Rentable Area of the Leased Premises. 10.02 Major Damage to Leased Premises - Notwithstanding anything contained in this Lease to the contrary, if the Leased Premises shall be damaged or destroyed by any hazard against which the Landlord is obligated to insure under this Lease; and if in the opinion of the Landlord's architect or engineer, given within 30 business days of the happening of said damage or destruction, said damage or destruction is to the extent that the Leased Premises shall be incapable of being rebuilt or repaired or restored with reasonable diligence within S months after the occurrence of such damage or destruction, then the Landlord may, at its option, terminate this Lease by notice in writing to the Tenant given within 15 days after the giving of the opinion by the Landlord's architect or engineer. If such notice is given by the Landlord under this Section 10.02, then this Lease shall terminate on the date of such notice and the Tenant shall immediately surrender the Leased Premises and all interest therein to the Landlord and Rent shall be apportioned and shall be payable by the Tenant only to the date of such damage or destruction and the Landlord may rEenter and repossess the Leased Premises. 1O.03 Damage to Building - Notwithstanding that the Leased Premises may not be affected, if in the reasonable opinion or determination of the Landlord or the Landlord's architect or engineer, rendered within 30 business days of the happening of damage or destruction, the Building shall be damaged or destroyed to the extent that any one or more of the following conditions exist: (a) in the reasonable opinion of the Landlord the Building must be totally or partially demolished, whether or not to be reconstructed in whole or in part; or (b) in the reasonable opinion of mb Landlord's architect or engineer the Building shall be incapable of being

rebuilt or repaired or restored with reasonable diligence within 6 months after the occurrence of such damage or destruction; or (c) any tenant of the Building which, in the Landlord's absolute discretion, is a major tenant of the Building becomes entitled to terminate its lease as a result of such damage or destruction; or (d) more than 35% of the Rentable Area of the Building is damaged or destroyed as reasonably determined by the Landlord's architect or engineer; or (e) any or all of the heating, ventilating, air conditioning, electrical, mechanical or elevator systems in the Building are damaged or destroyed as reasonably determined by the Landlord's architect or engineer; then the Landlord may at its sole option terminate this Lease by notice in writing to the Tenant given within 15 days after the rendering of such opinion or determination. If notice is given by the Landlord under this Section 10.03, then this Lease shall terminate from the date of such notice and the Tenant shall immediately surrender the Leased Premises and all interest therein to the Landlord and Rent shall be apportioned and shall be payable by the Tenant only to the date of such notice and the Landlord may thereafter re-enter and repossess the Leased Premises. If the Building is damaged to the extent described in this Section 10.03 and the Landlord does not terminate this Lease, the Landlord will rebuitd or repair the Building to base building standards, but the rebuilt or repaired Building may be different in configuration and design from that comprising the Project prior to the damage or destruction. 10.04 No Abatement - Except as specifically provided in this Article 10.00, there shall be no abatement of Rent and the Landlord shall have no liability to the Tenant by reason of any injury to, loss of or interference with the Tenants business or pmperty arising directly or indirectly from fire or other casualty, howsoever caused, or from the making of any repairs resulting therefrom or to any portion of the Building or the Leased Premises. 10.05 Notify Landlord - The Tenant shall immediately notify the Landlord or its representative in the Project of any accident or defect in the Project, the Leased Premises or any systems thereof and, as well, of any matter or condition which may cause injury or damage to the Project or any person or property located therein. 10.06 Expropriation - If at any time during the Term the whole or any part of the Leased Premises shall be taken by any lawful power or authority by the right of Expropriation, the Landlord may, at its option, give notice to the Tenant of termination of this Lease either in its entirety or only insofar as it affects the part of the Leased Premises taken by the lawful power or authority by right of Expropriation, on the date when the Tenant or the Landlord is required to yield up possession thereof to the Expropriating authority. Upon such termination, or upon termination by operation of law, as the case may be, the Tenant shall immediately surrender the Leased Premises or the part of the Leased Premises taken by the Expropriating authority, as the case may be, and all its interest therein, and Rent shall abate and be apportioned to the date of termination and the Tenant shall forthwith pay to the Landlord the apportioned Rent and all other amounts which may be due to the Landlord up to the date of termination. The Tenant shall have no claim upon the Landlord for the value of its property or the unexpired Term, but the parties shall each be entitled separately to advance their claims for compensation for the loss of their respective interests in the Leased Premises so taken, and the parties shall each be entitled to receive and retain such compensation as may be awarded to each respectively. However, to the extent that a part of the Project other than the Leased Premises is Expropriated the full proceeds paid or awarded will belong solely to the Landlord and the Tenant will assign to the Landlord any rights it might have or acquire in respect of the proceeds or awards and will execute those documents that the Landlord reasonably requires in order to give effect to this intention. Where used in this Section 10.06 "Expropriation" means expropriated by a governmental or municipal authority, or transferred, conveyed or dedicated in contemplation of a threatened expropriation and "Expropriated" and "Expropriating" have corresponding meanings. ARTICLE 11.00- DEFAULT 11.01 Interest - The Tenant shall pay monthly to the Landlord interest at a rate per annum equal to the lesser of the Prime Rate plus 5% and the maximum rate permitted by applicable law upon all Rent required to be paid hereunder from the due date for payment thereof until the same is fully paid and satisfied. 11.02 Costs of Enforcement - The Tenant shall indemnify the Landlord against all costs and charges (including

legal fees on a solicitor and client basis) reasonably incurred either during or after the Term in enforcing payment of Rent hereunder and in obtaining possession of the Leased Premises after default of the Tenant or upon expiration or earlier te+inination of this Lease or in enforcing any covenant, proviso or agreement of the Tenant herein contained. All such costs and charges shall be paid by the Tenant to the Landlord forthwith upon demand. 11.03 Performance of Tenants Obligations - All covenants and agreements to be performed by the Tenant under any of the terms of this Lease shall be performed by the Tenant, at the Tenant's sole cost and expense, and without any abatement of Rent If the Tenant fails to perform any act to be performed by it hereunder, then, in the event of an ertiergency, either real or perceived, or if the failure continues for 10 days following notice thereof, the Landlord may (but Shall not be obligated to) perform the act without waiving or releasing the Tenant from any of its obligations relative thereto. All sums paid and costs incurred by the Landlord in so performing the act, plus 20% of the cost for overhead and supervision together with interest thereon at the rate set out in Section 11.01 from the date payment was made or such cost incurred by the Landlord, shall be payable by the Tenant to the Landlord on demand. 11.04 Events of Default - If and whenever a)all or any part of the Rent hereby reserved is not paid when due; or b)the Term or any goods, merchandise, stock in trade, chattels or equipment of the Tenant or any Indemnifier is or are seized or taken or exigible in execution or in attachment or if a creditor takes possession thereof or if a writ of execution is issued against the Tenant or any Indemnifier; or (c) the Tenant or any Indemnifier or any Person bound to perform the obligations of the Tenant in this Lease either as guarantor or indemnifier or as one of the parties constituting the Tenant takes any steps in furtherance of or suffers any order to be made for its winding-up or other termination of its corporate existence or becomes insolvent or commits an act of bankmptcy or becomes bankrupt or takes the benefit of any statute that may be in force for bankrupt or insolvent debtors or becomes involved in voluntary or involuntary winding-up proceedings or if a receiver or receiver/manager shall be appointed for all or any part of the business, property, affairs or revenues of the Tenant or such Indemnifier or Person; or (d) the Tenant makes a bulk sale of its goods or moves or commences, attempts or threatens to move its goods, chattels and equipment, or any of them, out of the Leased Premises (other than in the normal course of its business) or ceases to conduct business in the Leased Premises; or (e) the Tenant fails to move into or take possession of the Leased Premises or vacates or abandons the Leased Premises in whole or in part or fails to actively carry on business therein; or (f) the Tenant or any Indemnifier or any Person bound to perform the obligations of the Tenant pursuant to this Lease either as guarantor or indemnifier or as one of the parties constituting the Tenant fails to observe, perform and keep each and every covenant, agreement, provision, stipulation and condition herein contained to be observed, performed and kept by the Tenant or the Indemnifier (other than payment of Rent) and persists in the failure after 10 days' notice by the Landlord requiring the Tenant to remedy, correct, desist or comply (or if any breach would reasonably require more than 10 days to rectify, unless the Tenant commences rectification within the 10 day notice period and thereafter promptly, effectively and continuously proceeds with the rectification of the breach) (g) any Transfer occurs except as permitted by and in accordance with Article 12.00; or (h) any Pollutant is present in the Leased Premises without the prior written consent of the Landlord or otherwise than in compliance with all terms and conditions imposed by the Landlord in giving its consent thereto; or (i) a report or statement required from the Tenant under this Lease is false or misleading except if it results from an innocent clerical error as determined by the Landlord; or (j) any policy of insurance taken out by either the Landlord or the Tenant with respect to the Project shall be cancelled by reason of any act or omission bf the Tenant; or (k) the Tenant fails to observe and perform the rules and regulations; or

(l) the use of the Leased Premises is not in accordance with that set out in Item 9 of the Term Sheet; then the Landlord shall be entitled to any oEil of those remedies set out in Section 11.05. Each of the foregoing circumstances constitutes an "Event of Default" for the purposes of this Lease. 11.05 Remedies on Default - Upon the happening of an Event of Default the Landlord may, at its option, and in addition to and without prejudice to all rights and remedies of the Landlord available to it either by any other provision of this Lease or by statute or the general law: a)the full amount of the current month's and the next ensuing 3 months instalments of Rent which shall immediately become due and payable and the landlord may immediately distrain for the same, together with any arrears then unpaid; or b) without notice or any form of legal process, forthwith re-let or sublet the Leased Premises or any part or parts thereof for whatever term or terms and at whatever rent and upon whatever other terms, covenants and conditions the Landlord considers advisable including, without limitation, the payment or granting of inducements all on behalf of the Tenant; and on each such rEleWing or subletting the rent received by the Landlord therefrom will be applied first to reimburse the Landlord for any such inducements and for any expenses, capital or otherwise, incurred by the Landlord in making the Leased Premises ready for re-letting or subletting; and secondly to the payment of any costs and expenses of re-letting or subletting including brokerage fees and legal fees on a solicitor and client basis; and third to the payment of Rent; and the residue, if any, will be held by the Landlord and applied to payment of Rent as it becomes due and payable. If rent received from re-letting or subletting during any month is less than Rent to be paid during that month hereunder, the Tenant will pay the deficiency which will be calculated and paid monthly on or before the first day of every month; and no re-letting or subletting of the Leased Premises by the Landlord or entry by the Landlord or its agents upon the Leased Premises for the purpose of re-letting or subletting or other act of the Landlord relating thereto including, without limitation, changing or permitting a subtenant to change locks, will be construed as an election on its part to terminate this Lease unless a written notice of termination is given to the Tenant; and if the Landlord elects to rElet or sublet the Leased Premises without terminating, it may afterwards elect to terminate this Lease at anytime by reason of any Event of Default then existing; or (c) seize and sell such goods, chattels and equipment of the Tenant as are in the Leased Premises and the Landlord may, but shall not be obligated to, apply the proceeds thereof to all Rent to which the Landlord is then entitled under this Lease. Any such sale may be effected by public auction, private sale or otherwise, and either in bulk or by individual item, or partly by one means and partly by anqther, all as the Landlord in its sole discretion may decide; or (d) terminate this Lease by leaving upon the Leased Premises notice in writing of the termination, and such termination shall be without pretjudice to the Landlord's right to damages, it being agreed that the Tenant shall pay to the Landlord on demand as damages the loss of income of the Landlord to be derived from this Lease and the Leased Premises for the unexpired portion of the Term had it not been terminated; or (e) rEenter into and upon the Leased Premises or any part thereof in the name of the whole and repossess and enjoy the same as of Landlord's former estate, anything herein contained to the contrary notwithstanding; and the Tenant shall pay to the Landlord forthwith upon demand all expenses of the Landlord in re-entering, terminating, rEletting, collecting sums due or payable by the Tenant or realizing upon assets seized or otherwise exercising its rights and remedies under this Section 11.05 including tenant inducements, leasing commissions, legal fees on a solicitor and client basis and all disbursements and the expense of keeping the Leased Premises in good order, repairing the same and preparing the same for re-letting. In addition, and without limiting the generality of the foregoing provisions of this Section 11.05, upon the happening of an Event of Default, and whether or not this Lease is terminated in accordance with such provisions: (i) the Landlord shall have no further liability to pay to the Tenant or any third party any amount on account or in respect of a refund of any Security Deposit, prepaid Rent or prepaid Taxes or any tenant inducement, leasehold improvement allowance, lease takeover or lease subsidy or any other concession or inducement otherwise provided to the Tenant under or with respect to this Lease, and any Rent free period otherwise provided to the Tenant hereunder shall be null and void and of no further force or effect and Rent shall be payable in full hereunder without regard to any such Rent free period; and

(ii) any cash allowance, inducement payment, and the value of any other benefit paidEto or conferred on the Tenant by or on behalf of the Landlord in connection with the Leased Premises or this Lease shall be recoverable in full as additional Rent and shall be payable to the Landlord on demand. 11.06 Availabilitv of Remedies - The Landlord may from time to time resort to any or all of the rights and remedies available to it upon the occurrence of an Event of Default either by any provision of this Lease or by statute or the general law, all of which rights and remedies are intended to be cumulative and not alternative, and the express provisions herein as to certain rights and remedies are not to be interpreted as excluding any other or additior"aEEl rights or remedies available to the Landlord by statute or the general law. 11.07 Waiver - If the Landlord shall overlook, excuse, condone or suffer any default, breach or nonobservance by the Tenant of any obligation hereunder, this shall not operate as a waiver of the obligation in respect of any continuing or subsequent default, breach or nonobservance and no such waiver shall be implied but shall only be effective if expressed in writing. The Landlord's acceptance of Rent after a default is not a waiver of any preceding default under this Lease even if the Landlord knows of the preceding default at the time of acceptance of the Rent. No term, covenant or condition of this Lease shall be considered to have been waived by the Landlord or the Tenant unless the waiver is in writing. The Tenant waives any statutory or other rights in respect ofabatement, set-off or compensation in its favour that may exist or come into existence hereafter with respect to Rent. 11.08 Waiver of Exemption and Redemption - Notwithstanding anything contained in any statute now or hereafter in force limiting the right of distress, none of the Tenant's goods or chattels in the Leased Premises at any time during the Term shall be exempt from levy by distress for Rent in arrears, and this agreement of the Tenant in this Section may be pleaded as an estoppel against the Tenant. 11.09 Companies' Creditors Arrangement Act - By virtue of its interest in this Lease, the importance of the Tenant continuing to carry on business in the Leased Premises in accordance with this Lease, and the Landlord's entitlement to damages where this Lease is terminated by reason of an Event of Default, the Landlord does and will (despite any changes in circumstances of the Tenant or its business) consfitute a separate class or category of creditor in any plan of arrangement or other proposal submitted by or on behalf of the Tenant under the Companies' Creditors Anangement Act (Canada) or any similar legislation for bankmpt or insolvent debtors. ARTICLE 12.00-ASSIGNMENT. SUBLETTING AND OTHER TRANSFERS 12.01 Request for Consent- The Tenant shall noteffect a Transfer of this Lease or of all or part of the Leased Premises without the prior consent in writing of the Landlord, which consent shall not, provided no Event of Default has occurred, be unreasonably wfthheld. Provided that the Tenant shall, at the time the Tenant shall request the consent of the Landlord,t deliver to the Landlord such information in writing (herein called the "required information") as the Landlord may reasonably require respecting the proposed Transferee including, without limflation, the name, address, nature of business, financial responsibility and standing of such proposed Transferee. Provided further that after receiving such request, the Landlord shall have the right, at its option, to terminate this Lease if the request relates to all of the Leased Premises or, if the request relates to a portipn of the Leased Premises only, to terminate this Lease with respect to such portion, by giving, within 10 days after receiving the required information, not less than 30 nor more than 60 days' written notice of termination to the Tenant. In the event of such termination the Rent and other payments required to be made by the Tenant hereunder shall be adjusted to the date of termination and in the case of a partial termination, Rent shall abate in the proportion that the area of the portion of the Leased Premises for which this Lease is terminated beam to the area of the Leased Premises and this Lease shall be deemed to be amended accordingly. If the Landlord elects to terminate this Lease as to all or part of the Leased Premises, the Tenant mayby written notice (given within 10 days or such longer time as the Landlord may consent to in writing after receipt bf the Landlord's notide of termination) notify the Landlord of the Tenant's intention to refrain from the Transfer which gave rise to the Landlord's notice of termination or of the Tenant's intention to accept such notice of termination. If the Tenant gives such written notice to the Landlord within such time period that it intends to refrain from such Transfer, then the Landlord's election to terminate this Lease in whole or in part shall become null and void. Otherwise, the Landlord's termination shall take effect on the date stipulated by the Landlord in its notice of

