__________

 

 

 

SHARE PURCHASE AGREEMENT

 

 

 

Among each of

:

MIV THERAPEUTICS, INC.; THE SOLE SHAREHOLDER OF SAGAX INC.;

And

:

SAGAX INC.

 

And

:

SHIMOCO LLC

 

And

:

DR. DOV SHIMON

 

And respecting the

:

PURCHASE OF SAGAX INC. BY SHIMOCO LLC FROM MIV THERAPEUTICS, INC.

 

 

MIV Therapeutics, Inc.

#1 - 8765 Ash Street, Vancouver, British Columbia, Canada, V6P 6T3

__________

 

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

SHARE PURCHASE AGREEMENT

 

 

                         THIS SHARE PURCHASE AGREEMENT is made and dated for
reference effective as of October 5, 2007 (the "Effective Date") as fully
executed on this 13th day of November, 2007 (the "Execution Date").

 

AMONG EACH OF

:

MIV THERAPEUTICS, INC.; THE SOLE SHAREHOLDER
OF SAGAX INC.

; a limited liability company incorporated under
the laws of the State of Nevada, U.S.A., and having an having an
address for notice and delivery located at #1 - 8765 Ash Street,
Vancouver, British Columbia, Canada, V6P 6T3

(the "Vendor");

OF THE FIRST PART

AND

:

SAGAX INC.

, a limited liability company incorporated under the
laws of the State of Delaware, U.S.A., and having an address for
notice and delivery located at #1 - 8765 Ash Street, Vancouver,
British Columbia, Canada, V6P 6T3

(the "Company");

OF THE SECOND PART

AND

:

SHIMOCO LLC

, having an address for notice and delivery
located at 57a Hapoel Street, Herzliya, Israel, 46600

(the "Purchaser");

OF THE THIRD PART

AND

:

DR. DOV SHIMON

, having an address for notice and delivery
located at 57a Hapoel Street, Herzliya, Israel, 46600

("Dr. Shimon");

OF THE FOURTH PART

 

(each of the Vendor, the Company, the Purchaser and Dr. Shimon
being hereinafter singularly also referred to as a "Party" and
collectively referred to as the "Parties" as the context so requires).

 

                         WHEREAS:

 

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- 2 -

A.                     The Company is a body corporate subsisting under and
registered pursuant to the laws of the State of Delaware, U.S.A., and the
Company is the sole legal, beneficial and registered owner of all of the
presently issued and outstanding common shares and securities in the capital of
S.M.T. Research & Development, Ltd. ("SMT"), a body corporate subsisting under
and registered pursuant to the laws of Israel;

B.                     The Vendor is the sole legal, beneficial and registered
owner of all of the presently issued and outstanding common shares and
securities in the capital of the Company (collectively, the "Purchased Shares");
the particulars of the legal, beneficial and registered ownership of such
Purchased Shares being set forth in Schedule "A" which is attached hereto and
which forms a material part hereof;

C.                     The Company, through SMT in Israel, is principally
engaged in the business of developing a neuro-vascular embolic stent filter
medical device, called an Anti Embolic Protection Device or "AEPD"
(collectively, the "Company's Business");

D.                     Dr. Shimon is a director of each of the Vendor, the
Company and SMT, Dr. Shimon founded and has been serving as the Chief Executive
Officer of the Company since inception and Dr. Shimon is the owner and manager
of the Purchaser; and

E.                     In accordance with certain very recent various
discussions, negotiations and understandings as between the Parties hereto they
agreed to use their best efforts to initiate, enter into and complete a formal
agreement whereby the Vendor would sell all of the Purchased Shares to the
Purchaser and, correspondingly, that it is their intentions by the terms and
conditions of this agreement (the "Agreement") to hereby replace, in their
entirety, all such prior discussions, negotiations and understandings and to
clarify their respective duties and obligations with respect to the proposed
purchase by the Purchaser from the Vendor of all of the Purchased Shares
together with the further development of the Company's Business as a consequence
thereof;

 

                         NOW THEREFORE THIS AGREEMENT WITNESSETH that in
consideration of the mutual promises, covenants and agreements herein contained,
THE PARTIES HERETO COVENANT AND AGREE WITH EACH OTHER as follows:

 

Article 1
DEFINITIONS

1.1                  Definitions. For the purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires, the
following words and phrases shall have the following meanings:

(a)        "affiliate" and "associate" have the meanings ascribed to them under
the Securities Act;

(b)        "Agreement" means this "Share Purchase Agreement" as entered into
among the Vendor, the Company and the Purchaser herein, together with any
amendments thereto and any Schedules and Exhibits as attached thereto;

(c)        "Arbitration Act" means the International Commercial Arbitration Act
and related Rules of the Province of British Columbia, R.S.B.C. 1996, as amended
from time to time, as set forth in Article "13" hereinbelow;

(d)        "Benefits" has the meaning ascribed to it in section "2.2"
hereinbelow;

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- 3 -

(e)        "Board of Directors" means, as applicable, the Board of Directors of
each of the Vendor and the Company as duly constituted from time to time;

(f)        "Bonus" has the meaning ascribed to it in section "2.4" hereinbelow;

(g)        "business day" means any day during which Canadian Chartered Banks
are open for business in the City of Vancouver, Province of British Columbia,
Canada;

(h)        "Change in Board and Officers" has the meaning ascribed to it in
section "6.3" hereinbelow;

(i)        "Change In Control" has the meaning ascribed to it in section "2.4"
hereinbelow;

(j)        "Closing" has the meaning ascribed to it in section "6.1"
hereinbelow;

(k)        "Closing Date" has the meaning ascribed to it in section "6.1"
hereinbelow;

(l)        "Company" means SagaX Inc., a company incorporated under the laws of
the State of Delaware, U.S.A., or any successor company, however formed, whether
as a result of merger, amalgamation or other action;

(m)        "Company Material Adverse Effect" has the meaning ascribed to it in
section "5.5" hereinbelow;

(n)        "Company's Assets" means all assets, contracts, equipment, goodwill,
inventory and Intellectual Property of the Company and including, without
limitation, all of the property interests, assets, contracts, equipment,
goodwill and inventory which are listed and described in Schedules "C" through
"G" which are attached hereto and which form a material part hereof;

(o)        "Company's Board" has the meaning ascribed to it in section "2.4"
hereinbelow;

(p)        "Company's Business" has the meaning ascribed to it in recital "C."
hereinabove;

(q)        "Company's Financial Statements" has the meaning ascribed to it in
section "3.1" hereinbelow; a copy of which Company's Financial Statements being
set forth in Schedule "B" which is attached hereto and which forms a material
part hereof;

(r)        "Company's Indebtedness" has the meaning ascribed to it in section
"2.2" hereinbelow;

(s)        "Confidential Information" has the meaning ascribed to it in section
"10.1" hereinbelow;

(t)        "Continuing Directors" has the meaning ascribed to it in section
"2.4" hereinbelow;

(u)        "Defaulting Party" and "Non-Defaulting Party" have the meanings
ascribed to them in section "14.1" hereinbelow;

(v)        "Dr. Shimon" means Dr. Dov Shimon; who is a director of each of the
Vendor, the Company and SMT, who is the founder and has been serving as the
Chief Executive Officer of the Company since inception and who is the owner and
manager of the Purchaser;

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- 4 -

(w)        "Effective Date" has the meaning ascribed to it on the front page of
this Agreement;

(x)        "Escrow Agent" has the meaning ascribed to it in section "7.1"
hereinbelow;

(y)        "Exchange Act" means the United States Securities Exchange Act of
1934, as amended, and all the Rules and Regulations promulgated under the United
States Securities Exchange Act of 1934;

(z)        "Execution Date" means the actual date of the complete execution of
this Agreement and any amendment thereto by all Parties hereto as set forth on
the front page of this Agreement;

(aa)      "GAAP" has the meaning ascribed to it in section "3.1" hereinbelow,

(ab)      "Indemnification" has the meaning ascribed to it in section "2.7"
hereinbelow;

(ac)      "Indemnified Releasee" has the meaning ascribed to it in section "2.7"
hereinbelow;

(ad)      "Initial Company Financing" has the meaning ascribed to it in section
"2.2" hereinbelow;

(ae)      "Initial Due Diligence" has the meaning ascribed to it in section
"5.1" hereinbelow;

(af)      "Intellectual Property" means, with respect to the Company, all right
and interest to all existing patents, patents pending, inventions, know-how, any
operating or identifying name or registered or unregistered trademarks and
tradenames, all computer programs, licensed end-user software, source codes,
products and applications (and related documentation and materials) and other
works of authorship (including notes, reports, other documents and materials,
magnetic, electronic, sound or video recordings and any other work in which
copyright or similar right may subsist) and all copyrights (registered or
unregistered) therein, industrial designs (registered or unregistered),
franchises, licenses, authorities, restrictive covenants or other industrial or
intellectual property used in or pertaining to the Company and which are
described in Schedule "C" which is attached hereto and which forms a material
part hereof;

(ag)      "Liens" the meaning ascribed to it in section "3.1" hereinbelow;

(ah)      "Mutual Release" has the meaning ascribed to it in section "2.7"
hereinbelow;

(ai)      "OTCBB" means the NASD Over-the-Counter Bulletin Board, together with
its respective successors and permitted assigns as the context so requires;

(aj)      "Outstanding Indebtedness" has the meaning ascribed to it in section
"2.5" hereinbelow;

 

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- 5 -

(ak)      "Parties" or "Party" means, respectively, the Vendor, the Company, the
Purchaser and Dr. Shimon hereto, as the case may be, together with their
respective successors and permitted assigns as the context so requires;

(al)      "person" or "persons" means an individual, corporation, partnership,
party, trust, fund, association and any other organized group of persons and the
personal or other legal representative of a person to whom the context can apply
according to law;

(am)      "Purchased Shares" has the meaning ascribed to it in recital "B."
hereinabove; the particulars of the registered and beneficial ownership of such
Purchased Shares being set forth in Schedule "A" which is attached hereto;

(an)      "Purchase Price" has the meaning ascribed to it in section "2.2"
hereinbelow;

(ao)      "Purchaser" means Shimoco LLC, a company incorporated under the laws
of the State of Delaware, U.S.A., or any successor company, however formed,
whether as a result of merger, amalgamation or other action;

(ap)      "Purchaser's Counsel's Opinion" has the meaning ascribed to it in
section "5.3" hereinbelow; the form of which being set forth in the Exhibit
which is attached hereto and which forms a material part hereof;

(aq)      "Ratification" has the meaning ascribed to it in section "5.1"
hereinbelow;

(ar)      "Regulatory Approval" means the acceptance for filing, if required, of
the transactions contemplated by this Agreement by the Regulatory Authorities;

(as) "Regulatory Authority" and "Regulatory Authorities" means, either
singularly or collectively as the context so requires, the OTCBB, and/or such
other regulatory agencies who have or who may have jurisdiction over the affairs
of the Company, the Purchaser and/or the Vendor herein and including, without
limitation, and where applicable, all applicable securities commissions and
again including, without limitation, the SEC, and all other regulatory
authorities from whom any such authorization, approval or other action is
required to be obtained or to be made in connection with the transactions
contemplated by this Agreement;

(at)      "Resignation" has the meaning ascribed to it in section "2.6"
hereinbelow;

(au)      "Revenues" has the meaning ascribed to it in section "2.2"
hereinbelow;

(av)      "Royalty" has the meaning ascribed to it in section "2.2" hereinbelow;

(aw)      "SEC" means the United States Securities and Exchange Commission;

(ax)      "Securities Act" means the United States Securities Act of 1933, as
amended, and all the Rules and Regulations promulgated under the United States
Securities Act of 1933;

(ay)      "Security for the Company's Indebtedness" has the meaning ascribed to
it in section "2.2" hereinbelow;

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- 6 -

(az)      "SMT" means S.M.T. Research & Development, Ltd., a company
incorporated under the laws of Israel, or any successor company, however formed,
whether as a result of merger, amalgamation or other action;

(ba)      "Subject Removal Date" has the meaning ascribed to it in section "5.1"
hereinbelow;

(bb)      "subsidiary" means any company or Company of which more than fifty
percent (50%) of the outstanding shares carrying votes at all times (provided
that the ownership of such shares confers the right at all times to elect at
least a majority of the board of directors of such company or Company) are for
the time being owned by or held for a company and/or any other company in like
relation to the company, and includes any company in like relation to the
subsidiary;

(bc)      "Termination of the Consulting Arrangement" has the meaning ascribed
to it in section "2.6" hereinbelow;

(bd)      "Transfer Documents" has the meaning ascribed to it in section "7.1"
hereinbelow;

(be)      "Vendor" means MIV Therapeutics, Inc., a company incorporated under
the laws of the State of Nevada, U.S.A., or any successor company, however
formed, whether as a result of merger, amalgamation or other action; and

(bf)      "Working Capital" has the meaning ascribed to it in section "2.5"
hereinbelow.

1.2                  Schedules and Exhibit. For the purposes of this Agreement,
except as otherwise expressly provided or unless the context otherwise requires,
the following shall represent the Schedules and Exhibit which are attached to
this Agreement and which form a material part hereof:

Schedule

Description of Schedule

Schedule "A":

Purchased Share, Vendor and Securities;

Schedule "B"

Company's Financial Statements;

Schedule "C":

Company's Intellectual Property;

Schedule "D":

Company's Leases;

Schedule "E":

Company's Contracts of Employment;

Schedule "F":

Company's Material Contracts;

Schedule "G":

Company's List of Bank Accounts etc.; and

   

Exhibit

Form of Purchaser's Counsel's Opinion.

1.3                  Interpretation. For the purposes of this Agreement, except
as otherwise expressly provided or unless the context otherwise requires,:

(a)        the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, section or other subdivision of this Agreement;

(b)        any reference to an entity shall include and shall be deemed to be a
reference to any entity that is a permitted successor to such entity; and

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- 7 -

(c)        words in the singular include the plural and words in the masculine
gender include the feminine and neuter genders, and vice versa.

