F-3










Exhibit 10.3  



ASSET AND SHARE
PURCHASE AGREEMENT 



        THIS
ASSET AND SHARE PURCHASE AGREEMENT (“Agreement”) is made and entered
into as of December 27, 2005 by and among: Elbit Vision Systems Ltd., an Israeli company
(the “EVS”), Scanmaster Systems (IRT) Ltd. (“Scan”),
Panoptes Ltd. (the “Company”) and Ma’aragim Enterprises Ltd. (“Ma’aragim”).  




RECITALS 



          	    A.       
               The Company is engaged principally in manufacturing and selling machine vision
               systems for surface inspection that assists manufacturers improve the quality of
               their products. The Company has its principal office at 2 Hamada Street, Yoqneam
               Ilit 20692 Israel. 



               



          	    B.       
               EVS desires to acquire all of the Assets (as defined below) and the Company
               wishes to sell the Assets to EVS for the purchase price set forth herein. 



               



          	    C.       
               Pursuant to a General Loan Agreement between the Company, Ma’aragim and
               Xsignnet Ltd. (“Xsignnet”) dated December 26, 2005 (the
               “Loan Agreement”) the Company currently has an outstanding debt
               of five million six hundred and sixty four thousand US dollars ($5,664,000) (the
               “Debt”), which following the assignment of certain rights from
               Xsignnet to Ma’aragim is due to be paid solely to Ma’aragim. The
               Company wishes to repay part of the Debt using the proceeds from the sale of the
               Assets. Following such partial repayment, the Debt shall be reduced to four
               million six hundred and fifty thousand US dollars ($4,650,000) (the
               “Remaining Debt”). 



               



          	    D.       
               Ma’aragim, the principal shareholder of the Company, is in the process of
               acquiring all of the Shares (as defined below) it does not own, from the other
               shareholders of the Company and intends to complete such purchase prior to the
               Closing Date. 



               



          	    E.       
               Scan desires to acquire all of the Shares and the Remaining Debt from
               Ma’aragim, and Ma’aragim desires to sell all of the Shares and the
               Remaining Debt to Scan, pursuant to the terms set forth herein. 



               



          	    F.       
               The Company, Ma’aragim, Scan and EVS desire to make certain representations
               and warranties and other agreements in connection with the transactions
               contemplated hereby. 



               



          	    G.       
Prior to the Closing, the Company’s board of directors (the
“Board”) shall adopt a resolution pursuant to which it will cause the
Company’s Employee Share Option Plan (2004), adopted by the Company on
November 24, 2004 (the “ESOP”) and the Company’s 2000
Israeli Employee Stock Option Plan to be terminated upon the Closing and the
Company shall have obtained the consent of each of the Option Holders (as
defined below) to the termination of all options to purchase equity of the
Company under the ESOP (“Options”) held by such Option Holder
upon the Closing.  



               





	 	        The
parties to this Agreement agree as follows:  


















	SECTION 1.  	 	
DESCRIPTION OF TRANSACTION.  






		    1.1       Purchase
and Sale. Subject to the terms and conditions of this Agreement, on the Closing Date
(as defined below): (i) EVS shall purchase and acquire from the Company, and the Company
shall sell, transfer, assign, convey and deliver to EVS, all of the Company’s right,
title and interest in and to all of the assets listed in Schedule 1.1 (the “Assets”),
free and clear of all mortgages, pledges, liens, security interests, conditional and
installment sale agreements, encumbrances, charges or other claims of third parties of
any kind (“Liens”); in consideration for the Purchase Consideration to
be provided by EVS in accordance with the Irrevocable Instructions (as defined below);
and (ii) Scan shall purchase and acquire from Ma’aragim and Ma’aragim shall
sell, transfer, assign, convey and deliver to Scan, (a) all of the issued and outstanding
shares of the Company (the “Shares”), free and clear of all Liens, and
(b) the Remaining Debt; in consideration for the Share and Loan Purchase Price.  







		    1.2       Closing. The
closing of the purchase, sale and assignment (the “Closing”) shall take
place at such other date, time and place as the parties may mutually agree (the “Closing
Date”). At the Closing, (A) the Company shall (i) deliver to EVS the Bill of
Sale, Assignment and Assumption (as defined below) and Assignment of Trademarks (as
defined below) duly executed by the Company which sells, delivers, transfers, conveys and
assigns to EVS all right, title, and interest in and to the Assets, free and clear of any
and all Liens, (ii) deliver to EVS the Irrevocable Instructions to issue the EVS Shares
and undertake to pay the Royalties to Ma’aragim as partial payment of the Company’s
outstanding debt, and (iii) deliver to Scan one or more instruments representing the
Shares; (B) Ma’aragim shall (i) deliver to Scan duly executed share transfer deeds
transferring the Shares to Scan, and (ii) deliver to Scan the Assignment Deed (as defined
below) duly executed by Ma’aragim, by which Ma’aragim sells, transfers,
conveys, assigns and delivers all of its right, title and interest in and to the
Remaining Debt to Scan; (C) Scan shall transfer to Ma’aragim the Share and Loan
Purchase Price (as defined below); and (E) EVS shall (i) issue the Initial Shares (as
defined below) to Ma’aragim on behalf of the Company, and (ii) shall deposit the
Escrow Shares (as defined below) with the Escrow Agent (as defined below).  







		    1.3       Further
Assurances. If, at any time after the Closing Date, EVS or Scan shall consider or be
advised that any deeds, bills of sale, assignments or any other acts or things are
reasonably necessary, desirable or proper (a) to vest, perfect or confirm, of record
or otherwise, in Scan, its right to, and title or interest in, the Shares or the
Remaining Debt, (b) to vest, perfect or confirm, of record or otherwise, in EVS, its
right to, and title or interest in, the Assets, or (c) otherwise to carry out the
purposes of this Agreement, EVS or Scan, as applicable shall so advise Ma’aragim
and/or the Company, as applicable, in writing, and Ma’aragim shall execute and
deliver all such deeds, bills of sale, assignments and do all such other acts and things
reasonably necessary, desirable or proper to vest, perfect or confirm its right, title or
interest in, to or under the Remaining Debt, the Shares and/or the Assets, as applicable,
and otherwise to carry out the purposes of this Agreement.  







2










		    1.4       Share
and Loan Purchase Price. Ma’aragim shall (i) transfer the Shares to Scan, and
(ii) assign to Scan all of its right, title and interest in and to the Remaining Debt;
and Scan shall receive the Shares and the rights, title and interest in and to the
Remaining Debt, for the consideration of ten US dollars ($10) (the “Share and
Loan Purchase Price”).  







		    1.5       Issuance
of Buyer Shares. The aggregate consideration (the “Purchase Consideration”)
for the Assets which will be paid by EVS as directed by the Company, shall be: (a) eight
hundred thousand (800,000) Ordinary Shares of EVS, nominal value NIS 1.00 per share (the
“EVS Shares”), subject to adjustment in the event of any share split,
share dividend, recapitalization, issuance of bonus shares or other adjustment of the EVS’s
Ordinary Shares prior to the Closing, and (b) the payment of Royalties (as defined below)
as further set forth in Section 1.6 below. On the Closing Date, EVS shall issue (i) an
aggregate of four hundred thousand (400,000) of the EVS Shares (the “Initial
Shares”), subject to adjustment in the event of any share split, share dividend,
recapitalization, issuance of bonus shares or other adjustment of the EVS’s Ordinary
Shares prior to the Closing to the Company or as otherwise directed in the Irrevocable
Instructions; and (ii) to the Escrow Agent an additional aggregate of four hundred
thousand (400,000) of the EVS Shares (the “Escrow Shares”),
subject to adjustment in the event of any share split, share dividend, recapitalization,
issuance of bonus shares or other adjustment of the EVS’s Ordinary Shares prior to
the Closing, which shall be deposited with an escrow agent, the identity of which shall
be approved by EVS and Ma’aragim prior to the Closing (the “Escrow Agent”),
and which shall be held by the Escrow Agent to satisfy the indemnification obligations of
the Company and Ma’aragim for a period of fourteen (14) months following the Closing
Date, all as further set forth in the Escrow Agreement (as defined below).  







		    1.6       Royalty
Payments. As part of the Purchase Consideration, EVS hereby undertakes to pay to Ma’aragim,
Royalties, according to the terms and conditions set forth in this Section.  







          		    (a)       
               Subject to Sections 1.6(b), following the Closing Date, EVS shall make royalty
               payments (“Royalties”) to Ma’aragim in an amount equal to
               three and one-half percent (3.5%) of (y) the proceeds recorded as income by EVS
               in its financial statements, in consideration for the sale by EVS of each EVS
               optical inspection system (excluding: (i) the sale of spare parts supplied by
               EVS to any of its customer after the termination of the warranty period covering
               such product, and (ii) service income related to such systems provided by EVS to
               any of its customers after the termination of the warranty period for such
               product) (the “Product”) and (z) license fees recorded as
               income by EVS in its financial statements, in consideration for license to use
               and/or produce the Product and/or any part of it, granted by EVS to third
               parties; from January 1, 2006 through December 31, 2008 (the “Royalty
               Term”). For the avoidance of doubt, sales made by EVS’s
               subsidiaries – Yuravision Co. Ltd., ScanMaster Systems (IRT) Ltd. and
               ScanMaster Systems, Inc. (NH) – shall not be considered in the calculation
               of Royalties. 



               



3










          		    (b)       
               The following shall be reduced from payments of Royalties (the “Reduced
               Amounts”): 



               



          		    (i)       
               In the event the Company has collected by September 30, 2006 a gross amount less
               than seven hundred fifty thousand US dollars ($750,000) (the
               “Receivables Amount”) from the Persons (the
               “Receivables Persons”) owing the Receivables (as defined in
               Section 2.4(e) below) as of October 19, 2005 and in the amounts owed by each
               such Person (each a “Collection Amount” and together, the
               “Collection Amounts”), as recorded in Schedule 1.6(b)(i)
               attached hereto, then the difference between the Receivables Amount and the
               gross amount of Receivables collected from the Receivables Persons, shall
               be deducted by EVS from the payment of Royalties starting with the payment of
               Royalties for the first fiscal quarter of 2007; 



               



          		    (ii)       
               All unreasonable expenses (e.g., legal expenses) incurred by either EVS, any of
               its subsidiaries or the Company (collectively, the “EVS 
               Companies”), in collection of the Receivables from the Receivables Persons,
               shall be deducted by EVS from the payment of Royalties. EVS shall inform and
               consult with Ma’aragim before making any such unreasonable expense; 



               



          		    (iii)       
                In the event on the Closing Date, the Total Account Payables (as defined in
               Section 2.4(f) below) is greater than the Account Amount (as defined in Section
               2.4(f) below), then the difference between the Total Account Payables and the
               Account Amount (the “Account Difference”) shall be deducted by
               EVS from the payment of Royalties; 



               



          		    (iv)       
               In the event the Company has not made full provision for and/or has not made all
               necessary payments in connection with severance pay that may be owed to any
               employee, officer or director of the Company for the period prior to the Closing
               Date (“Severance Pay Provisions”), then the difference between
               the amount of Severance Pay Provisions owed and Severance Pay Provisions made by
               the Company shall be deducted by EVS from the payment of Royalties; 



               



          		    (v)       
               All employment costs of the Dismissed Employees (as defined in Section 5.4(a)
               below) during the Minimal Period (as defined in Section 5.4(a) below) (the
               “Employment Costs”) shall be deducted by EVS from the payment
               of Royalties; 



               



4










          		    (vi)       
               In the event that the aggregate cost of the termination of the Dismissed
               Employees’ employment together with the Total Account Payables (the
               “Total Amount”) exceeds the Account Amount, the difference
               between (x) the Total Amount and (y) the Account Amount and the Account
               Difference, shall be deducted by EVS from the payment of Royalties; and 



               



          		    (vii)       
               All taxes that either the Company, EVS or any of the EVS Companies incurs as a
               result of the cancellation of the Options, shall be deducted by EVS from the
               payment of Royalties. 



               



          		    (c)             
                (i)        Royalties due to Ma’aragim minus any Reduced Amounts for the
               previous quarter and any other Reduced Amounts not previously deducted from the
               payment of Royalties, shall be paid on a quarterly basis, by no later than forty
               five (45) days following each financial quarter of the Royalty Term in which
               Products are sold by EVS, EVS shall provide Ma’aragim with a written
               summary describing all sales of the Product during each such financial quarter,
               within forty five (45) days following the end of the fiscal quarter. 