termination. 12.02 Basis for Consent - Notwithstanding anything in the Landlord and Tenant Act, the Commercial Tenancies Act or any other statute or law and without limiting the grounds upon which a consent may be refused, the Landlord will not be deemed to be unreasonable in refusing consent when: (a) the giving of such consent would place the Landlord in breach of any other tenant's lease in the Project or the proposed use by the Transferee is not substantially the same as that of the Tenant; b) such consent is requested for a mortgage, charge, debenture (secured by floating charge or otherwise) or other encumbrance of, or in respect of, this Lease or the Leased Premises or any part of them; c) the Transferee, in the opinion of the Landlord, (i) does not have a history of successful business operation in the business to be conducted in the Leased Premises, (ii) does not have a good credit rating or a substantial net worth, or (iii) there is a history of default under other leases by the Transfere&& by companies or partnerships that the Transferee was a principal shareholder of or a partner in at the time of the defaults; (d) the Transferee is an existing tenant in the Project or in any other project of the Landlord; or has been within 3 months prior to the proposed assignment or sublease taking effect; (e)the Landlord has other premises in the Project available for leasing to the Transferee; f)in the case of a Transfer to a subtenant of lessee than the entire Leased Premises, if suchwould result in a configuration which would require access to be provided through spaceleased or held for lease to another tenant or improvements to be made outside of the Leased Premises; (g) the required information received from the Tenant or the Transfereeis not sufficient in the Landlord's opinion to enable the Landlord to make a determination concerning the matters set out above; or (h) the use of the Leased Premises by the proposed Transferee, in the Landlord's opinion arrived at in good faith, could result in excessive use of the systems or Services in the Project, be inconsistent with the image and standards of the Project or expose the occupants of the Project to risk of harm, damage or interference with their use and enjoyment thereof, or reduce the value of the Project. The Landlord shall not be liable for any claims, actions, damages, liabilities, losses or expenses of the Tenant or any proposed Transferee arising out of the Landlord's unreasonably withholding its consent to any Transfer and the Tenants only recourse will be to bring an application for a declaration that the Landlord must grant its consent to the Transfer. In no event shall any Transfer to which the Landlord may have consented release or relieve the Tenant or any Indemnifier from its obligations fully to perform all the terms, covenants and conditions of this Lease, the Indemnity Agreement or any renewals or extensions of this Lease or the Term, on its part to be performed and in any event the Tenant shall be liable for the Landlord's costs incurred in connection with the Tenant's request for consent as set out in Subsection 12.03(g). 12.03 Terms and Conditions Relating to Consents - The following terms and conditions apply in respect of a consent given by the Landlord to a Transfer: (a) the consent by the Landlord is not a waiEer of the requirement for consent to subsequent Transfers, and no Transfer shall relieve the Tenant of its obligations under this Lease, unless specifically so provided in writing; (b) no acceptance by the Landlord of Rent or other payments by a Transferee is: (i) a waiver of the requirement for the Landlord to consent to the Transfer, (ii) the acceptance of the Transferee as tenant, or (iii) a release of the Tenant or Indemnifier from its obligations under this Lease or any Indemnity Agreement; (c) the Landlord may apply amounts collected from the Transferee to any unpaid Rent; (d) the Transferor, unless the Transferee is a suEtenant of the Tenant, will retain no rights under this Lease in respect of obligations to be performed by the Landlord or in respect of the use or occupation of the Leased

Premises after the Transfer and will execute an Indemnity Agreement on the LandIord's standard form in respect of obligations to be performed after the Transfer by the Transferee; (e) the Transferee shall, when required by the Landlord, jointly and severally with the Tenant, enter into an agreement directly with the Landlord agreeing to be bound by this Lease as if the Transferee had originally executed this Lease as the Tenant, and the Tenant will not be released nor relieved from its obligations under this Lease including, without limitation, the obligation to pay Rent; (f) in the event that this Lease is disaffirmed, disclaimed or terminated by any trustee in bankruptcy of a Transferee, the original Tenant named in this Lease shall be deemed, upon notice by the Landlord given within 30 days of such disaffirmation, disclaimer, or termination to have entered into a lease with the Landlord, containing the same terms and conditions as in this Lease, with the exception of the Term of such Lease which shall expire on the date on which this Lease would have ended save for such disaffirmation, disclaimer or termination; and (g) any documents relating to a Transfer or the Landlord's consent will be prepared by the Landlord or its solicitors and a reasonable administration charge of at least $250.00 and the greater of (i) a reasonable document preparation fee of at least $450.00 or (ii) those legal fees on a solicitor and client baEincurred by the Landlord will be paid to the Landlord by the Tenant on demand. 12.04 Subsequent Transfers - The Landlord's consent to a Transfer shall not be deemed to be consent to any subsequent Transfer, whether or not so stated. 12.05. Profit Rents Upon Transfers - In the event of any Transfer by the Tenant by virtue of which the Tenant receives a rent in the form of cash, goods or services from the Transferee which is greater than the Rent payable hereunder to the Landlord, the Tenant shall pay any such excess to the Landlord in addition to all Rent payable under this Lease, and such excess rent shall be deemed to be further Rent payable hereunder. 12.06 Advertising - The Tenant will not advertise the Leased Premises or any part thereof as being available for leasing or this Lease as being available for transfer in any medium and will not cause or permit any such advertisement, unless the Landlord has permitted the Tenant to do so in writing and has given written approval of the wording of such advertisement. 12.07 Grant of Securitv Interest bv Assignee or Sub-tenant - The Tenant will cause any Transferee and any new Indemnifier of this Lease to grant a mortgage, charge and security interest to the Landlord in form corresponding to the Security Interest granted in Section agreement in form and substance satisfactory to the Landlord prior to the effective date of the Transfer. The Tenant shall pay all costs associated with the granting and perfection of mortgages, charges and security interests granted pursuant to this Lease upon any Transfer. ARTICLE 13.00-TRANSFERS BY LANDLORD 13.01 Sale. Conveyance and Assignment - Nothing in this Lease shall restrict the right of the Landlord convey, assign, pledge or otherwise deal with the Project, subject (except as provided in Section only to the rights of the Tenant under this Lease. 13.02 Effect of Transfer - A sale, conveyance or assignment of the Project by the Landlord shall operate to release the Landlord from liability from and; after the effective date thereof in respect of all of the covenants, terms and conditions of this Lease, express or implied, except as they may relate to the period prior to the effective date, and the Tenant shall thereafter look solely to the Landlord's successor in interest. 13.03 Subordination - Subject to Section 13.04, this Lease is and shall be subject and subordinate in all respects to any and all mortgages (including deeds.of trust and mortgage) now or hereafter placed on the Building or Land and all advances thereunder, past, present and future and to all renewals, modifications, consolidations, replacements and extensions thereof. The Tenant agrees to execute promptly and in any event within 10 days after request therefor an instrument of subordination as maybe requested. 13.04 Aftomment - The Tenant agrees, Whenever requested by any mortgagee (herein called the"Purchaser")

taking title to the Project by reason of foreclosure or other proceedings for enforcement of any mortgage or deed of trust, or by delivery of a deed in lieu of such foreclosure or other proceeding, to attorn to such Purchaser as a tenant under all of the terms of this Lease. The Tenant agrees to execute promptly and in any event within 10 days after a request by any Purchaser an instrument of attomment as may be required of it. 13.05 Effect of Attomment - Upon attomment pursuant to Section 13.04, this Lease shall continue in full force and effect as a direct lease between the Purchaser and the Tenant, upon all of the same terms, conditions and covenants as are set forth in this Lease except that, after attomment, the Purchaser andits successors in title shall not be: (a) liable for any act or omission of the Landlord; or (b) subject to any offsets or defence which the Tenant might have against the Landlord; or (c) bound by any prepayment by the Tenant of more than 1 month's instalment of Rent unless the prepayment shall have been approved in writing by the Purchaser or by any predecessor of the Purchaser's former interest as mortgagee in the Project. 13.06 Repurchase - The Tenant acknowledges and agrees that should the Landlord sell, convey, assign, pledge or otherwise deal with the Project, or any interest therein, or intend to deal with the Project, orEany interest therein, in any manner described herein then the Landlord may, at its option, if the Landlord has provided the Tenant with Basic Rent free periods, Rent free periods and/or other inducements during the Term and/or any renewal of the Term of this Lease, reimburse the Tenant for the then present value of any then unexpired Basic Rent free periods or Rent free periods and/or other inducements provided to the Tenant under this Lease, in an amount equal to the discounted cash value thereof determined by applying the then current yield of 10 year Canadian Government Bonds plus 4%(hereinafter referred to in this Section 13.06 as the "Discounted Cash Value") to the dollar amount of such outstanding Basic Rent free periods, Rent free periods and/or otherinducements and the Tenant agrees that any such periods or inducements for which it has received such Discounted Cash Value from the Landlord will no longer exist or be payable or be of any force or effect from and after the date on whichsuch Discounted Cash Value is received by the Tenant from the Landlord. The Tenant agrees to forthwithexecute any agreement prepared by the Landlord, the purpose of which agreement is to amend this Lease by deleting such Basic Rent free periods, Rent free periods and/or other inducements from the Lease for which the Tenant has received the Discounted Cash Value from the Landlord.

ARTICLE 14.00- SURRENDER 14.O0 Possession and Restoration (1) Upon the expiration or other termination of the Term, the Tenant shall immediately quit and surrender possession of the Leased Premises and all Leasehold Improvements, in substantially the condition in which the Tenant is required to maintain the Leased Premises, excepting only reasonable wear and tear and damage covered by Landlord's insurance under Section 9.01, and the Tenant shall deliver to the Landlord the keys, mechanical or otherwise, and combinations, any, to the locks in the Leased Premises and entries thereto. Notwithstanding the foregoing, the Landlord sha! have the right, at its sole option upon expiration or other termination of the Term, to require that the Tenant remove or cause to be removed at the Tenant's cost all or any part of Leasehold Improvements in the Leased Premises whether or not installed by or on behalf of the Tenant or installed by or on behalf of a previous tenant or during a previous term and to restore the Leased Premises and other parts of the Project affected by the installation or removal thereof to base building standards. Upon surrendering all right, title,and interest of the Tenant in the Leased Premises and all Leasehold Improvements located therein shall cease. 2) 90 days (or as soon after such date as is reasonably possible) prior to the expiration of the Term the Landlord may inspect the Leased Premises to determine the extent of the work required to restore the Leased Premises and other parts of the Project affected by any installation or removal of Leasehold Improvements to base building standards and upon receipt of the Landlord's estimate of the costs thereof (the "restoration costs") the Tenant shall provide to the Landlord by cash or certified cheque that amount being the restoration costs. 14.02 Tenants Trade Fixtures and Personal Proverty - After the expiration or other termination ofthe Term or in

the event of the abandonment of the Leased Premises by the Tenant, all Leasehold Improvements, trade fixtures, and personal property remaining in the Leased Premises shall be deemed conclusively to have been abandoned by the Tenant and may be appropriated, sold, destroyed or otherwise disposed of by the Landlord without notice or obligation to compensate the Tenant or to account therefor, and the Tenant shall pay to the Landlord upon written demand all of the costs incurred by the Landlord in connection therewith. 14.03 Overholding - If the Tenant remains in the Leased Premises or any part thereof after the expiration or other termination of the Term: (a) without the consent of the Landlord, no yearly or other periodic tenancy shall be created but the Tenant shall be bound by the terms and provisions of this Lease except any options thereby granted to the Tenant and except the Basic Rent shall be twice the amount provided for herein plus the sum of $200 daily and subject to such additional obligations and conditions as the Landlord may impose by notice to the Tenant: or (b) with the consent of the Landlord and agreement as to the Rent payable, in which case the tenancy shall be month 40-month at the Rent agreed and otherwise on the terms and conditions of this Lease but without any option to renew. The Landlord may recover possession of the Leased Premises during any period with respect to which the Tenant has prepaid the amount payable under Subsection i4.03(a). The Tenant shall promptly indemnify and hold harmless the Landlord from and against all Claims against the Landlord as a result of the Tenant remaining in possession of all or any part of the Leased Premises after the expiry of the Term (including, without limitation, any compensation to any new tenant or tenants which the Landlord may elect to pay whether to offset the cost of overtime work or otherwise). ARTICLE 15.00-GENERAL 15.01 Estoppel Certificates - The Tenant shall whenever requested by the Landlord, a prospective purchaser or any mortgagee (including any trustee under a deed of trust and mortgage) promptly, and in any event within 10 days after request, execute and deliver to the Landlord or to any party designated by the Landlord a certificate in writing as to the then status of this Lease, including as to whether it is in full force and effect, is modified or unmodified,confirming the Rent payable hereunder and each element hereof and the then state of the accounts between the Landlord and the Tenant, the existence or non-existence of defaults, and any other matters pertaining to this Lease in respect of which the Landlord shall request a certificate, and provide such other information as may reasonably be required, including a copy of the Tenants most recent audited financial statements. The party or parties to whom such certificates are addressed may rely upon them. 15.02 Entire Agreement - There is no promise, warranty, representation, undertaking, covenant or understanding by or binding upon the Landlord except such as. are expressly set forth in this Lease, and this Lease including the Term Sheet and schedules hereto contains the entire agreement between the parties hereto. 15.03 No Registration of Leases or Notices - The Tenant shall not register or apply to register this Lease or any notice of this Lease or any interest under this Lease and waives any statutory obligation upon the Landlord to execute and deliver this Lease in registrable form. The Tenant shall, at its own cost,promptly on request discharge any registration or filing or notice that contravenes this Section. Notwithstanding the foregoing, the Landlord may elect to require this Lease or notice of this Lease be registered. 15.04 Proiect Name and Trademarks - The Tenant shall not refer to the Project or Building by any name other than that designated from time to time by the Landlord and the Tenant shall use the name of the Building for the business address of the Tenant but for no other purpose. Compliance with this Section shall be at the sole cost and expense of the Tenant and the Tenant shall have no claim against the Landlord for any costs or expenses incurred by the Tenant, whether direct or indirect, in complying with this Section. 15.05 Demolition I Substantial Renovation - Notwithstanding any other provision of this Lease, the Landlord may terminate this Lease at any time upon giving to the Tenant not less than 12 months' notice of such termination if it is the Landlord's intention to demolish, redevelope or substantially renovate all or part of the Building. 15.06 Relocation - The Landlord shall have the right, at any time and from time to time before and during the Term and any renewal of this Lease, to change the location of the Leased Premises from the location described in this Lease to another location br similar size and finishes anywhere else in the Building. Provided that the

Landlord shall give the Teh ant reasonable notice of such relocation and the Landlord shall reimburse the Tenant for all reasonable costs directly related to such relocation, but not including any indirect costs such as lost profits during the relocation period or damages for inconvenience. 15.07 "For Lease" Signs - The Landlord shall havethe right during the last 12 months of the Term to place upon the Leased Premises a notice of reasonable dimensions stating that the Leased Premises are "for lease" and the Tenant shall not obscure or remove such notice or permit the same to be obscured or removed. 15.08 Unavoidable Delavs - If the Landlord or the Tenant (the "delayed party") shall be delayed,hindered or prevented in or from the performance of any of its covenants under this Lease by any cause not within the control of the delayed party as determined by the Landlord acting reasonably (excluding lack of finances of the delayed party), the performance of the covenant shall be excused for the period during which performance is rendered impossible and the time for performance thereof shall be extended accordingly, but this shall not excuse the Tenant from the prompt payment of Rent or performing any of its other obligations under this Lease. 15.09 Limitation of Resource- N/A 15.10 Notice - Any notice required or contemplated by any provision bf this Lease shall be given in writing and shall be sufficiently given if delivered or if sent by telecopy or similar form of immediate transmission and if to the Landlord, so given to an executive officer of the Landlord at the Landlord's head office as specified in Item 1 of the Term Sheet and to the address set out in Item 1 of the Term Sheet and if to the Tenant, so given to the Tenant personally (or to a partner or officer of the Tenant if the Tenant is a firm or corporation) at the address specified in Item 2 of the Term Sheet or left at the Leased Premises (whether or not the Tenant has departed from, vacated or abandoned the same).Any notice shall be deemed to have been redeived on the business day following the date of delivery or sending.The Landlord or the Tenant may from time to time by notice in writing to the other designate another address or addresses in Canada as the address to which notices are to be sent. If two or more Persons are named as, or bound to perform the obligations of, the Tenant hereunder,notice given as herein provided to any one of the Persons constituting the Tenant or so bound shall be deemed to be notice simultaneously to all Persons constituting the Tenant and to all Persons so bound. Any notice given to the Indemnifier or the Tenant shall be deemed to have been given simultaneously to the other of them and to all Persons bound by their obligations hereunder. 15.11 Delegation of Authority - Subject to Section 15.13, the managing agent of the Landlord may acton behalf of the Landlord in any manner provided for herein. 15.12 Relationship of Parties - Nothing contained in this Lease shall create any relationship between the parties hereto other than that of landlord and tenant and, if applicable, indemnifier. 15.13 Governing Law - This Lease shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the province in which the Project is situate. 15.14 Amendment or Modification - No amendment, modification or supplement to this Lease shall be valid or binding unless set out in writing and executed by the Landlord and the Tenant with the same degree of formality as the execution of this Lease. 15.15 Leaal and Administration Costs - The Tenant shall indemnify the Landlord against all legal fees on a solicitor and client basis and disbursements incurred by the Landlord or by its manager or agents in connection with the negotiation, preparation and execution of any renewal, amendment, assignment, cancellation, approval or consent in connection with this Lease or Event of Default arising from this Lease, including the Landlord's reasonable administration charges. All such costs and charges shall be paid by the Tenant to the Landlord forthwith upon demand. 15.16. Construction - All of the provisions of this Lease are to be construed as covenants and agreements. If any provision of this Lease is illegal or unenforceable, it shall be considered separate and severable from the remaining provisions of this Lease which shall remain in force and be binding as though the provision had never been included.