 

Article 2
PURCHASE AND SALE OF THE PURCHASED SHARES

2.1                  Purchase and sale. Subject to the terms and conditions
hereof and based upon the representations, warranties and covenants contained in
Articles "3" and "4" hereinbelow and the prior satisfaction of the conditions
precedent which are set forth in Article "5" hereinbelow, the Vendor hereby
agrees to assign, sell and transfer at the Closing Date all of its respective
right, entitlement and interest in and to all of the Purchased Shares to the
Purchaser and the Purchaser hereby agrees to purchase all of the Purchased
Shares from the Vendor on the terms and subject to the conditions contained in
this Agreement.

2.2                  Purchase Price for the Vendor. The total purchase price
(the "Purchase Price") for all of the Purchased Shares will be satisfied by way
of:

(a)        The repayment of the Company's Indebtedness: the repayment by the
Purchaser and the Company to the Vendor of an aggregate of U.S. $4,000,000 in
prior loans and associated indebtedness which have been advanced and undertaken
by the Vendor in and to the Company and SMT since the Vendor's acquisition of
the Company (collectively, the "Company's Indebtedness") in the following manner
and at the following times:

(i)        an initial U.S. $1,000,000 of the Company's Indebtedness will be due
and payable by the Purchaser and the Company to the order and the direction of
the Vendor within six months of the first private or public equity financing of
the Company which is completed subsequent to the Closing hereof (the "Initial
Company Financing"); the terms and conditions of any such Initial Company
Financing being subject to the prior review and approval of the Vendor; such
approval not to be unreasonably withheld;

(ii)       an additional U.S. $1,000,000 of the Company's Indebtedness will be
due and payable by the Purchaser and the Company to the order and the direction
of the Vendor within 18 months of the completion of Initial Company Financing;

(iii)      a further U.S. $1,000,000 of the Company's Indebtedness will be due
and payable by the Purchaser and the Company to the order and the direction of
the Vendor within 30 months of the completion of Initial Company Financing; and

(iv)       the balance of U.S. $1,000,000 of the Company's Indebtedness will be
due and payable by the Purchaser and the Company to the order and the direction
of the Vendor within 48 months of the completion of Initial Company Financing.

In this regard the Parties hereby acknowledge and agree that, until payment in
full of the Company's Indebtedness by the Purchaser and the Company to the order
and the direction of the Vendor, the Company's Indebtedness will be secured,
contemporaneously with the Closing of this Agreement, by way of a senior,
subordinated (subordinated only to the Company's existing banking indebtedness),
fixed and floating charge registered over all of the assets of the Company (the
"Security for the Company's Indebtedness"); and

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- 8 -

(b)        A Royalty Fee on all Revenues and Benefits received by the Company:
the payment by the Purchaser and the Company to the Vendor of a royalty fee (the
"Royalty Fee") equating to eight percent (8%) percent of all sales revenues less
any documented rebates, refunds, taxes and delivery costs applicable to any sale
(collectively, the "Revenues"), other than from sub-licenses, in respect of
gross sales from any product associated or related to the Company's present
Intellectual Property under any existing patent or patent-pending applications,
and of any other benefit, directly or indirectly collected or received, whether
for cash or credit or by way of any benefit, advantage, equity, or concession
(collectively, the "Benefits") from the manufacturing, distribution, marketing,
contracting, joint venturing, leasing, equity participation or any other
activity in relation to the said products; the Royalty Fee being calculated and
payable in accordance with section "2.3" hereinbelow; and

2.3                  Calculation and payment of the Royalty Fee. In this regard
the Parties hereby acknowledge and agree that any such Royalty Fee shall be paid
and accounted for quarterly, within ten calendar days after the end of each
quarter, and that the first quarter shall commence on the first day of the month
following the month of the Closing Date hereof. The Royalty Fee shall be
calculated on all Revenues and Benefits actually received by the Company or the
Purchaser in a quarter as set forth in section "2.2(b)" hereinabove. Within 60
calendar days (or such extended time as the Vendor may permit) of the end of
each fourth quarter the Company shall render an annual statement with
explanatory notes, shall make any adjustments thereto, and shall pay any Royalty
Fee due from such adjustment upon presentation of such accounting or give notice
of any deduction to be carried to apply to Revenues for the next quarter. The
calculation of Revenues and Benefits and Royalty Fee payments shall be carried
out in accordance with generally accepted United States accounting principles
applied on a consistent basis. The Vendor may contest and/or audit any
accounting within 90 calendar days of presentation of such report. However, an
accounting may be challenged at any time that it comes to the attention of the
Vendor that the Company failed to clearly disclose any material fact or Revenue
or Benefit. Any and all expenses attributable to any audit shall be the
responsibility of and for the sole account of the Vendor.

                         It shall be the responsibility of the Company to
collect the amounts of Gross Sales and all risk of such shall be that of the
Company. Notwithstanding that the Company shall not have invoiced a customer, it
shall be deemed to have invoiced and have received the consideration for all
products on the 90th calendar day after delivery of the same unless Company can
demonstrate otherwise in writing to the Vendor and in advance of such 90
calendar day period. However, the Company may deduct from Revenues upon which a
Royalty Fee is calculated the uncollected receivables from preceding quarters
which the Company has made bona fide and reasonable best efforts to collect but
the cost of collection shall not be deducted from Revenues for the purpose of
the Royalty Fee calculation. The Royalty on Benefits shall be accounted to the
Vendor immediately upon the same being received, allocated or otherwise creating
value or ownership in the Company.

                         All Royalty Fee payments made by the Company to the
Vendor hereunder shall be made in United States dollars without any reduction or
deduction of any nature or kind whatsoever. Any Benefits shall be delivered to
the Vendor proportionately in kind, unless otherwise agreed, and in the event
that a Benefits' Royalty Fee cannot be lawfully delivered in kind the same shall
be valued by a mutually selected valuator, which shall value the Benefit in the
reasonable time-frame (if a share equity then at such time as the Vendor shall
require delivery or, at the election of the Vendor, at the time that the Company
shall sell the same) selected by the Company and the Royalty Fee shall be paid
in United States dollars unless the Vendor shall have elected to take in kind.

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- 9 -

2.4                  Bonus to the Vendor upon any Change In Control of the
Company. In addition to the Purchase Price consideration which is payable by the
Purchaser and the Company to the Vendor both prior to, in conjunction with and
subsequent to the Closing of the within purchase and sale, the Parties hereby
acknowledge and agree that the Purchaser and the Company will also be
responsible for paying the Vendor a bonus (the "Bonus") equal to ten percent
(10%) of any consideration in any form which is received by the Purchaser and/or
the Company from any source and from any transaction, or a series of related
transactions, at anytime and which is in anyway associated with a "Change In
Control" (as defined hereinbelow) of the Company at anytime while the Royalty
hereinabove remains due and payable by the Purchaser and the Company to the
Vendor.

                         In this regard the Parties hereby acknowledge and agree
that Change In Control means a change in ownership or control of the Company
effected through any of the following transactions:

(a)        the direct or indirect acquisition by any person or related group of
persons (other than an acquisition from or by the Company or by a
Company-sponsored employee benefit plan or by a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d 3 of the
Exchange Act) of securities possessing more than 50% of the total combined
voting power of the Company's outstanding securities pursuant to a tender or
exchange offer made directly to the Company's shareholders;

(b)        a change in the composition of the Board of Directors of the Company
(the "Company's Board") over a period of 36 months or less such that a majority
of the Company's Board members (rounded up to the next whole number) ceases, by
reason of one or more contested elections for the Company's Board membership, to
be comprised of individuals who are Continuing Directors;

(c)        the sale or exchange by the Company (in one or a series of
transactions) of all or substantially all of its assets to any other person or
entity; or

(d)        the approval by the shareholders of the Company of a plan to dissolve
and liquidate the Company.

                         In this regard the Parties hereby acknowledge and agree
that Continuing Directors means members of the Company's Board who either: (i)
have been Company's Board members continuously for a period of at least 36
months from the Closing Date herein; or (ii) have been Company's Board members
for less than 36 months from the Closing Date and were appointed or nominated
for election as Company's Board members by at least a majority of the Company's
Board members described in clause (i) who were still in office at the time such
appointment or nomination was approved by the Company's Board.

2.5                  Final Working Capital to be supplied by the Vendor to the
Company and forming part of the Company's Indebtedness. In consideration of the
Purchaser's and the Company's within agreement to provide the Purchase Price
consideration and any Bonus to the order and direction of the Vendor both prior
to, in conjunction with and subsequent to the Closing of the within purchase and
sale, the Vendor hereby agrees to provide the Company at Closing hereunder with
a final sum of U.S. $130,000 in additional working capital (the "Working
Capital"; having recently advanced an initial U.S. $80,000 in working capital to
the Company at SMT's request) in order to meet certain of the Company's
previously disclosed and bona fide current liabilities; with any said Working
Capital advances to simply form part of the overall Company's Indebtedness to
the Vendor herein.

2.6                  The Resignation of the Purchaser as a director of the
Vendor and the Termination of the Purchaser's existing Consulting Arrangement
with the Vendor. Effective on the Effective Date of this Agreement, and
notwithstanding the status of this Agreement or the completion of the within
purchase and sale, Dr. Shimon shall be deemed, without any further act required
on Dr. Shimon's behalf, to immediately resign as a director of the Vendor (the
"Resignation"), to immediately terminate Dr. Shimon's existing consulting
agreement and arrangement with the Vendor (the "Termination of the Consulting
Arrangement") and, consequent upon such Resignation and Termination of
Consulting Arrangement, to have no further claim as against the Vendor as a
previous director of or consultant to the Vendor.

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- 10 -

2.7                  Mutual Release and Indemnification. In conjunction with the
due and complete Closing of the terms and conditions of this Agreement, each of
the Parties hereby agrees, without any further action on its part, to release,
remise and forever discharge each of the other Parties hereto, together with, if
applicable, each of the other Parties' respective shareholders, subsidiaries,
directors, officers, employees, affiliates, associates, attorneys, agents,
executors, administrators, successors and assigns, from all manner of action and
actions, causes of action, suits, debts, dues, accounts, bonds, covenants,
contracts, claims, damages and demands, whether known or unknown, suspected or
unsuspected and whether at law or in equity, which against the other Parties,
and/or if applicable, any of the other Parties' respective shareholders,
subsidiaries, directors, officers, employees, affiliates, associates, attorneys,
agents, executors, administrators, successors and assigns, the Party ever had,
now has, or which any of the Party's respective successors or assigns, or any of
them hereafter can, shall or may have by reason of any matter whatsoever and
including, without limitation, arising in connection with the Party's prior
association and affiliation with the other Parties as either shareholders
directors, officers, employees or consultants of the other Parties at any time
(collectively, the "Mutual Release" herein).

                         In addition to the Mutual Release provided for
hereinabove, each of the Parties hereby also indemnifies and saves harmless the
other Parties hereto and including, where applicable, each of the other Parties'
respective shareholders, subsidiaries, directors, officers, employees,
affiliates, associates, attorneys, agents, executors, administrators, successors
and assigns (each such party then being an "Indemnified Releasee" herein)
harmless from and against any and all losses, claims, actions, suits,
proceedings, damages, liabilities or expenses of whatever nature or kind and
including, without limitation, any investigation expenses incurred by any
Indemnified Releasee, to which an Indemnified Releasee may become subject by
reason of the within Mutual Release as referenced herein (collectively, the
"Indemnification" herein). This Indemnification will not apply in respect of an
Indemnified Releasee in the event and to the extent that a Court of competent
jurisdiction in a final judgment shall determine that the Indemnified Releasee
was grossly negligent or guilty of willful misconduct. Each of the Parties
hereby agrees to waive any right that each such Party might have of first
requiring the Indemnified Releasee to proceed against or enforce any other
right, power, remedy, security or claim payment from any other person before
claiming this Indemnification. In case any action is brought against an
Indemnified Releasee in respect of which Indemnification may be sought against
any Party hereto, the Indemnified Releasee will give the relevant Party(ies)
prompt written notice of any such action of which the Indemnified Releasee has
knowledge and the relevant Party(ies) will undertake the investigation and
defense thereof on behalf of the Indemnified Releasee, including the prompt
employment of counsel acceptable to the Indemnified Releasee affected and the
relevant Party(ies) and the payment of all expenses. Failure by the Indemnified
Releasee to so notify shall not relieve the relevant Party(ies) of their
obligation of Indemnification hereunder unless (and only to the extent that)
such failure results in a forfeiture by the relevant Party(ies) of substantive
rights or defenses. No admission of liability and no settlement of any action
shall be made without the consent of the relevant Party(ies) hereto and the
consent of the Indemnified Releasee affected, such consent not to be
unreasonable withheld. Notwithstanding that the relevant Party(ies) will
undertake the investigation and defense of any action, an Indemnified Releasee
will have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
will be at the expense of the Indemnified Releasee unless: (i) such counsel has
been authorized by the relevant Party(ies); (ii) the relevant Party(ies) has not
assumed the defense of the action within a reasonable period of time after
receiving notice of the action; (iii) the named parties to any such action
include the relevant Party(ies) hereto and the Indemnified Releasee shall have
been advised by counsel that there may be a conflict of interest between the
relevant Party(ies) and the Indemnified Releasee; or (iv) there are one or more
legal defenses available to the Indemnified Releasee which are different from or
in addition to those available to the relevant Party(ies) hereto. If for any
reason other than the gross negligence or bad faith of the Indemnified Releasee
being the primary cause of the loss claim, damage, liability, cost or expense,
the foregoing Indemnification is unavailable to the Indemnified Releasee or
insufficient to hold them harmless, the relevant Party(ies) shall contribute to
the amount paid or payable by the Indemnified Releasee as a result of any and
all such losses, claim, damages or liabilities in such proportion as is
appropriate to reflect not only the relative benefits received by the relevant
Party(ies) on the one hand and the Indemnified Releasee on the other, but also
the relative fault of the relevant Party(ies) and the Indemnified Releasee and
other equitable considerations which may be relevant. Notwithstanding the
foregoing, the relevant Party(ies) shall in any event contribute to the amount
paid or payable by the Indemnified Releasee, as a result of the loss, claim,
damage, liability, cost or expense (other than a loss, claim, damage, liability,
cost or expenses, the primary cause of which is the gross negligence or bad
faith of the Indemnified Releasee), any excess of such amount over the amount of
the fees actually received by the Indemnified Releasee hereunder.

