Participatory Interests Purchase Agreement



 Exhibit 10.9 
  
 PARTICIPATORY INTERESTS PURCHASE AGREEMENT 
  
 This Participatory Interest Purchase Agreement (this “Agreement”) is made as of September 30, 2005
(the “Effective Date”) by and among Phage Biotech Ukraine, LLC (“PBU”), a Nevada limited liability company, and Cardio Phage International (“CPI”), a Bahamas corporation (collectively the “Sellers”), and BS
Biology Sciences Limited, a Cyprus corporation (the “Buyer”). 
  
 In consideration of the mutual agreements set forth below, the receipt and sufficiency of which is hereby acknowledged, the Sellers and Buyer agree as follows: 
  
 1. Sale/Purchase of the Participatory Interests. The Sellers hereby sells, transfers and delivers to Buyer, and Buyer
hereby purchases, all of the currently owned by the Sellers and outstanding participatory interests (the “Interests”) of Phage Biotech, a Ukrainian limited liability company (the “Company”), which total par value is the Hryvnya
equivalent of six hundred eighty six thousand five hundred thirty five US Dollars and sixty one cent (US$686,535.61), subject to the following terms and conditions of this Agreement. Of the Interests, PBU owns 99% and CPI owns 1%. 

 
 2. Purchase Price. In consideration of the sale, transfer,
assignment, conveyance and delivery by the Sellers of the Interests to Buyer, Buyer shall pay to the Sellers, in readily available funds, the amount of one hundred three thousand four hundred ninety US Dollars (US$103,490.00) (the “Purchase
Price”) to be divided pro-rata between the Sellers. Such amount may be adjusted based on asset values revised as of the Effective Date. If adjustments require any additional amount from Buyer, Buyer shall promptly remit such amount to Sellers
as set forth below. If adjustments require any refund to Buyer, Sellers shall promptly refund such amount to Buyer. 
  
 3. Representations and Warranties of the Sellers. Each of the Sellers individually represents and warrants to Buyer that: 
  
 3.1 Organization and Authority. The Company is a
limited liability company duly organized and validly existing under the laws of Ukraine and has full authority and power to carry on its business as now conducted. 
  
 3.2 Authorization: Binding Obligations. This Agreement has been duly authorized, executed and
delivered by each of the Sellers. This Agreement, when duly executed and delivered by each of the Sellers and the Buyer, will be a valid and binding obligation of each of the Sellers, enforceable against each of them in accordance with its terms,
subject only to bankruptcy, insolvency, moratorium or similar proceedings affecting the rights of creditors generally, and general principles of equity. 
  
 3.3 Title to Company Assets. The Company has good title to, or a valid leasehold interest in, all assets reflected in the Company
financial statements on the Effective Date, a sample balance sheet of which is attached hereto. as Exhibit A. 









 3.4 Capitalization. 
  
 (a) The authorized capital of the Company consists of participatory interests, 99% of which is assigned to
PBU and 1 % of which is assigned to CPJ. The Sellers and Buyer hereby acknowledge that, as of the Effective Date, the total amount of such authorized capital is Nine Hundred Forty Thousand Three Hundred Fifty Two U.S. dollars and Nineteen Cents
($US 940,352.19). The Sellers and Buyer further acknowledge that the total amount of the contributions to such authorized capital (charter fund) of the Company as made by the Sellers shall be Six Hundred Eighty Six Thousand Five Hundred Thirty Five
U.S. dollars and Sixty One Cents ($US 686,535.61), which as of the Effective Date constitutes 73.01% of the authorized capital of the Company. The Sellers undertakes and the Buyer each individually and collectively agree to use commercially
reasonable efforts to execute any and all documents which may be required to effect the reduction of the authorized capital (charter fund) of the Company from $U5940,352.19 to $US686,535.61 and to file such documents with the appropriate Ukrainian
authorities, with the intent that as a result of the reduction of the authorized capital (charter fund) the Buyer shall acquire 100% thereof. 
  
 (b) There are no existing, outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require the Company to issue, sell, or otherwise cause to become outstanding any of its participatory interests or any other participatory interest of the Company. There are no outstanding or
authorized appreciation rights, phantom stock, profit participation or similar rights of any character relating to the Company. 
  
 4. Representations and Warranties of Buyer. Buyer represents and warrants to the Sellers that: 
  
 4.1 Organization and Authority. Buyer is duly
organized and validly existing under the laws of Cyprus and has full power and authority to carry on its business as now conducted. 
  
 4.2 Authorization: Binding Obligations. This Agreement has been duly authorized, executed and delivered by Buyer. This Agreement,
when duly executed and delivered by Buyer and the Sellers will be valid and binding obligation of Buyer, enforceable against it in accordance with its terms, subject only to bankruptcy, insolvency, moratorium or similar proceedings affecting the
rights of creditors generally, and general principles of equity. 
  