15.17 Captions and Headings - The captions and headings contained in this Lease are for convenience of reference only and are not intended to limit, enlarge or otherwise affect the interpretation of the Articles, Sections or parts hereof to which they apply. 16.18 Interpretation - In this Lease, "herein", "hereor', "hereunder", "hereafter" and similar expressions refer to this Lease and not to any particular Article, Section or other portion thereof unless there is something in the subject matter or context inconsistent therewith. Wherever necessary or appropriate in this Lease, the plural shall be interpreted as singular, the masculine gender as feminine or neuter and vice versa; and when there are two or more parties bound by the Tenant's covenants herein contained,their obligations shall be joint and several. If the Tenant is a partnership each Person who is presently a member of such partnership and each Person who becomes a member of any successor partnership shall be and continue to be liable jointly and severally for the performance of the obligations of this Lease,whether or not such Person ceases to be a member of such partnership or successor partnership. 15.19 Time of The Essence - Time shall be of the essence hereof and no extension or variation of this Lease shall operate as a waiver of this provision. 15.20 Successors and Assigns - Subject to specific provisions contained in this Lease to the contrary,this Lease shall enure to the benefit of and be binding upon the successors and assigns of the Landlord and the heirs, executors and administrators and the permitted successors and assigns of the Tenant. 15.21 Counterparts - This Lease may be executed in counterparts and the counterparts together shall constitute an original. 15.22 Further Schedules - Any additional covenants agreements and conditions forming part of this Lease will be attached 15.23 Independent Leaal Advice - The Tenant and the Indemnifier each acknowledge that the Landlord hereby advises the Tenant and the Indemnifier to obtain advice from independent legal counsel prior to signing this Lease and/or the Indemnity Agreement. The Tenant and the Indemnifier further acknowledge that any information provided by the Landlord is not to be construed as legal, tax or any other expert advice and the Tenant and the Indemnifier are cautioned not to rely on any such information without seeking legal, tax or other expert advice. The Landlord and the Tenant understand, acknowledge, and agree that this Lease has been freely negotiated by both parties and that, in any dispute or contest over the meaning, interpretation, validity or enforceability of this Lease or any of its termes Or conditions, there shall be no inference, presumption or conclusion drawn whatsoever against either party by virtue of that party having drafted this Lease or any portion thereof. 15.24 No Offer - The Landlord will not be deemed to have made an offer to the Tenant by furnishing an unexecuted copy of this Lease with particulars inserted. Notwithstanding that a Security Deposit or payment of advance Rent is received by the Landlord when this Lease is received by the Landlord for execution, no contractual or other right will exist between the Landlord and the Tenant with respect to the Leased Premises until the Landlord, the Tenant and the Indemnifier, if any, have executed and delivered this Lease and any required Indemnity Agreement. 15.25 Landlord's Security Interest- N/A 15.26 Survival of Covenants and Indemnities - All obligations of the Tenant which arise during the Term pursuant to this Lease and which have not been satisfied at the end of the Term and all indemnities of the Tenant contained in this Lease shall survive the expiration or other termination of this Lease. 15.27 Excutpatorv Provisions - In all provisions of this Lease containing a release, indemnity or other exculpatory language in favour of the Landlord, reference to the Landlord includes reference also to the Landlord's agents and nominee (if any) and any Person for whom it is in law responsible and the directors, officers and eEployees of the Landlord, its agents and nominee (if any) and any Person for whom it is in law responsible while acting in the ordinary course of their employment. 15.28 Brokerage Commissions - The Tenant covenants that no act of the Tenant has given rise nor shall give rise to any Claims against the Landlord for any brokerage commission, finders fee or similar fee in respect of this Lease. The Tenant hereby indemnifies and agrees to hold the Landlord harmless from any Claims for such

commission or fees with respect to this Lease except any which were directly contracted for by the Landlord. 15.29 Covenants to be Performed at Landlord's Option - Where any provision in this Lease gives the Landlord the option of having the Landlord or the Tenant perform the covenants set out in such provision, the Tenant shall perform such covenants unless the Tenant is otherwise directed by way of written notice from the Landlord. 15.30 Radiation - Only if the Landlord believes on reasonable grounds that radiation is or has been used or created by the Tenant or any Person permitted by the Tenant to be in the Leased Premises shall this Section 15.30 apply to the Tenant. The Tenant agrees, if so requested by the Landlord, to conduct at its own expense a survey by anaccredited firm of consultants acceptable to the Landlord to the level of radiation in the Leased Premises, and if such levels are in excess of those allowable under Environmental Laws and set by the applicable regulatory authorities governing radiation, the Tenant agrees, at its own cost and expense and on terms and conditions approved by the Landlord, to reduce the level ofEdiation to a level allowable under Environmental Laws and set by such applicable regulatory authorities: IN WTNESS WHEREOF the Landlord and the Tenant have executed this Lease as of the date first set forth above. LANDLORD: MORGUARD REAL ESTATE INVESTMENT
by: /s/Dely Rurise Authorized Signatory -TENANT NORTHSTAR ELECTRONICS, INC. by:/s/ Wislon E. Russell Title: President SCHEDULE A:

LEGAL DESCRIPTION OF LAND- Lot one(1), Block 22, District Lot 541, Group One (1)-New Westminster District Plan 15029 SCHEDULE B: DEFINITIONS: "Basic Rent' means the amount set out in Item 8 of the Term Sheet payable by the Tenant to theLandlord in respect of each year of the Term. "Bio-Medical Waste" shall mean and include the following (a) (i) surgical waste including all materials discarded from surgical procedures, including but notlimited to, disposable gowns, soiled dressings, sponges casts, lavage tubes, drainage sets, underpads and surgical gloves; and ii) pathological waste including all human tissues and anatomical parts which emanate from surgery, obstetrical procedures, autopsy and laboratory; and (iii) biological waste including blood and blood products, excretions, exudates, secretions, suctionings and other body fluids including solidi liquid waste from renal dialysis: and (iv) isolation waste including all waste emanating from the care or treatment of a patient on anytype of isolation or precaution except reverse (protective) isolation; and (b) "Chemotherapy Waste" (also known as antineoplastic or cytotoxic waste) means and includesdiscarded items, including but not limited to, masks, gloves, gowns, empty IV tubing bags, syringes and other contaminated materials which have been contaminated by chemotherapeutic drugs or antineoplastic agents; and

(c) any waste defined as bio-medical waste under any applicable law or regulation. "Building" means the buildings, structures and improvements from time to time during the Term erected in, upon or under the Land municipally identified in Item S of the Term Sheet and all alterations andadditions thereto and replacements thereof. "Claims" means claims, losses, actions, suits, proceedings, causes of action, demands, damages(direct, indirect, consequential or otherwise), judgments, executions, liabilities, responsibilities, costs, charges, payments and expenses including, without limitation, any professional, consultant and legal fees on a solicitor and client basis and any associated disbursements. SCHEDULE C LANDLORDS WORK 1. Demolition and Construction of a new wall and millwork to existing Boardroom 2. Steam Clean Existing Carpet 3. Repaint Premises
/s/ Wilson Russel President- Northstar Electronic, Inc Tenate /s/Dely Rurise Authorized Signatory Landlord

THIS INDENTURE made at the City of St John's in the Province of Newfoundland, Canada, as of this 28th day May, 1998. BETWEEN: Par Holdings LTD., a body corporate, duly incorporated under the laws of the Province of Newfoundland (hereinafter called the "Landlord") AND: Northstar Technical, Inc., a body corporate, duly incorporated under the lawn of the Province of Newfoundland (hereinafter called "the Tenant") of the other part WITNESSETH that in consideration of the rents, covenants and agreements hereinafter contained the parties hereto covenant and agree as hereinafter set forth; ARTICLE I THE DEMISE PREMISES 1.01 the Landlord hereby demises to the Tenant that portion of the floor area of the commercial complex of the Landlord known as The Par Building situate On 685-687 Water Street in the city of St. John's, Newfoundland and consisting of approximately 2340 square feet as outlined in red on the plan or diagram hereto annexed as schedule "A" and hereinafter referred to as "the Demised Premise". 1.02 The Landlord hereby grants to the Tenant in common with others having the like right, the right of ingress and egress to the demised premises from Water Street and the right subject to Article 5.09 herein, to park vehicles on the parking lot of the commercial complex for the benefit of the Tenant, its employees, customers and invitees. ARTICLE II TERM 2.01 TO HAVE AND TO HOLD the Demised Premises for the term of two (2) years commencing upon the 1st day or July 1998 and ending upon the 30th day of June, 2000. The tenant will take occupancy as soon an the space in ready and will pay as per 3.02 ARTICLE III RENT 3.01 Rent - The Tenant Covenants and agrees to pay to the Landlord, without deduction, a basic rental of Twenty Four Thousand dollars ($24,000.O0) plus H.S.T payable in equal monthly installments for Two Thousand Three hundred dollars ($2,300.00) H.S.T included. 3.02 Partial Month Rent - In the event that the commencement date of This Lease should be a date other than the first of a month, then the tenant shall pay for that month a proportionate amount of the basic rent as the remainder of the said month bears to the whole of the said month and thereafter on the 1st day of each and every month during the term hereby create. ARTICLE IV LANDLORD'S COVENANTS 4.O0 The Landlord hereby for itself, its successors and assigns hereby covenants with the Tenant, its successors and assigns as follows: 4.01 That the Tenant paying the rental hereby reserved and observing and performing the several covenants and stipulations on its part herein contained shall hold and enjoy the said demised premises quietly and peaceably during the said term without any interruption by the landlord or any person rightfully claiming under or in trust for

it. 4.02 That the Landlord will maintain and repair the structure and exterior of the demised premises other than window, door, and plate glass and the Tenant's store front and signs. 4.03 Access by Landlord to Repair - The Landlord and all persons authorized by it 'shall have the right to erect, use and maintain wiring, mains, pipes, conduits and other means of distributing services in and throuqh Demised Premises; and the Landlord and all persons authorized by it shall have the right from time to time and at all reasonable times to enter upon the Demised Premises for the purpose of access thereto for installation, maintenance and repair, and such entry shall be deemed not to be an interference with the Tenant's possession under this lease. ARTICLE IV TENANT'S COVENANTS 5.00 The tenant, for itself, its successors and assigns and to the intent that the obligations may continue throughout the term hereby created, hereby covenants with the Landlord, its successors and assigns as follows: 5.01 To Pay Rent - The tenant will pay to the Landlord all rentals provided for in this Lease and all other amounts payable by it hereunder which shall be considered additional rental, as herein provided in lawful money of Canada, without any set off, compensation or deduction. 5.02 Repair - To keep the interior of the Demised Premises, and the Tenant's interior fixtures and improvements, in good and tenantable repair and condition and to yield up the same at the termination of this tenancy in qood and tenantable repair and condition, reasonable wear and tear only expected, and the Tenant Covenants to perform such maintenance and to effect such repairs and replacements and to decorate at its own cost and expense as and when necessary or reasonably required La do so by the Landlord: notwithstanding anything contained in this section, the Landlord shall at the default of the Tenant have the right, but not the obligation, to elect, in its sole discretion, to perform or cause repairs, maintenance or replacements to be undertaken by the Tenant hereunder, and to charge the Tenant therefore. The Tenant shall have permission to remove the existing carpet in two rooms and replace with tiles. The Tenant agrees as per this clause to replace this carpet at the end of the lease term) 5.03 Taxes: The Tenant shall pay for its telephone and all business taxes, licences, rates, assessments and other charges levied or assessed on or in respect of or in relation to the occupancy by the Tenant or the business carried on by and assets of the Tenant within the demised premises. In the event of the Tenant failing to pay for such utilities and/or for any such taxes, licences, rates, charges or assessments which it has covenanted to pay and which shall constitute a lien or charge upon the demised premises or the contents, the Landlord, if such default is not cured after giving ten (10) days notice to the Tenant may pay all or any of the same and all such payments so made shall constitute rental forthwith payable and interest at the rate specified in paragraph 7.01 herein from the date of each such payment until fully paid; provided, however, that where there its a bona fide dispute of the Tenant, forfeiture will not result from non- payment and the Landlord shall not pay the same until such dispute has been resolved by nither agreement of the Tenant or by the decision of a competent authority, which ever is earlier in date; whereupon such period of ten (10) will commence upon the date of such agreement or decision. 5.04 Not to Assign - The rights of the Tenant under this Lease shall not be transferred, assigned or sold and the tenant shall not sub-let the whole or any part of the Demised Premises nor grant any concession or license within or with respect to the Demised Premises to any Party without, in either case, the prior written consent of the Landlord. However, such use must in all cases be acceptable to the Landlord. Notwithstanding any such consent being given or any such transfer, assignment, sub-lease or grant being made, the Tenant shall remain responsible jointly and severally with much transferee, assignee, sub-lease or grantee for the fulfillment of all the obligations of the Tenant under the Lease. 5.05 Use of Demised Premises - The Tenant will not time or occupy the demised premises or any part thereof for any purpose other than the operation of an office and manufacturing shop, without first obtaining the previous written consent of the Landlord which consent shall not be unreasonably or arbitrarily withheld.

5.06 Painting, Decoration and Alterations - The Tenant may at any this and from time to time at its own expense paint and decorate the interior of the demised premises and make such changes, alterations, additions, and improvements in and to all the demised premised at will, in the judgment of the tenant, better adapt the demised premises for the purpose of its operation provided however that in so doing the Tenant shall be responsible for the cost of any changes that may have to be made by the Landlord in heating or air conditioning system at the building and further that no changes, alterations, additions or improvements shall be made without the prior written consent at the Landlord and all changes alterations, additions or improvements shall comply with all applicable statutes, regulations, codes or by-laws at any municipal, provincial or other governmental authority. 5.07 Nuisance - The Tenant shall not use or permit any part of the demised premises to be used in a manner so as to cause a nuisance to other tenants of the Landlord, nor to cause or permit annoying noises, vibrations or offensive odors, and the Landlord with regard to the portion of the building other then the herein detained premises shall not use or permit any part of the premises to be used in a manner so as to cause a nuisance to the Tenant, nor to cause or permit annoying noises, vibrations or offensive odors. 5.08 Not to affect the Landlord's Insurance - The Tenant will not do or permit to be done or omit to do anything on the demised premises whereby the Landlord's insurance may be rendered void or voidable or the premium increased and if the Landlord's insurance rate shall be increased by reason of the activity of the Tenant, the Tenant shall pay to the Landlord an additional rental the amount by which the insurance be so increased. 5.09 Landlord's Examination of the Demised Premises - The Landlord and any employee, servant or agent of the Landlord shall be entitled, at any time and from time to time to enter and examine the state of maintenance, repair, decoration and order of the demised premises all equipment and fixtures within the demised premises and any improvements now or hereafter made to the demised premises and the Landlord may give notice to the Tenant requiring that the Tenant perform such maintenance or affect such repairs, replacements or decorations as- may be found necessary from such examination: the failure of the Landlord to give such notice shaIl not however, relieve the Tenant from its obligations to maintain, repair, decorate and keep the leased premises and appurtenances in good order as a careful owner would do and to make such replacement as may be necessary. 5.10 Signs - The Tenant will not erect or permit any advertisements or signs to be erected on or in the demised premises without having obtained the prior written consent of the Landlord to erect such advertisements or signs, which consent which consent unreasonably or arbitrarily withheld. 5.11 Parking - The Tenant shall have access to the parking lot at the rear of the complex for the duration of the Leasing period. 5.12 Tenant to Insure - The Tenant shall take out and keep enforced during the term property damage and public liability insurance all in the amounts and with policies in form satisfactory from time to time to the Landlord, with coverage in no case to be less than $1,000,000.00. The Tenant agrees that if the Tenant fails to take out or keep In force such insurance, the Landlord will have the right to do so and to pay the premium therefore and in such event the Tenant shall repay to the Landlord the amount paid as premium, which payment shall be deemed to be additional rental payable on the 1st day of the next month following the said payment by the Landlord. The Tenant shall have an insurable interest in the Tenant's works and improvements including the store front, stock in trade, furniture, fixtures and interior improvements and shall be entitled to take out and keep in force insurance coverage equal to the full insurable value thereof. 5.13 Merchandise in Common Area -- The Tenant shall not keep. display or sell any merchandise on or otherwise obstruct or use any part Of the sidewalk-, parking lot, vestibule area or other common area and facilities except as permitted in writing by the Landlord. 5.14 Garbage Debris and Refuse - The Tenant shall not place or leave or permit to be placed or left in or upon any part of the commercial complex outside of the demised premises, any debris or refuse except as allowed by the Landlord at specific times of pick-up and then deposit it in areas indicated by the Landlord in proper receptacles provided and placed for that purpose by the Tenant. The Tenant shall pay for the cost of any commercial garbage and refuse removal service required in addition to any provided by the Municipality. At the sole cost and expense of the Tenant, the demised premises shall be kept in a clean and sanitary condition In accordance with the laws of the Municipality and in accordance with all directions, rule and regulations of the Health Officer, Fire Marshall, Building Inspector or other proper officers of the Municipality, other agencies having jurisdiction or the insurers of the Landlord; in the event that the Tenant fails to comply with the foregoing

