Document:

Exhibit 10.2

 

SHARE
PURCHASE AGREEMENT

 

THIS
SHARE PURCHASE AGREEMENT (this "Agreement") is made and entered into as of the 29 day of November 2009 (the “Effective
Date”), by and among all the current shareholders of Nano Size Ltd. (the “Company”), as listed in
Schedule 1 attached hereto (each a “Seller” and together the “Sellers”) and
P.V. Nano Cell Ltd. (the "Purchaser").

 

W
I T N E S S E T H:

 

WHEREAS,
the Sellers desire to sell their shares of the Company and all other outstanding securities (including warrants and options) subject
to the terms and conditions of this Agreement; and

 

WHEREAS,
the Purchaser agrees to purchase such shares and other securities of the Sellers; provided that all the shares and securities
of the Company are sold to Purchaser pursuant to the Company's articles of association, all as set-forth herein on the terms and
subject to the conditions set forth in this Agreement.

 

NOW,
THEREFORE, in consideration of the mutual promises and covenants set forth herein, the parties hereby agree as follows:

 

		1.	Sale of the Shares.

 

		1.1	Subject
                                         to the terms and conditions hereof, the Sellers shall sell to the Purchaser, and the
                                         Purchaser shall purchase from the Sellers such number of shares of the Company of par
                                         value of NIS1.00 per share and all other securities (including options, warrants and
                                         such other rights to purchase shares) as detailed in Schedule 3.7 attached hereto.
                                         Purchaser shall purchase the securities (the “Purchased Shares”) at
                                         the Closing, at an aggregate price for all Purchased Shares of the Sellers, as set forth
                                         in Section 1A below.

 

		1.2	Pursuant
                                         to the Bring-Along provision under the Company's articles of association in the form
                                         attached hereto as Schedule 1.2 (the "Articles"), in the
                                         event shareholders holding more than eighty percent (80%) of the Ordinary Shares of the
                                         Company (calculated on an as-converted basis), execute this Agreement, then, at the Closing
                                         all of the shareholders of the Company will be required, according to the Articles, to
                                         transfer their shares to Purchaser on the same terms and conditions as defined herein.

 

		1A.	Purchase
                                         Price.

 

The
Purchaser shall pay the Sellers the following consideration for the sale of the Purchased Shares ("Purchase Price"):

 

	 	1A.1	Initial Consideration.The initial consideration is US $120,000 (subject
to any adjustments according to the formula below) (the "Initial Consideration") out of which US $30,000 has
been already paid by the Purchaser to the Company pursuant to the MOU, and additional US $30,000 has been already paid by the
Purchaser to the Company pursuant to the MOU on August 31, 2009.

 

It
is agreed that the aforesaid US $60,000 out of the Initial Consideration is held by the Company in trust for the Sellers until
the Closing, and such amount shall be transferred by the Company to the Escrow (as defined below) prior to the Closing and shall
be distributed to the Sellers according to the provisions of Section 2.1 below at or as soon as practical after the Closing.

 

    	 

    	 

    

 

At
the Closing, the Purchaser shall pay to the Sellers, in accordance with Section 1A.4 below, the remaining installment out of the
Initial Consideration (the "Last Installment") calculated according to the following formula:

 

Last
Installment = US $60,000 – (minus) any outstanding debts of the Company, as set forth in Schedule 2.3.4 attached
hereto, that were not paid by the Company prior to the Closing in accordance with Section 2.3.4 below + (plus) any amounts due
to the Company from the Purchaser pursuant to the MOU, that were not paid by the Purchaser prior to the Closing + (plus) any credit
balance in the Company's bank account as of the Closing.

 

	 	1A.2	Additional Consideration.In addition to the Initial Consideration,
the Purchaser shall pay the Sellers, in accordance with Section 1A.4 below, an Additional Consideration (as such term is defined
below) as follows:

 

		1A.2.1	In
                                         this Section 1A the following terms shall have the meaning ascribed to them herein:

 

		(i)	"Affiliate":
                                         of a Party is an entity controlling that Party or controlled by it or under the same
                                         control with it; and "control" means the holding (directly and indirectly)
                                         of more than 50% of either the equity rights or the voting rights, or the right to appoint
                                         the majority of the directors.