 5. Deliveries. On the Effective Date or as soon as practical thereafter, the following transactions shall take place: 
  
 5.1 Documents to be Delivered by Sellers. The Sellers deliver the following to the Buyer: 
  
 (a) Notice of Waiver of First Refusal Rights; 
  
 (b) Notarized minutes of the meeting of the
Participants’ Assembly of the Company, whereby the sale of the Interest is authorized; and 









 (c) All such other bills of sale, assignments and other instruments of assignment,
transfer or conveyance as Buyer may reasonably request or as may be otherwise necessary to evidence and effect the sale, transfer, assignment, conveyance and delivery of the Interests to Buyer and to put Buyer in actual possession or control of the
Interests and the business of the Company. 
  
 5.2 Documents to be Delivered by Buyer. Buyer shall deliver the following to the Sellers: 
  
 (a) Proof of payment by wire transfer of US$102,455.10 to the bank account to be designated by PBU; and 
  
 (b) Proof of payment by wire transfer of US$1,034.90 to the
bank account to be designated by CPI. 
  
 6. The title to the
Interests shall pass from the Sellers to the Buyer on the Effective Date as set forth above (the “Title Transfer Date”). The Parties hereto affirm, that on or about the Effective Date all participants of the Company and the Company itself
received Notice of Waiver of First Refusal Rights with respect to purchase of the CPI’ s Interest signed by PBU; and that on or about the Effective Date all participants of the Company and the Company itself received Notice of Waiver of First
Refusal Rights with respect to purchase of the PBU’s Interests signed by CPI. Consequently, the Effective Date shall be the Title Transfer Date. 
  
 7. From the Title Transfer Date, the Buyer shall acquire all of the rights and assume all of the obligations associated with the participation in the
Company to the extent of the Interests acquired by it, and CPI and PBU from the Title Transfer Date shall be relieved from any of such rights and obligations associated with the Interests transferred hereunder. 
  
 8. Post-Effective Obligations. The Sellers and Buyer each individually
and collectively agree to use commercially reasonable efforts to execute and file any and all required documents with the Ukrainian government to effectuate the reduction of the amount of the authorized capital (charter fund) of the Company and to
effectuate the sale of the Interests hereunder. The Sellers and Buyer further agree to diligently carry out any additional act required, and to cooperate with each other as necessary, to carry out the intent and purpose of this Agreement. The
Sellers and Buyer acknowledge that the dollar amounts above may require adjustment depending on the timing of the filing of certain documents with the appropriate government authorities and the parties agree to any fair and equitable adjustment, if
required. 
  
 9. Disclaimer and Condition of Company
Assets. It is understood and acknowledged by the parties hereto that, subject to Section 3.3 hereof, the Company assets are on an “as is, where is” basis and the Sellers disclaim all warranties with respect to the Company assets,
including any implied warranties of merchantability and fitness for any particular purpose. In no event shall the Sellers be liable for indirect, incidental, consequential or exemplary damages, including without limitation, damages for loss of
profits, or other tangible and intangible losses resulting from use, quality, design, merchantability or functioning of the Company assets after the Effective Date, or damages for illness or injury to any person resulting from use of the Company
assets after the Effective Date. 









 10. Confidentiality. After the Effective Date, each party shall hold all information with respect
to the terms and conditions of this Agreement in confidence and shall not, directly or indirectly, use such information for its own benefit or disclose the same to any third party without the other party’s written consent. 
  
 10.1 Either the Sellers or the Buyer may disclose
information, which would otherwise be confidential, if and to the extent: 
  
 (a) such disclosure is required by the applicable Ukrainian legislation; 
  
 (b) the information is in its possession, or is in the public domain, through no fault of either the Sellers or the Buyer; or 

 
 (c) such disclosure is to either the Sellers’ or the
Buyer’s legal advisors, accountants or other consultants, who are also subject to the same or similar confidentiality restrictions as are contained in this Article 10. 
  
 11. Applicable Law. This Agreement shall in all respects be governed by and construed in accordance with the laws of
California, United States of America, without giving effect to the principles of conflict of laws. 
  
 12. Dispute Resolution. All disputes, which arise out of or in connection with this Agreement, or its interpretation, operation, or termination,
shall, in the first instance, be settled by means of amicable negotiations between the Sellers and the Buyer. In the event that any such dispute between the Sellers and the Buyer can not be resolved by means of such negotiations, either party
thereto undertake to transfer such dispute to binding arbitration with California, United States of America as the venue using the rules of the American Arbitration Association. 
  