provisions, the Landlord may rectify the situation and collect the expense for such work from the Tenant in the same manner as arrears of rent. 5.15 Not to Register Lease- The Tenant shall not register the Lease in the Registry of Deeds for the Province of Newfoundland or to do anything which would impair the Landlord's right or ability to encumber the Demised Premises 5.17 No Liens - The Tenant covenants that it will not permit, do, nor cause anything to be done to the Demised Premises which would allow any privilege, lien, mortgage, pledge, change or encurtibrance of any nature whatsoever to be imposed or to remain upon the Demised premises or the Commercial Complex and should any privilege, lien, mortgage. pledge, charqe or encumbrance arise, than the Landlord shall be permitted but not obliged to pay any such privilege. lien, mortgage, pledge, charge or encumbrance and any payment so made shall be additional rent and may be recovered from the Tenant as arrears of rent. 5.18 Indemnify Landlord - The Tenant covenants to indemnify and keep indemnified the Landlord from all liabilities, suits, claims, demands and actions of every nature or kind for which the Landlord become liable or suffer by reason of any breach, violation or non-observance or non-performance by the Tenant, its servants, agents or 1icensees, or any law, by-law or- regulation or any of the Tenant's covenants herein contained, or by reason of any injury to, or death occasioned or suffered by any person or persons or to any property through any act, neglect or default of the Tenant, its servants, agents or licensees; such indemnification In respect of any such breach, violation, or non-perfomance, damage to property. injury or death occurring during the term of this Lease, anything herein to the contrary notwithstanding. 5.19 Indemnify Landlord- The Landlord covenants to indemnify and keep -indemnified the Tenant from all liabilities, suits, claims, demands and actions of every nature or kind for which the Tenant may become liable or suffer by reason of any breach, violation or non-observance or nonperformance by the Landlord, its servants, agents or licensees, or any law, by-law or regulation, or any of the Landlords's covenants herein contained, or by reason or any injury to, or death occasioned or suffered by any person or persons or to any property through any act, neglect or default of the Landlord, its servants, agents or licensees; such indemnification in respect of any such breach, violation. or non-performance, damage to property, injury or death occurring during the term of this Lease or any extension thereof shall survive the termination of this Lease, anything herein to the contrary notwithstanding. ARTICLE VI DAMAGE OR DESTRUCTION 6.01 If only the demised premises shall be destroyed by fire, or other cause to such extend that the same shall not be capable with due diligence of being repaired, restored or rebuilt within a period of six(6) months after the happening of such destruction or damage, then the Landlord or Tenant may terminate this Lease upon thirty (30) days written notice one to the other, given within thirty (30) day's of the date of such destruction or damage; and the Tenant shall thereupon immediately surrender the demised premises to the Landlord and rent shall be apportioned to the date of such damage or destruction. 6.02 If in the event the whole or part of the demised premises shall, during the last two (2) years of the term of this Lease (and if the term shall have been extended, during the last two years of the latest extension thereof) be destroyed or damaged to the extent or fifty per cent (50%) or more of the then value of the premises, then in either such event the Landlord or the Tenant may terminate this Lease as of the date of such destruction or damage by giving notice to the other party within thirty (30) days thereafter or its election to do so 6.O3 Whether or not the demised premises shall have been destroyed or damage if the commercial complex shall be destroyed or damaged by fire or other cause to such an extent that the same shall not be capable with due diligence of being repaired restored or rebuilt within a period to twelve (12) months after the happening of such destruction or damage, then the Landlord may tenninate this Lease upon written notice given within thirty (30) days after the happening of such destruction or damage; and the Tenant shall thereupon immediately surrender the demised premises to the Landlord and rent shall be apportioned to date of such termination, unless the demised premises shall also have been destroyed or damaged in which event rent shall be apportioned to the date of such destruction or damage, provided, however, that if the commercial complex can with due diligence be repaired, restored or rebuilt within the period of twelve (12) months after the happening of such destruction or damage, the Landlord may rebuild the commercial complex; provided further that if the landlord becomes obligated to rebuild

the commercial complex pursuant to this provision, the Landlord in lieu of rebuilding the building and improvements, constituting the commercial complex in the same form that they previously were, shall be entitled to build a commercial complex in accordance with any plan chosen by the Landlord provided that the floor area at the commercial complex to be constructed is not substantially less than the floor area of the buildings destroyed or damaged immediately prior to such damage or destruction. 6.4 If the demised premises are destroyed or damaged by fire or other cause and notice to terminate this Lease shall not have been duly given as herein provided, the Landlord shall repair the demised premises (excluding Tenant's fixtures and leasehold improvements) with all reaonable speed, and (i) if the damage is such as to render the demised premises wholly unfit for occupancy, all rent hereunder shall cease from the time of the occurrence of the damage untill the completion of repairs to the demised premises by the Landlord, or (ii) if the darnaqe is such that the demised premises can be partially used by the Tenant, the minimum rent (but not percentage or additional rent) shall abate in the proportion that the part of the demised premises renderad unfit fur occupancy bears to the- whole of the demised premises from the time of the occurance of the damage until the completion of repairs to the demised premises (excluding Tenant'e fixtures and leasehold improvements) by the Landlord, and (iii) upon completion or repairs to the demised premises (excluding Tenant's fixtures and leasehold improvements) by the Landlord, all rent under this Lease shall re-comence and the Tenant shall with all resonable speed and at its own expense install all necessary Tenant's fixtures to enable the Tenant to re-open for business. ARTICLE VII INTEREST ON ARREARS 7.01 if the Tenant fails to pay to the Landlord when the same is due and payable, any basic rent, or any other charge under this Lease such amount or amounts shall bear interest at a rate of two per cent (2%) per annum in excess of the minimum lending rate to prime commercial borrowers from time to time current at the main Branch of the Royal Bank of Canada, St. John's, Newfoundland, from the date upon which same was due until actual payment thereof. Nothing herein contained shall be construed so as to compel the landlord to except payment of rent in arrears should the Landlord exact to apply its remedies under Article 8.01 or any other Article of this Lease in the event of default hereunder by the Tenant. ARTICLE VIII DEFAULT 8.01 If the basic rent or any other sums of money payable hereunder by the Tenant or any part thereof shall at any time be unpaid for ten (10) days after becoming payable, whether demanded or not, or if any covenant on the Tenants part herein contained shall not be performed or observed, or in case the demised premises are vacated or become vacant or remain unoccupied for five (5) days or are not used for the purpose provided in this Lease, or in case the term or any of the goods fixtures or equipment of the Tenant are taken in execution or in attachment or if a writ of Execution is issued against the goods, fixtures; or equipment of the Tenant, or in case the Tenant becomes bankrupt or insolvent or makes an assignment for the benefit of its credirors, or becoming bankrupt or insolvent takes the benefit of any act that may be in force for bankrupt or insolvent debtors, or makes a proposal, or if the Tenant shall make a bulk sale of its goods, fixtures or equipment, then in the happening of any such case the full amount of the then current months basic rent and the next three (3) months of basic rent shall immediately become due and payable and the said term shall immediately become forfeited and void, and the Landlord may, without notice or any form of legal process, forthwith re- enter upon and re-take possession of the demised premises and remove the Lessee's effects therefrom and such property may be stored in a public warehouse or elsewhere at the cost of and for the account of the Tenant, any statute or law to the contrary notwithstanding, and without prejudice to any claim for rent or damages which the Lessor may have aqainst the Tenant or to the right of action of the Tenant in respect of any antecedent breach of the Tenant'S covenant herein contained. If at any time an action is brought for recovery of possession of the demised premises, for the recovery of rental or any other amount due under the provisions of this lease, or bocause of a breach by act or omission of any other covenant herein contained on the part of the Tenant, and a breach is established, the Tenant shall pay to the Landlord all expenses incurred therefore. 8.02 Forbearance by Landlord - Any condoning, excusing or overlooking; by the Landlord of any default, breach or nonperformance by the Tenant at any time or times in respect of any payment covenant, agreernent, proviso, or condition contained in the Lease shall not operate as a waiver of the Landlord's right in respect of any subsequent and/or continuing default, breach or nonperformnance, nor so as to defeat or affect in any way the

rights of the landlord herein in respect of any such subsequent default, breach or nonperformance. 8.03 Time of the Essence - Time shall be of and continue to be of the essence of the Lease and of all covenants, agreements. provisos or conditions contained in the Lease. 8.04 Absconding Tenant- Notwithstanding any of the other provisions in this Lease, if the Tenant taken or attemts or threatens to take any action to cease to continuously and actively operate its business in the demised premises or to abandon the demised premises or if the Landlord has reasonable grounds to believe that the Tenant may take or atternpt to take any action to cease to continuously and actively operate its business in the demised premises or - to abandon the demised premises then in addition to any other remedy the Landlord may have under this Lease or in law or in equity, the Landlord may accelerate the current month's and the next three (3) month's basic rent payable under this Lease for the term hereof and without notice immediately enter upon the demised premises, seize the Tenant's inventory, fixturss and improvements and sell all or any portion of the inventory stock-in-trade, and fixtures by public auction or a private sale, and apply the proceeds to the accelerated rent and the other obligations of the Tenant under this Lease. ARTICLE IX RENEWAL 9.01 If the Tenant duly and regularly performs each and every of the covenants, provisos and agreements herein contained on the part of the Tenant to be paid, done and performed the Landlord will upon the written request of the Tenant given not less than six (6) months before the expiration of the term of this Lease, grant the Tenant a renewal of this lease for a further term of three years on the same terms and conditions as herein contained, except for basic rental which shall be re-negotiated, and escept for this covenant to renew. ARTICLE X ASSIGNMENT BY LANDLORD 10.01In the event of sale or lease by the Landlord of the commercial Complex or a portion thereof contained in the Demised premises or the assignment by the Landlord or this Lease or any interest of the landlord hereunder, and to the extent that such purchaser, Lessee under such lease, or Assignee has assumed the covenants and obligations or the Landlord hereunder, the landlord shall, without further wrirten agreement, be freed and relieved of liability upon such covenants and obliqations, the Tenant shall from time to time at the request or the Landlord certify or acknowledge to any mortgagee, purchaser, Lsssee or Aseignee as to the status and validity of this lease and the state of the Landlord's and Tenant's account hereunder. ARTICLE XI MISCELLANEOUS 11.0Outing of Premises by Tenant and Landlord's improvements- The Tenant covenants that it will leave the demised premises in good repair, reasonable wear and -tear, damage by fire, lighting and tempest, act of God and the Queen's enemies only excepted, and it is understood and agreed that all work done and materials supplied by the Tenant shall not be the Tenant's fixtures but shall become the property of the landlord except for such fixtures and equipment that can be removed by the Tenant without damage to the demised premises.
11.02 Notice - Any notice, demand, request or consent required or contemplate by any provision of this lease shall be given or made in writing and delivered or mailed by Registered Mail, in the case of the Landlord to Par Holdings Ltd., 685 Water street, St. John's, Newfoundland, and in the case of the Tenant to 687 Water Street, St. John's, Newfoundland, and any such notice, denmand, request or consent shall be conclusively deemed to have been given or made on the day on which such notice, demand, request or consent is delivered, or, if mailed, then on the next business day following the date of the mailing, as the case may be.

ARTICLE XII INTERPRETATION

12.01

Validity - If a term, covenant or condition of this Lease. or the application thereof to any person or circumstances is held to any extent invalid or unenforceable the remainder of this lease or the application of the term, covenant, or condition to persons or circumstances other than those as to which it is held invalid or unenforceable will not be affected.

12.02

Other Represetation- This lease and the schedules annexed hereto constitute the entire agreentent between the Landlord and the Tenant and neither party is bound by any representation, warranty, promise, agreelnent or iducement not embodied herein.

12.03

Subordination - This Lease is subject and subordinate to all mortgages or deeds of trust which may now or at any time hereafter affect the Demised Premises in whole or in part or the commercial complex in whole or in part and whether or not any such mortgages or deeds of trust shall effect only the Demised Premises or the coramercial complex or shall be blanket mortgages or deeds of trust affecting other premises as well, and the Tenant covenants and agrees at any time upon notice from the Landlord to attorn to and become a tenant or mortgagee or trustee under any such terms and conditions as are herein set forth. This lease shall also be subject and subordinate to all renewals, modifications, consolidations, replacements and extensions of any such mortgages or deeds of trust. In confirmation of such subordination and agreement to attorn, the Tenant shall execute promptly upon request by the Landlord any certificates and instruments which may from time to time be requested to give affect thereto.

12.04

This Lease sha11 enure to the benefit of and be binding upon the respective successors and assigns of each at the parties hereto and where and context so requires or permits the necessary grammatical changes shall be made accordingly.

ARTICLE XIII ARBITRATION
13.01 If any dispnte or question shall arise between the landlord and the Tenant touching this Agreement or anything, herein contained, or the construction hereof or the rights, duties or liabilities in relation to the Demised premises, the matter in difference shall be submitted to a single Arbitrator if the parties can agree on one and in the event that they cannot so agree then each party shall appoint one Arbitrator and the two so appointed shall select a third Arbitrator who shall be the chairman and the matter shall then proceed to arbitration in accordance with the provisions of The Judicature Act relating to arbetration or such other legislation as any be airbotituted thereof and the decision of the Arbitrator or Arbitrators shall be final and binding upon the parties.

IN WITNESS WHEREOF the parties hereto have properly executed these presents the day and year first before written. SINGED SEALED AND DELIVERED in the presence of:

/S/ Roma Kelly /S/ Dr. Dormheimer

/S/ Dave Ingelburg /S/ Wilson Russell

CONSENT OF ACCOUNTANTS We consent to the inclusion of all financial data prepared by our firm in this registration statement on Form SB-1 (File No.333-90031
December 13, 1999 /s/ SULLIVAN, LEWIS AND WHITE

June 17, 1999 DISCLOSURE STATEMENT SCIENTIFIC TECHNOLOGIES, INC. Suite 1455, 409 Granville Street, Vancouver, British Columbia, Canada V6C 1T2 Tel. (604) 685-0364
DATE OF DISCLOSURE STATEMENT: TYPE OF SECURITIES OFFERED: NUMBER OF SECURITIES OFFERED: (the "Shares") June 15, 1999 Shares of Common Stock of the Company Up to 1,000,000 Shares of Common Stock

Offering Price Commissions Per Share Total (If all shares sold) $1.00 $1.00 $1,000,000 $1,000,000

Underwriter Discount and Proceeds to Company NIL NIL

The securities offered are offered on a best efforts basis. The Shares are offered by the Company without the benefit of an underwriter. Sales of Common Stock will commence on the date of this Disclosure Statement and will terminate on February 28, 2000. There is no minimum number of Shares to be sold. THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"), AND ARE PROPOSED TO BE ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT PROVIDED BY REGULATION S PROMULGATED UNDER THE ACT. UPON ANY SALE, SUCH SECURITIES MAY NOT BE REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT. HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT. INVESTMENT IN THE COMMON STOCK OFFERED BY THE COMPANY INVOLVES A HIGH DEGREE OF RISK. IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. PROSPECTIVE INVESTORS SHOULD RETAIN THEIR OWN PROFESSIONAL ADVISORS TO REVIEW AND EVALUATE THE FINANCIAL, ECONOMIC, TAX AND OTHER CONSEQUENCES OF THIS INVESTMENT. INVESTORS SHOULD NOT INVEST ANY FUNDS IN THIS OFFERING UNLESS THEY CAN AFFORD TO LOSE THEIR INVESTMENT IN ITS ENTIRETY. THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION HAS NOT PASSED UPON THE MERITS OF THIS OFFERING OR GIVEN ITS APPROVAL TO ANY SECURITIES OFFERED OR TO THE TERMS OF THE OFFERING. THE UNITED STATES SECURITIES COMMISSION HAS NOT PASSED UPON THE ACCURACY OR COMPLETENESS OF THIS DISCLOSURE STATEMENT. THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED HEREUNDER ARE EXEMPT FROM REGISTRATION.