               



		    (ii)                  Notwithstanding
anything to the contrary herein, EVS shall withhold an aggregate amount equal to one hundred thousand US dollars ($100,000) (the
“Withheld Amount”) from the payment of Royalties in 2008 until such time
as: (a) EVS following the Closing Date has paid to the OCS as a direct result of the use
of the Assets in the sale of its products (the “OCS Payments”) an
aggregate amount equal to five hundred seventy five thousand US dollars ($575,000), in
which case the Withheld Amount shall remain with EVS and Ma’aragim shall have no
rights to the Withheld Amount, or (b) EVS has ceased using the Assets in the sale of its
products, in which case: (Y) if the OCS Payments are less than four hundred seventy five
thousand US dollars ($475,000) (the “OCS Debt”), EVS shall transfer the
entire Withheld Amount to Ma’aragim, and (Z) if the OCS Payments are equal to or
greater than the OCS Debt, then an amount equal to the difference between the OCS Payments
and the OCS Debt (the “OCS  Withheld Amount”) shall remain with
EVS and the difference between the Withheld Amount and the OCS Withheld Amount shall be
transferred to Ma’aragim. 







		    (iii)        Notwithstanding
anything to the contrary herein, EVS shall only pay Royalties for the first quarter of 2006 (the “Q1 2006
Royalties”) in amounts equal to the aggregate amount of Receivables the Company
has collected from the Receivables Persons by the date such Royalty payment is to be made
(the “Q1 2006  Receivables”). In the event the Q1 2006 Royalties
exceed the Q1 2006 Receivables, the difference between the Q1 2006 Royalties and the Q1
2006 Receivables shall be withheld by EVS until such time as the aggregate amount of
Receivables the Company has collected from the Receivables Persons is equal to the Q1 2006
Royalties. 







5










          		    (d)       
               Subject to a customary confidential undertaking, EVS will permit the authorized
               representatives of Ma’aragim, reasonably acceptable to EVS, review and
               copy, at reasonable times, and upon reasonable notice, and without unduly
               interfering with the operations of EVS, all books and records of EVS related to
               the sale of the Product. 



               



		    1.7       Ma’aragim
Waiver. Ma’aragim hereby waives and releases, effective as of the Closing Date,
any and all rights, claims and causes of action assertable against the Company in respect
of (i) its ownership of any securities of the Company and any and all agreements between
Ma’aragim and the Company, which agreements shall all automatically terminate as of
the Closing Date; and (ii) any funds it has provided to the Company, including without
limitation, under the Loan Agreement, the Convertible Loan Agreement between the Company
and Ma’aragim dated September 30, 2002 and the Convertible Loan Agreement between
the Company and Ma’aragim dated January 30, 2003.  







		    1.8        Employee
Options.  







          		    (a)       
               There are currently outstanding and unexercised options to acquire Options
               issued by the Company to employees, directors and consultants listed in
               Schedule 1.8 (the “Option Holders”). The names of all of
               the Option Holders and the number of the Ordinary Shares (as defined below)
               covered by each Option are set forth on Schedule 1.8. All such Options
               shall terminate as of the Closing Date at no expense to EVS. 



               



          		    (b)       
                As soon as practicable following the date hereof and in any event prior
               to the Closing Date, the Company shall secure the written agreement of all
               Option Holders, in a form acceptable to legal counsel of EVS, canceling all such
               Options and waiving their respective rights, if any, to any equity of the
               Company. 



               



	SECTION 2. 	 	
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND MA’ARAGIM.  






	 	        Each
of the Company and Ma’aragim, severally and jointly, hereby represent and warrant,
to and for the benefit of the Indemnitees (as defined below), the below representations
and warranties. Unless specifically stated otherwise all representations and warranties
shall be true and correct as of the date hereof and shall remain true and correct as of
the Closing as if made on such date. “Indemnitees” shall mean the
following Persons (as defined in Section 2.5(j)): (a) EVS; (b) EVS’s
current and future affiliates (including the Company); (c) the respective officers,
directors, employees, agents, attorneys, accountants and advisors (the “Representatives”)
of the Persons referred to in clauses “(a)” and “(b)” above; and (d) the
respective successors and assigns of the Persons referred to in clauses “(a)",
“(b)” and “(c)” above; provided, however, that Ma’aragim
shall not be deemed to be an “Indemnitee.” 







6










		    2.1        Due
Organization; Subsidiaries; Etc.  







          		    (a)       
               The Company is duly organized and validly existing under the laws of the State
               of Israel. The Company has all requisite corporate power and authority to
               conduct its business in the manner in which its business is currently being
               conducted and as currently proposed to be conducted and to own and use its
               assets in the manner in which its assets are currently and proposed to be owned
               and used. 



               



          		    (b)       
               The Company has not conducted any business under or otherwise used, for any
               purpose or in any jurisdiction, any fictitious name, assumed name, trade name or
               other name, other than the name, “Panoptes Ltd.” 



               



          		    (c)       
               The Company is not and has not been required to be qualified, authorized,
               registered or licensed to do business as a foreign corporation in any
               jurisdiction, except where the failure to be so qualified, authorized,
               registered or licensed has not and will not materially and adversely affect the
               business, properties or condition (financial or otherwise) of the Company
               (“Material  Adverse Effect”). 



               



          		    (d)       
               Part 2.1(d) of the Company Disclosure Schedule accurately sets forth
               (i) the names of the members of the Company’s board of directors (the
               “Board”), and (ii) the names and titles of the Company’s
               officers. The Board does not have and has never had any committees. 



               



          		    (e)       
               The Company does not own any controlling interest in any corporation (including
               any non-profit corporation), general partnership, limited partnership, limited
               liability partnership, joint venture, estate, trust, company (including any
               limited liability company or joint stock company), firm or other enterprise,
               association, organization or entity (each an “Entity”) and the
               Company has never owned, beneficially or otherwise, any shares or other
               securities of, or any direct or indirect equity interest in, any Entity. The
               Company has not agreed and is not obligated to make any future investment in or
               capital contribution to any Entity. 



               



		    2.2       Articles
of Association; Records. The Company has delivered to EVS accurate and complete
copies of: (1) its Memorandum of Association and Articles of Association, including
all amendments thereto; (2) the stock records of the Company; and (3) the minutes
and other records of the meetings and other proceedings (including any actions taken by
written consent or otherwise without a meeting) of the shareholders of the Company and
the Board. There have been no formal meetings or other proceedings of the shareholders of
the Company or the Board that are not fully reflected in such minutes or other records.
There has not been any violation of any of the provisions of the Memorandum of
Association or Articles of Association of the Company, nor has the Company taken any
action that is inconsistent with any resolution adopted by the Company’s
shareholders or the Board. The books of account, share records, minute books and other
records of the Company are accurate, up-to-date and complete in all material respects,
and have been maintained in accordance with prudent business practices.  







7










		    2.3       Capitalization. The
registered share capital of the Company is NIS 450,000 divided into 15,000,000
(fifteen million) Ordinary Shares, nominal value NIS 0.01 per share, (the “Ordinary
Shares”); 15,000,000 (fifteen million) Ordinary A Shares, nominal value NIS 0.01
per share (the “Ordinary A Shares”); and 15,000,000 (fifteen million)
Management Shares, nominal value NIS 0.01 per share (the “Management Shares” and
together with the Ordinary Shares and the Ordinary A Shares, the “Company Shares”);
of which 3,335,000 (three million three hundred and thirty five thousand) Ordinary
Shares, 1,900,000 (one million and nine hundred thousand) Ordinary A Shares and 8,100,000
(eight million and one hundred thousand) Management Shares are issued and outstanding
(all such issued and outstanding shares of the Company are referred to as, the “Shares”).
Except as set forth in Part 2.3 of the Company Disclosure Schedule, there are no
other shares, share capital, preemptive rights, convertible securities, outstanding
warrants, options or other rights to subscribe for, purchase or acquire from the Company
any share capital of the Company and there are not any contracts or binding commitments
providing for the issuance of, or the granting of rights to acquire, any share capital of
the Company or under which the Company is, or may become, obligated to issue any of its
securities. All issued and outstanding share capital of the Company has been duly
authorized, and is validly issued and outstanding and fully paid and nonassessable.
Excluding the transactions contemplated hereunder, at the Closing Date, there will not be
any outstanding or authorized subscriptions, options, warrants, calls, rights,
commitments, convertible securities, or any other agreements of any character directly or
indirectly obligating the Company or any Entity under the control of the Company, to
issue any additional shares or any securities convertible into, or exchangeable for, or
evidencing the right to subscribe for, any shares of the Company or any Entity under the
control of the Company.  







		     2.4        Financial
Statements.  







          		    (a)       
               The Company has delivered to EVS the following financial statements and notes
               (collectively, the “Company Financial Statements”): 



               



          		    (i)       
               audited and consolidated, financial statements of the Company as of and for the
               year ended December 31, 2004, attached hereto as Schedule 2.4(a)(i); and 



               



          		    (ii)       
               the unaudited and consolidated balance sheet of the Company as of September 30,
               2005, attached hereto as Schedule 2.4(a)(ii) (the “Unaudited
               Interim Balance Sheet”). 



               



8










          		    (b)       
                The Company Financial Statements are accurate and complete in all
               material respects and present fairly the financial position of the Company as of
               the respective dates thereof and the results of operations and (in the case of
               the financial statements referred to in Section 2.4(a)(i)) cash flows of the
               Company for the periods covered thereby. The Company Financial Statements have
               been prepared in accordance with generally accepted accounting principles
               consistently applied in Israel throughout the periods covered and comply with
               the requirements of all applicable regulations. 



               



          		    (c)       
               All proper and necessary books of account, minute books, registers and records
               have been maintained by the Company, are in its possession and contain accurate
               information relating to all material transactions to which the Company has been
               a party. 



               



          		    (d)       
               A complete list of the Company’s outstanding debts and loan facilities is
               set forth in Part 2.4(d) of the Company Disclosure Schedule. 



               



          		    (e)       
               As of October 19, 2005, the account receivables of the Company with payments due
               prior to February 1, 2006 as listed in Schedule 1.6(b)(i) (the
               “Receivables”), were at least five hundred thousand US dollars
               ($500,000). 



               



          		    (f)       
               As of the Closing Date, (i) the total account payables and other liabilities as
               listed in the Unaudited Interim Balance Sheet, excluding future royalty payments
               to be paid back by the Company to the Israeli Office of the Chief Scientist (the
               “OCS”) for grants received by the Company from the OCS (but
               including all royalty payments owed to the OCS prior to the Closing Date), (ii)
               the Company’s aggregate debt to banks and other financial institutions (the
               “Total Account Payables”), and (iii) fees, costs and expenses
               incurred for the Company and Ma’aragim in connection with the transactions
               contemplated by this Agreement and the negotiations leading up to the execution
               of this Agreement, minus (iv) any VAT refunds for the
               period prior to the Closing Date shall not exceed four hundred twenty thousand
               US dollars ($420,000) (the “Account Amount”). 