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2.8                  Other securities. If and to the extent that the Vendor or
any other party related, associated or affiliated with the Vendor has any
absolute, contingent, optional, pre-emptive or other right to acquire any
securities in the capital of the Company, it is hereby acknowledged and agreed
by the Vendor that such party shall be conclusively deemed, as and from the
Closing, to have transferred the same to the Purchaser to the fullest extent
permitted by law, and to otherwise hold the same in trust for and at the
discretion of the Purchaser.

2.9                  Costs. It is hereby acknowledged and agreed by the Parties
hereto that while any portion of any Company's Indebtedness is outstanding
hereunder, and should this Agreement have terminated due solely to either the
substantive breach, default or failure to perform thereunder by either of the
Purchaser or the Company, the Company will remain responsible for all fees and
expenses and including, without limitation, all legal, accounting, sponsorship,
regulatory and filing fees and expenses, and otherwise, in connection with the
preparation and execution of this Agreement, all corporate and statutory
materials in conjunction with this Agreement, all filings with any Regulatory
Authority as may have jurisdiction over either the Company or the Vendor in
conjunction with the completion of this Agreement and all documentation
necessarily incidental thereto; and which fees and expenses shall be added to
and form part of the Company's Indebtedness hereunder.

2.10                Standstill provisions. In consideration of the Parties'
within agreement to purchase and sell the Purchased Shares and to enter into the
terms and conditions of this Agreement, each of the Parties hereby undertake for
themselves, and for each of their respective agents and advisors, that they will
not until the earlier of the Closing Date or the termination of this Agreement
approach or consider any other potential purchasers, or make, invite, entertain
or accept any offer or proposal for the proposed sale of any interest in and to
any of the Purchased Shares or the assets or the respective business interests
of the Company or the Purchaser, as the case may be, or, for that matter,
disclose any of the terms of this Agreement, without each Party's prior written
consent. In this regard each of the Parties hereby acknowledges that the
foregoing restrictions are important to the respective businesses of the Parties
and that a breach by any of the Parties of any of the covenants herein contained
would result in irreparable harm and significant damage to each affected Party
that would not be adequately compensated for by monetary award. Accordingly, the
Parties hereby agree that, in the event of any such breach, in addition to being
entitled as a matter of right to apply to a Court of competent equitable
jurisdiction for relief by way of restraining order, injunction, decree or
otherwise as may be appropriate to ensure compliance with the provisions hereof,
any such Party will also be liable to the other Parties, as liquidated damages,
for an amount equal to the amount received and earned by such Party as a result
of and with respect to any such breach. The Parties hereby also acknowledge and
agree that if any of the aforesaid restrictions, activities, obligations or
periods are considered by a Court of competent jurisdiction as being
unreasonable, they agree that said Court shall have authority to limit such
restrictions, activities or periods as the Court deems proper in the
circumstances.

 

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Article 3
REPRESENTATIONS, WARRANTIES AND COVENANTS
BY THE COMPANY AND THE VENDOR

3.1                  Representations, warranties and covenants by the Company
and the Vendor. In order to induce each of the Purchaser and Dr. Shimon to enter
into and consummate this Agreement, each of the Vendor and the Company; and the
Vendor only to the extent of its actual knowledge and information; hereby
represents to, warrants to and covenants with each of the Purchaser and Dr.
Shimon, with the intent that each of the Purchaser and Dr. Shimon will rely
thereon in entering into this Agreement and in concluding the transactions
contemplated herein, that, to the best of the knowledge, information and belief
of each of the Company and the Vendor, after having made due inquiry (and for
the purposes of the following representations, warranties and covenants,
"Company" shall mean the Company and SMT as the context so requires):

(a)        the Company is duly incorporated under the laws of its jurisdiction
of incorporation, is validly existing and is in good standing with respect to
all statutory filings required by the applicable corporate laws except where the
failure to be so qualified would not reasonably be expected to result in a
Company Material Adverse Effect (as hereinafter defined), and each of the
Company and, where applicable, the Vendor, has the requisite power, authority
and capacity to own and use all of their respective business assets and to carry
on the Company's Business as presently conducted by them;

(b)        the Company owns and possess and has good and marketable title to and
possession of all of its Company's Assets and business assets free and clear of
all liens, charges, options, encumbrances, voting agreements, voting trusts,
demands, limitations and restrictions of any nature whatsoever (collectively,
the "Liens");

(c)        the Company holds all material licenses and permits required for the
conduct in the ordinary course of its operations of the Company's Business and
for the uses to which its Company's Assets have been put in each case except
where the failure to hold all such licenses and permits would not reasonably be
expected to result in a Company Material Adverse Effect (as hereinafter defined)
and are in good standing, and such conduct and uses are in compliance in all
material respects with all material laws, zoning and other by-laws, building and
other restrictions, rules, regulations and ordinances applicable to the Company
and to its business assets, and neither the execution and delivery of this
Agreement nor the completion of the transactions contemplated hereby will give
any person the right to terminate or cancel any said license or permit or affect
such compliance;

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(d)        all of the issued and outstanding shares of capital stock of the
Company are and will be fully paid and non-assessable as at Closing, and all of
the outstanding shares of capital stock or other equity interests of the Vendor
are duly authorized, validly issued, fully paid and non-assessable. In addition:
(i) all of the issued and outstanding shares of capital stock or other equity
interests of the Company are free and clear of all Liens; (ii) there are no
outstanding securities convertible into or exchangeable for capital stock or
other equity interests of the Company; (iii) there are no outstanding or
authorized options, preferred stock, restricted stock, warrants, calls, rights
(preemptive or otherwise), subscriptions, rights of first refusal or first
offer, or other rights, benefit plan, agreements, arrangements or commitments of
any character, obligating the Company to issue, transfer or sell or cause to be
issued, transferred or sold any shares of its capital stock or other equity
interest (other than to the Purchaser pursuant to this Agreement); (iv) there
are no outstanding or authorized stock appreciation, phantom stock or similar
rights with respect to the Company; (v) no shares of capital stock or other
equity interests of the Company are reserved for issuance or are held as
treasury shares; (vi) there are no contracts, understandings or restrictions
relating to the capital stock or other equity interest of the Company, whether
or not outstanding; (vii) there are no contracts affecting or relating to the
voting, issuance, purchase, redemption, registration, repurchase or transfer of
any of the capital stock or other equity interests of the Company, or securities
or obligations of any kind convertible into any shares of the capital stock or
other equity interests of the Company; and (viii) none of the issued and
outstanding capital stock or other equity interests of the Company were issued
in violation of any preemptive rights or rights of first refusal or first offer;

(e)        there will be no shares in the capital of the Company issued or
allotted or agreed to be issued or allotted to any persons or entities other
than the Vendor herein at Closing;

(f)        the Vendor has good and marketable title to and is the legal,
registered and beneficial owner of all of the Purchased Shares;

(g)        the Purchased Shares are validly issued and outstanding and fully
paid and non-assessable and are free and clear of actual liens, charges,
options, encumbrances, voting agreements, voting trusts, demands, limitations
and restrictions of any nature;

(h)        there are no actions, suits, proceedings or investigations (whether
or not purportedly against or on behalf of the Company or the Vendor), pending
or threatened, which may affect, without limitation, the right of the Vendor to
transfer any of the Purchased Shares to the Purchaser at law or in equity, or
before or by any federal, state, provincial, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, and, without limiting the generality of the foregoing, there are no
claims or potential claims under any relevant family relations legislation or
other equivalent legislation affecting the Purchased Shares. In addition, the
Vendor and the Company are not now aware of any existing ground on which any
such action, suit or proceeding might be commenced with any reasonable
likelihood of success;

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(i)        the Vendor has the power, capacity and authority to own and dispose
of the Purchased Shares;

(j)        this Agreement constitutes a legal, valid and binding obligation of
each of the Company and the Vendor, enforceable against each of the Company and
the Vendor in accordance with its respective terms, except: (i) as enforcement
may be limited by laws of general application affecting the rights of creditors;
and (ii) the availability of the remedy of specific performance or injunctive or
other forms of equitable relief may be subject to equitable defenses and would
be subject to the discretion of the court before which any such proceeding may
be brought;

(k)        as of the date hereof the Company has not committed itself to provide
any person, firm or corporation with any agreement, option or right, consensual
or arising by law, present or future, contingent or absolute, or capable of
becoming an agreement, option or right:

(i)        to require it to issue any further or other shares in its share
capital, or any other security convertible or exchangeable into shares in its
share capital, or to convert or exchange any securities into or for shares in
its share capital;

(ii)       for the issue and allotment of any of the authorized but unissued
shares in its share capital;

(iii)      to require it to purchase, redeem or otherwise acquire any of the
issued and outstanding shares in its share capital; or

(iv)       to purchase or otherwise acquire any shares in its share capital;

(l)        no other person, firm or corporation has any agreement, option or
right capable of becoming an agreement for the purchase of any of the Purchased
Shares;

(m)        except as will be provided for in the Company's consolidated
financial statements for its most recently completed financial period to be
provided prior to Closing (the "Company's Financial Statements"), there are no
material liabilities, contingent or otherwise, existing on the date hereof in
respect of which the Company may be liable on or after the completion of the
transactions contemplated by this Agreement which would be required to be
reflected on a balance sheet prepared in accordance with United States generally
accepted accounting principles ("GAAP") other than:

(i)        liabilities disclosed or referred to in this Agreement; and

(ii)       liabilities incurred in the ordinary course of the Company's
Business, none of which are materially adverse to the business, operations,
affairs or financial condition of the Company;

(n)        no dividend or other distribution by the Company will be declared,
paid or authorized up to and including the Closing Date, and the Company has not
and has not committed itself to confer upon, or pay to or to the benefit of, any
entity, any benefit having monetary value, any bonus or any salary increases
except in the normal course of its business;

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(o)        there is no basis for and there are no actions, suits, judgments,
investigations or proceedings outstanding or pending or, to the best of the
knowledge, information and belief of each of the Company and the Vendor,
threatened in writing against or affecting the Company at law or in equity or
before or by any federal, state, municipal or other governmental department,
commission, board, bureau or agency which if determined adversely would be
likely to have a Company Material Adverse Effect (as hereinafter defined);

(p)        the Company is in material compliance with all laws, ordinances,
statutes, regulations, by-laws, orders or decrees to which it is subject or
which apply to it, except where the failure to be in such compliance would not
reasonably be likely to have a Company Material Adverse Effect (as hereinafter
defined);

(q)        the Company has not experienced, nor is the Company or the Vendor
aware of, any occurrence or event which has had, or might reasonably be expected
to have, a Company Material Adverse Effect (as hereinafter defined);

(r)        the Company is not, nor until or at the Closing Date will it be, in
breach of any provision or condition of, nor has it done or omitted anything
that, with or without the giving of notice or lapse or both, would constitute a
breach of any provision or condition of, or give rise to any right to terminate
or cancel or accelerate the maturity of any payment under, any deed of trust,
contract, certificate, consent, permit, license or other instrument to which it
is a party, by which it is bound or from which it derives benefit, any judgment,
decree, order, rule or regulation of any court or governmental authority to
which it is subject, or any statute or regulation applicable to it, to an extent
that it would be expected to result in a Company Material Adverse Effect (as
hereinafter defined);

(s)        the Company has not committed to making and until the Closing Date
will not make or commit itself to:

(i)        guarantee, or agree to guarantee, any indebtedness or other
obligation of any person or corporation; or

(ii)       waive or surrender any right of material value;

(t)        until the Closing Date the Company will:

(i)        maintain its assets in a manner consistent with and in compliance in
all material respects with applicable law; and

(ii)       not enter into any material transaction or assume or incur any
material liability outside the normal course of its business without the prior
written consent of the Purchaser;

(u)        the Company has, and shall have until repayment in full of the
Company's Indebtedness, all requisite power and authority to grant and enter
into any Security for the Company's Indebtedness documentation, and any such
Security for the Company's Indebtedness security and supporting documents have
been and will be duly and validly authorized, executed and delivered by the
Company to the Vendor and are valid obligations of and legally binding on the
Company enforceable in accordance with each of their respective terms;

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(v)        to the knowledge, information and belief of each of the Company and
the Vendor, the execution of this Agreement, the completion of the transactions
contemplated hereby and the performance of and compliance with the terms hereof
does not and will not:

(i)        conflict with or result in a breach of or violate any of the terms,
conditions or provisions of the certificate of incorporation, bylaws or similar
organizational documents of either of the Company or the Vendor;

(ii)       conflict with or result in a breach of or violate any of the terms,
conditions or provisions of any law, judgment, order, injunction, decree,
regulation or ruling of any court or governmental authority, domestic or
foreign, to which either of the Company or the Vendor is subject, or constitute
or result in a default under any agreement, contract or commitment to which
either of the Company or the Vendor is a party;

(iii)      give to any party the right of termination, cancellation or
acceleration in or with respect to any material agreement, contract or
commitment to which either of the Company or the Vendor is a party;

(iv)       give to any government or governmental authority, or any municipality
or any subdivision thereof, including any governmental department, commission,
bureau, board or administration agency, any right of termination, cancellation
or suspension of, or constitute a breach of or result in a default under, any
permit, license, control or authority issued to either of the Company or the
Vendor which is necessary in connection with the conduct and operations of the
Company's Business and the ownership or leasing of its business assets; or

(v)        constitute a default by either of the Company or the Vendor, or any
event which, with the giving of notice or lapse of time or both, might
constitute an event of default, under any agreement, contract, indenture or
other instrument relating to any indebtedness of the Company or the Vendor which
would give any party to that agreement, contract, indenture or other instrument
the right to accelerate the maturity for the payment of any amount payable under
that agreement, contract, indenture or other instrument;

(w)        no proceedings are pending for, and the Company and Vendor are
unaware of, any basis for the institution of any proceedings leading to their
respective dissolution or winding up, or the placing of the Company or the
Vendor in bankruptcy or subject to any other laws governing the affairs of
insolvent companies or persons;