TABLE OF CONTENTS
Page SUMMARY RISK FACTORS PLAN OF DISTRIBUTION USE OF PROCEEDS DILUTION DESCRIPTION OF BUSINESS DESCRIPTION OF PROPERTY DIRECTORS, OFFICERS AND SIGNIFICANT EMPLOYEES REMUNERATION OF DIRECTORS AND OFFICERS SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY OWNERS INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS SECURITIES BEING OFFERED LITIGATION FINANCIAL STATEMENTS 3 5 10 13 14 15 20 20 22

23 24 25 27 27

EXHIBITS 28 SUMMARY The following summary is qualified in its entirety by the more detailed information and financial statements appearing elsewhere in this Disclosure Statement and the exhibits hereto. Prospective investors are urged to read this Disclosure Statement in its entirety. The Company Scientific Technologies, Inc., the "Company", is a Delaware corporation incorporated on May 11, 1998. The Offering Securities Being Offered Up to 1,000,000 shares of Common Stock of the Company at a price of $1.00 US per share; See "DESCRIPTION OF SHARES."
Purchase Price OFFERING." Regulation S: $1.00 US per Share. See "TERMS OF THE

The Shares are being offered pursuant to

Regulation S of the United States Securities Act of 1933 to persons who are not "U.S. Persons". See "PLAN OF DISTRIBUTION". Registration Rights: The Company has agreed to register the Shares with the United States Securities and Exchange Commission in order to qualify the resale of the Shares in the United States. The Company will file the required registration statement within a reasonable time of acceptance of the Subscription. See "PLAN OF DISTRIBUTION".

Securities Issued: As of the date of this Document, there are 7,404,481 shares of Common Stock issued and outstanding. Upon the completion of this offering, there will be 8,404,481 shares of Common Stock issued and outstanding if the offered Shares are fully sold. See "PRINCIPAL STOCKHOLDERS" and "PLAN OF DISTRIBUTION." Use of Proceeds: The proceeds to the Company from the sale of the Shares will be approximately $1,000,000, assuming all Shares are sold. See "USE OF PROCEEDS." Dilution: Investors in this offering will experience substantial dilution. Dilution represents the difference between the offering price and the net tangible book value per share after the offering. Additional dilution may result from future offerings or from the exercise of future options pursuant to any stock option plan or warrants that may be established by the Company. See "DILUTION". Risk Factors: The securities offered hereby involve a high degree of risk and should not be purchased by anyone who cannot afford the loss of their entire investment. Prospective investors should carefully review and consider the factors set forth in the following section of this Document entitled "RISK FACTORS," as well as the other information set-forth herein, before subscribing for any of the Shares offered hereby.

RISK FACTORS An investment in the Shares offered herein is highly speculative and subject to a high degree of risk. Only those persons who can bear the risk of the entire loss of their investment should participate. Any investor should carefully consider the risks described below and the other information in this Disclosure Statement and any other filings the Company may make with the United States Securities and Exchange Commission (the "SEC") in the future before investing in the Company's common stock. The risks described below are not the only ones affecting the Company. Additional risks that the Company is not aware of or that the Company currently believes are immaterial may become important factors that affect its business. If any of the following risks occur, or if others occur, the Company's business, operating results and financial condition could be seriously harmed. The trading price of its common stock could decline due to any of these risks, and any investor may lose all or part of his or her investment. Risk Factors: An investment in the Common Stock involves many substantial risk factors, including those associated generally with a new venture and a high technology undertaking which does not have a developed marketing structure into a tested market. Although management itself feels that there is substantial demand for its product at its proposed price, that assumption is yet to be tested in full operation. The Company itself has a limited operating history. Risk Factors Related to the Company's Business Status of Venture: The Company, formed in 1998, has had no significant operations or business assets, and is yet in its early, development stage. In January, 1999 it purchased all of the shares of Northstar Technical Inc. ("Northstar") as described below. No Operating History: The Company has been in actual operation under its current management for a relatively short time. It faces all of the risks inherent in a new business and those risks specifically inherent in the development and operation of a new business. The likelihood of the Company's success must be considered in light of the problems, expense, difficulties and delays frequently encountered in connection with a new business, including,but not limited to, uncertainty as to the ability to develop a market for a new product in a new area. The Company is not expected to generate any significant revenues until it completes a further offering of its securities. The purchase of the securities offered hereby must be regarded as the placing of funds at risk in a new or "startup" venture with all of the unforeseen costs, expenses, problems and difficulties to which such ventures are subject. Management Risks Inherent in High-Technology Businesses: New ventures, particularly those involved in high technology, have substantial inherent risks. These risks are in three general areas: technical, mechanical and human. Notwithstanding any pre-production planning, any new products can incur unexpected problems in full scale production, all of which cannot always be foreseen or accurately predicted. Designs can become unworkable, for unpredicted reasons. Quality control and component sourcing failures are to be expected from time to time. Any operation, including the one contemplated here, is substantially dependent upon the capabilities and performance of both management and sales personnel. Mistakes in judgement or performance can be costly and, in instances, disabling. Therefore, management skill, experience, character and reliability are of premium importance. Production Risks in High-Technology Ventures: The high-technology product line requires the Company to deal with suppliers and subcontractors supplying highly specialized parts, operating highly sophisticated and narrow tolerance equipment and performing highly technical calculations and tasks. Components must be custom designed and manufactured, which is not only complicated and expensive, but can require a number of months to accomplish. Slight mistakes in either the design or manufacturing can result in unsatisfactory parts which may not be correctable. Since this operation uses the talents of various professions, mistakes from very slight oversights or miscommunications can occur, resulting not only in costly delays and lost orders but in disagreements regarding liability and, in any event, extended delays in production. Conflicts of Interest in Economic and Cost Data: The only production cost studies and market analysis which are relied upon in this Confidential Private Placement Offering Memorandum were prepared and performed by personnel of the Company. Those persons will derive substantial personal benefits from the start-up of the Company, part of which income will result whether or not the Company ever achieves sufficient income to reach

economic equilibrium enabling it to make dividend distributions to shareholders. Nature of Market Appeal: Although Management believes that the product will have sustained market demand over an extended period into the future, it is possible that current indications of commercial demand are limited to current market conditions only. It is possible that demand may be directed to other similar or competing products, because of technical developments or preferences or simply because of overwhelming commercial promotion, within a short period of time, thereby limiting the commercial viability of the product either prior to or shortly after the Company reaches an initial level of economic profitability. Unexpected negative publicity, even if not relating directly to the Company or its own products and even if unwarranted, can devastate a market. Such unusual fortuities can never be predicted.

Risk Factors Relating to Market Protection Market Competition: The fishing trawl monitoring business is dominated by a number of larger competitors who are well established in the market place, have experienced and talented management, are well financed and have well recognized trade names related to their product lines. Although the Company believes Northstar's product line has certain distinctive characteristics which will allow it to penetrate the existing market and acquire a sufficient market share in its special niche to be profitable, there is no assurance that existing companies will not aggressively compete by introducing new products substantially similar to the Company's and at a price below that at which the Company can compete. Should this occur, the Company may not be able to survive for a sufficient time to reach viability. Inherently Limited Nature of Patent Protection: The Company knows of several products directly competing with Northstar's NETMIND technology described inthis Disclosure Statement and it is conceivable that new similar products are now being or will be produced and distributed by one or more other entities. As some security from competition within the market place, the Company is relying on the protection which it hopes to realize under the United States and foreign patent laws. It is even conceivable that certain patent copyright claims superior to the Company's currently unfiled are either pending or planned, either within the U.S. or other foreign countries, which could significantly impact the Company's rights to the use of all, or important aspects, of the NETMIND technology. It is further conceptually possible that similar devices could be designed which, although not identical and therefore not infringing upon the Company's proprietary right, could function adequately to be distributed into the same market. Moreover, it is even possible that an unpatented or uncopyrighted but prior existing device or design may exist which simply has never been made public and therefore not known to Management or the industry in general. Such a device could be introduced into the market without infringing upon the Company's current rights. If any such competing non-infringing devices are produced and distributed, the Company's profit potential could be seriously limited. Patent Protection is Not Self Enforcing: The Company plans to file copyright claims within the United States and countries where major markets exist. However, even apart from a superior right to the Company's claim to exclusive design and concept rights, if one or more competitors should yet produce and distribute a product apparently within the protection of one or more of those claims, the cost of enforcing the Company's claim could fall on the Company itself. The costs can be substantial and ultimately could be beyond the financial resources of the Company. Even if it is not, the legal costs required in protecting that claim could seriously debilitate the Company's other operations. This is an inherent problem in relying upon patent claims for market protection. Thus, even though the patent may be valid, investors should be aware that it is not self-enforcing. Cautions on Copyright Protection: If any of those copyright claims are challenged in a future lawsuit by one or more competitors, it is possible, although not probable, that a court could yet find one or more of those claims invalid, or at least too broad. The courts, and not the granting agencies are generally the final arbiters on such matters. If challenged, the court through its own interpretation of the laws and facts may either determine the patent to be completely invalid or the claim to be considerably narrower than defined in the patent documents issued by the patent offices. Dependence Upon Key Personnel: At least in the near term, the Company is dependent upon its executive officers and certain key employees and consultants, the loss of any one of whom could have a material adverse effect on the Company. The Company has not obtained key man life insurance on the lives of its key personnel except for a policy of CDN $250,000 on Wilson Russell payable to Northstar Technical Inc. At the present time, the Company has not entered into consulting and employment agreements with each of its key employees. Alternatively, the primary means of maintaining their relationship with the Company's pursuit is their substantial equity interest. The continued success of the Company will also be dependent upon its ability to attract and retain highly qualified personnel in the sales area. There can be no assurance that the Company will be able to recruit and retain such personnel. Risks Related to the Management Structure of the Company Limitation on Liability of Management: Management will have no liability to the Company for any mistakes or errors of judgement or for any act or omission believed to be within the scope of authority conferred by the Company's articles unless such acts or omissions were performed or omitted fraudulently or in bad faith, constituted gross negligence or were a violation of a director's or officer's fiduciary obligations to the Company.

The Company has agreed to indemnify the officers and directors against all loss or damage even if caused by an officer's or director's simple negligence unless such loss or damage was caused by that officer's or director's fraud, bad faith, gross negligence or breach of fiduciary obligation.

Risks Inherent in Business Investment No Assurance of Profitability of Operation: Notwithstanding the business plan and projections made by the Company, there can be no assurance that the Company will be able to operate the commercial operation successfully and in fact, may ultimately fail. Even if the commercial operation itself is successful, there is no assurance that any specific level of profitability will be achieved by Management. Application of Revenues: Although earnings sufficient to allow the possible payment of stock dividends may in the future develop, there is no assurance that earnings sufficient to pay such dividends will ever be achieved. Even if achieved, there is no assurance that such funds will not be applied by Management to other purposes. For instance, Management could apply those funds to payment of other debt which either now exists or may be incurred in the future, capital expansion or improvements, the creation of reserves, the payment of compensation or any other of a variety of business purposes. The decision of what portion of earnings is to be distributed in payment of dividends and what portion is to be retained for any of those other purposes is inherently within the discretion of Management. Dilutionary Possibilities: A Board of Directors has the inherent right under applicable law, for whatever value the Board deems adequate, to the limit of shares authorized by the Articles, to issue additional shares, and all Common Stock shareholders, regardless of when the stock is issued, thereafter generally rank equally in all aspects of that class of stock, regardless of when issued. A majority of shareholders can vote to amend the Articles of Incorporation to authorize the issuance of additional preferred shares. The Board of Directors likewise has the inherent right, limited only by applicable law, provisions of the Articles of Incorporation and existing resolutions, to expand the number of shares in a series, createnew series and to establish preferences and all other terms and conditions in regard to such newly created series. Those terms and conditions may include preferences on an equal or prior rank to existing series and to all Common Stock. Those shares may be issued on such terms and for such consideration as the Board then deems reasonable and such stock shall then rank equally in all aspects of the series and on the preferences and conditions so provided, regardless of when issued. Any of those actions can not only dilute the Common Shareholders but the relative position of the holders of any series of any preferred class. Current shareholders have no rights to prohibit such issuances nor inherent "preemptive" rights to purchase any such stock when offered. RISKS RELATING TO THE NATURE OF THE OFFERING Arbitrary Offering Price: The offering price of the Common Stock was arbitrarily determined by the Management and is not based on any specific recognized criteria of value or other practices. Quite specifically, it should be recognized that it is impossible to determine at what price if anything, those shares would sell. See "Terms of Offering", and "Conflicts of Interest". Dilution of Proceeds from Common Stock: The Common Stock offered hereunder is being sold at US$1.00 per share. Subscribers under this offering will suffer an immediate dilution of their rights and contribution, as compared to the current shareholders of the Company. See "Terms of Offering" and "Financial Statements". While Management feels that the value of its technology and the business plan discussed herein justifies the subscription price, there is no assurance that this venture will succeed, thereby confirming that projection of disproportionate value. GENERAL CAUTION: For all of the aforesaid reasons, and others set forth herein, the very nature of the Company, its management structure and the securities being offered here, each involve a notable risk. Any person considering an investment in the securities offered hereby should be aware of these and other risk factors as set forth in this Disclosure Statement. No person should invest in these securities if that person anticipates a need for immediate return on his investment. These securities should only be purchased by persons who can afford to absorb a total loss of their investment and, at the very least, have no need for immediate return on that investment. PLAN OF DISTRIBUTION Securities Offered The Offering consists of the offering of up to 1,000,000 shares of Common Stock of the Company, par value $0.0001 per share (each a "Share") at a price of $1.00 US per Share (the "Offering").

Sales of Common Stock to the public will commence on the date of this Disclosure Statement and will terminate on February 28, 2000, unless extended by the board of directors of the Company. There is no minimum number of Shares to be sold. Capital Structure: The Company is authorized to issue a total of 100,000,000 shares of Common Stock and 20,000,000 shares of Preferred Stock, all of a par value of $0.0001 per share. At the present time, the Company has issued and outstanding a total of 7,404,481 shares of that Common Stock. If this Offering is fully subscribed, a maximum of 1,000,000 further shares will be issued in return for those subscriptions. This will bring the total shares outstanding, at the closing of this Offering to 8,404,481 shares.

Regulation S The Offering is being made pursuant to Regulation S of the United States Securities Act of 1933 (the "Act"). The Offering is made to persons who are not "U.S. Persons" as defined by Regulation S of the Act. A "U.S. Person" is defined by Regulation S of the Act to be any person who is: a. any natural person resident in the United States; b. any partnership or corporation organized or incorporated under the laws of the United States; c. any estate of which any executor or administrator is a U.S. person; d. any trust of which any trustee is a U.S. person; e. any agency or branch of a foreign entity located in the United States; f. any non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporate, or (if an individual) resident in the United States; and g. any partnership or corporation if: (1) organized or incorporated under the laws of any foreign jurisdiction; and (1) formed by a U.S. person principally for the purpose of investing in securities not registered under the Act, unless it is organized or incorporated, and owned, by accredited investors [as defined in Section 230.501(a) of the Act] who are not natural persons, estates or trusts. By execution of the Subscription Agreement, each subscriber for shares (a "Subscriber") will represent to the Company that the Subscriber is not a U.S. Person and will agree with the Company as follows as a condition of the Company selling Shares to any Subscriber: (A) The Subscriber will resell the Shares only in accordance with the provisions of Regulation S of the Act pursuant to registration under the Act, or pursuant to an available exemption from registration pursuant to the Act; (B) The Subscriber will not engage in hedging transactions with regard to the Shares unless in compliance with the Act; (C) The Subscriber will acknowledge and agree that all certificates representing the Shares will be endorsed with the following legend in accordance with Regulation S of the Act: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"), AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT PROVIDED BY REGULATION S PROMULGATED UNDER THE ACT. SUCH SECURITIES MAY NOT BE REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT. HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT" (A) The Company will refuse to register any transfer of the Shares not made in accordance with the provisions of Regulation S of the Act, pursuant to registration under the Act, or pursuant to an available exemption from registration. Registration Rights The Company will prepare and file a registration statement with the United States Securities and Exchange Commission (the "SEC") pursuant to the Act on a Form SB-1, or other appropriate registration statement, as required to qualify the Shares purchased by each Subscriber for resale in the United States (the "Registration Statement"). The Company will undertake to file the Form SB-1 with the SEC within a reasonable time following the completion of the Offering of the Shares. The Company will use its best efforts to ensure effectiveness of the Registration Statement within a reasonable period of time following filing of the Registration Statement. Local Securities Laws

The Offering and any subscription for Shares is subject to compliance with the securities laws and other applicable laws of the jurisdiction in which any Subscriber for the Offering is resident. Each Subscriber will deliver to the Company all other documentation, agreements, representations and requisite government forms required by the lawyers for the Company, in addition to the Subscription Agreement, as required to comply with all securities laws and other applicable laws of the jurisdiction of the Subscriber. The Company will not grant any registration or other qualification rights to any Subscriber, other than the agreement of the Company to register the Shares with the SEC, as discussed above. Best Efforts Basis The Shares are being offered by the Company on a "best efforts". There is no minimum number of Shares to be sold pursuant to this Offering. The Company may immediately use proceeds obtained from this Offering. All proceeds received by the Company from subscribers for the Shares offered hereby will be available to the Company immediately.