               



		                    2.5        Absence
of Changes.  Since September 30, 2005: 







          		    (a)       
               there has not been any material adverse change in the Company’s business,
               prospects, operations, assets, liabilities, debts, work force or its condition
               (financial or otherwise) and no event has occurred that will, or could
               reasonably be expected to, have a Material Adverse Effect on the Company; 



               



          		    (b)       
               there has not been any material loss, damage or destruction to, or any material
               interruption in the use of, any of the Company’s assets (whether or not
               covered by insurance); 



               



          		    (c)       
               the Company has not declared, accrued, set aside or paid any dividend or made
               any other distribution in respect of any of its shares, and has not repurchased,
               redeemed or otherwise reacquired any of its shares or other securities; 



               



9










          		    (d)       
               Excluding the execution of the Loan Agreement, the Company has not sold, issued
               or authorized the issuance of (i) any share capital or other security,
               (ii) any option or right to acquire any share capital or any other security
               or (iii) any instrument convertible into or exchangeable for any share
               capital or other security; 



               



          		    (e)       
               the Company has not amended or waived any of its rights under, or permitted the
               acceleration of vesting under (i) any provision of the ESOP for the
               issuance of Options to employees, directors, officers and consultants of the
               Company and (ii) any provision of any agreement evidencing any outstanding
               Option or rights to equity; 



               



          		    (f)       
               there has been no amendment to the Memorandum of Association or the Articles of
               Association of the Company and the Company has not effected or been a party to
               any transaction involving: (i) the sale, license, disposition or acquisition of
               all or any portion of the Company’s business or assets; (ii) the issuance,
               disposition or acquisition of (x) any share capital or other equity
               security of the Company, (y) any option, call, warrant or right (whether or
               not immediately exercisable) to acquire any share capital or other equity
               security of the Company, or (z) any security, instrument or obligation that
               is or may become convertible into or exchangeable for any share capital or other
               equity security of the Company; or (iii) any merger, consolidation, acquisition,
               business combination, reorganization or similar transaction involving the
               Company (each, an “Acquisition  Transaction”),
               recapitalization, reclassification of shares, share split, reverse share split
               or similar transaction; 



               



          		    (g)       
               the Company has not formed any subsidiary or acquired any equity interest or
               other interest in any other Entity; 



               



          		    (h)       
               the Company has not made any capital expenditure which exceeds ten thousand US
               dollars ($10,000); 



               



          		    (i)       
               the Company has not (i) entered into or permitted any of the assets owned
               or used by it to become bound by any written, oral or other agreement, contract,
               subcontract, lease, understanding, instrument, note, warranty, insurance policy,
               benefit plan or legally binding commitment or undertaking of any nature (each a
               “Contract”) that is or would constitute a Material Agreement
               (as defined in Section 2.10(a)), or (ii) amended or prematurely terminated,
               or waived any material right or remedy under, any such Contract; 



               



          		    (j)       
               the Company has not (i) acquired, leased or licensed any right or other
               asset from any other individual, Entity or Governmental Body (each, a
               “Person”), (ii) sold or otherwise disposed of, or leased
               or licensed, any right or other asset to any other Person, or (iii) waived
               or relinquished any right; 



               



10










          		    (k)       
               the Company has not written off as uncollectible, or established any
               extraordinary reserve with respect to, any account receivable or other
               indebtedness; 



               



          		    (l)       
               the Company has not made any pledge of any of its assets or otherwise permitted
               any of its assets to become subject to any lien, pledge, hypothecation, charge,
               mortgage, security interest, encumbrance, claim, infringement, interference,
               option, right of first refusal, preemptive right, community property interest or
               restriction of any nature (including any restriction on the voting of any
               security, any restriction on the transfer of any security or other asset, any
               restriction on the receipt of any income derived from any asset, any restriction
               on the use of any asset and any restriction on the possession, exercise or
               transfer of any other attribute of ownership of any asset) (each, an
               “Encumbrance”); 



               



          		    (m)       
               the Company has not (i) lent money to any Person, or (ii) incurred or
               guaranteed any indebtedness for borrowed money; 



               



          		    (n)       
               the Company has not (i) established or adopted any employee incentive plan,
               (ii) paid any bonus or made any profit-sharing or similar payment to, or
               increased the amount of the wages, salary, commissions, fringe benefits or other
               compensation or remuneration payable to, any of its directors, officers or
               employees, or (iii) hired any new employees or consultants; 



               



          		    (o)       
               Except as disclosed in Part 2.5(o) of the Company  Disclosure
               Schedule, there has been no resignation or termination of employment of any,
               employee, officer or consultant of the Company; 



               



          		    (p)       
               the Company has not changed any of its methods of accounting or accounting
               practices in any respect; 



               



          		    (q)       
               the Company has not made any Tax election. “Tax” shall mean any
               tax (including any income tax, franchise tax, capital gains tax, gross receipts
               tax, value-added tax, surtax, excise tax, ad valorem tax, transfer tax, stamp
               tax, sales tax, use tax, property tax, business tax, withholding tax or payroll
               tax), levy, assessment, tariff, duty (including any customs duty), deficiency or
               fee, and any related charge or amount (including any fine, penalty or interest),
               imposed, assessed or collected by or under the authority of any:
               (a) nation, state, commonwealth, province, territory, county, municipality,
               district or other jurisdiction of any nature; (b) federal, state, local,
               municipal, foreign or other government; or (c) governmental or
               quasi-governmental authority of any nature (including any governmental division,
               department, agency, commission, instrumentality, official, organization, unit,
               body or Entity and any court or other tribunal) (each, a “Governmental
               Body”); 



               



11










          		    (r)       
               the Company has not commenced or settled any action, suit, litigation,
               arbitration, proceeding (including any civil, criminal, administrative,
               investigative or appellate proceeding), hearing, inquiry, audit, examination or
               investigation commenced, brought, conducted or heard by or before, or otherwise
               involving, any court or other Governmental Body or any arbitrator or arbitration
               panel (each, a “Legal Proceeding”); 



               



          		    (s)       
               the Company has not entered into any transaction or taken any other action
               outside the ordinary course of business or inconsistent with its past practices;
               and 



               



          		    (t)       
               the Company has not agreed or committed to take any of the actions referred to
               in clauses “(a)” through “(s)” above. 



               



		    2.6       Properties
and Assets. Full and accurate details of the Company’s properties and assets are
contained in Part 2.6 of the Company Disclosure Schedule. Except as disclosed in
Part 2.6 of the Company Disclosure Schedule, the Company has good and marketable
title to its assets, including without limitation those reflected in the Company
Financial Statements, free and clear of any right, interest or equity of any individual
or entity (including any right to acquire, option, or right of preemption) or any
mortgage, charge, pledge, lien, or assignment, or any other encumbrance or security
interest or arrangement of whatsoever nature over or in the relevant property (“Security
Interests”). With respect to the assets that are leased, the Company is in
compliance with all material provisions of such leases, such leases are valid and
binding, and, the Company holds leasehold interests in such assets free and clear of all
Security Interests.  







		     2.7        Bank
Accounts; Receivables.  







          		    (a)       
               Part 2.7(a) of the Company Disclosure Schedule provides accurate
               information with respect to each account maintained by or for the benefit of the
               Company at any bank or other financial institution. 



               



          		    (b)       
               Schedule 1.6(b)(i) provides an accurate and complete breakdown and aging
               of all accounts receivable, notes receivable and other receivables of the
               Company as of October 19, 2005. All existing accounts receivable of the Company
               (including those accounts receivable reflected on the Unaudited Interim Balance
               Sheet that have not yet been collected and those accounts receivable that have
               arisen since October 19, 2005 and have not yet been collected) (i) represent
               valid obligations of customers of the Company arising from bona fide
               transactions entered into in the ordinary course of business and (ii) are
               current and are expected to be collected in full when due, without any
               counterclaim or set off. 



               



12










		     2.8        Equipment;
Leasehold.  







          		    (a)       
               All material items of equipment and other tangible assets owned by or leased to
               the Company are adequate for the uses to which they are being put, are in good
               condition and repair (ordinary wear and tear excepted) and are adequate for the
               conduct of the Company’s business in the manner in which such business is
               currently being conducted and as currently proposed to be conducted. 



               



          		    (b)       
               The Company does not own any real property or any interest in real property,
               except for the leasehold created under the real property lease identified in
               Part 2.8 of the Company Disclosure Schedule. 



               



		     2.9        Intellectual
Property and Other Intangible Assets.  







          		    (a)       
               As used herein, the term “Intellectual Property” shall mean all
               registered patents, designs and trademarks, all applications for registration
               thereof, and all computer programs including, but not limited to, computer
               programs embodied in semiconductor chips, and related flow-charts, programmer
               notes, updates and data, whether in object or source code form, developed, or
               used in connection with the business of the Company, and all hardware,
               algorithms, utilities flowcharts, logic, documentation, processes, formulations,
               data, experimental methods, or results, descriptions, business or scientific
               plans, depictions, customer lists and any other written, printed or
               electronically stored materials or information, including specifications,
               pricing plans, market research or data, potential marketing strategies,
               prospective users and distribution channels, engineering drawings, information
               concerning specialized suppliers, specifications for products and/ or processes
               and/or software, test protocols, and all other materials relating thereto, and
               copies thereof in any storage media, and all other works of authorship,
               inventions, concepts, ideas, and discoveries developed, discovered, conceived,
               created, made, reduced to practice, or used by the Company and all intellectual
               property rights therein, including, without limitation, all copyrights in the
               United States, Israel and elsewhere, including all rights of registration and
               publication, rights to create derivative works, and all other rights incident to
               copyright ownership, for the residue now unexpired of the present term of any
               and all such copyrights and any term thereafter granted during which such
               information is entitled to copyright, and all inventions (patentable or
               unpatentable), trade secrets, know-how, ideas and confidential information
               embodied or reflected in such information, including any shop rights, for the
               longest period of protection accorded to such interests under applicable law. 



               



          		    (b)       
               The Company (i) owns or has the right to use, free and clear of all liens,
               claims and restrictions the Intellectual Property used in the conduct of its
               business, and (ii) such Intellectual Property does not infringe upon or violate
               any right, lien, or claim of others, including without limitation any of its
               present or former employees or consultants or the former employers of all such
               persons. Except as set forth in Part 2.9(b) of the Company Disclosure
               Schedule, the Company is not currently obligated or under any liability
               whatsoever to make any payments by way of royalties, fees or otherwise to any
               owner or licensee of, or other claimant to, any patent, trademark, service mark,
               trade name, copyright or other intangible asset, with respect to the use thereof
               or in connection with the conduct of its business or otherwise. 



               



13










          		    (c)       
               Any and all Intellectual Property of any kind which has been developed or, is
               currently being developed, by any of the Company or any employees or consultants
               of the Company is the property solely of the Company. The Company has taken
               security measures to protect the secrecy, confidentiality and value of all the
               Intellectual Property, which measures are reasonable and customary in the
               industry in which the Company operates. Each person who, either alone or in
               concert with others, developed, invented, discovered, derived, programmed or
               designed the Intellectual Property, or who has knowledge of or access to
               information about the Intellectual Property, has entered into a written
               non-disclosure agreement with the Company regarding the assignment of ownership
               and confidential treatment of the Intellectual Property. 



               



          		    (d)       
               Except as specifically set forth in Part 2.9(d) of the  Company
               Disclosure Schedule, neither the Company nor, to the best knowledge of the
               Company, any of its directors, officers, consultants or employees has received
               any communications alleging that the Company has violated or by conducting its
               business as currently conducted, would violate, any of the patents, trademarks,
               service marks, trade names, copyrights or trade secrets or other proprietary
               rights of any other person or entity. Except as set forth in Part 2.9(d) of
               the Company Disclosure  Schedule, neither the Company nor, to the best
               knowledge of the Company, any of its directors, officers, consultants or
               employees has received notice nor is it otherwise aware of any infringement of
               or conflict with asserted rights of others, with respect to any of the
               Intellectual Property, or of any facts, or assertion of any facts, which would
               render any of the Intellectual Property, questionable, invalid or unenforceable. 



               



          		    (e)       
               To the best knowledge of the Company, none of the Company’s employees,
               officers, consultants or directors are obligated under any contract (including
               licenses, covenants or commitments of any nature) or other agreement, or subject
               to any judgment, decree or order of any court or administrative agency, that
               would interfere with the use of such persons’ best efforts to promote the
               interests of the Company or that would conflict with the Company’s business
               as conducted and as proposed to be conducted. Neither the execution nor delivery
               of the Agreement, nor, to the best knowledge of the Company, the carrying on of
               the Company’s business by employees and consultants of the Company, nor the
               conduct of the Company’s business as proposed to be conducted, will
               conflict with or result in a material breach of the terms, conditions or
               provisions of, or constitute a default under, any contract, covenant or
               instrument under which any of the Company’s employees, officers,
               consultants or directors is now obligated. It is not, and will not become,
               necessary to utilize any inventions, and specifically, patent applications, of
               any of the Company’s employees or consultants (or people the Company
               currently intends to hire) made prior to their employment or hire by the Company
               other than those that have been assigned to the Company pursuant to valid and
               legally binding instruments of assignment. 



               



14










          		    (f)       
               The Intellectual Property owned by the Company constitutes all of the
               Intellectual Property necessary to enable the Company to conduct its business in
               the manner in which such business has been and is being conducted. The Company
               has not licensed any of the Company Intellectual Property to any Person
               on an exclusive basis, nor has the Company entered into any covenant not to
               compete, or entered into a Contract limiting its ability to exploit fully any of
               its Intellectual Property or to transact business in any market or
               geographical area or with any Person. 



               



          		    (g)       
               All of the Intellectual Property of the Company, including without limitation,
               all licenses and other rights to use Intellectual Property not owned by the
               Company, is listed in Schedule 1.1 and upon the transfer of the Assets,
               EVS will have full ownership of all Intellectual Property necessary to enable
               EVS to conduct the business of the Company in the same manner in which the
               Company’s business has been conducted up to and immediately prior to the
               execution of this Agreement. 



               



		     2.10        Agreements
and Trading.  







          		    (a)       
               All the material agreements to which the Company is a party (including
               instruments, leases, licenses, arrangements, or undertakings of any nature,
               written or oral) (the “Material Agreements”) are listed in
               Part 2.10(a) of the  Company Disclosure Schedule. 



               



          		    (b)       
               All the Material Agreements are in full force and effect and the Company has no
               knowledge of the invalidity of or grounds for rescission, avoidance or
               repudiation of any of the Material Agreements and, the Company has not received
               any notice of any intention to terminate any such agreement. 