(x)        the trademarks, trade names, business names, patents, inventions,
know-how, copyrights, software, source code, object code, service marks, brand
names, industrial designs and all other industrial or intellectual property
owned or used by the Company in carrying on the Company's Business and all
applications therefore and all goodwill connected therewith and including,
without limitation, all licences, registered user agreements and all like rights
used by or granted to the Company in connection with the Company's Business and
all right to register or otherwise apply for the protection of any of the
foregoing (collectively, the "Intellectual Property") included in Schedule "C"
to this Agreement constitute all of the Intellectual Property of the Company;

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(y)        the Intellectual Property comprises all trade marks, trade names,
business names, patents, inventions, know-how, copyrights, software, source
code, object code, service marks, brand marks, industrial designs and all other
industrial or intellectual property necessary to conduct the Company's Business;

(z)        the Company is the beneficial owners of the Intellectual Property
free and clear of all liens, charges or encumbrances of any kind whatsoever, and
the Company is not party to or bound by any agreement or other obligation of any
kind whatsoever that limits or impairs their ability to sell, transfer, assign
or convey, or that otherwise affects, the Intellectual Property;

(aa)      other than for SMT, no person has been granted any interest in or
right to use all or any portion of the Intellectual Property and they are not
aware of a claim of any infringement or breach of any industrial or intellectual
property rights of any other person by the Company, nor has the Company received
any notice that the conduct of the Company's Business, including the use of the
Intellectual Property, infringes upon or breaches any industrial or intellectual
property rights of any other person, and they, after due inquiry, do not have
any knowledge of any infringement or violation of any of the rights of the
Company in the Intellectual Property;

(ab)      the conduct of the Company's Business does not infringe upon the
patents, trade marks, licences, trade names, business names, copyright or other
industrial or intellectual property rights, domestic or foreign, of any other
person and they are not aware of any state of facts that casts doubt on the
validity or enforceability of any of the Intellectual Property;

(ac)      the Company does not have and does not use any service mark, tradename
or trademark except as disclosed as part of the Company's Intellectual Property;

(ad)      the Company has good and marketable title to all of its Company's
Intellectual Property, Company's Business, Company's Assets, properties and
interests in properties, real and personal, including those reflected in the
Company's Financial Statements or which have been acquired since the date of the
latest Company's Financial Statements (except for those which have been
transferred, sold or otherwise disposed of in the ordinary or normal course of
business), free and clear of all encumbrances, and none of the Company's
properties or the Company's Assets is in the possession of or under the control
of any other person;

(ae)      except for the real property leases and the contracts of employment
which are set forth in Schedules "D" and "E", respectively, which are attached
hereto and which form a material part hereof, the Company is not party to or
bound by any other material contract, whether oral or written, other than the
contracts and agreements as set forth in Schedule "F" which is attached hereto
and which forms a material part hereof;

(af)      as to the contracts listed in Schedule "F" which is attached hereto:

(i)        each such contract is in full force and effect and unamended;

(ii)       no material default exists in respect thereof on the part of either
the Company or any other party thereto; provide, however, that SMT may be
exposed to the demands from certain employees and/or creditors who may raise
claims relating to their salaries and/or social benefits and other sums owed to
them by SMT;

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(iii)      each such contract does not involve the Vendor or any non-arm's
length party except where described; and

(iv)       neither the Vendor nor the Company is aware of any intention on the
part of any other party thereto to terminate or materially alter any such
contract;

(ag)      the Company has no consulting or employment agreements, whether
written or otherwise, except for those which are set forth in Schedule "F" which
is attached hereto;

(ah)      Schedule "G" which is attached hereto and which forms a material part
hereof is a true and complete list showing the name of each bank, trust company
or similar institution in which the Company has accounts or safety deposit
boxes, the identification numbers of each such account or safe deposit box, the
names of all persons authorized to draw therefrom or to have access thereto and
the number of signatories required on each account. In addition, Schedule "G"
also includes a list of all non-bank account numbers, codes and business numbers
used by the Company for the purposes of remitting tax, dues, assessments and
other fees;

(ai)      the most recently completed and consolidated Company's Financial
Statements are true and correct in every respect and present fairly the
financial position of the Company as at its most recently completed financial
period and the results of its operations for the period then ended in accordance
with GAAP on a basis consistently applied; a copy of said Company's Financial
Statements being attached hereto as Schedule "B";

(aj)      the Company's Financial Statements and the books and records of the
Company are true and correct in every material respect, were prepared in
accordance with GAAP and fairly reflect the Company's Business, property, the
Company's Assets and the financial position of the Company as at the date of the
Company's Financial Statements and any such books and records and the results of
the operations for the period then ended, and there have been no adverse changes
in the Company's Business or affairs of the Company since the date of the
Company's Financial Statements and any such books and records;

(ak)      since the date of the Company's Financial Statements:

(i)        there has not been any material adverse change in the financial
position or condition of the Company or any damage, loss or other change in
circumstances materially affecting the Company's Business or properties or the
Company's right or capacity to carry on business, other than the shortage of
working capital experienced by SMT which if continued shall expose SMT to claims
by creditors, including its employees, consultants, suppliers and others, and
which may result in SMT being put under receivership or liquidation procedures;

(ii)       the Company has not waived or surrendered any right of material
value;

(iii)      the Company has not discharged or satisfied or paid any lien or
encumbrance or obligation or liability other than current liabilities in the
ordinary course of business; and

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(iv)       the Company's Business has been carried on in the ordinary course;

(al)      there are no liabilities, contingent or otherwise, of the Company not
disclosed or reflected in the Company's Financial Statements except those
incurred in the ordinary course of business of the Company;

(am)      save and except as set forth in the Company's Financial Statements, no
payments of any kind have been made or authorized by or on behalf of the Company
to or on behalf of any directors, officers, shareholders or employees of the
Company or under any management agreements with the Company other than in the
ordinary course of business;

(an)      the Vendor and the Company have not retained, employed or introduced
any broker, finder or other person who would be entitled to a brokerage
commission or finder's fee arising out of the transactions contemplated hereby;

(ao)      save and except for those matters which are listed in Schedule "F"
which is attached hereto, the Company does not have any contracts, agreements,
undertakings or arrangements, whether oral, written or implied, with employees,
lessees, licensees, managers, accountants, suppliers, agents, distributors,
directors, officers, lawyers or others which cannot be terminated, without
penalty, on no more than 12 month's notice;

(ap)      save and except as set forth in the Company's Financial Statements,
and save and except for certain personal guarantees which have been provided by
Dr. Shimon for certain loans which have been received by SMT, neither the
Vendor, nor any directors, officers or employees of the Company, are now
indebted or under obligation to the Company on any account whatsoever other than
in the ordinary course of business;

(aq)      all material transactions of the Company and including, without
limitation, all directors' and shareholders' resolutions, have been promptly and
properly recorded or filed in or with its books and records;

(ar)      the Vendor and the Company have the full authority and capacity
required to enter into this Agreement and to perform their respective
obligations hereunder;

(as)      prior to Closing the Company will have obtained all authorizations and
approvals or waivers that may be necessary or desirable in connection with the
transactions contemplated in this Agreement, and other actions by, and have made
all filings with, any and all Regulatory Authorities, if applicable, from whom
any such authorization, approval or other action is required to be obtained or
to be made in connection with the transactions contemplated herein, and all such
authorizations, approvals and other actions will be in full force and effect,
and all such filings will have been accepted by the Company which will be in
compliance with, and have not committed any breach of, any securities laws,
regulations or policies of any Regulatory Authority to which the Company may be
subject;

(at)      each of the attached Schedules contains all material information for
each particular Schedule listed therein and there are no omissions of material
information by the Company;

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(au)      the Company will, for a period of at least five business days prior to
the Closing Date, during normal business hours:

(i)        make available for inspection by the counsel, auditors and
representatives of the Purchaser, at such location as is appropriate, all of the
Company's books, records, contracts, documents, correspondence and other written
materials, and afford such persons every reasonable opportunity to make copies
thereof and take extracts therefrom at the sole cost of the Purchaser; provided
such persons do not unduly interfere in the operations of the Company;

(ii)       authorize and permit such persons at the risk and the sole cost of
the Purchaser, and only if such persons do not unduly interfere in the
operations of the Company, to attend at all of its respective places of business
and operations to observe the conduct of its business and operations, inspect
its properties and assets and make physical counts of its inventories, shipments
and deliveries; and

(iii)      require the Company's management personnel to respond to all
reasonable inquiries concerning the Company's Business and assets or the conduct
of its business relating to its liabilities and obligations;

(av)      the Vendor and the Company will give to the Purchaser, within at least
five business days prior to the Closing Date, by written notice, particulars of:

(i)        each occurrence within the Vendor's and the Company's knowledge after
the Execution Date of this Agreement that, if it had occurred before the
Execution Date, would have been contrary to any of the Vendor's or the Company's
respective representations or warranties contained herein; and

(ii)       each occurrence or omission within the Vendor's and the Company's
knowledge after the Execution Date that constitutes a breach of any of the
Vendor's or the Company's respective covenants contained in this Agreement;

(aw)      all registration statements, reports and proxy statements filed by the
Vendor with the SEC, and all registration statements, reports and proxy
statements required to be filed by the Vendor with the SEC, will have been filed
by the Vendor under the Exchange Act, will have been filed in all material
respects in accordance with the requirements of the Exchange Act and the rules
and regulations thereunder and no such registration statements, reports or proxy
statements will have contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading;

(ax)      except for the representations and warranties contained in this
Agreement, neither the Vendor nor the Company make any express or implied
representation or warranty, and the Vendor and the Company hereby disclaim any
such representation or warranty with respect to the execution and delivery of
this Agreement and the consummation of the transactions contemplated by this
Agreement;

(ay)      neither this Agreement nor any other document, certificate or
statement furnished to the Purchaser by or on behalf of the Vendor or the
Company in connection with the transactions contemplated hereby knowingly or
negligently contains any untrue or incomplete statement of material fact or
omits to state a material fact necessary in order to make the statements therein
not misleading which would likely affect the decision of the Purchaser to enter
into this Agreement; and

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(az)      the Vendor and the Company are not aware of any fact or circumstance
which has not been disclosed to the Purchaser which should be disclosed in order
to prevent the representations and warranties contained in this section from
being misleading or which would likely affect the decision of the Purchaser to
enter into this Agreement.

3.2                  Continuity of the representations, warranties and covenants
by each of the Company and the Vendor. The representations, warranties and
covenants by each of the Vendor and the Company contained in this Article, or in
any certificates or documents delivered pursuant to the provisions of this
Agreement or in connection with the transactions contemplated hereby, will be
true at and as of the Closing Date as though such representations, warranties
and covenants were made at and as of such time. Notwithstanding any
investigations or inquiries made by the Purchaser or by the Purchaser's
professional advisors prior to the Closing Date, or the waiver of any condition
by the Purchaser, the representations, warranties and covenants of each of the
Vendor and the Company contained in this Article shall survive the Closing Date
and shall continue in full force and effect for a period of one calendar year
from the Closing Date; provided, however, that the Vendor and the Company shall
not be responsible for the breach of any representation, warranty or covenant of
either of the Vendor or the Company contained herein caused by any act or
omission of the Purchaser prior to the Effective Date hereof of which the Vendor
or the Company were unaware or as a result of any action taken by the Purchaser
after the Execution Date. In the event that any of the said representations,
warranties or covenants are found by a court of competent jurisdiction to be
incorrect and such incorrectness results in any loss or damage sustained
directly or indirectly by the Purchaser, then the Vendor and/or the Company, as
the case may be, will, in accordance with the provisions of section "2.7"
hereinbelow, pay the amount of such loss or damage to the Purchaser within 30
calendar days of receiving notice of judgment therefore; provided that the
Purchaser will not be entitled to make any claim unless the loss or damage
suffered may exceed the amount of U.S. $1,000.00.

 

Article 4
REPRESENTATIONS, WARRANTIES AND COVENANTS
BY THE PURCHASER AND DR. SHIMON

4.1                  Representations, warranties and covenants by the Purchaser
and Dr. Shimon. In order to induce each of the Company and the Vendor to enter
into this Agreement and to consummate the transactions hereby, each of the
Purchaser and Dr. Shimon hereby represents to, warrants to and covenants with
each of the Company and the Vendor, with the intent that each of the Company and
the Vendor will rely thereon in entering into this Agreement and in concluding
the transactions contemplated herein, that, to the best of the knowledge,
information and belief of each of the Purchaser and Dr. Shimon, after having
made due inquiry (and for the purposes of the following representations,
warranties and covenants, "Purchaser" shall mean the Purchaser, any subsidiary
of the Purchaser and/or Dr. Shimon as the context so requires):

(a)        each of the Purchaser and Dr. Shimon hereby expressly repeats to each
of the Company and the Vendor; and acknowledges and understands that, due to Dr.
Shimon's actual knowledge as the mind and management of SMT since inception,
each of the Company and the Vendor will be relying on the same as an inducement
to enter into this Agreement for which each of the Purchaser and Dr. Shimon
hereby agrees to indemnify and save harmless the other Parties hereto; each of
the representations, warranties and covenants of the Company and the Vendor
contained in section "3.1" hereinabove with respect to the Company and in
particular, without limitation, each of the representations, warranties and
covenants contained in paragraphs "3.1(a)" through "3.1(as)" hereinabove as
though the Purchaser's and Dr. Shimon's representation, warranty and/or covenant
for each was substituted for the Company's and the Vendor's therein;

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(b)        the Purchaser is duly incorporated under the laws of its jurisdiction
of incorporation, is validly existing and is in good standing with respect to
all statutory filings required by the applicable corporate laws;

(c)        the Purchaser has the requisite power, authority and capacity to own
and use all of its business and personal assets and to carry on its business as
presently conducted by it;

(d)        the Purchaser owns and possesses and has good and marketable title to
and possession of all of its business and personal assets free and clear of all
actual or threatened Liens;

(e)        the Purchaser holds all licenses and permits required for the conduct
in the ordinary course of the operations of its business and for the uses to
which its business assets have been put and are in good standing, and such
conduct and uses are in compliance in all material respects with all laws,
zoning and other by-laws, building and other restrictions, rules, regulations
and ordinances applicable to the Purchaser, and neither the execution and
delivery of this Agreement nor the completion of the transactions contemplated
hereby will give any person the right to terminate or cancel any said license or
permit or affect such compliance;