 13. Miscellaneous. 
  
 (a) The performance of any act or payment by one party shall not be deemed a waiver of any obligation or default on the part of the other.
One party’s failure to require strict performance by the other party of any of the provisions of this Agreement shall not be a waiver thereof. 
  
 (b) This Agreement constitutes the entire understanding between the parties and supersedes any previous representations or agreements,
whether verbal or written, with respect to the sale of the Interests. 
  
 (c) No amendment or change of any of the terms or conditions herein shall be binding upon the parties unless they are made in writing and are signed by an authorized representative of each party. 
  
 (d) Any provision of this Agreement which is unenforceable
shall not cause any other remaining provision to be ineffective or invalid. The captions set forth herein are for convenience only and shall not define or limit any of the terms hereof. Any notices or demands in connection with this Agreement shall
be given in writing by certified mail at the address indicated in this Agreement, or to any other address specified in writing. 









 (e) None of the parties shall be liable or deemed to be in default for any delay or
failure in performance under this Agreement or interruption of service resulting directly or indirectly from acts of God or military authority, acts of public enemy, war, riots, civil disturbances, insurrections, accidents, fire, explosions,
earthquakes, floods, the elements, strikes, labor disputes, shortages of the equipment or components thereof suitable parts, materials, labor or transportation, or any other causes beyond the reasonable control of such party. 
  
 (f) This Agreement may be executed in one or more
counterparts, and via facsimile, each of which, including an identical photo, chemical or electronic copy, shall be deemed an original but all of which shall constitute one and the same instrument. 
  
 IN WITNESS WHEREOF, the parties signing below each have the authority to sign
and enter into this Agreement and have executed this Agreement as of the Effective Date. 
  

			
	 THE SELLERS

	
	 Phage Biotech Ukraine,
 a Nevada limited liability company

		
	By	 	/S/    MICKAEL A.
FLAA        
	 Name:
	 	Mickael A. Flaa
	 Title:
	 	Manager
	
	 Cardio Phage International,
 a Bahamas corporation

		
	By	 	/S/    GRANT
GORDON        
	 Name:
	 	Grant Gordon
	 Title:
	 	President
	
	 BUYER

	
	 BS Biology Sciences Limited,
 a Cyprus company

		
	By	 	/S/    PETROS
LIVANIOS        
	 Name:
	 	Petros Livanios
	 Title:
	 	Director











  
 EXHIBIT A 
  
 Balance Sheet of Phage Biotech on March 31, 20005 
  

							
	 Purchase Price (noted below, highlighted, bold with *** around it):
	  	***103.49***

  
 Amounts are in US Dollars 

 

									
	 Assets

	  	Code

	  	For the
beginning of
accounting
period
(31 Dec 2004)

	 	 	For the end of
accounting
period
(31 March 2005)

	 
	 1. Capital assets
	  	 	  	 	 	 	 	 
	 Intangible assets:
	  	 	  	 	 	 	 	 
	 depreciated book value
	  	010	  	0.15	 	 	0.11	 
	 cost value (initial)
	  	011	  	0.17	 	 	0.17	 
	 depreciation
	  	012	  	(0.02	)	 	(0.06	)
	 Uncompleted construction
	  	020	  	—  	 	 	—  	 
	 Basic means:
	  	 	  	 	 	 	 	 
	 depreciated book value
	  	030	  	91.03	 	 	80.1	 
	 cost value (initial)
	  	031	  	182.47	 	 	176.64	 
	 amortization
	  	032	  	(91.44	)	 	(96.54	)
	 Long-term financial investments:
	  	 	  	 	 	 	 	 
	 share in other enterprises’ capital
	  	040	  	—  	 	 	—  	 
	 other financial investments
	  	045	  	—  	 	 	—  	 
	 long-term accounts receivable
	  	050	  	—  	 	 	—  	 
	 deferred tax assets
	  	060	  	—  	 	 	—  	 
	 Goodwill
	  	065	  	—  	 	 	—  	 
	 Other capital assets
	  	070	  	—  	 	 	—  	 
	 	  	
	  	
	
	 	
	

	 Total for section 1
	  	080	  	91.18	 	 	80.21	 
	 	  	
	  	
	
	 	
	