               



          		    (c)       
               The Company and all third parties with whom it has transacted business have
               performed in all respects all of their material obligations under the Material
               Agreements. To the best of the Company’s knowledge, no party to any of the
               Material Agreements is in breach or in default in any respect of its material
               obligations thereunder. No party to any of the Material Agreements has made a
               claim to the effect that the Company has failed to perform any obligation
               thereunder. 



               



          		    (d)       
               There are no agreements, promises or understandings in force restricting the
               competitive freedom of the Company to provide and take goods and services by
               such means and from and to such individuals or entities as it may from time to
               time think fit. 



               



15










          		    (e)       
               The Company has delivered to EVS accurate and complete copies of all written
               Material Agreements identified in Part 2.10(a) of the Company 
               Disclosure Schedule, including all amendments thereto. Part 2.10(a) of
               the Company  Disclosure Schedule provides an accurate description of
               the terms of each Material Agreement that is not in written form. Each Material
               Agreement identified in Part  2.10(a) of the Company Disclosure
               Schedule is valid and in full force and effect, and, is enforceable by the
               Company in accordance with its terms. 



               



          		    (f)       
               (i)        the Company has not violated or breached, or committed any default
               under, any Material Agreement, and, to the Company’s best knowledge, no
               other Person has violated or breached, or committed any default under, any
               Material Agreement; 



               



		                (ii)                   no
event has occurred, and no circumstance or condition
exists, that (with or without notice or lapse of time) will, or could reasonably be
expected to, (A) result in a material violation or breach of any of the provisions of
any Material Agreement, (B) give any Person the right to declare a material default
or exercise any remedy under any Material Agreement, (C) give any Person the right to
accelerate the maturity or performance of any Material Agreement, or (D) give any
Person the right to cancel, terminate or modify any Material Agreement; 







		                (iii)                  since
September 30, 2005, the Company has not  received
any notice or other communication regarding any actual or possible violation or breach of,
or default under, any Material Agreement; and 







		                (iv)                  the
Company has not waived any of its rights under
any Material Agreement.






          		    (g)       
               No Person is renegotiating, or has a right pursuant to the terms of any Material
               Agreement to renegotiate, any amount paid or payable to or by the Company under
               any Material Agreement or any other material term or provision of any Material
               Agreement. 



               



          		    (h)       
               The Material Agreements identified in Part 2.10(a) of the  Company
               Disclosure Schedule collectively constitute all of the Contracts necessary
               to enable the Company to conduct its business in the manner in which its
               business is currently being and proposed to be conducted. 



               



          		    (i)       
               Part 2.10(i) of the Company Disclosure Schedule identifies
               and provides a brief description of each proposed Contract as to which any bid,
               offer, award, written proposal, term sheet or similar document has been
               submitted or received by the Company regarding the business of the Company since
               September 30, 2005. 



               



          		    (j)       
               Part 2.10(j) of the Company Disclosure Schedule provides an accurate
               description and breakdown of the Company’s backlog under Material
               Agreements. 



               



16










		     2.11        Capital
Expenditure and Commitments. Except as disclosed in Part 2.11 of the Company
Disclosure Schedule or in the Company Financial Statements:  







          		    (a)       
               The Company has not undertaken to make any material capital commitment,
               expenditure or purchase. 



               



          		    (b)       
               The Company is not a party to any material hire, hire purchase, credit sale or
               conditional sale agreement or any contract providing for payment on deferred
               terms in respect of assets purchased by the Company. 



               



          		    (c)       
               The Company is not in breach of any material obligation under any material deed,
               agreement or transaction to which it is a party, and to the best of its
               knowledge, no third party that has transacted business with the Company is in
               breach of any of its material obligations under any material deed, agreement, or
               transaction with the Company to which it is a party. 



               



          		    (d)       
               The Company is not aware of any Security Interest on, over or affecting the
               issued or unissued share capital of the Company, nor is the Company aware of any
               agreement or commitment to give or create any such Security Interest and no
               claim has been made by any Person to be entitled to any such Security Interest. 



               



          		    (e)       
               The Company has not given any guarantee, indemnity or security for, or otherwise
               agreed to become directly or contingently liable for, any obligation of any
               other individual or entity, and to the best of the Company’s knowledge, no
               individual or entity has given any guaranty of or security for any of the
               Company’s obligations. 



               



          		    (f)       
               There are in force no powers of attorney given by the Company with respect to
               any asset or business of the Company, and no individual or entity, as agent,
               representative, distributor or otherwise, is entitled or authorized to bind or
               commit the Company to any obligation not in the ordinary course of the
               Company’s business. 



               



          		    (g)       
               The Company has not applied for or received any grant, right or allowance from
               any governmental authority in any jurisdiction with the exception of grants,
               rights and allowances received from the OCS and the Investment Center of the
               Ministry of Industry and Trade of the State of Israel (“IC”).
               Part  2.11(g) of the Company Disclosure Schedule provides an
               accurate description and breakdown of all grants, rights and allowances received
               from the OCS and the IC to date. 



               



17










		     2.12        Compliance
with Legal Requirements.  







          		    (a)       
               To the best of its knowledge, information and belief, the Company has carried on
               its business and affairs in all material respects in accordance with all
               applicable laws and regulations, to the extent material to the Company’s
               business or assets, including, inter alia, in accordance with the provisions of
               the Israeli Companies Law – 1999 and in accordance with the Memorandum of
               Association and Articles of Association of the Company, and, the Company is not
               in violation or default with respect to any statute, regulation, order, decree,
               or judgment of any court or any governmental agency which could have a Material
               Adverse Effect upon the Company’s assets or business, and the Company has
               been granted and there are now in force all approvals, consents, and licenses
               necessary for the carrying on of its business in the places and in the manner in
               which it is now carried on, and the Company is not aware of any circumstances
               which evidence or indicate that any such approvals, consents or licenses, are
               likely to be suspended, canceled, revoked or not renewed. 



               



          		    (b)       
               The copies of the Memorandum of Association and Articles of Association of the
               Company, all as provided to EVS prior to the Closing Date, are complete, true,
               accurate and have not been amended or repealed. 



               



          		    (c)       
               To the best of the Company’s knowledge, all documents required to be filed
               with or delivered to any government authority in respect of the Company have
               been properly filed or delivered in a timely manner. 



               



		    2.13       Governmental
Authorizations. Part 2.13 of the Company Disclosure Schedule identifies
each (i) material permit, license, certificate, franchise, permission, clearance,
registration, qualification or authorization issued, granted, given or otherwise made
available by or under the authority of any Governmental Body or pursuant to any federal,
state, local, municipal, foreign or other law, statute, constitution, principle of common
law, resolution, ordinance, code, edict, decree, rule, regulation, ruling or requirement
issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or
under the authority of any Governmental Body (each a “Legal Requirement”),
or (b) right under any Contract with any Governmental Body (each of (a) and (b)
referred to as a “Governmental Authorization”) held by the Company, and
the Company has delivered to EVS accurate and complete copies of all Governmental
Authorizations identified in Part 2.13 of the Company Disclosure Schedule.
The Governmental Authorizations identified in Part 2.13 of the Company Disclosure
Schedule are valid and in full force and effect, and collectively constitute all
Governmental Authorizations necessary to enable the Company to conduct its business in
the manner in which its business is currently being and is proposed to be conducted. The
Company is in compliance with the terms and requirements of the respective Governmental
Authorizations identified in Part 2.13 of the Company Disclosure Schedule.
The Company has not received any notice or other communication from any Governmental Body
regarding (a) any actual or possible violation of or failure to comply with any term
or requirement of any Governmental Authorization, or (b) any actual or possible
revocation, withdrawal, suspension, cancellation, termination or modification of any
Governmental Authorization.  







18










		     2.14        Tax
Matters.  







          		    (a)       
               The Company Financial Statements make full provisions for all Taxes for which
               the Company was then or thereafter became or may hereafter become liable or
               accountable in respect of or by reference to any income, profit, receipt, gain,
               transaction, agreement, distribution or event which was earned, accrued,
               received, or realized, entered into, paid, made or accrued on or before December
               31, 2004, and the Company promptly paid or fully provided in its books of
               account for all Taxes for which it has or may hereafter become liable or
               accountable in the period from the date of its incorporation to the Closing
               Date. 



               



          		    (b)       
               The Company has at all times and within the requisite time limits promptly,
               fully and accurately observed, performed and complied with all material
               obligations or conditions imposed on it, or to which any claim, deduction,
               allowance or relief made, claimed by or afforded to it was made subject, under
               any legislation relating to Taxes. 



               



          		    (c)       
               The Company is not aware of any circumstances which will or may, whether by
               lapse of time or the issue of any notice of assessment or otherwise, give rise
               to any dispute with any relevant Government Body in relation to its liability or
               accountability for Taxes, any claim made by it, any relief, deduction, or
               allowance afforded to it, or in relation to the status or character of the
               Company or any of its enterprises under or for the purpose of any provision of
               any legislation relating to Taxes. 



               



		     2.15        Employees.  







          		    (a)       
               Full particulars of all the directors, officers, employees and consultants of
               the Company (each, an “Employee”), including their present
               compensation packages, are disclosed in Part 2.15(a) of the Company
               Disclosure  Schedule, which particulars show all benefits including, without
               limitation, salaries, directors’ fees, social benefits, bonuses,
               commissions, profit shares, automobile, reimbursement of expenses and benefits
               in kind (“Benefits”) payable or which the Company is bound to
               provide (whether now or in the future) to each director, officer, employee and
               consultant of the Company, and are true, accurate and complete. 



               



          		    (b)       
               Except as disclosed in Part 2.15(b) of the Company  Disclosure
               Schedule, no employee or consultant of the Company has been dismissed in the
               last six months or has given notice of termination of his employment. 



               



          		    (c)       
               Part 2.15(c) of the Company Disclosure Schedule includes the form of
               contracts under which all of the Company’s employees and consultants, at
               the date hereof, are engaged. 



               



19










          		    (d)       
               Subject to the provisions of any applicable law and except as set forth in
               Part 2.15(d) of the Company Disclosure Schedule, there are no agreements
               or arrangements (whether legally enforceable or not) for the payment of any
               pensions, allowances, lump sums, or other like benefits on retirement or on
               death or termination or during periods of sickness or disablement for the
               benefit of any employee, director or officer of the Company or for any former
               employee, director or officer of the Company or for the benefit of the
               dependents of any such individual in operation at the date hereof. 



               



          		    (e)       
               All the Benefits to which any employee, officer or director of the Company or
               any former officer, director or employee of the Company is or may be entitled
               including, inter alia, leave and health, have been paid or adequately provided
               for in the Company Financial Statements. The Company has made full provision for
               and has made all necessary payments in connection with severance pay that may be
               owed to any employee, officer or director of the Company. 



               



          		    (f)       
               A complete list of all of the outstanding shares and options granted to or
               purchased by employees, directors, officers or consultants of the Company, and
               their respective vesting schedules, is set forth in Part 2.15(f) of 
               the Company Disclosure Schedule. Except as set forth therein, the Company
               does not maintain any share incentive scheme, share option scheme or profit
               sharing scheme for the benefit of any of its directors, officers, employees or
               consultants. 



               



          		    (g)       
               Neither the execution, delivery or performance of this Agreement, nor the
               consummation of any of the other transactions contemplated by this Agreement,
               will result in any payment (including any bonus, golden parachute or severance
               payment) to any current or former employee, officer or director of the Company
               (whether or not under any incentive plan), or materially increase the benefits
               payable under any incentive plan, or result in any acceleration of the time of
               payment or vesting of any such benefits. 



               



          		    (h)       
               Part 2.15(a) of the Company Disclosure Schedule contains a list of
               all salaried employees and consultants of the Company as of the date of this
               Agreement, and correctly reflects, in all material respects, their salaries, any
               other compensation payable to them (including compensation payable pursuant to
               bonus, deferred compensation or commission arrangements), their dates of
               employment and their positions. The Company is not a party to any collective
               bargaining contract or other Contract with a labor union involving any of its
               employees. All of the Company’s employees are “at will” employees
               and may be dismissed by providing up to forty five (45) days notice. 



               



          		    (i)       
               There are no employees who are not fully available to perform work because of
               disability or other leave and sets forth the basis of such leave and the
               anticipated date of return to full service. 



               



20










          		    (j)       
               The Company is in compliance with all applicable Legal Requirements and
               Contracts relating to employment, employment practices, wages, bonuses and terms
               and conditions of employment, including employee compensation matters. 