SUBSCRIPTION AGREEMENT Subscription for the Shares shall be made pursuant to a subscription agreement (the "Subscription Agreement") in the form attached to this Disclosure Statement. The Subscription Agreement contains, among other things, customary representations and warranties by the Company, covenants of the Company reflecting the information set forth herein, representations by the investors and appropriate conditions to closing. Underwriter The Shares are being offered by the Company to the public without the benefit of an underwriter. Discounts and Commissions The sales of the Shares being offered by the Company will be carried out by the Company. The Company will not discount the price of the Shares or pay a commission to any dealer in connection with the sale of the Shares. USE OF PROCEEDS Use of Proceeds: It is estimated that the Company will use the maximum funds of $1,000,000 in the manner set forth below:
Production (Marine Electronics) Production (Contract Manufacturing) Marketing (Marine Electronics) Business Development (Contract Manufacturing) Operating Capital $ 150,000 200,000 200,000 200,000 250,000 ========= $1,000,000

The actual expenditures of the proceeds of the Offering may differ substantially from the estimated use of proceeds. The actual expenditures of the proceeds of the Offering will be according to the expenditures deemed by the Company and its board of directors to be in the best interests of advancing the business of the Company. The actual expenditures will also vary from the estimated use of proceeds if less than all of the Shares are sold. The Company anticipates that the net proceeds from the Offering will be sufficient to meet its financial requirements for only a short period of time. The Company, therefore, will require substantial additional capital to fund its contemplated business plan in the near future. The Company anticipates expenses associated with the Offering, including legal, accounting and stock transfer agent expenses, will be approximately $10,000 US. The Company anticipates expenses associated with the registration of the Shares issued pursuant to the Offering, including legal and accounting expenses, will be approximately $30,000 US. DILUTION "Net tangible book value" is the amount that results from subtracting the total liabilities and intangible assets of an entity from its total assets. "Dilution" is the difference between the offering price of a security such as the Shares, and its net tangible book value per Share immediately after the Offering, giving effect to the receipt of net proceeds in the Offering. As of the date of this Disclosure Statement, the net tangible book value of the Company was $156,848 or approximately $0.021 per share. Giving effect to the sale by the Company of all offered Shares at the Offering price, the pro forma net tangible book value of the Company would be approximately $156,848, or approximately $0.138 per Share, which would represent an immediate increase in net tangible book value of approximately $0.117 per Share to present shareholders and an immediate dilution of approximately $0.362 per Share, or approximately 86.2% to new investors. The following table illustrates the pro forma per Share dilution assuming the maximum Shares offered are sold. ASSUMING MAXIMUM SHARES SOLD

Offering Price (before deduction of Offering expenses) Net tangible book value before Offering Net tangible book value after Offering Dilution to new investors Dilution as a percentage

$1.000 per share $0.021 per share $0.138 per share $0.862 per share 86.2%2

DESCRIPTION OF BUSINESS CORPORATE BACKGROUND Corporate Organization History: The Company is a corporation organized under the laws of the State of Delaware on May 11, 1998. History and Current Status: The Company was originally incorporated for the purpose of high technology development and manufacturing of underwater communications systems and contract manufacturing. Corporate Facilities: The Company maintains its principal corporate offices at #1455 - 409 Granville Street, Vancouver, British Columbia, Canada V6C 1T2. Introduction: The Company acquired all of the issued and outstanding common shares in Northstar Technical Inc. ("Northstar") in January, 1999. Northstar is a high technology development and manufacturing company with two main business activities. One is underwater communications systems, the other is contract manufacturing. Northstar's objectives are to become a leader in marine electronics and a major regional contract manufacturer. As a result of the acquisition, Northstar became a subsidiary of the Company. Northstar - Corporate Information: Northstar is a corporation incorporated under the laws of Newfoundland on July 5, 1989 and extra-provincially registered in British Columbia on April 1, 1997. The registered and records offices of Northstar are located at 10 Fort William Place, P.O. Box 5939, St. John's, Newfoundland, A1C 5X4 (Telephone: (709) 722-8735, Facsimile: (709) 722-1763). Northstar's head office is located at Suite 1455, 409 Granville Street, Vancouver, British Columbia, Canada, V6C 1T2 (Telephone: (604) 685-0364, Facsimile: (604) 689-8337). Northstar - General Development and History: Northstar was founded in 1989 by Dr. Wilson Russell as a technology development and manufacturing company. Northstar acquired the initial technology for the NETMIND system from the receiver of National Petroleum and Marine Consultants Limited and Altair Marine Systems Limited for the sum of CDN$1.00, which two companies had spent an aggregate CDN$1,740,000 on the partial development of the technology. Northstar has since spent over CDN $3,500,000 to complete the development and commercialization of the NETMIND system and establish a production operation. The basic technology was commercialized in August 1996 when the first industrial system was produced. The plant has since manufactured over thirty complete systems. The customers of the NETMIND system include the National Oceanics and Atmospheric Administration (NOAA) in the United States, the United States Department of the Interior and Fishery Products International (FPI) in Canada. In 1995, Northstar signed a Teaming Agreement with Loral Librascope ("Loral") (now Lockheed Martin) of Glendale, California pursuant to which, if Loral were successful in a proposal to the Canadian Navy, Northstar would assemble and test multi-function work stations (submarine control consoles). In 1997, Lockheed Martin entered into a contract with NTI pursuant to which NTI assisted Lockheed Martin with the production of the first prototype console on their premises. NTI is attempting to secure a sole source contract to manufacture control consoles for the Upholder submarines which Canada recently purchased from the United Kingdom. Background Technology: Northstar has developed a core technology for underwater communications which has applications in the fishery, offshore oil and gas, defence, marine transportation, oceanographic and environmental industries. The basic engines are underwater sensors which take measurements and transmit the information back to a receiver on board a ship or oil rig. Each sensor is equipped with one or more acoustic transducers depending on its function. Analog and digital signal processing and power management functions are performed by the sensor electronics. The telemetered data are received by a hull mounted, hydrodynamically shaped hydrophone. The received signals

are amplified at the hydrophone for transmission via cable to the deck unit processor/display, a small cabinet mounted at a convenient location on the bridge. The processor portion of the deck unit decodes the signals and converts them into engineering units for display on a high resolution colour monitor. The NETMIND System: The first application of Northstar's core technology is the NETMIND system for the world's commercial fishing industry. NETMIND monitors the performance of a trawl and is both a conservation tool and an efficiency tool. It consists of a group of electronic sensors that transmit measurements from the net through the water to a receiver on the ship. The information is displayed on a computer screen and the captain can tell what activities are occurring in the net. He then knows how to adjust the height and width of the net opening, how much fish are in the opening and when the net is full and ready to be pulled in. Fishermen call NETMIND their 'eyes beneath the sea'. The Market: NETMIND was introduced to the marketplace in 1996 and sales have been made in North America and Europe. The targeted customers have been strategic in that they are industry leaders and government agencies. Three different agencies of the US Government have purchased systems and have given very positive feedback. International customers are interested in NETMIND for its price and technical advantages. To date, Northstar has barely penetrated the potential market which is estimated to be about 25,000 vessels worldwide. Upon the successful close of this offering, sales in the first year are estimated to be about 100 NETMIND systems. Competition: The NETMIND system has two known main competitors, Furuno in Japan and Scanmar in Norway. It is believed that NETMIND has price and technical advantages over each. Technically, NETMIND has longer sensor battery life, longer operating distance, and better maintenance and repair features. See "Risk Factors". Technology Protection: Since commercializing NETMIND in 1996, Northstar has made many enhancements to the system. These activities have resulted in an optimum design for which a patent application is intended. The technology is difficult to replicate because of its sophistication and, regardless of patent protection, it is expected it would take several years for a new player to catch up to the present system. In the meantime, Northstar is developing new innovative NETMIND products which should ensure a competitive edge. Future Opportunities: Northstar's second technology application will likely be for the multi-billion dollar offshore oil and gas industry. One potential product is for the remote control of subsea wellheads. This is especially important as the industry goes into deeper and deeper water to find and produce petroleum. Further business opportunities are envisaged for the defense, marine transportation, oceanographic and environmental industries. The possibilities include towed arrays for seismic exploration, towed arrays for submarines, docking systems for large ocean going ships, positioning systems for oil and gas drilling platforms, acoustic measurements of ocean currents, and diver to diver communications for the recreational diving industry. Northstar would look to strategic alliances with other companies and government agencies to reduce technological risks and open doors to new markets. Contract Manufacturing: Northstar's second business division focuses on manufacturing systems for the defense, transportation and communications industries in strategic alliance with major international contractors. Several years ago, Northstar signed a Teaming Agreement with LORAL LIBRASCOPE, in Glendale, California for the manufacture of control consoles for submarines. This was followed by the first start-up contract with LOCKHEED MARTIN which was signed in April 1997. Northstar is attempting to secure a contract to manufacture consoles for Canadian Navy submarines. It is expected that other work for Canadian patrol frigates, destroyers and maritime helicopters will follow on from the submarine contracts. Northstar expects to establish good relationships with other major defense and communications contractors in Canada and the United States and significant contract opportunities are expected through them. Historical Financial Information: Northstar has spent over CDN$1,850,000to complete the development and commercialization of the NETMIND system. Northstar has received CDN$458,309 in Scientific Research and Experimental Development refunds from Revenue Canada. Funding support from the major shareholder and private investors total approximately CDN$1,565,500 in the form of share purchases or loans. The federal government of Canada has provided support totaling approximately CDN$600,000 in the form of research

grants and interest-free loans through the National Research Council and the Atlantic Canada Opportunities Agency. Northstar's wholesale revenues were CDN$272,631 for year ending March 31, 1998 and CDN$252,565 for nine months ending December 31, 1998. The gross profit for the year ending March 31, 1998 was 48% and was 48% for the nine months ending December 31, 1998. Expenses totaled CDN$388,000 for the year ended March 31, 1999 and CDN$356,000 for the nine months ended December 31, 1998. Dividends of CDN$42,282 were paid on Northstar's preference shares in 1998. These shares have been fully redeemed or converted to common shares. Northstar's assets as of December 31, 1998 totaled CDN$1,112,490 and its current liabilities totaled CDN$374,425. Long-term debt of CDN$711,774 consists of government interest-free loans and a loan of CDN$240,000 payable to Pathfinder Enterprises Inc., a company controlled by a shareholder of Scientific, with monthly interest payments only to July 2002, secured by a floating charge debenture. There are shareholder loans of CDN$258,709 with no fixed terms of repayment. Northstar has an accumulated deficit of CDN$854,871 as of December 31, 1998. Projected Revenues: Northstar anticipates sales of approximately CDN$5 million in the first year upon completion of the Offering. Depending on the financial, production and management resources, there is potential for CDN$20 million in revenues in the second year, with greater potential in the third year. Management: Northstar's management is comprised of a small team of individuals experienced in the development, manufacture and sale of ocean industry technologies. Dr. Wilson Russell, Chairman and Chief Executive Officer, has 25 years experience in the field and has established himself as an international consultant in ocean industry, oil and gas, and high technology. Dr. Russell is also a director of the Company. See "Management" for detailed information regarding Dr. Russell. Dr. David Buttle is Northstar's Technical Director and one of the world's leaders in developing and manufacturing ocean instrumentation for the defense industry. In 1977, Dr. Buttle founded Marine Acoustics which designed and manufactured sonar transducers for OEM use and subsea computers for the control of subsea rock drills. In 1985, Marine Acoustics was reorganized as Marine Acoustics Ltd. Marine Acoustics Ltd. produces numerous sonar systems, including exercise mine acoustic telemetry systems, which are used by the British, United States, Australian, Belgian, Canadian and Egyptian Navies. Dr. Buttle supervised the design of the NETMIND system and advises Northstar on production and value engineering. Mr. Brian Gamberg, P.Eng., Senior Electronics Engineer, has over 20 years experience developing marine systems, computer and communications systems and in project management. He has been involved in the design, development and implementation of both hardware and software elements of tracking radar systems, geophysical sounding systems, distributed computing systems, Geographical Information Systems and embedded instrumentation systems. Mr. Gamberg is responsible for the development of new NETMIND technologies and other underwater communication products. Mr. James Hall is an Electronics Technologist and Northstar's Production Manager. Mr. Hall is responsible for all production activities including inventory control, electronic and mechanical production, testing, quality control and shipping. Ms. Philomena Kavanagh has extensive experience in office management and has worked for companies such as Coopers Lybrand, A.H. Murray Ltd. and Atlantic Specialties Ltd. Ms. Kavanagh is responsible for all of Northstar's financial and product shipment administration. Plant, Equipment and Operations: The manufacturing plant is located in St. John's, Newfoundland. The plant is approximately 3,000 square feet in area and is comprised of an electronics shop, a mechanical engineering shop, a molding room, a component inventory area, a finished goods area, research and development offices and administrative offices. The plant possesses equipment typical of an electronics manufacturing operation, i.e., oscilloscopes, soldering stations, computers, flume hood, molding equipment, drill press and specialty testing and assembly tools. The inventory system is computerized, with a rigorous quality program in place which covers incoming components, assembly testing and finished goods testing. Northstar uses the program TANGO for its computer aided design (CAD) activities. Lockheed Martin Federal Systems in Manassas, Virginia has supplied to Northstar proprietary hardware and software for the testing of submarine control consoles.

Northstar uses outsourcing as much as possible to keep overhead and staffing levels low. For example, most of the mechanical assemblies for the NETMIND system are supplied by a local mechanical shop, which assemblies are then incorporated into the molding of the plastic housings which are produced in-house. Northstar currently has ten full-time employees and three part-time engineering consultants.

EMPLOYEES As of June 15, 1999, the Company had ten employees and three part-time engineering consultants. None of the Company's employees is represented by a labour union, and the Company considers its employee relations to be good. Competition for qualified personnel in the Company's industry is intense, particularly for software development and other technical staff. The Company believes that its future success will depend in part on its continued ability to attract, hire and retain qualified personnel. DESCRIPTION OF PROPERTY The primary business activities of the Company are carried on at leased premises located at Suite 1455, 409 Granville Street, Vancouver, British Columbia, Canada V6C 1T2. The premises are comprised of 1,000 square feet and is leased for a term of two years expiring on September 30, 1999. Northstar Technical Inc. leases premises at 687 Water Street, St. John's, Newfoundland, Canada A1C 6J9. The premises are comprised of 3,000 square feet and is leased for a term of two years expiring on June 30, 2000. The Company does not lease or own any other property. DIRECTORS, OFFICERS AND SIGNIFICANT EMPLOYEES The following information sets forth the names of the officers and directors of the Company, their present positions with the Company, and their biographical information. Each director will serve until the next annual meeting of shareholders, and thereafter if re-elected.
Name of Director Dr. Wilson Russell Mr. Frank Power Mr. Lee Meyer Name of Officer Dr. Wilson Russell Mr. Frank Power Age 53 56 54 Office President Vice-President

53 56

As a Delaware corporation, the final responsibility for the management of the affairs of the Company rests with the Board of Directors. That Board currently consists of three directors. Those directors are elected at the annual meeting of the shareholders and serve for an annual term or until they resign or are replaced. Those directors meet or otherwise consult with one another on a regular basis to review the affairs of the Company and to adopt or confirm any resolutions which are necessary to grant contractual and other authority to the administrative officers. The directors may, and probably will, designate an executive committee to which they will grant limited authority to make certain ministerial decisions on behalf of the board between meetings of the full board. The affairs of the Company are administered by its executive officers. Those officers are designated by the Board of Directors to whom those officers are responsible. The executive officers are generally elected by the directors on an annual basis and serve throughout that term or until such earlier time as they resign or are replaced. The directors may, and in the case of this Company will designate themselves as senior executive officers of the Company. The Company's day to day actions will occur through the actions of those executive officers acting on behalf of the Company. Throughout this Offering Memorandum the term "Management" shall be interpreted as the current directors and officers of the Company designated in the following section. The following sets forth information as to the principal occupation and business experience for at least the past five years of each of those directors and officers. Dr. Wilson Russell: Dr. Russell received a Masters Degrees in Engineering and in Physics from Memorial University of Newfoundland and a Doctorate in Engineering Physics from the University of Aix-Marseille in France. Dr. Russell's numerous positions include: geophysicist with Pan American Petroleum (AMOCO) in Calgary, Alberta (1968); professor and researcher at Memorial University (1968 to 1977); Director of Engineering at NORDCO Ltd. (1977 to 1980); and Associate Director of the Newfoundland Petroleum Directorate. After starting his own consulting and technology development firm in 1983, Dr. Russell has also

managed the preparation of the developmentplan for the $6 billion Hibernia development which was submitted to the government for approval of the project; invented, developed and commercialized the Hydroball current profiling system, a unique phased array ocean current profiling system which won the silver medal at the Canada Awards for Business Excellence in 1986; and developed a fiber optic modem for TRW in the United States. Dr. Russell founded NewTech Instruments Ltd. in partnership with a subsidiary of Bell Canada and was the first Chairman of the Board of Directors of Seabright Corporation. Dr. Russell has also acted as a consultant for the Canadian federal government, the provincial governments of Newfoundland and British Columbia, the Canadian Consul in Boston, Massachusetts, Mobil Oil, the Defense Research Establishment Pacific and the French Navy. Dr. Russell founded Northstar in 1989 and serves as Chairman and Chief Executive Officer. He is also a director and President of Cabot Management Ltd. and, until recently, was a director of the University of Victoria's Innovation and Development Corporation. Mr. Frank Power: Mr. Power, a business management consultant, has managed and administered several public companies for the past 15 years. Since 1984, Mr. Power has provided services including strategic planning, management, administration, design, and construction of major mining projects both nationally and internationally. He has owned and operated several consulting companies which have been providing comprehensive services in the industrial and high-technology fields as well as the mining field. His expertise also includes reactivating public companies, project acquisitions, public and private funding, as well as developing and taking existing private companies public. He is equally skilled to function in the public markets both in Canada and the United States. Mr. Power is President and Owner of Pow Con Management since 1981 and Premier Enterprises Ltd. since 1994. These companies manage, administrate and finance reporting companies. He served as President and Director of several Vancouver reporting companies and publicly listed companies since 1986 to present. Since 1992, Mr. Power has served as President of World Organics Inc., listed on the Vancouver Stock Exchange. From 1996 to 1997, Mr. Power served as President and Director of Accuimage Diagnostics and he is also past President of Security Industries, Inc. These companies are traded on the OTC Bulletin Board. Mr. Lee Meyer: Mr. Meyer, since completing his Business Administration degree from Arizona State University, has held positions including Managing Director of Omni International; Vice-President and Director of World Organics, Inc., a reporting company; Secretary and Treasurer of Tec Industries Corp., a specialty equipment rental agency; and owner and President of Stretchcoat, a national manufacturer and marketer of specialty products. Mr. Meyer has also represented major principals selling products nationally. Management Compensation: The Company has agreed to pay Mr. Frank Power, Director and Vice President, a past consulting fee of $27,000 and current monthly fees of $2,000 and to pay Wilson Russell, Director and President, a bonus of $100,000 payable when the Company is able to pay.