 

		(ii)	"Products":
                                         all Company's Products using the Technology (as defined in Section 3.8 below), or any
                                         part thereof.

 

		(iii)	"Sales
                                         Proceeds": shall mean the gross ex-factory invoice price actually received (net
                                         of import/export taxes, customs, duties, VAT, sales taxes, refunds, returns and rebates),
                                         by which the Company or its Affiliates shall sell the Products or otherwise grant any
                                         right of use in the Products to distributors, representatives, agents, and direct sales
                                         to customers (if any).

 

		(iv)	"Consideration
                                         Period": is the period from the first commercial sale of the first Product or
                                         the performance of Sublicense Transaction (as applicable) and until the aggregate Additional
                                         Consideration together with the Initial Consideration reaches US $1,520,000 (including
                                         any sums that were duly off set pursuant to the terms of this Agreement and including
                                         any adjustment made pursuant to Section 1A.1 above to the Initial Consideration).

 

		(v)	"Sublicense
                                         Transaction"- sale, transfer, grant of license or other right or assignment
                                         by the Company of its rights in the Technology (or any part thereof), during the Consideration
                                         Period, to any third party excluding Affiliates of the Company.

 

		(vi)	"Sublicense
                                         Proceeds"- the consideration actually received by the Company or its Affiliates
                                         in the Sublicense Transaction with respect to the Technology (or any part thereof), net
                                         of any direct expenses incurred by the Company and its Affiliates with respect to the
                                         Sublicense Transaction.

 

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		1A.2.2	Sales
                                         Consideration. Subject to the terms of this Agreement, during the Consideration Period
                                         the Purchaser shall pay the Sellers a consideration in an amount equal to 3% of the Sales
                                         Proceeds actually received by the Purchaser ("Sales Consideration ").

 

		1A.2.3	Sublicense
                                         Consideration. Subject to the terms of this Agreement, during the Consideration Period
                                         the Purchaser shall pay the Sellers a consideration in an amount equal to 10% of the
                                         Sublicense Proceeds actually received by the Purchaser ("Sublicense Consideration",
                                         and together with the Sales Consideration – "Additional Consideration").

 

		1A.2.4	The
                                         Sales Consideration and/or the Sublicense Consideration shall be paid by the Purchaser
                                         to the Sellers on a quarterly basis in arrears for such Products and Sublicense Transactions
                                         for which Sales Proceeds and Sublicense Proceeds were actually received by the Company
                                         or an Affiliate during the relevant quarter.

 

		1A.2.5	Within
                                         21 days after the end of each calendar quarter, the Purchaser shall provide to the Escrow
                                         with a report, showing the quantities of Products and Sales Proceeds received by the
                                         Company or its Affiliates during such quarter, and the Sublicense Proceeds received by
                                         the Company or its Affiliates during that quarter, and accordingly, the calculation of
                                         the Sales Consideration and Sublicense Consideration due to the Sellers from the Purchaser
                                         (the "Quarterly Report/s").

 

		1A.2.6	Together
                                         with each Quarterly Report and against the receipt of a tax invoice from the Escrow,
                                         the Purchaser will pay the Escrow the Sales Consideration and\or the Sublicense Consideration
                                         due to the Sellers. The payment of Sales Consideration and\or the Sublicense Consideration
                                         shall be paid to the Escrow by cash or wire transfer, in US dollars or in NIS, calculated
                                         at the last representative exchange rate known on the date of transfer. VAT shall be
                                         added to any payment of Sales Consideration and\or the Sublicense Consideration, according
                                         to any applicable law. Any withholding taxes required by applicable law shall be deducted
                                         by the Escrow, and a copy of a document showing such withholding and payment of the withheld
                                         amount to the tax authorities shall be provided by the Escrow to the Purchaser after
                                         such payment is made.