	 2. Current assets
	  	 	  	 	 	 	 	 
	 Inventories and supplies:
	  	 	  	 	 	 	 	 
	 production supplies
	  	100	  	7.82	 	 	12.52	 
	 animals tested
	  	110	  	—  	 	 	—  	 
	 uncompleted construction
	  	120	  	—  	 	 	—  	 
	 end products
	  	130	  	—  	 	 	—  	 
	 goods
	  	140	  	—  	 	 	—  	 
	 Notes
	  	150	  	—  	 	 	—  	 
	 Accounts receivable for goods, services:
	  	 	  	 	 	 	 	 
	 net realizable value
	  	160	  	—  	 	 	—  	 
	 cost value (initial)
	  	161	  	—  	 	 	—  	 
	 doubtful debts
	  	162	  	—  	 	 	—  	 
	 Accounts receivable due to budget
	  	170	  	0.04	 	 	0.15	 
	 for advanced payments
	  	180	  	3.37	 	 	4.32	 
	 from accrued income
	  	190	  	—  	 	 	—  	 
	 from internal settlements
	  	200	  	—  	 	 	—  	 
	 Other current accounts receivable
	  	210	  	0.72	 	 	0.51	 
	 Current financial investments
	  	220	  	—  	 	 	—  	 
	 Cash or equivalent:
	  	 	  	 	 	 	 	 
	 national currency
	  	230	  	2.71	 	 	9.2	 
	 foreign currency
	  	240	  	12.06	 	 	4.0	 
	 Other current assets
	  	250	  	—  	 	 	—  	 
	 	  	
	  	
	
	 	
	

	 Total for section 2
	  	260	  	26.72	 	 	30.70	 
	 	  	
	  	
	
	 	
	

	 3. Future expenses
	  	270	  	—  	 	 	—  	 
	 	  	
	  	
	
	 	
	

	 Balance
	  	280	  	117.9	 	 	110.91	 
	 	  	
	  	
	
	 	
	












									
	 Liabilities

	  	Code

	  	For the
beginning of
accounting
period

	 	 	For the end of
accounting
period

	 
	 1. Equity capital
	  	 	  	 	 	 	 	 
	 Statutory fund
	  	300	  	554.37	 	 	554.37	 
	 Share capital
	  	310	  	—  	 	 	—  	 
	 Additional invested capital
	  	320	  	—  	 	 	—  	 
	 Other additional capital
	  	330	  	—  	 	 	—  	 
	 Reserve capital
	  	340	  	—  	 	 	—  	 
	 Undistributed profit (uncovered loss)
	  	350	  	(414.98	)	 	(450.88	)
	 Unpaid capital
	  	360	  	(22.19	)	 	—  	 
	 Withdrawn capital
	  	370	  	—  	 	 	—  	 
	 	  	
	  	
	
	 	
	

	 Total for section 1
	  	380	  	117.20	 	 	***103.49***	 
	 	  	
	  	
	
	 	
	

	 2. Costs and payments
	  	 	  	 	 	 	 	 
	 Salaries
	  	400	  	—  	 	 	—  	 
	 Other payments
	  	410	  	—  	 	 	—  	 
	 	  	415	  	—  	 	 	—  	 
	 	  	416	  	—  	 	 	—  	 
	 Target financing
	  	420	  	—  	 	 	—  	 
	 	  	
	  	
	
	 	
	

	 Total for section 2
	  	430	  	—  	 	 	—  	 
	 	  	
	  	
	
	 	
	

	 3. Long-term liability
	  	 	  	 	 	 	 	 
	 Long-term loans
	  	440	  	—  	 	 	—  	 
	 Other long-term financial liability
	  	450	  	—  	 	 	—  	 
	 deferred tax liability
	  	460	  	—  	 	 	—  	 
	 Other long-term liability
	  	470	  	—  	 	 	—  	 
	 	  	
	  	
	
	 	
	

	 Total for section 3
	  	480	  	—  	 	 	—  	 
	 	  	
	  	
	
	 	
	

	 4. Current liability
	  	 	  	 	 	 	 	 
	 Short-term loans
	  	500	  	—  	 	 	—  	 
	 Current receivables from long-term liability
	  	510	  	—  	 	 	—  	 
	 Notes
	  	520	  	—  	 	 	—  	 
	 Accounts receivable for goods, services
	  	530	  	0.40	 	 	0.41	 
	 Current receivables:
	  	 	  	 	 	 	 	 
	 from received advanced payments
	  	540	  	0.30	 	 	0.28	 
	 due to budget
	  	550	  	—  	 	 	0.59	 
	 from non-budget payments
	  	560	  	—  	 	 	—  	 
	 Pension & social fund
	  	570	  	—  	 	 	2.01	 
	 from salaries
	  	580	  	—  	 	 	4.13	 
	 before members
	  	590	  	—  	 	 	—  	 
	 from internal calculations
	  	600	  	—  	 	 	—  	 
	 Other current liability
	  	610	  	—  	 	 	—  	 
	 	  	
	  	
	
	 	
	

	 Total for section 4
	  	620	  	0.70	 	 	7.42	 
	 	  	
	  	
	
	 	
	

	 5. Future income
	  	630	  	—  	 	 	—  	 
	 	  	
	  	
	
	 	
	

	 Balance
	  	640	  	117.9	 	 	110.91