(f)        this Agreement constitutes a legal, valid and binding obligation of
each of the Purchaser and Dr. Shimon, enforceable against each of the Purchaser
and Dr. Shimon in accordance with its respective terms, except: (i) as
enforcement may be limited by laws of general application affecting the rights
of creditors; and (ii) the availability of the remedy of specific performance or
injunctive or other forms of equitable relief may be subject to equitable
defenses and would be subject to the discretion of the court before which any
such proceeding may be brought;

(g)        there are no material liabilities, contingent or otherwise, in
respect of which the Purchaser may be liable on or after the completion of the
transactions contemplated hereby other than liabilities incurred in the ordinary
course of business, none of which are materially adverse to the business,
operations, affairs or financial conditions of the Purchaser or the Company's
Business;

(h)        there are no basis for and there are no actions, suits, judgments,
investigations or proceedings outstanding or pending or, to the best of the
knowledge, information and belief of each of the Purchaser and Dr. Shimon,
threatened against or affecting the Purchaser or Dr. Shimon at law or in equity
or before or by any federal, state, municipal or other governmental department,
commission, board, bureau or agency;

(i)        each of the Purchaser and Dr. Shimon is not in breach of any laws,
ordinances, statutes, regulations, by-laws, orders or decrees to which it is
subject or which apply to it;

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(j)        each of the Purchaser and Dr. Shimon will have not experienced, nor
will the Purchaser or Dr. Shimon be aware of, any occurrence or event which has
had, or might reasonably be expected to have, a materially adverse affect on the
Purchaser's business, the Company's Business or on the results of their
respective operations;

(k)        no proceedings are pending for, and the Purchaser and Dr. Shimon are
unaware of, any basis for the institution of any proceedings leading to the
Purchaser's dissolution or winding up, or the placing of the Purchaser or Dr.
Shimon in bankruptcy or subject to any other laws governing the affairs of
insolvent companies or persons;

(l)        the conduct of the Purchaser's and Dr. Shimon's business does not
infringe upon the patents, trade marks, licences, trade names, business names,
copyright or other industrial or intellectual property rights, domestic or
foreign, of any other person and they are not aware of any state of facts that
casts doubt on the validity or enforceability of any of the Company's
Intellectual Property;

(m)        the Purchaser and Dr. Shimon have not retained, employed or
introduced any broker, finder or other person who would be entitled to a
brokerage commission or finder's fee arising out of the transactions
contemplated hereby;

(n)        up to and including the Closing Date there has been and will be
prepared and filed on a timely basis all federal and provincial income tax
returns, elections and designations, and all other governmental returns, notices
and reports of which the Purchaser had or ought reasonably to have had
knowledge, required to be or reasonably capable of being filed up to the Closing
Date, with respect to the Purchaser, and no such returns, elections,
designations, notices or reports contain any material misstatement or omit any
material statement that should have been included, and each such return,
election, designation, notice or report, including accompanying schedules and
statements, is true, correct and complete in all material respects;

(o)        adequate provision has been made and will be made for taxes payable
by the Purchaser for the current period for which a tax return is not yet
required to be filed and, to the best of the knowledge, information and belief
of the Purchaser, after having made due inquiry, there are no contingent tax
liabilities of the Purchaser or any grounds which would prompt a re-assessment
of the Purchaser and including, without limiting the generality of the
foregoing, the aggressive treatment of income and expenses in the filing of
earlier tax returns by the Purchaser;

(p)        the Purchaser is not, nor until or at the Closing Date will it be, in
breach of any provision or condition of, nor has it done or omitted anything
that, with or without the giving of notice or lapse or both, would constitute a
breach of any provision or condition of, or give rise to any right to terminate
or cancel or accelerate the maturity of any payment under, any deed of trust,
contract, certificate, consent, permit, license or other instrument to which it
is a party, by which it is bound or from which it derives benefit, any judgment,
decree, order, rule or regulation of any court or governmental authority to
which it is subject, or any statute or regulation applicable to it, to an extent
that, in the aggregate, has a material adverse affect on it or on the Company's
Business;

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(q)        the Purchaser is purchasing the Purchased Shares for investment for
its own account and not with a view to, or for sale in connection with, any
distribution thereof. The Purchaser is an "accredited investor", as that term is
used in the Securities Act, and has sufficient knowledge and experience in
financial and business matters so as to be capable of evaluating the merits and
risks of its investment in the Purchased Shares and is capable of bearing the
economic risks of such investment. The Purchaser has adequate means of providing
for its current needs and possible contingencies, and has no need for liquidity
in the Purchased Shares, and understands that the Purchased Shares have not
been, and will not be, registered under the Securities Act, or any state
securities laws, in reliance on exemptions from registration thereunder for
private offerings;

(r)        the Purchaser has conducted, to its satisfaction, an independent
investigation and verification of the financial condition, results of
operations, assets, liabilities, properties and projected operations of the
Company and, in making its determination to proceed with the transactions
contemplated by this Agreement, the Purchaser has relied on the results of its
own independent investigation and verification and the representations and
warranties of the Company and the Vendor expressly and specifically set forth in
this Agreement. Such representations and warranties by the Company and the
Vendor constitute the sole and exclusive representations and warranties of the
Company and the Vendor to the Purchaser in connection with the transactions
contemplated hereby, and the Purchaser understands, acknowledges and agrees that
all other representations and warranties of any kind or nature expressed or
implied (including any relating to the future or historical financial condition,
results of operations, assets or liabilities of the Company or the quality,
quantity or condition of the assets of the Company) are specifically disclaimed
by the Company and the Vendor. The Company and the Vendor do not make or
provide, and the Purchaser hereby waives, any warranty or representation,
express or implied, as to the quality, merchantability, fitness for a particular
purpose, conformity to samples, or condition of the Company's Assets, Business
or any part thereto. In this respect the Purchaser hereby confirms that it has
waived making a due diligence examination of the Company based on the fact that
the Company's Financial Statements were prepared with the participation of Dr.
Shimon, and were duly filed by Vendor, with the regulatory authorities as
consolidated financial statements together with those of the Vendor, the
Company's parent company, and thus Purchaser considers the Company's Financial
Statements to accurately reflect the status of the Company;

(s)        in connection with the Purchaser's investigation of the Company, the
Purchaser may have received from or on behalf of the Company certain
projections. The Purchaser acknowledges that there are uncertainties inherent in
attempting to make such estimates, projections and other forecasts and plans,
that the Purchaser is familiar with such uncertainties, that the Purchaser is
taking full responsibility for making its own evaluation of the adequacy and
accuracy of all estimates, projections and other forecasts and plans so
furnished to it (including the reasonableness of the assumptions underlying such
estimates, projections and forecasts), and that the Purchaser shall have no
claim against the Vendor with respect thereto. Accordingly, neither the Company
nor the Vendor make any representations or warranties whatsoever with respect to
such estimates, projections and other forecasts and plans (including the
reasonableness of the assumptions underlying such estimates, projections and
forecasts). The Purchaser agrees that neither the Vendor nor any other person
will have or be subject to any liability to the Purchaser or any other person
resulting from the distribution to the Purchaser, or the Purchaser's use of, any
information regarding the Company or its business, and any information, document
or material made available to the Purchaser or its affiliates in any data rooms,
management presentations or any other form in expectation of the transactions
contemplated by this Agreement;

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(t)        the Purchaser holds or has applied for all permits, licenses,
consents and authorities issuable by any federal, state, regional or municipal
government or agency thereof which are necessary or desirable in connection with
its operations and the operations of the Company;

(u)        the Purchaser maintains, and has maintained, insurance in force
against loss on the Purchaser's assets and properties, against such risks, in
such amounts and to such limits, as is in accordance with prudent business
practices prevailing in its line of business and having regard to the location,
age and character of its assets and properties, and has complied fully with all
requirements of such insurance, including the prompt giving of any notice of any
claim or possible claim thereunder, and all such insurance has been and is with
insurers which the Purchaser believes to be responsible;

(v)        prior to the Closing Date the Purchaser will have obtained all
authorizations, approvals, or waivers that may be necessary or desirable in
connection with the transactions contemplated in this Agreement, and other
actions by, and have made all filings with, any and all Regulatory Authorities
required to be made in connection with the transactions contemplated herein, and
all such authorizations, approvals and other actions will be in full force and
effect, and all such filings will have been accepted by the Purchaser, which
will be in compliance with, and have not committed any breach of, any securities
laws, regulations or policies of any Regulatory Authority to which the Purchaser
may be subject;

(w)        the Purchaser will, for a period of at least five business days prior
to the Closing Date, during normal business hours:

(i)        make available for inspection by the counsel, auditors and
representatives of the Vendor, at such location as is appropriate, all of the
Purchaser's and the Company's books, records, contracts, documents,
correspondence and other written materials, and afford such persons every
reasonable opportunity to make copies thereof and take extracts therefrom at the
sole cost of the Vendor; provided such persons do not unduly interfere in the
operations of the Purchaser and the Company; and

(ii)       authorize and permit such persons at the risk and the sole cost of
the Vendor, and only if such persons do not unduly interfere in the operations
of the Purchaser and the Company, to attend at all of its respective places of
business and operations to observe the conduct of its business and operations,
inspect its properties and assets and make physical counts of its inventories,
shipments and deliveries;

(x)        each of the Purchaser and Dr. Shimon will give to the Company and the
Vendor, within at least five business days prior to the Closing Date, by written
notice, particulars of:

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(i)        each occurrence within the Purchaser's or Dr. Shimon's knowledge
after the Execution Date of this Agreement that, if it had occurred before the
Execution Date, would have been contrary to any of the Purchaser's or Dr.
Shimon's representations or warranties contained herein; and

(ii)       each occurrence or omission within the Purchaser's or Dr. Shimon's
knowledge after the Execution Date that constitutes a breach of any of the
Purchaser's or Dr. Shimon's covenants contained in this Agreement;

(y)        the execution and delivery of this Agreement and the performance of
and compliance with the terms thereof will not:

(i)        conflict with or result in a breach of or violate any of the terms,
conditions or provisions of any law, judgment, order, injunction, decree,
regulation or ruling of any court or governmental authority, domestic or
foreign, to which the Purchaser is subject, or constitute or result in a default
under any agreement, contract or commitment to which the Purchaser is a party;

(ii)       give to any party the right of termination, cancellation or
acceleration in or with respect to any agreement, contract or commitment to
which the Purchaser is a party;

(iii)      give to any government or governmental authority, or any municipality
or any subdivision thereof, including any governmental department, commission,
bureau, board or administration agency, any right of termination, cancellation
or suspension of, or constitute a breach of or result in a default under, any
permit, license, control or authority issued to the Purchaser which is necessary
or desirable in connection with the conduct and operations of its business and
the ownership or leasing of its business assets; or

(iv)       constitute a default by the Purchaser or any event which, with the
giving of notice or lapse of time or both, might constitute an event of default,
under any agreement, contract, indenture or other instrument relating to any
indebtedness of the Purchaser which would give any party to that agreement,
contract, indenture or other instrument the right to accelerate the maturity for
the payment of any amount payable under that agreement, contract, indenture or
other instrument;

(a)        neither this Agreement nor any other document, certificate or
statement furnished to the Company or the Vendor by or on behalf of the
Purchaser in connection with the transactions contemplated hereby knowingly or
negligently contains any untrue or incomplete statement of material fact or
omits to state a material fact necessary in order to make the statements therein
not misleading which would likely affect the decision of the Company or the
Vendor to enter into this Agreement; and

(aa)      the Purchaser and Dr. Shimon is not aware of any fact or circumstance
which has not been disclosed to the Vendor and the Company which should be
disclosed in order to prevent the representations and warranties contained in
this section from being misleading or which would likely affect the decision of
the Vendor and the Company to enter into this Agreement.

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4.2                  Continuity of the representations, warranties and covenants
by the Purchaser and Dr. Shimon. The representations, warranties and covenants
by each of the Purchaser and Dr. Shimon contained in this Article, or in any
certificates or documents delivered pursuant to the provisions of this Agreement
or in connection with the transactions contemplated hereby, will be true at and
as of the Closing Date as though such representations, warranties and covenants
were made at and as of such time. Notwithstanding any investigations or
inquiries made by either of the Vendor or the Company, or by the Vendor's or the
Company's respective professional advisors prior to the Closing Date, or the
waiver of any condition by either of the Vendor or the Company, the
representations, warranties and covenants of the Purchaser and Dr. Shimon
contained in this Article shall survive the Closing Date and shall continue in
full force and effect for a period of one calendar year from the Closing Date;
provided, however, that the Purchaser and Dr. Shimon shall not be responsible
for the breach of any representation, warranty or covenant of the Purchaser and
Dr. Shimon contained herein caused by any act or omission of either of the
Vendor or the Company prior to the Effective Date hereof of which the Purchaser
was unaware or as a result of any action taken by either of the Vendor or the
Company after the Effective Date. In the event that any of the said
representations, warranties or covenants are found by a court of competent
jurisdiction to be incorrect and such incorrectness results in any loss or
damage sustained directly or indirectly by either of the Vendor and/or the
Company, then the Purchaser and Dr. Shimon will, in accordance with the
provisions of section "2.7" hereinbelow, pay the amount of such loss or damage
to either of the Vendor and/or the Company, as the case may be, within 30
calendar days of receiving notice of judgment therefore; provided that the
Vendor and the Company will not be entitled to make any claim unless the loss or
damage suffered may exceed the amount of U.S. $1,000.00.

 

Article 5
CONDITIONS PRECEDENT TO CLOSING

5.1                  Parties' conditions precedent prior to the Closing Date.
All of the rights, duties and obligations of each of the Parties hereto under
this Agreement are subject to the following conditions precedent for the
exclusive benefit of each of the Parties to be fulfilled in all material aspects
in the reasonable opinion of each of the Parties or to be waived by each or any
of the Parties, as the case may be, as soon as possible after the Execution
Date; however, unless specifically indicated as otherwise, not later than five
calendar days prior to the Closing Date (such date being the "Subject Removal
Date"):

(a)        the specific ratification of the terms and conditions of this
Agreement by each of the Board of Directors of the Vendor and of the General
Shareholder's Assembly of the Vendor, if required, within five business days of
the due and complete execution of this Agreement by each of the Parties hereto
(collectively, the "Ratification");

(b)        the completion by each of the Vendor and the Purchaser of an initial
due diligence and operations review of the other Party's respective businesses
and operations within five business days of the prior satisfaction of the
Ratification (the "Initial Due Diligence"); and

(c)        if required under applicable corporate and securities laws, the
receipt of all necessary approvals from any Regulatory Authority having
jurisdiction over the transactions contemplated by this Agreement on or before
November 30, 2007.