 

		1A.2.7	If
                                         the Company accepts return of Products for which Sales Consideration have already been
                                         paid by the Purchaser to the Sellers, or grants refunds or rebates for such Products,
                                         the Purchaser shall be entitled to offset the sum of such Sales Consideration against
                                         future Sales Consideration due to the Sellers.

 

		1A.2.8	Within
                                         180 days after each calendar year commencing as of the end of the year in which the Company
                                         has its first commercial sale of Products or the performance of Sublicense Transaction
                                         (as applicable), the Purchaser shall provide the Escrow with a confidential report of
                                         the Company, certified by the Company's auditors, setting forth the Sales Proceeds and
                                         the Sublicense Proceeds received by the Company during the previous calendar year, according
                                         to the Company's financial reports ("Annual Report").

 

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		1A.2.8A	Audit
                                         Rights. Without derogating from the above, the Purchaser shall maintain accurate records
                                         with respect to the sales of Products, the Sales Proceeds, the Sublicense Transactions
                                         and the Sublicense Proceeds. Not more than once a year, the Purchaser shall provide to
                                         the Escrow and/or other auditor designated by the Sellers, at Sellers sole discretion,
                                         sufficient access, during normal business hours, to the Company's and/or to the Purchaser's
                                         (as applicable) facilities, personnel and records relating to the sales of Products,
                                         the Sales Proceeds, the Sublicense Transactions and the Sublicense Proceeds, to verify
                                         the Purchaser’s compliance with its obligation to pay the Sales Consideration and/or
                                         the Sublicense Consideration due to the Sellers. The Escrow or auditor shall execute
                                         a confidentially undertaking towards the Purchaser as customary. The aforesaid audits
                                         shall be conducted at Sellers’ expense. If, as a result of any audit, the auditor
                                         determines that the Purchaser has underpaid the Sellers, the Purchaser shall promptly
                                         pay to the Sellers the delinquent amount, plus annual interest at a rate of 12 month
                                         Libor + 8% calculated from the date the delinquent amount became due until the date of
                                         actual payment to the Sellers. If the audit shows an underpayment, and the Purchaser
                                         contests part or all of the findings, the uncontested part shall be paid without delay
                                         and the contested sums shall be resolved between the auditors of the Purchaser and the
                                         auditor or Escrow on behalf of the Sellers. If the audit discovers an overpayment, the
                                         overpayment shall be deemed on account of future Sales Proceeds, and the Sublicense Proceeds
                                         that become due. If any audit reveals an underpayment, during any audit period, exceeding
                                         10% of the Sales Consideration and/or the Sublicense Consideration due during such period,
                                         the Purchaser shall reimburse the Seller, notwithstanding the above, for the reasonable
                                         costs and expenses of such audit.

 

		1A.2.9	Security.
                                         As security for the payment of the Additional Consideration up to US $1,520,000 in accordance
                                         with this Section 1A, the Purchaser shall create at the Closing, in favor of the Sellers,
                                         a first ranking fixed charge on the Purchased Shares, all as set forth in the Fixed Charge
                                         Deed attached hereto as Schedule 1A.2.9.

 

		1A.2.10	In
                                         the event that during a period of 24 months following the Closing (the "Objective
                                         Period"), the Sellers shall not receive from the Purchaser Sales Consideration
                                         and/or Sublicense Consideration in a cumulative amount of at least US$ 60,000 (including
                                         any sums that were duly off-set pursuant to the terms of this Agreement) ("Minimum
                                         Additional Consideration"), then the Sellers shall be entitled, during a period
                                         of 6 months following the lapse of the Objective Period, to repurchase the Purchased
                                         Shares from the Purchaser, upon the payment of their nominal value.