               



          		    (k)       
               The Company is not aware of any organizational campaigns, petitions or other
               unionization activities seeking recognition of a collective bargaining unit
               which could affect the Company; nor is the Company aware of any controversies,
               strikes, slowdowns or work stoppages pending or threatened between the Company
               and any of its employees. The consummation of any of the transactions
               contemplated by this Agreement will not have a Material Adverse Effect on the
               Company’s labor relations, and none of the Company’s employees has
               notified the Company of any intention to terminate his or her employment with
               the Company. 



               



		    2.16       Environmental
Matters. The Company is in compliance in all material respects with all applicable
Environmental Laws (as defined below), which compliance includes the possession by the
Company of all permits and other Governmental Authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof. The Company has
not received any notice or other communication (in writing or otherwise), whether from a
Governmental Body, citizens group, employee or otherwise, that alleges that the Company
is not in compliance with any Environmental Law, and there are no circumstances that may
prevent or interfere with the Company’s compliance with any Environmental Law in the
future. To the Company’s best knowledge, no current or prior owner of any property
leased or controlled by the Company has received any notice or other communication (in
writing or otherwise), whether from a Government Body, citizens group, employee or
otherwise, that alleges that such current or prior owner or the Company is not in
compliance with any Environmental Law with respect to such property. All Governmental
Authorizations currently held by the Company pursuant to Environmental Laws are
identified in Part 2.16 of the Company Disclosure Schedule. For purposes of
this Section 2.16: (i) “Environmental Law” means any federal,
state, local or foreign Legal Requirement relating to pollution or protection of human
health or the environment (including ambient air, surface water, ground water, land
surface or subsurface strata), including any law or regulation relating to emissions,
discharges, releases or threatened releases of Materials of Environmental Concern, or
otherwise relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Materials of Environmental Concern; and (ii) “Materials
of Environmental Concern” include chemicals, pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products and any other substance that
is now regulated by any Environmental Law or that is otherwise a danger to health,
reproduction or the environment.  







21










		    2.17        Insurance.  







          		    (a)       
               Full and accurate details of the Company’s insurance policies are contained
               in Part 2.17(a) of the Company Disclosure Schedule. 



               



          		    (b)       
               The Company has not done anything or suffered any damage which has rendered or
               might render any policies of insurance taken out by it void or voidable or which
               might result in an increase in premiums and the Company has complied with all
               conditions attached to such policies. 



               



          		    (c)       
               There is no claim outstanding under any of such policies nor are there any
               circumstances likely to give rise to such a claim. 



               



		    2.18       Related
Party Transactions. Except as set forth in Part 2.18 of the Company
Disclosure Schedule: (a) no Related Party (as defined below) has, and no Related
Party has at any time, any direct or indirect interest in any asset used in or otherwise
relating to the business of the Company; (b) no Related Party is, or has at any time
been, indebted to the Company; (c) no Related Party has entered into, or has had any
direct or indirect financial interest in, any Material Agreement, transaction or business
dealing involving the Company; (d) no Related Party is competing, or has at any time
competed, directly or indirectly, with the Company; and (e) no Related Party has any
claim or right against the Company. For purposes of this Section 2.18 each of the
following shall be deemed to be a “Related Party”: (i) each
shareholder of the Company that owns an aggregate of five percent (5%) or more of the
share capital of the Company; (ii) each individual who is, or who has at any time
been, an officer or director of the Company; (iii) each member of the immediate
family of each of the individuals referred to in clauses “(i)” and “(ii)” above;
and (iv) any trust or other Entity (other than the Company) in which any one of the
individuals referred to in clauses “(i)", “(ii)”and “(iii)” above
holds (or in which more than one of such individuals collectively hold), beneficially or
otherwise, a material voting, proprietary or equity interest.  







		     2.19        Legal
Proceedings; Orders.  







          		    (a)       
               Except as set forth in Part 2.19 of the Company Disclosure 
               Schedule there is no, nor will there have been any pending Legal
               Proceeding, and, no Person has threatened to commence any Legal Proceeding:
               (i) that involves the Company or any of the assets owned or used by the
               Company or any Person whose liability the Company has or may have retained or
               assumed, either contractually or by operation of law; or (ii) that
               challenges, or that may have the effect of preventing, delaying, making illegal
               or otherwise interfering with, any of the transactions contemplated by this
               Agreement. No event has occurred, and no claim, dispute or other condition or
               circumstance exists, that will, or that could reasonably be expected to, give
               rise to or serve as a basis for the commencement of any such Legal Proceeding. 



               



22










          		    (b)       
               Except as set forth in Part 2.19 of the Company Disclosure 
               Schedule, no Legal Proceeding has ever been commenced by or has ever been
               pending against the Company. 



               



          		    (c)       
               Except as set forth in Part 2.19 of the Company Disclosure 
               Schedule, there is no order, writ, injunction, judgment or decree to
               which the Company, or any of the assets owned or used by the Company, is
               subject. To the Company’s best knowledge, no director, officer, consultant
               or employee of the Company is subject to any order, writ, injunction, judgment
               or decree that prohibits such director, officer, consultant or employee from
               engaging in or continuing any conduct, activity or practice relating to the
               Company’s business. 



               



		    2.20       Authority;
Binding Nature of Agreement. The Company has the absolute and unrestricted right,
power and authority to enter into and to perform its obligations under this Agreement and
the execution, delivery and performance by the Company of this Agreement have been duly
authorized by all necessary action on the part of the Company and its board of directors.
This Agreement constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to (i) laws of
general application relating to bankruptcy, insolvency and the relief of debtors, and (ii) rules
of law governing specific performance, injunctive relief and other equitable remedies.  







		    2.21       Non-Contravention;
Consents. Neither (1) the execution, delivery or performance of this Agreement
or any of the other agreements referred to in this Agreement, nor (2) the
consummation of any of the transactions contemplated by this Agreement, will directly or
indirectly (with or without notice or lapse of time):  







          		    (a)       
               contravene, conflict with or result in a violation of (i) any of the
               provisions of the Memorandum of Association or Articles of Association of the
               Company, or (ii) any resolution adopted by the Company’s shareholders
               or the Board; 



               



          		    (b)       
               contravene, conflict with or result in a violation of, or give any Governmental
               Body or other Person the right to challenge any of the transactions contemplated
               by this Agreement or to exercise any remedy or obtain any relief under, any
               Legal Requirement or any order, writ, injunction, judgment or decree to which
               the Company, or any of the assets owned or used by the Company, is subject; 



               



          		    (c)       
               contravene, conflict with or result in a violation of any of the terms or
               requirements of, or give any Governmental Body the right to revoke, withdraw,
               suspend, cancel, terminate or modify, any Governmental Authorization that is
               held by the Company or that otherwise relates to the Company’s business or
               to any of the assets owned or used by the Company; 



               



23










          		    (d)       
               contravene, conflict with or result in a violation or breach of, or result in a
               default under, any provision of any Material Agreement that is or would
               constitute a Material Agreement, or give any Person the right to
               (i) declare a default or exercise any remedy under any such Material
               Agreement, (ii) accelerate the maturity or performance of any such Material
               Agreement, or (iii) cancel, terminate or modify any such Material
               Agreement; or 



               



          		    (e)       
               result in the imposition or creation of any Lien or other Encumbrance upon or
               with respect to any asset owned or used by the Company. 



               



	 	
Except
as set forth in Part 2.21 of the Company Disclosure Schedule, the Company is
not and will not be required to make any filing with or give any notice to, or to obtain
any approval, consent, ratification, permission, waiver or authorization (including any
Governmental Authorization) (“Consent”) from, any Person in connection
with (x) the execution, delivery or performance of this Agreement or any of the
other agreements referred to in this Agreement, or (y) the consummation of any of
the transactions contemplated by this Agreement.  






		    2.22       No
Conflicting Interest. Except as set forth in Part 2.22 of the Company
Disclosure Schedule, the Company is not aware that any director, officer, employee or
Related Party of the Company has any interest in any corporation, partnership, or other
entity that is engaged in a business which is in competition with that of the Company, is
a supplier or customer of the Company, or is a party to any Contract which may have any
effect on the business of the Company.  







		    2.23        Ma’aragim.
Ma’aragim owns all of the Shares and such shares and rights with respect
thereto, are free from and clear of any Liens. Ma’aragim has full right, title and
interest in and to the Remaining Debt free and clear of any and all Liens. No proceeding
or resolution for bankruptcy, dissolution, liquidation, winding-up, appointment of a
receiver and/or similar proceeding has been instituted or taken by Ma’aragim, and,
to the Company’s best knowledge, no such proceeding has been instituted or to the
Company’s and Ma’aragim’s best knowledge, threatened against Ma’aragim.
Ma’aragim has the full corporate power and authority to enter into, execute and
deliver this Agreement, bind itself thereunder and comply with its obligations
thereunder. The execution, delivery and performance of this Agreement by Ma’aragim
has been duly approved and the relevant corporate action required to be taken by Ma’aragim
has occurred prior to the Closing including but not limited to the approval of the sale
of the its Shares by Ma’aragim and the assignment of the Remaining Debt hereunder.
The actions taken by Ma’aragim, including but not limited to the sale of the Shares
and the assignment of the Remaining Debt, do not conflict with, give rise to, or result
in, any breach or default of any terms of any provision of law, or regulation, agreement,
obligation, commitment, ruling, judgment or order to which Ma’aragim is a party or
by which it might be bound.  







24










		    2.24        Brokers.
No broker, finder or investment banker, for which any of the Company or Ma’aragim
may be liable, is entitled to any brokerage, finder’s or other fee or commission in
connection with the transactions contemplated by this Agreement.  







		    2.25       Full
Disclosure. This Agreement (including the Company Disclosure Schedule) does not, and
the Company Closing Certificate (as defined below) will not, (i) contain any
representation, warranty or information that is false or misleading with respect to any
material fact, or (ii)  omit to state any material fact necessary in order to make
the representations, warranties and information contained and to be contained herein and
therein (in the light of the circumstances under which such representations, warranties
and information were or will be made or provided) not false or misleading.  







	SECTION 3.  	 	
REPRESENTATIONS AND WARRANTIES OF EVS AND SCAN  






	 	        EVS
represents and warrants to the Company and to Ma’aragim each of the below
representations and warranties only concerning itself. Scan represents and warrants to
the Company and to Ma’aragim each of the representations and warranties set forth in
Sections 3.1, 3.3, 3.5, 3.6, 3.7, and 3.8 only concerning itself. Such representations
and warranties shall be true and correct as of the date hereof and shall remain true and
correct as of the Closing as if made on such date.  







		    3.1       Due
Organization. EVS and Scan are companies duly organized and validly existing under
the laws of the State of Israel. EVS and Scan have all requisite corporate power and
authority to own, lease and operate its properties and to carry on its businesses as now
conducted.  







		     3.2        SEC
Filings; Financial Statements.  







          		    (a)       
               EVS has timely filed all required forms, reports and documents with the SEC
               since December 31, 2003 (the “EVS SEC Documents”), each of
               which has complied in all material respects with all applicable requirements of
               the Securities Act of 1933, as amended (the “Securities Act”)
               and the Securities Exchange Act of 1934, as amended (the “Exchange
               Act”) and the rules and regulations promulgated thereunder, each as in
               effect on the dates such forms, reports, and documents were filed. As of the
               time it was filed with the United States Securities and Exchange Commission (the
               “SEC”) (or, if amended or superseded by a filing prior to the
               date of this Agreement, then on the date of such filing): (i) each of the
               EVS SEC Documents, including, any financial statements or schedules included or
               incorporated by reference therein, complied in all material respects with the
               applicable requirements of the Securities Act or the Exchange Act (as the case
               may be); and (ii) none of the EVS SEC Documents contained any untrue
               statement of a material fact or omitted to state a material fact required to be
               stated therein or necessary in order to make the statements therein, in the
               light of the circumstances under which they were made, not misleading. 



               



25










          		    (b)       
               The consolidated financial statements contained in the EVS SEC Documents:
               (i) complied as to form in all material respects with the published rules
               and regulations of the SEC applicable thereto; (ii) were prepared in
               accordance with generally accepted accounting principles applied on a consistent
               basis throughout the periods covered, except as may be indicated in the notes to
               such financial statements, and except that unaudited financial statements may
               not contain footnotes and are subject to year-end audit adjustments; and
               (iii) fairly present the consolidated financial position of EVS and its
               subsidiaries as of the respective dates thereof and the consolidated results of
               operations of EVS and its subsidiaries for the periods covered thereby. 