REMUNERATION OF DIRECTORS AND OFFICERS The following table sets forth certain information as to the Company's three highest paid officers and directors for the period from the commencement of Scientific's Business to June 15, 1999. No other compensation was paid to any such officer or director other than the cash compensation set forth below. Summary Compensation Table
Name of Individual or Identity of Group Dr. Wilson Russell Mr. Frank Power Mr. Lee Meyer Officers and Directors of the Company as a Group Capacities in which Remuneration was Received Director and President Director and Vice President Director Directors and Officers Aggregate Remuneration $16,300 $ 2,000 NIL _______ $18,300

The compensation paid to directors and officers to June 15, 1999 is believed by the Company to be below market compensation rates for the services provided by the directors and officers, having regard to the experience and qualifications of the directors and officers. The Company anticipates compensation being increased to market rates upon the Company achieving sufficient revenues and/or financings to pay such increased compensation.

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY OWNERS The following table sets forth, as of September 15, 1999, the beneficial ownership of the Company's Common Stock by each officer and director of the Company, by each person known by the Company to beneficially own more than 10% of the Company's Common Stock outstanding and by the officers and directors of the Company as a group. Except as otherwise indicated, all shares are owned directly.
Name and address of beneficial owner Frank Power Wilson Russell Lee Meyer Ladner Enterprises Monaco Ventures All Officers and Directors as a Group (3 persons) Number of Shares of Common Stock 990,000 164,883 100,000 1,397,900(2) 1,000,000(3) 4,352,783 Percentage of Common Stock(1) 13.30% 2.23% 1.35% 18.88% 13.51% 58.79%

Title of class Common Stock Common Stock Common Stock Common Stock Common Stock Common Stock

(1) Based on 7,404,481 shares of Common Stock of the Company issued and outstanding on June 15, 1999. (2) [DISCLOSE BENEFICIAL OWNERSHIP AND CONTROL OF STOCK IN NAME OF LADNER ENTERPRISES] (3) [DISCLOSE BENEFICIAL OWNERSHIP AND CONTROL OF STOCK IN NAME OF MONACO VENTURES] The following directors and officers of the Company have been granted options to purchase shares of the Company's common stock as follows:
Optionee Wilson Russell Frank Power Position Director Director Options 250,000 100,000 Option Price Per Share $0.50 $0.50

INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS There are no material contracts entered into by the Company within the two years preceding the date hereof which are still in effect, except as follows: Completion of previous offering: The Company completed an offering of 363,000 shares on January 26, 1999. The proceeds of the offering were US$363,000. The purchasers of the shares were all non US residents. Acquisition of Northstar: The Company acquired Northstar in January, 1999 pursuant to an agreement dated July 31, 1998. The Company purchased all of the issued and outstanding shares of Northstar in exchange for 4,901,481 shares of the Company's Common Stock which were issued from treasury. Copies of the foregoing contracts and any reports referred to in this Disclosure Statement may be inspected at the head office of the Company at Suite 1455, 405 Granville Street, Vancouver, British Columbia, Canada V6C 1T2, during normal business hours while the Offering contemplated hereunder is in progress to and including the closing date. Except for the acquisition of Northstar, none of the following persons has any direct or indirect material interest in any transaction to which the Company is a party since the incorporation of the Company in May, 1998 or in any proposed transaction to which the Company is proposed to be a party:
(A) (B) any director or officer of the Company; any proposed nominee for election as a director of the Company;

(C)

any person who beneficially owns, directly or indirectly,

shares carrying more than 10% of the voting rights attached to the Company's Common Stock; or (D) any relative or spouse of any of the foregoing persons, or any relative of such spouse, who has the same house as such person or who is a director or officer of any parent or subsidiary of the Company.

SECURITIES BEING OFFERED The securities being offered are the shares of the Company's common stock, par value $0.0001 per share. Under the Company's Articles of Incorporation, the total number of shares of all classes of stock that the Company shall have authority to issue is 100,000,000 shares of common stock, par value $0.0001 per share (the " Common Stock") and 20,000,000 shares of preferred stock, par value $0.001 per share (the "Preferred Stock"). As of September 15, 1999, a total of 7,404,481 shares of Common Stock are issued and outstanding. No shares of Preferred Stock are issued or outstanding. All issued and outstanding shares of the Common Stock are fully paid and non-assessable. Common Stock Holders of Common Stock have the right to cast one vote for each share held of record on all matters submitted to a vote of holders of Common Stock, including the election of directors. Holders of Common Stock do not have cumulative voting rights in the election of directors. Holders of a majority of the voting power of the capital stock issued and outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting of the Company's stockholders, and the vote by the holders of a majority of such outstanding shares is required to effect certain fundamental corporate changes such as liquidation, merger or amendment of the Company's Articles of Incorporation. Holders of Common Stock are entitled to receive dividends pro rata based on the number of shares held, when, as and if declared by the Board of Directors, from funds legally available therefor. In the event of the liquidation, dissolution or winding up of the affairs of the Company, all assets and funds of the Company remaining after the payment of all debts and other liabilities shall be distributed, pro rata, among the holders of the Common Stock. Holders of Common Stock are not entitled to pre-emptive or subscription or conversion rights, and there are no redemption or sinking fund provisions applicable to the Common Stock. All outstanding shares of Common Stock are fully paid and non-assessable. Transfer Agent Signature Stock Transfer of Dallas, Texas is the transfer agent for the Shares. Share Purchase Warrants None. Options The directors of the Company approved an incentive stock option plan (the "Stock Option Plan"). The directors have approved the following grants of options pursuant to the Stock Option Plan. (a) an aggregate of 500,000 options to purchase shares of Common Stock at a price of $0.50 per share to the Company's officers and directors. (a) an aggregate of 275,000 options to purchase shares of Common Stock at a price of $0.50 per share to the Company's employees. (a) an aggregate of 15,000 options to purchase shares of Common Stock at a price of $0.75 per share to the Company's consultants. All options are subject to a vesting schedule with one-third vesting on grant, one-third on the first anniversary of the date of grant and one-third on the second anniversary of the date of grant. Convertible Securities Pathfinder Enterprises Inc. has the option to convert a $240,000 CDN loan to Northstar Technical Inc. to common shares at $0.90 US per share in the first year and $1.25 US per share in the second year commencing March 11, 1999.

LITIGATION The Company is a defendant in a lawsuit commenced against the Company by the Company's former master distributor. The former distributor has alleged that the Company has interfered with the ability of the former distributor to sell products. The Company has filed a counterclaim for monies owing by the former distributor to the Company. An adverse outcome to the lawsuit could have a material adverse impact on the Company.

FINANCIAL STATEMENTS The Company's unaudited Financial Statements, as described below, are attached hereto. A. Unaudited financial statements for the period ending January 31, 1999, including: (a) Consolidated Balance Sheet; (b) Consolidated Statement of Operations and Deficit; (c) Consolidated Statement of Shareholders' Equity; (d) Consolidated Statement of Cash Flows; (e) Notes to Consolidated Financial Statements. (f) Financial Statements The Company's audited financial statements for the eight month period ended December 31, 1998, together with the auditor's report, are appended to this Offering Memorandum. The financial statements are non-consolidated statements for the Company. INVESTORS ARE URGED TO CAREFULLY REVIEW SUCH FINANCIAL STATEMENTS AND THE FOOTNOTES TO THOSE FINANCIAL STATEMENTS. Certain Financial Matters: This statement reflects the position of the Company on December 31,1998, which is prior to the completion of the $US 363,000 placement and prior to the purchase of Northstar and prior to the funding under this Offering. Therefore, such statements reflect substantially no assets other than cash but do demonstrate that the Company likewise has few liabilities. Accordingly, the book value of Common Shares outstanding at the date of their statement are at this time, negligible. The statement further reflects no income, other than deposits. Its earnings per share are negative. Management's Discussion of Financial Statements: The Balance Sheet and financial statements are audited and are prepared in accordance with generally accepted accounting principles of the United States. Specifically, those figures do not, and are not intended to, reflect the current net fair market value of the Company's assets. That value can only be estimated, based upon the potential sales and prospective net income which will be generated from the Company's present and future technology. Because of the various matters which inherently must occur in the future, the outcome cannot be precisely determined and is therefore necessarily a matter of opinion. Management believes that technology, combined with management's ability to successfully commercialize the applications through its developed products, to be substantial. It is that opinion, and not the current financial statement, upon which the price of the Common Stock is being offered under this Offering.

The following additional attachments are attached to this Disclosure Statement: Attachment Description No. 1 Subscription Agreement SUBSCRIPTION AGREEMENT Scientific Technologies, Inc. (Company has since changed its name to Northstar Electronics, Inc.) See Exhibits SUBSCRIPTION AGREEMENT made as of this 25 day of June, 1999 between Scientific Technologies, Inc., a Delaware corporation with an office at 1455-409 Granville Street, Vancouver, British Columbia V6C 1T2 ("the Company") and the undersigned ("the Subscriber"). WHEREAS: A. The company desires to issue a maximum of 1,000,000 shares of common stock of the Company at a price of $1.00 US per share ("the Offering") pursuant to Regulation S of the United States Securities Act of 1933 ("the Act"). B. The Subscriber desires to acquire the number of shares of the Offering set forth on the signature page here of ("the Shares") on the terms and subject to the conditions of this Subscription Agreement. NOW, THEREFORE, for and in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereto do hereby agree as follows: 1. SUBSCRIPTION FOR SHARES 1.1 Subject to the terms and conditions hereinafter set forth, the Subscriber hereby subscribes for and agrees to purchase from the Company such number of Shares as is set forth upon the signature page hereof at a price equal to $1.00US per share. Upon execution, the subscription by the Subscriber will be irrevocable. 1.2 The purchase price is payable by the Subscriber contemporaneously with the execution and delivery of this Subscription Agreement. 1.3. Upon execution by the Company, the Company agrees to sell such Shares to the Subscriber for said purchase price subject to the Company's right to sell to the Subscriber such lesser number of Shares as it may, in its sole discretion, deem necessary or desirable. 1.4 Any acceptance by the Company by the Subscriber is conditional upon compliance with all securities laws and other applicable laws of the jurisdiction in which the Subscribers resident. Each Subscriber will deliver to the Company all other documentation, agreements, representations and requisite government forms required by the lawyers for the Company as required to comply with all securities laws and other applicable laws of the jurisdiction of the subscriber. The Company will not grant any registration or other qualification rights to any Subscriber, other than the agreement of the Company to register the shares with the United States Securities and Exchange Commission ("the SEC") as set forth in Section 2 of this Agreement. 2. REGISTRATION STATEMENT 2.1 The company agrees that within a reasonable time of execution of this Agreement by the Company that the Company will prepare and file a registration statement with the SEC pursuant to the Act on a Form SB-1, or other appropriate registration statement, as required to qualify the resale of shares in the United States (the 'Registration Statement.') The Company will use its best efforts to ensure effectiveness of the Registration Statement within a reasonable period of time following filing of the Registration Statement. 3. REGULATION S AGREEMENTS OF THE SUBSCRIBER 3.1 The Subscriber agrees only to resell the shares only in accordance with the provisions of Regulation S of the act pursuant to registration under the Act, or pursuant to an available exemption from registration pursuant to the Act. 3.2 The Subscriber agrees not to engage in heading transactions with regards to the shares unless in compliance with the Act. 3.3 The Subscriber acknowledges and agrees that all certificates representing the Shares will be endorsed with the following legend in accordance with Regulation S of the Act: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933(THE"ACT"), AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT PROVIDED BY REGULATION S PROMULGATED UNDER THE ACT. SUCH SECURITIES MAY NOT BE

REOFFERED FOR SALE OR RESOLD OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE ACT. HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT." 3.4 The Subscriber and the Company agree that the Company will refuse to register any transfer of the Shares not made in accordance with the provisions of regulation S of the Act, pursuant to registration under the Act, or pursuant to an available exemption from registration. 4. REPRESENTATIONS AND WARRANTIES BY THE SUBSCRIBER 4.1 The Subscriber represents and warrants the Company and acknowledges that the company is relying upon the Subscriber's representations and warranties in agreeing to sell the Shares to the Subscriber. (A) The Subscriber is not a "U.S. Person" as defined by Regulation S of the Act and is not acquiring the Shares for the account or benefit of a U.S. person. A U.S. Person is defined by Regulation S of the Act to be any person who is: (i) any natural person resident in the United States; (ii) any partnership or corporation organized or incorporated under the laws of the United States; (iii) any estate of which any executor or administrator is a U.S. person; (iv) any trust of which any trustee is a U.S. person; (v) any agency or branch of a foreign entity located in the United States; (vi) any non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporate, or (if an individual) resident in the United States; and (vii) any partnership or corporation if: 1. Organized or incorporated under the laws of any foreign jurisdiction; and 2. Formed by a U.S. person principally for the purpose of investing in securities not registered under the Act, unless it is organized or incorporated, and owned, by accredited investors {as defined in Section 230.501(a) of the Act} who are not natural persons, estates or trusts. (B) The Subscriber recognizes that the purchase of Shares involves a high degree of risk in that the Company has only recently commenced its proposed business and may require sub- stantial funds in addition to the proceeds of this private placement; (C) an investment in the Company is highly speculative and only investors who can afford the loss of their investment should consider investing in the Company and the Shares; (D) the Subscriber has been delivered the Company's disclosure statement and its unaudited financial statements for the period ending December 31, 1998 and has had full opportunity to review the disclosure document and financial statements with the Subscriber's legal and financial advisors prior to execution of this Subscription Agreement; (E) the Subscriber has such knowledge and experience in finance, securities, investments, including investment in non-listed and non-registered securities, and other business matters so as to be able to protect its interests in connection with this transaction. (F) the Subscriber acknowledges that a limited market for the Shares presently exists and accordingly the Subscriber may not be able to liquidate its investment. (G) the Subscriber hereby acknowledges that this offering of Shares has not been reviewed by the SEC and the Shares are being issued by the Company pursuant to an exemption from registration provided by Regulation S pursuant to the Act. (H) the Subscriber is acquiring the Shares as principal for the Subscribers own benefit; (I) the Subscriber is not aware of any advertisement of the Shares; (J) Subscriber is acquiring the Shares subscribed to hereunder as an investment for Subscriber's own account, not as a nominee or agent, and not with a view towards the resale or distribution of any part thereof, and Subscriber has no present intention of selling, granting any participation in, or otherwise distributing the same; (K) Subscriber does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person, or to any third person, with respect to any of the shares sold hereby; (L) Subscriber has full power and authority to enter into this Agreement which constitutes a valid and legally binding obligation, enforceable in accordance with its terms; (M) Subscriber can bear the economic risk of this investment, and was not organized for the purpose of acquiring the Shares; (N) The Subscriber has satisfied himself or herself as to the full observance of the laws of his or her jurisdiction in connection with any invitation to subscribe for the Shares and/or any use of this Agreement, including (i) the legal requirements within his/her jurisdiction for the purchase of the Shares, (ii)any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption sale, or transfer of the Shares. 5. REPRESENTATIONS BY THE COMPANY 5.1 The Company represents and warrants to the Subscriber that: (A) The Company is a corporation duly organized, existing and in good standing under the laws of the State of Delaware and has the corporate power to conduct the business which it conducts and proposes to conduct. (B) Upon issue, the Shares will be duly and validly issued, fully-paid and non-assessable common shares in the

Capital of the Company. 6. TERMS OF SUBSCRIPTION 6.1 Pending acceptance of this subscription by the Company, all funds paid hereunder shall be deposited by the Company and immediately available to the Company for the purposes set forth in the disclosure statement. In the event subscription is not accepted, the subscription funds, will constitute a non-interest bearing demand loan of the Subscriber to the Company. 6.2 The Subscriber hereby authorizes and directs the Company to deliver the Securities to be issued to such Subscriber pursuant to this Subscription Agreement to the Subscriber's address indicated herein.