5.2                  Parties' waiver of conditions precedent. The conditions
precedent set forth in section "5.1" hereinabove are for the exclusive benefit
of each of the Parties hereto and may be waived by each or any of the Parties in
writing and in whole or in part at any time; however, not later than five
calendar days prior to the Subject Removal Date.

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5.3                  The Vendor's and the Company's conditions precedent. The
rights, duties and obligations of each of the Vendor and the Company under this
Agreement are also subject to the following conditions precedent for the
exclusive benefit of each of the Vendor and the Company to be fulfilled in all
material aspects in the reasonable opinion of the Vendor and the Company or to
be waived by each or any of the Vendor and the Company as soon as possible after
the Execution Date, however; unless specifically indicated as otherwise, not
later than five calendar days prior to the Subject Removal Date:

(a)        (i) the representations and warranties of each of the Purchaser and
Dr. Shimon contained in this Agreement will be true and correct in all material
respects at and as of the time of the Closing as if made on the Closing Date and
the Closing Date were substituted for the date of this Agreement throughout such
representations and warranties, except for those representations and warranties
that address matters as of any other particular date (in which case such
representations and warranties shall have been true and correct in all material
respects as of such particular date); and (ii) the Purchaser shall have
performed in all material respects all of the covenants and agreements required
to be performed by it under this Agreement at or prior to the Closing;

(b)        the Purchaser shall have obtained all authorizations, approvals and
other actions by, and have made all filings with, any securities regulatory
authority from whom any such authorization, approval or other action is legally
required to be obtained or to be made in connection with the transactions
contemplated herein, and all such authorizations, approvals and other actions
are in full force and effect and all such filings have been accepted and the
Purchaser is in compliance in all material respects with, and has not committed
any breach of, any securities laws, regulations or policies of any securities
regulatory authority to which the Purchaser may be subject;

(c)        all matters which, in the opinion of counsel for the Company and the
Vendor, are material in connection with the transactions contemplated by this
Agreement shall be subject to the favourable opinion of such counsel, and all
relevant records and information shall be supplied to such counsel for that
purpose;

(d)        no material loss or destruction of or damage to the assets of the
Purchaser shall have occurred;

(e)        the delivery to the Company and the Vendor by the Purchaser, on a
confidential basis, of all remaining material documentation and information;

(f)        the completion by the Company and the Vendor, and by the Company's
and the Vendor' professional advisors, of a thorough due diligence and
operations review of both the business and operations of the Purchaser;

(g)        the Purchaser shall have obtained those consents and approvals as are
required in order to complete the terms and conditions of this Agreement; and

(h)        the delivery to the Company and the Vendor by the Purchaser of a
draft form of opinion of the counsel for the Purchaser to be presented at
Closing in the form generally provided herewith as an Exhibit (the "Purchaser's
Counsel's Opinion").

5.4                  The Vendor's and the Company's waiver of conditions
precedent. The conditions precedent set forth in section "5.3" hereinabove are
for the exclusive benefit of each of the Vendor and the Company and may be
waived by each of the Vendor and the Company in writing and in whole or in part
at any time after the Execution Date; however, unless specifically indicated as
otherwise, not later than five calendar days prior to the Subject Removal Date.

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5.5                  The Purchaser's conditions precedent prior to the Closing
Date. The rights, duties and obligations of the Purchaser under this Agreement
are also subject to the following conditions precedent for the exclusive benefit
of the Purchaser to be fulfilled in all material aspects in the reasonable
opinion of the Purchaser or to be waived by the Purchaser as soon as possible
after the Execution Date; however, unless specifically indicated as otherwise,
not later than five calendar days prior to the Subject Removal Date:

(a)        (i) the representations and warranties of each of the Company and the
Vendor contained in this Agreement will be true and correct in all material
respects at and as of the time of the Closing as if made on the Closing Date and
the Closing Date were substituted for the date of this Agreement throughout such
representations and warranties, except for those representations and warranties
that address matters as of any other particular date (in which case such
representations and warranties shall have been true and correct in all material
respects as of such particular date), and (ii) the Company and the Vendor shall
have performed in all material respects all of the covenants and agreements
required to be performed by them under this Agreement at or prior to the
Closing;

(b)        each of the Company and the Vendor shall have obtained all
authorizations, approvals and other actions by, and have made all filings with,
any securities regulatory authority from whom any such authorization, approval
or other action is legally required to be obtained or to be made in connection
with the transactions contemplated herein, and all such authorizations,
approvals and other actions are in full force and effect and all such filings
have been accepted and each of the Company and the Vendor are in compliance in
all material respects with, and have not committed any breach of, any securities
laws, regulations or policies of any securities regulatory authority to which
either of the Company or the Vendor may be subject;

(c)        no Company Material Adverse Effect (as hereinafter defined) shall
have occurred. As used herein, "Company Material Adverse Effect" means a
material adverse effect which has occurred to the financial condition or results
of operations of the Company, taken as a whole; provided, that, for purposes of
this Agreement, a Company Material Adverse Effect shall not include the effect
of (i) changes to the industry or markets in which the business of the Company
operates that are not unique to such business, (ii) the announcement or
disclosure of the transactions contemplated herein, (iii) general economic,
regulatory or political conditions or changes, (iv) military action or any act
of terrorism, (v) changes in applicable law or GAAP after the date hereof, (vi)
compliance with the terms of this Agreement, (vii) actions taken or to be taken
in connection with the sale of the Shares, (viii) an earthquake or other natural
disaster, (ix) the failure of the Company to meet or achieve the results set
forth in any internal projection or (x) the coming about of any contingency set
forth in the Schedules attached hereto. The Purchaser acknowledges that there
could be a disruption to the Company's Business as a result of the execution of
this Agreement, the announcement by the Purchaser of its intention to purchase
the Company or the announcement of the Vendor of its intention to sell the
Company, and the consummation of the transactions contemplated hereby, and the
Purchaser agrees that such disruptions do not and shall not constitute a Company
Material Adverse Effect;

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(d)        no action or proceeding at law or in equity shall be pending or
threatened by any person, company, firm, governmental authority, regulatory body
or agency to enjoin or prohibit:

(i)        the purchase or transfer of any of the Purchased Shares contemplated
by this Agreement or the right of any of the Company or the Vendor to dispose of
any of the Purchased Shares; or

(ii)       the right of the Company to conduct its operations and carry on, in
the normal course, its Company's Business and operations as it has carried on in
the past in all material respects;

(e)        the delivery to the Purchaser by the Company and the Vendor, on a
confidential basis, of all remaining material documentation and information; and

(f)        each of the Company and the Vendor shall have obtained those consents
and approvals as are required in order to complete the terms and conditions of
this Agreement.

5.6                  Purchaser's waiver of conditions precedent. The conditions
precedent set forth in section "5.5" hereinabove are for the exclusive benefit
of the Purchaser and may be waived by the Purchaser in writing and in whole or
in part at any after the Execution Date; however, unless specifically indicated
as otherwise, not later than five calendar days prior to the Subject Removal
Date.

 

Article 6
CLOSING AND EVENTS OF CLOSING

6.1                  Closing and Closing Date. The Closing of the within
purchase and delivery of the Purchased Shares, together with all of the
transactions contemplated by this Agreement, shall occur on the day which is
five business days following the satisfaction of all of the conditions precedent
which are set out in Article 5 hereof, or on such earlier or later Closing Date
as may be agreed to in advance and in writing by each of the Parties hereto, and
will be closed at the offices of counsel for the Vendor, Lang Michener LLP,
Lawyers - Patent & Trade Mark Agents, located at 1500 Royal Centre, 1055 West
Georgia Street, Vancouver, British Columbia, Canada, V6E 4N7, at 2:00 p.m.
(Vancouver time) on the Closing Date.

6.2                  Latest Closing Date. If the Closing Date has not occurred
by December 31, 2007 this Agreement will be terminated and unenforceable unless
the Parties hereto agree in writing to grant an extension of the Closing Date.

6.3                  Documents to be delivered by the Vendor and the Company
prior to the Closing Date. Not later than two calendar days prior to the Closing
Date, and in addition to the documentation which is required by the agreements
and conditions precedent which are set forth hereinabove, the Vendor and the
Company shall also execute and deliver, or cause to be delivered, to the
Purchaser and/or the Escrow Agent, as applicable, all such other documents,
resolutions and instruments as may be necessary, in the opinion of counsel for
the Purchaser, acting reasonably, to complete all of the transactions
contemplated by this Agreement and including, without limitation, the necessary
transfer all of the Purchased Shares to the Purchaser free and clear of all
Liens, charges and encumbrances, and in particular including, but not being
limited to, the following materials:

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(a)        all documentation as may be necessary and as may be required by
counsel for the Purchaser, acting reasonably, to ensure that all of the
Purchased Shares are transferred, assigned and are registerable at the Closing
in the name of and for the benefit of the Purchaser under all applicable
corporate and securities laws;

(b)        certificate(s) representing the Purchased Shares registered in the
name of the Vendor, duly endorsed for transfer to the Purchaser or irrevocable
stock powers transferring the Purchased Shares to the Purchaser;

(c)        a certificate representing the Purchased Shares for the Company
registered in the name of the Purchaser;

(d)        a certified copy of the resolutions of the Board of Directors of each
of the Company and the Vendor authorizing the transfer by the Vendor to the
Purchaser of the Purchased Shares and any other securities in and to the
Company;

(e)        such documentation as may be required and dated as at the Closing
Date, and addressed to the Purchaser and its counsel, in form and substance
satisfactory to the Purchaser's counsel, acting reasonably, evidencing the
Vendor's commitment to provide the balance, if any, of any and all Working
Capital not otherwise advanced by the Purchaser to the Company prior to Closing;

(e)        a copy of all corporate or limited liability company, as the case may
be, records and books of account for each of the Company and its respective
subsidiaries, if any, and including, without limitation, a copy of all minute
books, share register books, share certificate books and annual reports of each
of the Company and its respective subsidiaries, if any, to the extent
applicable;

(f)        a certificate of an executive officer of the Vendor, dated as of the
Closing Date, acceptable in form to counsel for the Purchaser, acting
reasonably, certifying that the representations, warranties, covenants and
agreements of the Company and the Vendor contained in this Agreement are true
and correct in all respects and will be true and correct as of the Closing Date
as if made by the Company and the Vendor on the Closing Date;

(g)        resignations and similar documentation required in order to remove
all existing directors and officers of the Company and appoint such nominees of
the Purchaser as directors and officers of the Company at Closing as the
Purchaser may so direct (collectively, the "Change in Board and Officers" of the
Company);

(h)        all necessary consents and approvals in writing to the completion of
the transactions contemplated herein; and

(i)        all such other documents and instruments as the Purchaser's counsel
may reasonably require.

6.4                  Documents to be delivered by the Purchaser prior to the
Closing Date. Not later than two calendar days prior to the Closing Date, and in
addition to the documentation which is required by the agreements and conditions
precedent which are set forth hereinabove, the Purchaser shall also execute and
deliver, or cause to be delivered, to the Company, the Transfer Agent and/or the
Escrow Agent, as applicable, all such other documents, resolutions and
instruments as are necessary, in the opinion of counsel for the Vendor and the
Company, acting reasonably, to complete all of the transactions contemplated by
this Agreement and including, without limitation, the following materials:

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(a)        a Closing agenda;

(b)        a certificate of an officer of the Purchaser, dated as of the Closing
Date, acceptable in form to counsel for the Company, acting reasonably,
certifying that the warranties, representations, covenants and agreements of the
Purchaser contained in this Agreement are true and correct in all respects and
will be true and correct as of the Closing Date as if made by the Purchaser on
the Closing Date;

(c)        consents to act, a certified copy of the resolutions of the Board of
Directors of the Company and similar documentation required in order to effect
the proposed Change in Board and Officers of the Company in accordance with
section "6.3" hereinabove;

(d)        such documentation as may be required and dated as at the Closing
Date, and addressed to the Vendor and its counsel, in form and substance
satisfactory to the Vendor's counsel, acting reasonably, evidencing:

(i)        the due and complete Security for the Company's Indebtedness;

(ii)        Dr. Shimon's Resignation; and

(iii)      Dr. Shimon's Termination of the previous Consulting Arrangement;

(e)        all necessary consents and approvals in writing to the completion of
the transactions contemplated herein;

(f)        the executed form of Purchaser's Counsel's Opinion, dated as at the
Closing Date, and addressed to the Vendor and its counsel, in form and substance
satisfactory to the Vendor's counsel, acting reasonably, and including the
following:

(i)        the due incorporation, existence and standing of the Company and its
qualification to carry on business;

(ii)       the authorized and issued capital of the Company;

(iii)      all necessary steps and proceedings have been taken in connection
with the execution, delivery and performance of this Agreement and the
transactions contemplated herein;

(iv)       that the Purchased Shares have been duly issued to and registered in
the name of the Purchaser in compliance with all applicable corporate and
securities laws; and

(v)        that all documentation delivered by the Company and the Vendor at
Closing and including, without limitation, and representing each of the Security
for the Company's Indebtedness, the Royalty, the Bonus and the Mutual Release
and Indemnification, are in compliance with all applicable corporate laws; and

(g)        all such other documents and instruments as the Vendor's counsel may
reasonably require.

 

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Article 7
APPOINTMENT OF ESCROW AGENT AND TRANSFER DOCUMENTS

7.1                  Appointment of Escrow Agent. The Parties hereto hereby
acknowledge and initially appoint Lang Michener LLP, Lawyers - Patent & Trade
Mark Agents, located at 1500 Royal Centre, 1055 West Georgia Street, Vancouver,
British Columbia, Canada, V6E 4N7, counsel for the Vendor herein, as escrow
agent (the "Escrow Agent") herein, or such other Escrow Agent as may be mutually
determined by the Parties hereto prior to the Subject Removal Date.