               



		    3.3       Authority;
Binding Nature of Agreement. EVS and Scan have the absolute and unrestricted right,
power and authority to perform their obligations under this Agreement and the execution,
delivery and performance by EVS and Scan of this Agreement (including the contemplated
issuance of EVS Shares and payment of Royalties in accordance with this Agreement) have
been duly authorized by all necessary action on the part of EVS and Scan and their board
of directors. This Agreement constitutes the legal, valid and binding obligation of EVS
and Scan, enforceable against them in accordance with its terms, subject to (i) laws
of general application relating to bankruptcy, insolvency and the relief of debtors, and
(ii) rules of law governing specific performance, injunctive relief and other
equitable remedies.  







		    3.4       Valid
Issuance. The EVS Shares to be issued in the transactions contemplated by this
Agreement will, when issued in accordance with the provisions of this Agreement, be
validly issued, fully paid and nonassessable.  







		    3.5       Consents
and Approvals. Except as set forth on Part 3.5 of the EVS Disclosure
Schedule and on Part 3.5 of the Scan Disclosure Schedule, no filing or
registration with, no notice to and no permit, authorization, consent or approval of any
third party or any Governmental Body is necessary for the consummation by EVS and Scan of
the transactions contemplated by this Agreement.  







		    3.6       No
Violation. Neither the execution and delivery of this Agreement by EVS and Scan, the
performance by EVS and Scan of their obligations hereunder nor the consummation by EVS
and Scan of the transactions contemplated hereby will (a) violate, conflict with or
result in any breach of any provision of the Articles of Association or Memorandum of
Association of EVS and Scan, (b) violate, conflict with or result in a violation or
breach of, or constitute a default (with or without due notice or lapse of time or both)
under the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease or agreement to which EVS or Scan is a party or (c) violate
any order, writ, judgment, injunction, decree, statute, rule or regulation of any court
or domestic or foreign Governmental Body applicable to EVS and Scan.  







26










		    3.7        Brokers. No
broker, finder or investment banker, for which EVS and Scan may be liable, is entitled to
any brokerage, finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement.  







		    3.8       Full
Disclosure. This Agreement does not, and the EVS Closing Certificate (as defined
below) and the Scan Closing Certificate (as defined below) will not, (i) contain any
representation, warranty or information that is false or misleading with respect to any
material fact, or (ii) omit to state any material fact necessary in order to make
the representations, warranties and information contained and to be contained herein and
therein (in the light of the circumstances under which such representations, warranties
and information were or will be made or provided) not false or misleading.  







	SECTION 4.  	 	
CERTAIN COVENANTS OF THE COMPANY.  






	 	        All
references to the Company in this Section 4 and the covenants thereon shall also apply to
Ma’aragim.  







		    4.1       Access
and Investigation. During the period from the date of this Agreement through the
Closing Date (the “Pre-Closing Period”), the Company shall, and shall
cause its Representatives to: (a) provide EVS and EVS’s Representatives with
reasonable access to the Company’s Representatives, personnel, properties, accounts,
books and assets and to all existing books, records, returns, reports and information
statements with respect to Tax required to be filed by or on behalf of the Company with
any taxing authority (“Tax Returns”), work papers and other agreements,
documents and information relating to the Company; and (b) provide EVS and EVS’s
Representatives with copies of such existing books, records, Tax Returns,work
papers and other documents and information relating to the Company, and with such
additional financial, operating and other data and information regarding the Company, as
EVS may reasonably request.  







		    4.2       Operation
of the Company’s Business. Other than as contemplated hereunder, during the
Pre-Closing Period:  







          		    (a)       
               the Company shall conduct its business and operations in the ordinary course and
               in substantially the same manner as such business and operations have been
               conducted prior to the date of this Agreement; 



               



          		    (b)       
               the Company shall use its best efforts to preserve intact its current business
               organization, assets, keep available the services of its current officers and
               employees and maintain its relations and good will with all suppliers,
               customers, landlords, creditors, employees and other Persons having business
               relationships with the Company; 



               



          		    (c)       
               the Company shall keep in full force all insurance policies referred to in
               Part 2.17 of the Company Disclosure Schedule; 



               



27










          		    (d)       
               the Company shall cause its officers to report regularly (but in no event less
               frequently than weekly) to EVS concerning the status of the Company’s
               business; 



               



          		    (e)       
               the Company shall not declare, accrue, set aside or pay any dividend or make any
               other distribution in respect of any share capital, and shall not repurchase,
               redeem or otherwise reacquire any of its shares or other securities 



               



          		    (f)       
               the Company shall not sell, issue or authorize the issuance of (i) any
               share capital or other security, (ii) any option or right to acquire any
               share capital or other security, or (iii) any instrument convertible into
               or exchangeable for any share capital or other security; 



               



          		    (g)       
               the Company shall not amend or waive any of its rights under, or permit the
               acceleration of vesting under, (i) any provision of the ESOP or
               (ii) any provision of any agreement evidencing any outstanding Option; 



               



          		    (h)       
               the Company shall not amend or permit the adoption of any amendment to its
               Memorandum of Association or Articles of Association or effect or permit the
               Company to become a party to any Acquisition Transaction, recapitalization,
               reclassification of shares, share split, reverse share split or similar
               transaction; 



               



          		    (i)       
               the Company shall not form any subsidiary or acquire any equity interest or
               other interest in any other Entity; 



               



          		    (j)       
               the Company shall not make any capital expenditure during the Pre-Closing
               Period, without the prior written consent of EVS; 



               



          		    (k)       
               the Company shall not, other than in the ordinary course of business,
               (i) enter into, or permit any of the assets owned or used by it to become
               bound by, any Contract that is or would constitute a Material Agreement, or
               (ii) amend or prematurely terminate, or waive any right or remedy under,
               any such Contract; 



               



          		    (l)       
               the Company shall not (i) acquire, lease or license any right or other
               asset from any other Person, (ii) sell or otherwise dispose of, or lease or
               license, any right or other asset to any other Person, or (iii) waive or
               relinquish any right, except for rights relinquished by the Company pursuant to
               Contracts that are not Material Agreements; 



               



          		    (m)       
               the Company shall not (i) lend money to any Person or (ii) incur or
               guarantee any indebtedness for borrowed money; 



               



          		    (n)       
               the Company shall not (i) establish, adopt or amend any employee benefit
               plan, (ii) pay any bonus or make any profit-sharing payment, management fee
               payment, cash incentive payment or similar payment to, or increase the amount of
               the wages, salary, commissions, fringe benefits or other compensation or
               remuneration payable to, any of its directors, officers, consultants or
               employees, or (iii) hire any new employee; 



               



28










          		    (o)       
               the Company shall not change any of its methods of accounting or accounting
               practices in any material respect; 



               



          		    (p)       
               the Company shall not make any Tax election; 



               



          		    (q)       
               the Company shall not commence or settle any material Legal Proceeding; 



               



          		    (r)       
               the Company shall not agree or commit to take any of the actions described in
               clauses "(a)” through “(q)” above. 



               



		     4.3        Notification;
Updates to Company Disclosure Schedule.  







          		    (a)       
               During the Pre-Closing Period, the Company shall promptly notify EVS in writing
               of: 



               



		    (i)                  the
discovery by the Company of any event,  condition,
fact or circumstance that occurred or existed on or prior to the date of this Agreement
and that caused or constitutes an inaccuracy in or breach of any representation or
warranty made by the Company in this Agreement; 







		    (ii)                  any
event, condition, fact or circumstance that  occurs,
arises or exists after the date of this Agreement and that would cause or constitute an
inaccuracy in or breach of any representation or warranty made by the Company in this
Agreement if (A) such representation or warranty had been made as of the time of the
occurrence, existence or discovery of such event, condition, fact or circumstance, or
(B) such event, condition, fact or circumstance had occurred, arisen or existed on or
prior to the date of this Agreement; 







		    (iii)                  any
material breach of any material covenant or  obligation
of the Company; and 







		    (iv)                  any
event, condition, fact or circumstance that  would
make the timely satisfaction of any of the conditions set forth in Section 6 or
Section 7 impossible or unlikely. 







          		    (b)       
               If any event, condition, fact or circumstance that is required to be disclosed
               pursuant to Section 4.3(a) requires any change in the Company Disclosure
               Schedule, or if any such event, condition, fact or circumstance would require
               such a change assuming the Company Disclosure Schedule were dated as of the date
               of the occurrence, existence or discovery of such event, condition, fact or
               circumstance, then the Company shall promptly deliver to EVS an update to the
               Company Disclosure Schedule specifying such change. No such update shall be
               deemed to supplement or amend the Company Disclosure Schedule for the purpose of
               (i) determining the accuracy of any of the representations and warranties
               made by the Company in this Agreement, or (ii) determining whether any of
               the conditions set forth in Section 6 has been satisfied. 



               



29










		    4.4       No
Negotiation. During the Pre-Closing Period, the Company and its officers directors,
employees, shareholders, agents and other representatives, shall not directly or
indirectly:  







          		    (a)       
               solicit or encourage the initiation of any inquiry, proposal or offer from any
               Person (other than EVS) relating to a possible Acquisition Transaction; 



               



          		    (b)       
               participate in any discussions or negotiations or enter into any agreement with,
               or provide any non-public information to, any Person (other than EVS) relating
               to or in connection with a possible Acquisition Transaction; or 



               



          		    (c)       
               consider, entertain or accept any proposal or offer from any Person (other than
               EVS) relating to a possible Acquisition Transaction. 



               



	 	
The
Company shall promptly notify EVS in writing of any material inquiry, proposal or offer
relating to a possible Acquisition Transaction that is received by the Company or any of
its Representatives during the Pre-Closing Period.  






	SECTION 5.  	 	
ADDITIONAL COVENANTS OF THE PARTIES.  






		    5.1       Filings
and Consents. As promptly as practicable after the execution of this Agreement, each
party to this Agreement (a) shall make all filings (if any) and give all notices (if
any) required to be made and given by such party in connection with the transactions
contemplated by this Agreement, and (b) shall use all commercially reasonable
efforts to obtain all Consents (if any) required to be obtained (pursuant to any
applicable Legal Requirement or Contract, or otherwise) by such party in connection with
the transactions contemplated by this Agreement. Each party to this Agreement shall (upon
request) promptly deliver to the other parties a copy of each such filing made, each such
notice given and each such Consent obtained by such party during the Pre-Closing Period.  







		    5.2       Public
Announcements. During the Pre-Closing Period, (a) the Company and Ma’aragim
shall not issue any press release or make any public statement regarding this Agreement,
or regarding any of the transactions contemplated by this Agreement, without EVS’s
prior written consent, and (b) EVS shall not issue any press release or make any
public statement regarding this Agreement, or regarding any of the transactions
contemplated by this Agreement, without Company’s prior written consent.
Notwithstanding the provisions of the preceding sentence, each party shall be permitted
to issue any press release or make any public statement as such party is advised by
counsel is legally required to be issued or made under any applicable laws; provided,
however, that in such event the party issuing such press release or making such public
statement will provide the other parties with prompt written notice of such requirement
and a copy of the press release to be issued or public statement to be made, and the
parties shall use reasonable commercial efforts to coordinate the content of such press
release or public statement.  







30










		    5.3       Best
Efforts. During the Pre-Closing Period, (a) the Company shall use its best
efforts to cause the conditions set forth in Section 6 to be satisfied on a timely
basis, and (b) EVS shall use its best efforts to cause the conditions set forth in
Section 7 to be satisfied on a timely basis.  







		    5.4       Continued
Employment. Following the Closing Date, EVS shall continue to employ all employees of
the Company (the “Current Employees”), either as employees of the
Company or of EVS or of any other subsidiary of EVS, subject to the following sentence,
for a minimum period of three (3) months following the Closing Date (the “Minimal
Period”). Forty five (45) days prior to the conclusion of the Minimal Period,
EVS shall be entitled to terminate the employment of any such employees (the employees
who have been dismissed at the conclusion of the Minimal Period are referred to as the
“Dismissed Employees”). The Company and Ma’aragim shall make all
reasonable efforts in order to cause employment agreements substantially in the form
attached hereto as Schedule 5.4(a)1 executed by the individuals listed in Schedule
5.4(a)2  pursuant to which such individuals will remain employees of the Company, EVS
or other subsidiary of EVS (as determined by EVS) for the period set forth next to such
individual’s name on Schedule 5.4(a)2. For the avoidance of any doubt, it is
hereby clarified that in the event that EVS and/or the Company shall be obligated to pay
to any of the Current Employees any payment for preliminary notice (excluding payments to
Dismissed Employees that in the aggregate are less than the Employment Costs) such
amounts shall not be deducted from the Royalties.  