NORTHSTAR TECHNICAL INC. NETMIND Year 2000 Compliance Statement All hardware components of the NETMIND system have been verified to contain no date related processing, and thus are considered to be year 2000 compliant. Version 1.23 of the display and control software has been tested and verified to be year 2000 compliant when installed in a system with other component products that are year 2000 compliant. NETMIND owners should check with their computer manufacturer, and operating system and application software vendors to ensure that their systems are year 2000 compatible. LEGAL DISCLAIMER Northstar Technical Inc. has made every effort to ensure the accuracy of our product testing. However, because each target environment is different from NTI's testing environment, it is the responsibility of the system owner to validate the Year 2000 readiness of these products in the target environment. Therefore, information about the Year 2000 status of NETMIND products is provided "as is" without warranties of any kind and is subject to change without notice. NTI makes no representation or warranty respecting the accuracy or reliability of information about non-NTI products. U.S.A. The information provided here constitutes a Year 2000 Readiness Disclosure for purposes of the Year 2000 Information and Readiness Disclosure Act. U.K. This product complies with the definition of Year 2000 Conformity Requirements specified in Disc PD2000-1 of the British Standards Institute. March 12, 1999

Northstar Technical Inc. Y2K Contingency Plan December 2, 1999 Introduction All date sensitive equipment at Northstar has been verified to be Y2K compliant. Equipment, including computers, has been replaced where necessary to ensure Y2K compliance. One month's supply of finished product inventory has been stocked to provide continued sales in the event of an interrruption in production. One month's supply of raw material has been stocked to provide continued production in the event of an interruption in material supply. Long lead, single source, and transportation restricted components have been stocked to a three month production level. Production Facilities The NETMIND production facility is located in St. John's, Nfld. In the event of the complete loss of the production facility, it is estimated that the facility could be implemented at a new site in approximately 1 month, using existing personnel, and assuming the availability of standard commercial equipment and materials. Details are supplied in the attached Northstar Technical Inc. Disaster Recovery Plan. Customers The NETMIND system is a trawl management system, designed for use on ocean going vessels. Therefore, all NETMIND customers have stable platforms, with independent services (electricity, water, communications, and transportation). Approximately 50% of NETMIND customers are located on the East Coast of Canada. Many of these customers have their systems installed and serviced in St. John's Harbour (1 mile from the production facility). Therefore, it is expected that Y2K problems will have little impact on NETMIND customers. A finished inventory equivalent to one month's production has been stocked to provide continued sales in the event of an interruption in production. Suppliers The majority of materials used in the manufacture of the NETMIND system are available from multiple commercial suppliers. (See the Disaster Recovery Plan for details). A 6 month supply of all components with long lead times, single source suppliers, or transportation limitations has been ordered, and will be in inventory before December 31, 1999. Services Newfoundland Power and Newfoundland and Labrador Hydro provide electricity in the St. John's region. Y2K plans can be viewed at http://www.nlh.nf.ca/y2k/y2kframe.htm and http://www.nfpower.nf.ca/year2000/articles.asp . In the event of the failure of the electrical system, Northstar can forego production by selling existing inventory for one month with no appreciable impact. If an extended period of power outage occurs, Northstar's modest power requirements for production could be met using a commercially available 5KW, single phase generator. The risk of such an event does not warrant the investment in such a power backup system. NewTel Systems provides telephone service in the St. John's area. The state of NewTel's Y2K plans can be viewed at http://www.newtel.com/y2000/y2kinfo.htm. In the event of the failure of the land telephone system, Northstar has arranged for access to 4 Cell Phones for the first month of the year 2000. For contact with suppliers, the fallback position would be to Internet communications using a cable modem, and finally to Canada Post. For contact with customers, the fallback for most customers would be using Ship to Shore radio, or direct VHF radio.

Cable Atlantic provides Internet services for Northstar. Cable Atlantic's Y2K plans can be viewed at http://www.cableatlantic.nf.ca/about/pg4.htm/. In the event of failure of the cable system, the fallback internet service provider will be NewTel systems. Complete loss of internet services for extended periods will not seriously impact Northstar's manufacturing or sales operations. The master copy of all web pages is kept on a local computer system, and is archived daily. In the event of the failure of Cable Atlantic to provide satisfactory web page hosting, hosting will be performed on an in-hous linux based server. Municipal services are provided by the City of St. John's. The municipal Y2K compliance statement can be viewed at http://www.city.st-johns.nf.ca/. In the event of closure of the Northstar production facility due to lack of Municipal resources, a closure of up to 1 month can be accomodated with little effect by relying on sales from stocked inventory. Transportation for supplies and products is accomplished by air (St. Johns international airport; 3 miles), highway (Trans Canada Highway, 1 mile), and sea (St. John's harbour, 1 mile).In the event of failure of transportation systems, Northstar can continue production for up to one month using stocked inventory. With a complete failure of all transportation systems, customer deliveries would be limited to those customers (approx 50% of the current customer base) able to deliver their ships to St. John's harbour for installation/repair.

Northstar Technical Inc. Disaster Recovery Plan December 2, 1999 Table of Contents 1 Netmind Division 1 1.1 Information 1 1.2 Software 2 1.2.1 In-House Software 2 1.2.2 Commercial Software 2 1.3 Hardware 3 1.3.1 In-House Hardware 3 1.3.2 Commercial Hardware 3 1.4 Inventory 4 1.4.1 Subcontracted Components 4 1.4.1.1 Mechanical Housings,Etc. 4 1.4.1.2 Crystals 4 1.4.1.3 Hydrophones 4 1.4.1.4 Printed Circuit Boards 4 1.4.2 Commercial Components 4 1.5 Production Facility 4 1.5.1 Administration, Sales and Marketing 1.5.2 Inventory 1.5.3 Electronic Production 1.5.4 Mechanical Production 1.5.5 Engineering 2 Contract Manufacturing Division 2.1 Information 2.2 Software 2.3 Hardware 2.4 Inventory 1 Netmind Division

5 6 7 8 9 9 9 9 10 10

The Netmind Division of NorthStar Technical manufactures the NETMIND trawl management system. The systems and materials required for production are described below. In the event of the complete loss of the production facility, it is estimated that the facility could be re-established in new quarters in approximately one month, using existing personnel. Production could begin immediately on completion of the facility, with the first systems completed one month after the start of production. This document provides details of the systems necessary for the production of the NETMIND system. 1.0 Information The information required to manufacture the NETMIND system is stored in a computer compatible format. The following classifications have been specifically identified: 1.Manufacturing Procedures 2.Quality Control Manual 3.Policies and Procedures Manual 4.Marketing Materials 5.Price Lists 6.Customer Records 7.Manufacturing records 8.Mechanical Drawings 9.Electrical Schematics 10.PCB Layouts 11.User Manuals 12.Technical Manuals 13.Inventory Information 14.Supplier Records 15.Accounting Records 16.Sales/Marketing contact Records The master copies of all of the above items are stored on the computer system, and are archived and stored at a remote site on a daily basis. 1.1 Software 1.1.0 In-House Software This category includes all software which has been developed at Northstar. The most critical piece of software is the NETMIND software which is sold as an integral component of the netmind system. In addition to the NETMIND software, various administrative and production tools have been locally developed. All of the in-house software source code is stored in a Revision Control library. This allows the storage and retrieval of multiple versions of the software at any point in time. In addition, the full library is archived daily as described above.

1.1.1 Commercial Software Backup copies of all commercial software are maintained at several offsite locations. Although the commercial software could be repurchased in the event of loss, the maintenance of backup copies ensures the availability of the software irregardless of the state of the software manufacturer or vendor. In the event of a failure of the Microsoft windows platform, most of the functionality would be available under the Linux operating system as indicated below. All computers at Northstar have been verified as Linux-ready.The following commercial software packages are used by Northstar: Software Package Linux replacement Microsoft Windows 95/98 Linux Red Hat Linux Linux StarOffice version 5.1A Star Office, Linux version Microsoft Office 9X Star Office, Linux version Microsoft Visual C++ version 1.52 Gnu C++ Microsoft Visual Basic version 4.0 none Netscape Communicator Star Office, Linux version Accpac Plus Accounting System Accpac Plus, DOSEMU Tango Schematic Tango Schematic, DOSEMU Tango PCB Tango PCB, DOSEMU Edwin Schematic Capture/Layout No direct replacement WinTek HC11 cross compiler WinTek, DOSEMU TLIB version Control System TLIB, DOSEMU AutoCad No direct replacement Lotus SmartSuite 95 Star Office, Linux version Corel Draw Star Office, Linux version Business Pro Business Plan Software No direct replacement Maximizer Contact Management Software Star Office, Linux version AGAMA Inventory Control system No direct replacement 1.2 Hardware 1.2.0 In-House Hardware Hardware which has been developed in house to aid in the NETMIND production process includes the following: 1.Vacuum Chambers 2.Molds 3.Fume Hoods 4.Jigs

All of these items are straightforward to reproduce using standard tools and components with the exception of the Molds. Extra molds have been manufactured, and are stored off site. 1.2.1 Commercial Hardware Commercial Hardware which is used in the production of the NETMIND system includes the following: 1.Vacuum Pump 2.Component cleaner 3.Precision scales 4.Sand blaster 5.Compressor 6.Oscilloscopes 7.Frequency Counter 8.Function Generator 9.Prom Burner 10.MicroController Development System 11.Computers All of the above items are available from multiple commercial suppliers at short notice. 1.3 Inventory The inventory required to manufacture the NETMIND system consists primarily of commercially available components. Many highly specialized components (precision inductors, transformers,etc.) are manufactured in-house from commercially available supplies(standard ferrites, magnet wire). Other components are manufactured under subcontract to other manufacturers. 1.3.0 Subcontracted Components 1.3.0.0 Mechanical Housings,Etc. The mechanical components of the NETMIND system are fabricated to specifications provided by Northstar Technical to a local Machine Shop. Several Machine Shops with the capabilities necessary have been identified in the local area. No specialized equipment is required by the subcontractor to manufacture these items 1.3.0.1 Crystals The NETMIND sensors require the use of high stability, high precision crystals at non-standard frequencies. The crystals are currently manufactured by a British company to specifications supplied by Northstar. Several additional crystal manufacturers have been identified who have the capabilities of producing the crystals to the required specifications. 1.3.0.2 Hydrophones The hydrophones used in the Netmind system are currently manufactured by a British company to specifications supplied by Northstar. Northstar is in the process of purchasing the design rights to the hydrophones with the intention of manufacturing the hydrophones in-house in the near future. 1.3.0.3 Printed Circuit Boards Printed Circuit Boards are currently manufactured in Canada by a PCB production facility. Several other PCB manufacturers have been identified who would be capable of producing the same quality circuit boards. 1.3.1 Commercial Components The majority of the components required to manufacture the NETMIND system are commercially available from many manufacturers/suppliers. The inventory system currently in use at Northstar identifies multiple suppliers for each component. 1.4 Production Facility The production facilities the NETMIND system can be constructed in any standard Office/light manufacturing environment.

1.4.0 Administration, Sales and Marketing Administration, sales and marketing facilities require standard office space of approximately 1500 sq ft, with standard office facilities. The following office equipment is required:
Equipment Quantity 1 1 1 1 1 1 1 1 3 3 3 3 3 Supplier any Any HP Northern Telecom HP,IBM,DELL HP,IBM,DELL HP,IBM,DELL HP,IBM,DELL any Specifications Plain Paper Flat bed, feeder Laser, 10ppm, networked 4 lines in, 16 key set capacity Low end office, Windows98 Minimum server, Windows98 Portable,Windows98 Low end office,Linux

fax Machine Copier Printer Telephone System Accounting Computer Office Server Computer Marketing Computer Internet Server Computer Office Desks BookCases Filing Cabinets Chairs Telephone Keyset 1.4.1 Inventory

Compatible with Telephone system

The inventory area requires 600 sq ft of storage space, 200 sq. ft. of shipping space, and 200 sq ft of office space.

Equipment

Quantity 1 1 1 1 1 5 2 1

Supplier HP,IBM,DELL HP

Specifications Low end Office, Windows98 Ink Jet, networked

Computer Printer Office Desk Filing Cabinet Chair Heavy Duty Shelving Bookcase Telephone Keyset

tier

300 sq ft Compatible with telephone system

1.4.2 Electronic Production The electronic production area requires 1000 sq ft of space with anti-static flooring, and an external ventilation system. Equipment Administrative Computer Manual Printer Test Computer Field Test Computer Electronic Workbench Quantity 1 1 2 1 5 Supplier HP,IBM,DELL HP HP,IBM,DELL HP,IBM,DELL Specifications Low end Office Color, double sided capability Low end Office Portable 8 ft. with shelf, anti-static surface, outlets, light 100MHz, storage, 2 probes Global Specialities

Oscilloscope Function Generator Frequency resolution Soldering Station Eprom Eraser Eprom Burner Reference Hydrophone Exhaust System External Exhaust Office Desk Bookcase Filing Cabinet Telephone Keyset

3 3 1 4 2 2 1 4 1 3 3 1 1

HP,Tektronix HP, Tektronix, Hz

Motorola

Hand Tools

1.4.3 Mechanical Production The mechanical production area requires 800 sq ft of space with a smooth, resiliant floor (Asphalt or vinyl tile), external ventilation, and precise

temperature and humidity control.
Equipment Quantity Supplier IBM,HP,DELL Specifications High End Office, 17" monitor

Computer 1 Workbench 3 Heavy Duty Vise 1 Grinder 1 Drill Press 1 Sandblaster 1 Compressor 1 Vacuum Chambers 2 Vacuum Pump 1 Fume Hood 1 Air Conditioner 1 Component Cleaner 1 Precision Weight Scales 1 Clamps many Hand Tools Dehumidifier 1 Office Desk 2 Filing Cabinet 1 BookCase 1 Heavy DutyCompatible with Telephone System

Shelving 200 Sq Ft

1.4.4 Engineering The Engineering area requires 500 sq ft of space with anti-static flooring, and an external ventilation system.
Equipment Development computer Drawing Printer Bench Oscilloscope Portable Oscilloscope Function Generator 1 Hz resolution Power Supply Soldering Station Test Computer Network Server Office Desk Filing Cabinet Bookshelf Admin Computer Field Test Computer Prom Programmer Spectrum Analyzer Hand Tools Telephone Keyset Quantity 1 1 1 1 1 1 1 1 1 2 2 3 1 1 1 1 10 2 Supplier Specifications High end Office, 17" monitor Color, Inkjet, 11X17 100 Mhz, Storage 200 Mhz, battery operated HP Lab Supply Low end office High end server, Linux

IBM,HP HP HP,Tektronix Tektronix,Fluke Global Specialties HP,BK Precision IBM,HP,DELL IBM,HP,DELL

IBM,HP,DELL IBM,HP,DELL Motorola Motorola

Low end office Portable MicroController Development System

Compatible with Telephone system

Contract Manufacturing Division 2.0 Information The majority of the documentation of the Contract Manufacturing Division is stored on the computer system, and is archived on a daily basis. 2.1 Software At present, only commercially available software is used in the Contract Manufacturing Division, and off-site backups are maintained of all such software

2.2 Hardware Several pieces of special purpose test equipment are maintained at the plant site for the testing of military consoles.This equipment is not commercially available, and in the event of loss, would have to be replaced by the supplier/owner (Lockheed Martin); 2.3 Inventory No inventory is currently in stock for the contract manufacturing division. In general, the inventory for this division will consist of specialized components, many custom manufactured by single source suppliers. However, the inventory will be held for very short periods of time, and will be used completely in the manufacture of the contracted systems. It is not anticipated that there will be any stock items in the Inventory.