7.2                  Escrow of Transfer Documents. Subject to and in accordance
with the terms and conditions hereof and the requirements of Articles "2", "5"
and "6" hereinabove, and without in any manner limiting the obligations of each
of the Parties hereto as contained therein and hereinabove, it is hereby
acknowledged and confirmed by the Parties hereto that each of the Parties will
execute, deliver, or cause to be delivered, all such documentation as may be
required by the requirements of Articles "2", "5" and "6" hereinabove (herein,
collectively, the "Transfer Documents") and deposit the same with the Escrow
Agent, or with such other mutually agreeable escrow agent, together with a copy
of this Agreement, there to be held in escrow for release by the Escrow Agent to
the Parties in accordance with the strict terms and provisions of Articles "2",
"5" and "6" hereinabove.

7.3                  Resignation of Escrow Agent. The Escrow Agent may resign
from its duties and responsibilities if it gives each of the Parties hereto
three calendar days' written notice in advance. Upon receipt of notice of the
Escrow Agent's intention to resign, the Parties shall, within three calendar
days, select a replacement escrow agent and jointly advise the Escrow Agent in
writing to deliver the Transfer Documents to the replacement escrow agent. If
the Parties fail to agree on a replacement escrow agent within three calendar
days of such notice, the replacement escrow agent shall be selected by a Judge
of the Supreme Court of the Province of British Columbia upon application by any
Party hereto. The Escrow Agent shall continue to be bound by this Agreement
until the replacement escrow agent has been selected and the Escrow Agent
receives and complies with the joint instructions of the Parties to deliver the
Transfer Documents to the replacement escrow agent. The Parties agree to enter
into an escrow agreement substantially in the same form of this Agreement with
the replacement escrow agent.

7.4                  Instructions to Escrow Agent. Instructions given to the
Escrow Agent pursuant to this Agreement shall be given by duly authorized
signatories of the respective Parties hereto.

7.5                  No other duties or obligations. The Escrow Agent shall have
no duties or obligations other than those specifically set forth in this
Article.

7.6                  No obligation to take legal action. The Escrow Agent shall
not be obligated to take any legal action hereunder which might, in its
judgment, involve any expense or liability unless it shall have been furnished
with a reasonable indemnity by all of the Parties hereto together with such
other third parties as the Escrow Agent may require in its sole and absolute
discretion.

7.7                  Not bound to any other agreements. The Escrow Agent is not
bound in any way by any other contract or agreement between the Parties hereto
whether or not it has knowledge thereof or of its terms and conditions and its
only duty, liability and responsibility shall be to hold and deal with the
Transfer Documents as herein directed.

7.8                  Notice. The Escrow Agent shall be entitled to assume that
any notice and evidence received by it pursuant to these instructions from
anyone has been duly executed by the Party by whom it purports to have been
signed and that the text of any notice and evidence is accurate and the truth.
The Escrow Agent shall not be obliged to inquire into the sufficiency or
authority of the text or any signatures appearing on such notice or evidence.

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7.9                  Indemnity. The Parties hereto, jointly and severally,
covenant and agree to indemnify the Escrow Agent and to hold it harmless against
any loss, liability or expense incurred, without negligence or bad faith on its
part, arising out of or in connection with the administration of its duties
hereunder including, without limitation, the costs and expenses of defending
itself against any claim or liability arising therefrom.

7.10                Not required to take any action. In the event of any
disagreement between any of the Parties hereto to these instructions or between
them or either or any of them and any other person, resulting in adverse claims
or demands being made in connection with the Transfer Documents, or in the event
that the Escrow Agent should take action hereunder, it may, at its option,
refuse to comply with any claims or demands on it, or refuse to take any other
action hereunder, so long as such disagreement continues or such doubt exists,
and in any such event, it shall not be or become liable in any way or to any
person for its failure or refusal to act, and it shall be entitled to continue
so to refrain from acting until:

(a)        the rights of all Parties shall have been fully and finally
adjudicated by a court of competent jurisdiction; or

(b)        all differences shall have been adjusted and all doubt resolved by
agreement among all of the interested persons, and it shall have been notified
thereof in writing signed by all such persons.

 

Article 8
DUE DILIGENCE INVESTIGATION

8.1                  Due diligence. Each of the Parties hereto shall forthwith
conduct such further due diligence examination of the other Parties hereto as it
deems appropriate.

8.2                  Confidentiality. Each Party may in a reasonable manner
carry out such investigations and due diligence as to the other Parties hereto,
at all times subject to the confidentiality provisions of Articles "9" and "10"
hereinbelow, as each Party deems necessary. In that regard the Parties agree
that each shall have full and complete access to the other Parties' books,
records, financial statements and other documents, articles of incorporation,
by-laws, minutes of Board of Directors' meetings and its committees, investment
agreements, material contracts and as well such other documents and materials as
the Parties hereto, or their respective solicitors, may deem reasonable and
necessary to conduct an adequate due diligence investigation of each Party, its
respective operations and financial condition prior to the Closing.

 

Article 9
NON-DISCLOSURE

9.1                  Non-disclosure. Subject to the provisions of section "9.3"
hereinbelow, the Parties hereto, for themselves, their officers, directors,
shareholders, consultants, employees and agents, agree that they each will not
disseminate or disclose, or knowingly allow, permit or cause others to
disseminate or disclose to third parties who are not subject to express or
implied covenants of confidentiality, without the other Parties' express written
consent, either: (i) the fact or existence of this Agreement or discussions
and/or negotiations between them involving, inter alia, possible business
transactions; (ii) the possible substance or content of those discussions; (iii)
the possible terms and conditions of any proposed transaction; (iv) any
statements or representations (whether verbal or written) made by either Party
in the course of or in connection with those discussions; or (v) any written
material generated by or on behalf of any Party and such contacts, other than
such disclosure as may be required under applicable securities legislation or
regulations, pursuant to any order of a Court or on a "need to know" basis to
each of the Parties' respective professional advisors.

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9.2                  Documentation. Any document or written material generated
by either Party hereto in the course of, or in connection with, the due
diligence investigations conducted pursuant to this Agreement shall be marked or
deemed "Confidential" and shall be treated by each Party as a trade secret of
the other Parties. Upon termination of this Agreement prior to Closing all
copies of any and all documents obtained by any Party from any other Party
herein, whether or not marked "Confidential", shall be returned to the other
Parties forthwith.

9.3                  Public announcements. Notwithstanding the provisions of
this Article, the Parties hereto agree to make such public announcements of this
Agreement promptly upon its execution in accordance with the requirements of
applicable securities legislation and regulations.

 

Article 10
PROPRIETARY INFORMATION AND
ADDITIONAL OBLIGATIONS OF THE PARTIES HERETO

10.1                Confidential Information. Each Party hereto acknowledges
that any and all information which a Party may obtain from, or have disclosed to
it, about the other Parties constitutes valuable trade secrets and proprietary
confidential information of the other Parties (collectively, the "Confidential
Information"). No such Confidential Information shall be published by any Party
without the prior written consent of the other Parties hereto, however, such
consent in respect of the reporting of factual data shall not be unreasonably
withheld, and shall not be withheld in respect of information required to be
publicly disclosed pursuant to applicable securities or corporation laws.
Furthermore, each Party hereto undertakes not to disclose the Confidential
Information to any third party without the prior written approval of the other
Parties and to ensure that any third party to which the Confidential Information
is disclosed shall execute an agreement and undertaking on the same terms as
contained herein.

10.2                Impact of breach of confidentiality. The Parties hereto
acknowledge that the Confidential Information is important to the respective
businesses of each of the Parties and that, in the event of disclosure of the
Confidential Information, except as authorized hereunder, the damage to each of
the Parties hereto, or to either of them, may be irreparable. For the purposes
of the foregoing sections the Parties recognize and hereby agree that a breach
by any of the Parties of any of the covenants therein contained would result in
irreparable harm and significant damage to each of the other Parties that would
not be adequately compensated for by monetary award. Accordingly, the Parties
agree that in the event of any such breach, in addition to being entitled as a
matter of right to apply to a Court of competent equitable jurisdiction for
relief by way of restraining order, injunction, decree or otherwise as may be
appropriate to ensure compliance with the provisions hereof, any such Party will
also be liable to the other Parties, as liquidated damages, for an amount equal
to the amount received and earned by such Party as a result of and with respect
to any such breach. The Parties also acknowledge and agree that if any of the
aforesaid restrictions, activities, obligations or periods are considered by a
Court of competent jurisdiction as being unreasonable, the Parties agree that
said Court shall have authority to limit such restrictions, activities or
periods as the Court deems proper in the circumstances. In addition, the Parties
further acknowledge and agree that all restrictions or obligations in this
Agreement are necessary and fundamental to the protection of the respective
businesses of each of the Parties and are reasonable and valid, and all defenses
to the strict enforcement thereof by either of the Parties are hereby waived by
the other Parties.

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10.3                Compliance with applicable laws. The Parties will comply
with all Canadian, U.S. and foreign laws, whether federal, provincial or state,
applicable to their respective duties hereunder and, in addition, hereby
represent and warrant that any information which they may provide to any person
or company hereunder will, to the best of their respective knowledge,
information and belief, be accurate and complete in all material respects and
not misleading, and will not omit to state any fact or information which would
be material to such person or company.

10.4                Opinions, reports and advice of the Vendor. The Vendor
acknowledge and agree that all written and oral opinions, reports, advice and
materials provided by the Vendor to the Purchaser or the Company in connection
with purchase and sale contemplated herein are intended solely for the
Purchaser's benefit and for the Purchaser's use only, and that any such written
and oral opinions, reports, advice and information are the exclusive property of
the Purchaser. In this regard the Vendor covenant and agree that the Purchaser
may utilize any such opinion, report, advice and materials for any other purpose
whatsoever and, furthermore, may reproduce, disseminate, quote from and refer
to, in whole or in part, at any time and in any manner, any such opinion,
report, advice and materials in the Purchaser's sole and absolute discretion.
The Vendor further covenant and agree that no public references to the
Purchaser, the Company or the Vendor, or disclosure of the Vendor' role in
respect of the Purchaser or the Company, be made by the Vendor without the prior
written consent of the Purchaser in each specific instance and, furthermore,
that any such written opinions, reports, advice or materials shall, unless
otherwise required by the Purchaser, be provided by the Vendor to the Purchaser
in advance of publication in a form and with such substance as would be
acceptable for filing with and approval by any Regulatory Authority having
jurisdiction over the affairs of the Purchaser and the Company from time to
time.

 

Article 11
ASSIGNMENT AND VARIATIONS

11.1                Assignment. Save and except as provided herein, no Party
hereto may sell, assign, pledge or mortgage or otherwise encumber all or any
part of its respective interest herein without the prior written consent all of
the other Parties hereto.

11.2                Amendment. This Agreement and any provision thereof may only
be amended in writing and only by duly authorized signatories of each of the
respective Parties hereto.

11.3                Variation in the terms of this Agreement upon review. It is
hereby acknowledged and agreed by each of the Parties hereto that where any
variation in the terms and/or conditions of this Agreement is reasonably
required by any of the Regulatory Authorities as a condition of their respective
Regulatory Approval to any of the terms and conditions of this Agreement, any
such reasonable variation, having first been notified to all Parties, will be
deemed to be accepted by each of the Parties hereto and form part of the terms
and conditions of this Agreement; provided that any such variation does not
place more onerous financial, commercial or legal obligations on a Party than
those set forth in this Agreement. If any such Party, acting reasonably, deems
any such notified variation unreasonable, that Party may, in its sole and
absolute discretion, and within a period of not greater than 10 calendar days
from its original notification and at its cost, make such further applications
or submissions to the relevant Regulatory Authority as it considers necessary in
order to seek an amendment to any such variation; provided, however, that the
final determination by any such Regulatory Authority to any such application or
submission by such objecting Party will be deemed binding upon such Party who
must then provide notification to all other Parties as provided for hereinabove.

 

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Article 12
FORCE MAJEURE

12.1                Events. If any Party hereto is at any time prevented or
delayed in complying with any provisions of this Agreement by reason of strikes,
walk-outs, labour shortages, power shortages, fires, wars, act of terror, acts
of God, earthquakes, storms, floods, explosions, accidents, protests or
demonstrations by environmental lobbyists or native rights groups, delays in
transportation, breakdown of machinery, inability to obtain necessary materials
in the open market, unavailability of equipment, governmental regulations
restricting normal operations, shipping delays or any other reason or reasons
beyond the control of that Party, then the time limited for the performance by
that Party of its respective obligations hereunder shall be extended by a period
of time equal in length to the period of each such prevention or delay.

12.2                Notice. A Party shall, within seven calendar days, give
notice to the other Parties of each event of force majeure under section "12.1"
hereinabove, and upon cessation of such event shall furnish the other Parties
with notice of that event together with particulars of the number of days by
which such Party considers the obligations of that Party hereunder have been
extended by virtue of such event of force majeure and all preceding events of
force majeure.

 

Article 13
ARBITRATION

13.1                Matters for Arbitration. The Parties hereto agree that all
questions or matters in dispute with respect to this Agreement shall be
submitted to arbitration pursuant to the terms hereof.

13.2                Notice. It shall be a condition precedent to the right of
any Party to submit any matter to arbitration pursuant to the provisions hereof
that any Party intending to refer any matter to arbitration shall have given not
less than 10 calendar days' prior written notice of its intention to do so to
the other Parties together with particulars of the matter in dispute. On the
expiration of such 10 calendar days the Party who gave such notice may proceed
to refer the dispute to arbitration as provided in section "13.3" hereinbelow.