		    5.5       Termination
of Employee Plans. At the Closing, the Company shall terminate its ESOP and the
Company’s 2000 Israeli Employee Stock Option Plan, and shall ensure that no
employee, officer, director, consultant or former employee, officer, director or
consultant of the Company has any rights under the ESOP or under any similar type of plan
and that any liabilities of the Company under such ESOP (including any such liabilities
relating to services performed prior to the Closing) are fully extinguished at no cost to
the Company.  







		    5.6       Registration
of Shares. Following the receipt of a request from Ma’aragim, EVS will upon the
earlier of (i) twelve (12) months following the Closing Date; and (ii) the submission of
a registration statement with the SEC requesting to register shares of EVS (with the
exception of registration statements filed in connection with (a) shares to be issued in
relation to employee compensation schemes, and (b) shares of EVS currently registered
under existing registration statements); prepare and file with the SEC a registration
statement under the Securities Act with respect to the registration of the EVS Shares
issuable in connection with the transactions contemplated by this Agreement (the “Registration
Statement”). EVS will, and will cause its accountants and lawyers to, cause the
Registration Statement to be declared effective as promptly as practicable after filing
with the SEC and the Registration Statement shall be kept effective continuously for a
period of two years following the date on which the Registration Statement is declared
effective by the SEC.  







31










		    5.7       Legend. Ma’aragim
hereby agrees to the imprinting, until the Registration Statement is declared effective,
of the following legend on certificates representing the EVS Shares:  







“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR TRANSFERRED, DIRECTLY OR INDIRECTLY,
WITHOUT A REGISTRATION STATEMENT IN EFFECT OR AN EXEMPTION FROM REGISTRATION.” 



	 	        The
legend set forth above shall be removed at any time after the Registration Statement has
been declared effective under the Securities Act, or, such legend is no longer required
under applicable requirements of the Securities Act (including judicial interpretations
and pronouncements issued by the staff of the SEC) in the opinion of counsel to EVS
experienced in the area of United States securities laws. The share certificates
representing the EVS Shares shall also bear any other legends required by applicable
United States federal or state securities laws, which legends may be removed when, in the
opinion of counsel to EVS experienced in the applicable securities laws, such legend is
no longer required under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the staff of the SEC). EVS agrees
that it will provide Ma’aragim, upon request, with a substitute share certificate or
certificates free from such legend at such time as such legend is no longer applicable. Ma’aragim
agrees that, in connection with any transfer of the EVS Shares by it pursuant to an
effective registration statement under the Securities Act, it will comply with all
prospectus delivery requirements of the Securities Act.  







		    5.8       Lock-up
Restrictions. All EVS Shares issued to Ma’aragim pursuant to this Agreement by
EVS shall be subject to restrictions upon resale and consequently may not be offered,
sold, granted, assigned, pledged, transferred or otherwise disposed of during a six (6)
month period from the Closing Date unless the transfer is made to a third party and where
such third party provides its prior written consent to be bound by the abovementioned
selling restrictions. All certificates representing such EVS Shares issued to Ma’aragim
shall bear restrictive legends referencing the abovementioned lock-up period.  







		    5.9       Tax
Liability. Each party shall be responsible for all its own respective tax obligations
deriving from the transactions contemplated in this Agreement. For the avoidance of any
doubt it is hereby clarified that any tax obligations occur upon the Company as a result
of the sale of the Assets to EVS as contemplated herein shall not be considered part of
the Total Account Payables.  







32










		    5.10       Bank
Consent. As promptly as practicable after the execution of this Agreement and no
later then the Closing Date, the Parties shall use their best efforts to receive the
consent of Bank Hapoalim Ltd. to the sale of the Assets to EVS, as contemplated herein
(the “Bank Consent”). The Parties shall take any reasonable action and
sign any document reasonably requested in order to receive the Bank Consent.







	SECTION 6.  	 	
CONDITIONS PRECEDENT TO OBLIGATIONS OF EVS.  






	 	        The
obligations of EVS and Scan to consummate the transactions contemplated by this Agreement
are subject to the satisfaction, at or prior to the Closing, of each of the following
conditions any or all of which may be waived in writing by EVS:  







		    6.1       Ownership
of Shares. All of the Shares shall be owned by Ma’aragim and other than the
Shares there shall be no other shares, share capital, convertible securities, outstanding
warrants, options or other rights to subscribe for, purchase or acquire from the Company
any share capital of the Company and there shall not be any contracts or binding
commitments providing for the issuance of, or the granting of rights to acquire, any
share capital of the Company or under which the Company is, or may become, obligated to
issue any of its securities.  







		    6.2       Accuracy
of Representations. Each of the representations and warranties made by the Company
and Ma’aragim in this Agreement and in each of the other agreements and instruments
delivered to EVS in connection with the transactions contemplated by this Agreement shall
have been accurate in all material respects as of the date of this Agreement, and shall
be accurate in all material respects as of the Closing Date as if made on the Closing
Date.  







		    6.3        Performance
of Covenants. All of the covenants and obligations that the Company and Ma’aragim
are required to comply with or to perform at or prior to the Closing shall have been
complied with and performed in all material respects.  







		    6.4       Consents. All
Consents required to be obtained in connection with the transactions contemplated by this
Agreement (including the Consents identified in Part 2.21 of the Disclosure Schedule)
shall have been obtained without conditions and shall be in full force and effect. EVS
shall sign any document reasonably requested by the OCS in order for the OCS to approve
the sale of the Assets to EVS including an undertaking to pay the future royalty payments
to the OCS for grants received by the Company from the OCS, if such undertaking shall be
required by the OCS for the approval of the sale of the assets.  







33










		    6.5       Agreements
and Documents. EVS shall have received the following agreements and documents, each
of which shall be in full force and effect:  







          		    (a)       
               fully executed escrow agreement to be entered into with the Escrow Agent setting
               forth the terms of the Escrow Shares (the “Escrow Agreement”)
               in the form attached hereto as Schedule 6.5(a). 



               



          		    (b)       
               legal opinion from Naomi Assia & Co., Law Offices in the form attached
               hereto as Schedule 6.5(b), addressed to EVS and dated as of the Closing
               Date; 



               



          		    (c)       
               a certificate executed by: (i) an officer of the Company, and (ii)
               Ma’aragim, all certifying that each of the representations and warranties
               set forth in Section 2 is accurate in all material respects as of the Closing
               Date as if made on the Closing Date and that the conditions set forth in Section
               6 have been duly satisfied (the “Company Closing Certificate”); 



               



          		    (d)       
               lock-up agreement executed by Ma’aragim in the form and substance
               reasonably satisfactory to counsel for EVS which shall contain terms and
               conditions standard and customary in transactions of this nature, including a
               six (6) month restriction on the sale, pledge, assignment, transfer or
               disposition of EVS Shares by Ma’aragim; 



               



          		    (e)       
               written resignations of all directors of the Company, effective as of the
               Closing Date; 



               



          		    (f)       
               certificate of the Israeli Registrar of Companies evidencing the removal of the
               charge currently placed on the Company’s assets; 



               



          		    (g)       
               Bill of Sale, Assignment and Assumption in the form attached hereto as
               Schedule 6.5(g) duly executed by the Company; 



               



          		    (h)       
               Trademark Assignment in the form attached hereto as Schedule 6.5(h) duly
               executed by the Company; 



               



          		    (i)       
               Irrevocable Instructions in the form attached hereto as Schedule 6.5(i)
               duly executed by the Company (the “Irrevocable
               Instructions”); 



               



          		    (j)       
               certificates representing all of the Shares accompanied by share transfer deeds
               in the form attached hereto as Schedule 6.5(j) duly executed for transfer
               in blank by Ma’aragim; 



               



          		    (k)       
               Assignment Deed in the form attached hereto as Schedule  6.5(k)
               duly executed by Ma’aragim; 



               



34










          		    (l)       
               Transfer to Ma’aragim of all and any rights Xsignnet has in the Loan
               Agreement the form attached hereto as Schedule 6.5(l) and waiver of any
               rights it may have against the Company duly executed by Xsignnet; and 



               



		    (m)                  Waiver
in the form of Schedule 6.5(m) duly executed by Ma’aragim.  







		    6.6       Securities
Law Requirements. All permits, licenses, consents and approvals necessary under any
laws relating to the sale of securities have been issued or given, and no such permit,
license, consent or approval shall have been revoked, canceled, terminated, suspended or
made the subject of any stop order or proceeding thereof.  







		    6.7       No
Restraints. No temporary restraining order, preliminary or permanent injunction or
other order preventing the consummation of the transactions contemplated by this
Agreement shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or applicable to the
transactions contemplated by this Agreement that makes consummation of the transactions
contemplated by this Agreement illegal, which Legal Requirement shall not have been
removed within thirty (30) days of enactment.  







		    6.8       No
Legal Proceedings. No Person shall have commenced or taken steps towards any Legal
Proceeding challenging or seeking the recovery of a material amount of damages in
connection with the transactions contemplated by this Agreement or seeking to prohibit or
limit the exercise by EVS of any material right pertaining to its ownership of shares of
the Company.  







		    6.9       Termination
of Employee Plans. The Company shall have provided EVS with evidence, reasonably
satisfactory to EVS, as to the termination of the ESOP.  







		    6.10       Due
Diligence. The legal, technological, business and financial due diligence of Company
by EVS and its Representatives shall have been completed to the sole and complete
satisfaction of EVS and its Representatives two (2) weeks prior to the Closing; provided
however, that upon EVS’s request, such period shall be extended by an additional two
(2) weeks.  







		    6.11       Material
Adverse Change. From the date hereof until the Closing there will have been no
adverse change in the financial or business condition of the Company that would have an
adverse effect on the Company.  







		    6.12       Completion
of Exhibits. The schedules and exhibits to this Agreement shall be completed by
Closing shall be in form and substance satisfactory to EVS, which shall be completed no
later than December 31, 2005.  







35










	SECTION 7.  	 	
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY.  






	 	        The
obligations of the Company and Ma’aragim to consummate the transactions contemplated
by this Agreement are subject to the satisfaction, at or prior to the Closing, of the
following conditions any or all of which may be waived in writing by the Company and Ma’aragim
together:  







		    7.1       Accuracy
of Representations. Each of the representations and warranties made by EVS in this
Agreement shall have been accurate in all material respects as of the date of this
Agreement, and shall be accurate in all material respects as of the Closing Date as if
made on the Closing Date.  







		    7.2       Performance
of Covenants. All of the covenants and obligations that EVS is required to comply
with or to perform at or prior to the Closing shall have been complied with and performed
in all respects.  







		    7.3       Documents. Ma’aragim
and the Company shall have received the following agreements and documents, each of which
shall be in full force and effect:  







          		    (a)       
               validly executed share certificate covering the Initial Shares; 



               



          		    (b)       
               evidence that the Escrow Shares have been issued to the Escrow Agent and placed
               in escrow; 



               



          		    (c)       
               duly executed Escrow Agreement; 



               



          		    (d)       
               certificates executed by EVS’s Chief Financial Officer and Scan’s
               Chief Financial Officer certifying that each of the representations and
               warranties set forth in Section 3 is accurate in all material respects as of the
               Closing Date as if made on the Closing Date and that the conditions set forth in
               Section 7 have been duly satisfied (the “EVS Closing
               Certificate” and “Scan Closing Certificate”); and 



               



          		    (e)       
               Guaranties in favor of Bank Hapoalim Ltd. (the “Bank”) duly
               executed by EVS, concerning the two (2) guaranties given by Ma’aragim to
               the Bank in relation to: (i) the loan in an aggregate amount of nine hundred
               thousand New Israeli Shekels (NIS 900,000) provided to the Company by the Bank,
               and (ii) the credit line in an aggregate amount of nine hundred thousand New
               Israeli Shekels (NIS 900,000) provided to the Company by the Bank. 



               



		    7.4       Consents. All
Consents required to be obtained in connection with the transactions contemplated by this
Agreement shall have been obtained without conditions and shall be in full force and
effect.  







		    7.5       Securities
Law Requirements. All permits, licenses, consents and approvals necessary under any
laws relating to the sale of securities have been issued or given, and no such permit,
license, consent or approval shall have been revoked, canceled, terminated, suspended or
made the subject of any stop order or proceeding thereof.  







36










		    7.6       Completion
of Exhibits. The schedules and exhibits to this Agreement shall be completed by
Closing shall be in form and substance satisfactory to Ma’aragim and the Company,
which shall be completed no later than December 31, 2005.  







	SECTION 8.  	 	
INDEMNIFICATION, ETC.  






		     8.1        Survival
of Representations, Etc.  







          		    (a)       
               The representations and warranties made by the Company and Ma’aragim shall
               survive the Closing and will survive this Agreement until all statutes of
               limitations for actions that may be brought have expired. 