13.3                Appointments. The Party desiring arbitration shall appoint
one arbitrator, and shall notify the other Parties of such appointment, and the
other Parties shall, within 10 calendar days after receiving such notice,
appoint an arbitrator, and the two arbitrators so named, before proceeding to
act, shall, within 10 calendar days of the appointment of the last appointed
arbitrator, unanimously agree on the appointment of a third arbitrator, to act
with them and be chairman of the arbitration herein provided for. If the other
Parties shall fail to appoint an arbitrator within 10 calendar days after
receiving notice of the appointment of the first arbitrator, or if the two
arbitrators appointed by the Parties shall be unable to agree on the appointment
of the chairman, the chairman shall be appointed under the provisions of the
Arbitration Act. Except as specifically otherwise provided in this section, the
arbitration herein provided for shall be conducted in accordance with such
Arbitration Act. The chairman, or in the case where only one arbitrator is
appointed, the single arbitrator, shall fix a time and place in Vancouver,
British Columbia, for the purpose of hearing the evidence and representations of
the Parties, and he shall preside over the arbitration and determine all
questions of procedure not provided for under such Arbitration Act or this
section. After hearing any evidence and representations that the Parties may
submit, the single arbitrator, or the arbitrators, as the case may be, shall
make an award and reduce the same to writing, and deliver one copy thereof to
each of the Parties. The expense of the arbitration shall be paid as specified
in the award. The arbitrators shall not be bound by the common law rules of
evidence, and shall be required to set forth in writing and in detail the
reasoning for their award.

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13.4                Award. The Parties hereto agree that the award of a majority
of the arbitrators, or in the case of a single arbitrator, of such arbitrator,
shall be final and binding upon each of them.

 

Article 14
DEFAULT AND TERMINATION

14.1                Default. The Parties hereto agree that if any Party hereto
is in default with respect to any of the provisions of this Agreement (herein
called the "Defaulting Party"), the non-defaulting Parties (herein called,
collectively, the "Non-Defaulting Party") shall give notice to the Defaulting
Party designating such default, and within 21 calendar days after its receipt of
such notice, the Defaulting Party shall either:

(a)        cure such default, or commence proceedings to cure such default and
prosecute the same to completion without undue delay; or

(b)        give the Non-Defaulting Party notice that it denies that such default
has occurred and that it is submitting the question to arbitration as herein
provided.

14.2                Arbitration. If arbitration is sought, a Party shall not be
deemed in default until the matter shall have been determined finally by
appropriate arbitration under the provisions of Article "13" hereinabove.

14.3                Curing the Default. If:

(a)        the default is not so cured or the Defaulting Party does not commence
or diligently proceed to cure the default; or

(b)        arbitration is not so sought; or

(c)        the Defaulting Party is found in arbitration proceedings to be in
default, and fails to cure it within five calendar days after the rendering of
the arbitration award,

the Non-Defaulting Party may, by written notice given to the Defaulting Party at
any time while the default continues, terminate the interest of the Defaulting
Party in and to this Agreement.

14.4                Termination. In addition to the foregoing it is hereby
acknowledged and agreed by the Parties hereto that this Agreement will be
immediately terminated, unless otherwise extended in accordance with section
"6.2" hereinabove, in the event that:

(a)        the entire Ratification is not received within five business days of
the Execution Date;

(b)        the completion by each of the Purchaser and the Company of a
satisfactory Initial Due Diligence review of the other Party's respective
businesses and operations within five business days of the prior satisfaction of
the Ratification;

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(c)        either of the Parties hereto has not either satisfied or waived each
of their respective conditions precedent prior to the Subject Removal Date in
accordance with the provisions of Article "5" hereinabove;

(d)        either of the Parties hereto has failed to deliver or caused to be
delivered any of their respective documents required to be delivered by Articles
"5", "6" and "7" hereinabove prior to each of the Subject Removal Date and the
Closing Date in accordance with the provisions of Articles "5", "6" and "7";

(e)        the Closing has not occurred on or before December 31, 2007 in
accordance with section "6.2" hereinabove; or

(f)        by agreement in writing by each of the Parties hereto;

and in such event this Agreement will be terminated and be of no further force
and effect other than the obligations under Articles "9" and "10" hereinabove.

 

Article 15
NOTICE

15.1                Notice. Each notice, demand or other communication required
or permitted to be given under this Agreement shall be in writing and shall be
sent by prepaid registered mail deposited in a post office addressed to the
Party entitled to receive the same, or delivered to such Party, at the address
for such Party specified above. The date of receipt of such notice, demand or
other communication shall be the date of delivery thereof if delivered, or, if
given by registered mail as aforesaid, shall be deemed conclusively to be the
third calendar day after the same shall have been so mailed, or 15 calendar days
in the case of an addressee with an address for service in a country other than
a country in which the Party giving the notice, demand or other communication
resides, except in the case of interruption of postal services for any reason
whatsoever, in which case the date of receipt shall be the date on which the
notice, demand or other communication is actually received by the addressee.

15.2                Change of address. Either Party may at any time and from
time to time notify the other Parties in writing of a change of address and the
new address to which notice shall be given to it thereafter until further
change.

 

Article 16
GENERAL PROVISIONS

16.1                Entire agreement. This Agreement constitutes the entire
agreement to date between the Parties hereto and supersedes every previous
agreement, communication, expectation, negotiation, representation or
understanding, whether oral or written, express or implied, statutory or
otherwise, between the Parties hereto with respect to the subject matter of this
Agreement and including, without limitation, the Agreement In Principle.

16.2                Enurement. This Agreement will enure to the benefit of and
will be binding upon the Parties hereto, their respective heirs, executors,
administrators and assigns.

16.3                Schedules. The Schedules to this Agreement are hereby
incorporated by reference into this Agreement in its entirety.

16.4                Time of the essence. Time will be of the essence of this
Agreement.

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16.5                Representation and costs. It is hereby acknowledged by each
of the Parties hereto that Lang Michener LLP, Lawyers - Patent & Trade Mark
Agents, other than in their capacity as Escrow Agent hereunder, if applicable,
act solely for the Vendor, and, correspondingly, that each of the Purchaser and
Dr. Shimon have been required by each of Lang Michener LLP and the Vendor to
obtain independent legal advice with respect to their respective reviews and
execution of this Agreement. In addition, it is hereby further acknowledged and
agreed by the Parties hereto that Lang Michener LLP, and certain or all of its
principal owners or associates, from time to time, may have both an economic or
shareholding interest in and to the Vendor and/or a fiduciary duty to the same
arising from either a directorship, officership or similar relationship arising
out of the request of the Purchaser for certain of such persons to act in a
similar capacity while acting for the Vendor as counsel. Correspondingly, and
even where, as a result of this Agreement, the consent of each Party hereto to
the role and capacity of Lang Michener LLP, and its principal owners and
associates, as the case may be, is deemed to have been received, where any
conflict or perceived conflict may arise, or be seen to arise, as a result of
any such capacity or representation, each Party hereto acknowledges and agrees
to, once more, obtain independent legal advice in respect of any such conflict
or perceived conflict and, consequent thereon, Lang Michener LLP, together with
any such principal owners or associates, as the case may be, shall be at liberty
at any time to resign any such position if it or any Party hereto is in any way
affected or uncomfortable with any such capacity or representation. Each Party
to this Agreement will also bear and pay its own costs, legal and otherwise, in
connection with its respective preparation, review and execution of this
Agreement and, in particular, that the costs involved in the preparation of this
Agreement, and all documentation necessarily incidental thereto, by Lang
Michener LLP, shall be at the cost of the Vendor.

16.6                Applicable law. The situs of this Agreement is Vancouver,
British Columbia, Canada, and for all purposes this Agreement will be governed
exclusively by and construed and enforced in accordance with the laws and Courts
prevailing in the Province of British Columbia, Canada, and the federal laws of
Canada applicable therein.

16.7                Further assurances. The Parties hereto hereby, jointly and
severally, covenant and agree to forthwith, upon request, execute and deliver,
or cause to be executed and delivered, such further and other deeds, documents,
assurances and instructions as may be required by the Parties hereto or their
respective counsel in order to carry out the true nature and intent of this
Agreement.

16.8                Invalid provisions. If any provision of this Agreement is at
any time unenforceable or invalid for any reason it will be severable from the
remainder of this Agreement and, in its application at that time, this Agreement
will be construed as though such provision was not contained herein and the
remainder will continue in full force and effect and be construed as if this
Agreement had been executed without the invalid or unenforceable provision.

16.9                Currency. Unless otherwise stipulated, all payments required
to be made pursuant to the provisions of this Agreement and all money amount
references contained herein are in lawful currency of the United States.

16.10              Severability and construction. Each Article, section,
paragraph, term and provision of this Agreement, and any portion thereof, shall
be considered severable, and if, for any reason, any portion of this Agreement
is determined to be invalid, contrary to or in conflict with any applicable
present or future law, rule or regulation in a final unappealable ruling issued
by any court, agency or tribunal with valid jurisdiction in a proceeding to any
of the Parties hereto is a party, that ruling shall not impair the operation of,
or have any other effect upon, such other portions of this Agreement as may
remain otherwise intelligible (all of which shall remain binding on the Parties
and continue to be given full force and agreement as of the date upon which the
ruling becomes final).

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- 41 -

16.11              Captions. The captions, section numbers, Article numbers and
Schedule numbers appearing in this Agreement are inserted for convenience of
reference only and shall in no way define, limit, construe or describe the scope
or intent of this Agreement nor in any way affect this Agreement.

16.12              Counterparts. This Agreement may be signed by the Parties
hereto in as many counterparts as may be necessary and, if required, by
facsimile, each of which so signed being deemed to be an original, and such
counterparts together shall constitute one and the same instrument and,
notwithstanding the date of execution, will be deemed to bear the Execution Date
as set forth on the front page of this Agreement.

16.13              No partnership or agency. The Parties hereto have not created
a partnership and nothing contained in this Agreement shall in any manner
whatsoever constitute any Party the partner, agent or legal representative of
any other Party, nor create any fiduciary relationship between them for any
purpose whatsoever. No Party shall have any authority to act for, or to assume
any obligations or responsibility on behalf of, any other party except as may
be, from time to time, agreed upon in writing between the Parties or as
otherwise expressly provided.

16.14              Consents and waivers. No consent or waiver expressed or
implied by either Party hereto in respect of any breach or default by any other
Party in the performance by such other of its obligations hereunder shall:

(a)        be valid unless it is in writing and stated to be a consent or waiver
pursuant to this section;

(b)        be relied upon as a consent to or waiver of any other breach or
default of the same or any other obligation;

(c)        constitute a general waiver under this Agreement; or

(d)        eliminate or modify the need for a specific consent or waiver
pursuant to this section in any other or subsequent instance.

 

                         IN WITNESS WHEREOF each of the Parties hereto has
hereunto set its seal by the hand of its duly authorized signatory as of the
Execution Date as set forth on the front page of this Agreement.

 

The COMMON SEAL of
MIV THERAPEUTICS, INC.,
the Vendor herein,
was hereunto affixed in the presence of:

          /s/ "Patrick McGowan"
____________________________________
Authorized Signatory

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(C/S)

 

 

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- 42 -

The COMMON SEAL of
SAGAX INC.,
the Company herein,
was hereunto affixed in the presence of:

          /s/ "D. Shimon"
____________________________________
Authorized Signatory

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(C/S)

 

The COMMON SEAL of
SHIMOCO LLC,
the Purchaser herein,
was hereunto affixed in the presence of:

          /s/ "D. Shimon"
____________________________________
Authorized Signatory

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(C/S)

 

SIGNED, SEALED and DELIVERED by
DR. DOV SHIMON in the presence of:

          /s/ "Dr. Yuval Shezifi"
____________________________________
Witness Signature

      6 Bnei Brit street, Haifa, Israel      
Witness Address

      Dr. Yuval Shezifi, Engineer         
Witness Name and Occupation

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/s/ "D. Shimon
________________________
DR. DOV SHIMON

__________

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Schedule A

 

 

                         This is Schedule "A" to that certain Share Purchase
Agreement as entered into among each of MIV Therapeutics, Inc. (the Vendor),
SagaX Inc. (the Company), Shimoco LLC (the Purchaser) and Dr. Dov Shimon.

 

Purchased Shares, Vendor and Securities

Refer to the materials attached hereto

.

__________

 

 

 

 

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

Schedule B

 

 

                         This is Schedule "B" to that certain Share Purchase
Agreement as entered into among each of MIV Therapeutics, Inc. (the Vendor),
SagaX Inc. (the Company), Shimoco LLC (the Purchaser) and Dr. Dov Shimon.

 

Company's Financial Statements

Refer to the materials attached hereto

.

__________

 

 

 

 

 

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

Schedule C

 

 

                         This is Schedule "C" to that certain Share Purchase
Agreement as entered into among each of MIV Therapeutics, Inc. (the Vendor),
SagaX Inc. (the Company), Shimoco LLC (the Purchaser) and Dr. Dov Shimon.

 

Company's Intellectual Property

Refer to the materials attached hereto

.

 

 

 

 

 

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

Schedule D

 

 

                         This is Schedule "D" to that certain Share Purchase
Agreement as entered into among each of MIV Therapeutics, Inc. (the Vendor),
SagaX Inc. (the Company), Shimoco LLC (the Purchaser) and Dr. Dov Shimon.

 

Company's Leases

Refer to the materials attached hereto

.

_________

 

 

 

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

Schedule E

 

 

                         This is Schedule "E" to that certain Share Purchase
Agreement as entered into among each of MIV Therapeutics, Inc. (the Vendor),
SagaX Inc. (the Company), Shimoco LLC (the Purchaser) and Dr. Dov Shimon.

 

Company's Contracts of Employment

Refer to the materials attached hereto

.

__________

 

 

 

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

Schedule F

 

 

                         This is Schedule "F" to that certain Share Purchase
Agreement as entered into among each of MIV Therapeutics, Inc. (the Vendor),
SagaX Inc. (the Company), Shimoco LLC (the Purchaser) and Dr. Dov Shimon.

 

Company's Material Contracts

Refer to the materials attached hereto

.

_________

 

 

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

Schedule G

 

 

                         This is Schedule "G" to that certain Share Purchase
Agreement as entered into among each of MIV Therapeutics, Inc. (the Vendor),
SagaX Inc. (the Company), Shimoco LLC (the Purchaser) and Dr. Dov Shimon.

 

Company's List of Bank Accounts etc.

Refer to the materials attached hereto

.

__________

 

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

Exhibit

 

 

                         This is the Exhibit to that certain Share Purchase
Agreement as entered into among each of MIV Therapeutics, Inc. (the Vendor),
SagaX Inc. (the Company), Shimoco LLC (the Purchaser) and Dr. Dov Shimon.

 

Form of Purchaser's Counsel's Opinion

Refer to the materials attached hereto

.

__________

End of Share Purchase Agreement

__________