               



          		    (b)       
               The representations, warranties, covenants and obligations of the Company and
               Ma’aragim and the rights and remedies that may be exercised by the
               Indemnitees, shall not be limited or otherwise affected by or as a result of any
               information furnished to, or any investigation made by or knowledge of, any of
               the Indemnitees or any of their Representatives. 



               



          		    (c)       
               For purposes of this Agreement, each statement or other item of information set
               forth in the Company Disclosure Schedule or in any update to the Company
               Disclosure Schedule shall be deemed to be a representation and warranty made by
               the Company and/or Ma’aragim in this Agreement. 



               



          		    (d)       
               The representations and warranties made by EVS shall survive the Closing and
               will survive this Agreement until all statutes of limitations for actions that
               may be brought have expired. 



               



          		    (e)       
               The representations, warranties, covenants and obligations of EVS, and the
               rights and remedies that may be exercised by Ma’aragim, shall not be
               limited or otherwise affected by or as a result of any information furnished to,
               or any investigation made by or knowledge of, Ma’aragim or any of its
               Representatives. 



               



		     8.2        Indemnification.  







          		    (a)       
               Subject to the provisions of Section 8.5 below, from the Closing Date and until
               fourteen (14) months thereafter, the Indemnitees may, among other remedies
               available to it by law, seek indemnification from the Escrow Shares for any
               loss, damage, injury, liability, claim, demand, settlement, judgment, award,
               fine, penalty, Tax, fee (including reasonable attorneys’ fees), charge,
               cost (including costs of investigation) or expense of any nature
               (“Damages”) that are directly or indirectly suffered or
               incurred by any of the Indemnitees or to which any of the Indemnitees may
               otherwise become subject (regardless of whether or not such Damages relate to
               any third-party claim) and which arise from or as a result of, or are directly
               or indirectly connected with: (i)  any inaccuracy in or breach of any
               representation or warranty set forth in Section 2 or in the Company Closing
               Certificate; (ii) any inaccuracy in or breach of any representation or warranty
               set forth in Section 2 as if such representation and warranty had been made on
               and as of the Closing Date; (iii) any breach of any covenant or obligation of
               the Company and/or Ma’aragim under this Agreement (including the covenants
               set forth in Sections 4 and 5); or (iv) any Legal Proceeding relating to any
               inaccuracy or breach of the type referred to in clause “(i)” or
               “(ii)” above (including any Legal Proceeding commenced by any
               Indemnitee for the purpose of enforcing any of its rights under this
               Section 8). 



               



37










          		    (b)       
               Maaragim and the Company acknowledge and agree that, if the Company suffers,
               incurs or otherwise become subject to any Damages as a result of or in
               connection with any inaccuracy in or breach of any representation, warranty,
               covenant or obligation, then (without limiting any of its rights as an
               Indemnitee) EVS shall also be deemed, by virtue of its ownership of the shares
               of the Company, to have incurred Damages as a result of and in connection with
               such inaccuracy or breach. 



               



          		    (c)       
               Without derogating from the provisions of Section 8.2(a) or (b), in the event
               EVS has not received the relevant Source Codes, Functional Description of
               Parameters, Drawings of Hardware and the Collection of Specs and all knowledge
               necessary to enable EVS to manufacture the products manufactured by the Company
               (collectively, the “Required Know How”), then it is hereby
               agreed that the Escrow Shares shall not be transferred from the Escrow Agent to
               Ma’aragim until EVS receives the Required Know How. 



               



		    8.3       Defense
of Third Party Claims. In the event of the assertion or commencement by any Person of
any claim or Legal Proceeding (whether against the Company, against EVS or against any
other Person) with respect to which any of the Indemnitees shall have the right to seek
indemnification pursuant to this Section 8, EVS shall have the right, at its
election, to proceed with the defense of such claim or Legal Proceeding on its own. If
EVS so proceeds with the defense of any such claim or Legal Proceeding, EVS shall not
have the right to settle, adjust or compromise such claim or Legal Proceeding without the
consent of Ma’aragim, which shall not be unreasonably withheld. EVS shall give Ma’aragim
prompt notice of the commencement of any such Legal Proceeding against EVS or the
Company; provided, however, that any failure on the part of EVS to so notify Ma’aragim
shall not limit any of the rights of the Indemnitees under this Section 8 (except to the
extent such failure materially prejudices the defense of such Legal Proceeding).  







		    8.4       Exercise
of Remedies by Indemnitees Other Than EVS. No Indemnitee (other than EVS or any
successor thereto or assign thereof) shall be permitted to assert any indemnification
claim or exercise any other remedy under this Agreement unless EVS (or any successor
thereto or assign thereof) shall have consented to the assertion of such indemnification
claim or the exercise of such other remedy.  







38










		    8.5       Minimum
Claim. Notwithstanding anything herein to the contrary, the Company and Ma’aragim
shall not be obligated to indemnify, pursuant to the terms hereof, with respect to any
Damages pursuant to this Section 8 unless and until the aggregate Damages hereunder shall
have exceeded the aggregate amount of ten thousand US dollars ($10,000) (the “Minimum
Claim”), provided however, that if and when the Damages so exceed the Minimum
Claim, all of the Damages shall be subject to indemnification hereunder including the
amount of Damages up to the Minimum Claim.  







	SECTION 9.  	 	
MISCELLANEOUS PROVISIONS.  






		    9.1       Further
Assurances. Each party hereto shall execute and cause to be delivered to each other
party hereto such instruments and other documents, and shall take such other actions, as
such other party may reasonably request (prior to, at or after the Closing) for the
purpose of carrying out or evidencing any of the transactions contemplated by this
Agreement.  







		    9.2       Fees
and Expenses. Each party to this Agreement shall bear and pay all of its own fees,
costs and expenses (including legal fees and accounting fees) that have been incurred or
that are incurred by such party in connection with the transactions contemplated by this
Agreement and the negotiations leading up to the execution of this Agreement, with the
exception of stamp tax on the issuance of the EVS Shares, if applicable, which shall be
borne by EVS alone; provided however that the Company shall bear and pay the fees, costs
and expenses of Ma’aragim in this transaction.  







		    9.3       Attorneys’ Fees. If
any action or proceeding relating to this Agreement or the enforcement of any provision
of this Agreement is brought against any party hereto, the prevailing party shall be
entitled to recover reasonable attorneys’ fees, costs and disbursements (in addition
to any other relief to which the prevailing party may be entitled).  







		    9.4       Notices. Any
notice or other communication required or permitted to be delivered to any party under
this Agreement shall be in writing and shall be deemed properly delivered, given and
received when delivered (by hand, by registered mail, by courier or express delivery
service or by facsimile) to the address or facsimile telephone number set forth beneath
the name of such party below (or to such other address or facsimile telephone number as
such party shall have specified in a written notice given to the other parties hereto):  







39











	 	
if
to EVS or Scan:  






	 	
Elbit
Vision Systems Ltd.
 New Industrial Park
 P.O.B. 140
 Yoqneam 20692
 Israel 

Fax: (972) (4) -
989-4733
 Attention: Chief Executive Officer 






	 	
with
a copy to:  






	 	
Yigal
Arnon & Co.
 One Azrieli Center (Round Tower) 
46th Floor
 Tel Aviv 67021 
Israel 
Fax: (972)
(3) - 608-7714 
Attention: David Schapiro, Adv. 






	 	
if
to the Company:  






	 	
Panoptes
Ltd. 
2 Hamada Street, 
Yoqneam Ilit 20692 
Israel 
Fax: (972) (4) - 959-7746 
Attention:
Chief Executive Officer 






	 	
with
a copy to:  






	 	
Naomi
Assia & Co., Law Offices 40th Floor 
32 Habarzel Street
 Ramat-Hayal, Tel-Aviv 69710 
Israel

Fax: (972-3) 644-4818 
Attention: Naomi Assia, Adv. 







	 	
if
to Ma'aragim:  






	 	
Ma'aragim
Enterprises Ltd.
 28 Hama'apilim Street 
Ramat Hasharon 47240 
Israel 
Fax: (972) (3) 5479888

Attention: Chief Executive Officer  






40










	 	
with
a copy to:  






	 	
Naomi
Assia & Co., Law Offices
 32 Habarzel Street 
Ramat-Hayal, Tel-Aviv 69710 
Israel 
Fax:
(972-3) 644-4818 
Attention: Naomi Assia, Adv. 








		    9.5       Headings. The
boldface headings contained in this Agreement are for convenience of reference only,
shall not be deemed to be a part of this Agreement and shall not be referred to in
connection with the construction or interpretation of this Agreement.  







		    9.6       Counterparts. This
Agreement may be executed in several counterparts, each of which shall constitute an
original and all of which, when taken together, shall constitute one agreement.  







		    9.7       Governing
Law. This Agreement shall be construed in accordance with, and governed in all
respects by, the internal laws of the State of Israel (without giving effect to
principles of conflicts of laws). Each party to this Agreement consents to the exclusive
jurisdiction and venue of the courts of District of Tel Aviv-Jaffa in the State of
Israel.  







		    9.8       Successors
and Assigns. This Agreement shall be binding upon: the Company and its successors and
assigns (if any); EVS and its successors and assigns (if any). This Agreement shall inure
to the benefit of the Company and Ma’aragim; the other Indemnitees; and the
respective successors and assigns (if any) of the foregoing. Neither party may assign any
of its rights under this Agreement to any other Person without obtaining the consent or
approval of the other parties hereto.  







		    9.9        Waiver.  







          		    (a)       
               No failure on the part of any Person to exercise any power, right, privilege or
               remedy under this Agreement, and no delay on the part of any Person in
               exercising any power, right, privilege or remedy under this Agreement, shall
               operate as a waiver of such power, right, privilege or remedy; and no single or
               partial exercise of any such power, right, privilege or remedy shall preclude
               any other or further exercise thereof or of any other power, right, privilege or
               remedy. 



               



          		    (b)       
               No Person shall be deemed to have waived any claim arising out of this
               Agreement, or any power, right, privilege or remedy under this Agreement, unless
               the waiver of such claim, power, right, privilege or remedy is expressly set
               forth in a written instrument duly executed and delivered on behalf of such
               Person; and any such waiver shall not be applicable or have any effect except in
               the specific instance in which it is given. 



               



41










		    9.10       Amendments. This
Agreement may not be amended, modified, altered or supplemented other than by means of a
written instrument duly executed and delivered on behalf of all of the parties hereto.  







		    9.11       Severability. In
the event that any provision of this Agreement, or the application of any such provision
to any Person or set of circumstances, shall be determined to be invalid, unlawful, void
or unenforceable to any extent, the remainder of this Agreement, and the application of
such provision to Persons or circumstances other than those as to which it is determined
to be invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent permitted
by law.  







		    9.12       Parties
in Interest. Except for the provisions of Section 9, none of the provisions of this
Agreement are intended to provide any rights or remedies to any Person other than the
parties hereto and their respective successors and assigns (if any).  







		    9.13       Entire
Agreement. This Agreement, its schedules and the other agreements referred to herein
set forth the entire understanding of the parties hereto relating to the subject matter
hereof and thereof and supersede all prior agreements and understandings among or between
any of the parties relating to the subject matter hereof and thereof including but not
limited to a certain term sheet entered into by the parties on October 19, 2005.  







		    9.14        Construction.  







          		    (a)       
               For purposes of this Agreement, whenever the context requires: the singular
               number shall include the plural, and vice versa; the masculine gender shall
               include the feminine and neuter genders; the feminine gender shall include the
               masculine and neuter genders; and the neuter gender shall include the masculine
               and feminine genders. 



               



          		    (b)       
               The parties hereto agree that any rule of construction to the effect that
               ambiguities are to be resolved against the drafting party shall not be applied
               in the construction or interpretation of this Agreement. 



               



          		    (c)       
               As used in this Agreement, the words “include” and
               “including,” and variations thereof, shall not be deemed to be terms
               of limitation, but rather shall be deemed to be followed by the words
               “without limitation.” 



               


[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]



42










        The
parties hereto have caused this Asset and Share Purchase Agreement to be executed and
delivered as of the date first above written.  





	 	
ELBIT
VISION SYSTEMS LTD. 






	 	
By:
__________________________ 






	 	
Name:
________________________ 






	 	
Title:
_______________________ 







	 	
SCANMASTER
SYSTEMS (IRT) LTD. 






	 	
By:
__________________________ 






	 	
Name:
________________________ 






	 	
Title:
_______________________ 







	 	
PANOPTES
LTD. 






	 	
By:
__________________________ 






	 	
Name:
________________________ 






	 	
Title:
_______________________ 







	 	
MA'ARAGIM
ENTERPRISES LTD. 






	 	
By:
__________________________ 






	 	
Name:
________________________ 






	 	
Title:
_______________________