 

			Notwithstanding
                                         the above it is agreed, that in the event that during the Objective Period, the Sales
                                         Consideration and/or Sublicense Consideration received by the Sellers from the Purchaser
                                         do not reach the Minimum Additional Consideration, the Purchaser shall have the option
                                         to pay to the Sellers, until the termination of the Objective Period, any deficient amount
                                         required in order to reach the Minimum Additional Consideration (the "Deficient
                                         Amount"). In such event, the Deficient Amount shall be off-set from any future
                                         Sales Consideration and/or Sublicense Consideration due to the Sellers.

 

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In
the event in which the Sellers exercise their right to repurchase the Purchased Shares as aforesaid, the Purchaser undertakes
to transfer the Purchased Shares to the Sellers, free and clear of all pledges, debts, security interests and other third party
interests or rights, and the escrow of PGS as set out below in this Section 1A.2.10 shall be terminated.

 

For
the purpose of this Section 1A.2.10, the Purchaser shall deliver to Primes, Shiloh, Givon, Meir – Law Firm (“PGS”)
as an escrow agent at the Closing, a validly executed deed of transfer (without setting the date) with respect to the Purchased
Shares, in the form attached hereto as Schedule 1A.2.10(a). PGS shall act according to the letter of instructions
attached as Schedule 1A.2.10(b) (the "Letter of Instructions"). It is hereby agreed that
the Purchaser and the Sellers (including the representative of the Sellers) may provide a release notice and/or an objection notice
to PGS according to the Letter of Instructions solely with respect to the payment or the non payment of the Minimum Additional
Consideration to the Sellers, as applicable.

 

		1A.3	Emulsions
                                         Technology Consideration. In addition to the Initial Consideration and the Additional
                                         Consideration, the Sellers shall be entitled to receive from the Purchaser net (after
                                         payment of all applicable taxes and expenses incurred by the Company and the Purchaser)
                                         sums actually received by the Company from Nano Em Ltd. in connection with the Emulsion
                                         Technology (as such term is defined below) sold by the Company to Nano Em Ltd. under
                                         the Technology Sale Agreement, dated November 28, 2009 ("Emulsions Technology
                                         Consideration"). Sections 1A.2.5, 1A.2.8 and 1A.2.8A above shall apply also
                                         with respect to the Emulsions Technology Consideration, mutatis mutandis.

 

		1A.4	Without
                                         derogating from the above, it is agreed that the Purchase Price due to Sellers pursuant
                                         to this Section 1A (i.e. the Initial Consideration, the Additional Consideration and
                                         the Emulsions Technology Consideration), as well as the Quarterly Report and the Annual
                                         Report, shall be provided by the Purchaser to the Sellers solely via Adv. Shuky Regev
                                         (the "Escrow"), and not directly. The Escrow shall distribute the Purchase
                                         Price between the Sellers pro-rata with the holdings of each Seller, and shall be responsible
                                         to deduct and pay to the tax authorities any withholding taxes required by applicable
                                         laws.

 

		2.	Closing of Sale and Purchase of the Purchased Shares.

 

		2.1	Closing.
                                         The purchase of the Purchased Shares by the Purchaser shall take place on November 29,
                                         2009, or such other date agreed upon by the Sellers and the Purchaser at 10:00 AM (the
                                         "Closing"). The Closing shall not be later than November 30, 2009 (unless
                                         agreed in writing by the Purchaser). The Closing shall take place at the offices of Primes,
                                         Shiloh, Givon, Meir – Law Firm.

 

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		2.2	Conditions
                                         to Closing:

 

		2.2.1	The
                                         Sellers and the Purchaser received the Company's Board of Directors’ resolution
                                         by a unanimous written consent, attached hereto as Schedule 2.2.1, approving
                                         the sale and transfer of the Purchased Shares from the Sellers to the Purchaser.

 

		2.2.2	All
                                         Eligible Shareholders, as defined in the Articles, have waived their rights of first
                                         refusal in connection with the transaction contemplated in this Agreement.

 

		2.2.3	Prior
                                         to the Closing, the Company's Board of Directors shall have issued a notice to all the
                                         shareholders of the Company, in the form attached as Schedule 2.2.3 hereto,
                                         notifying the shareholders of the sale of the Purchased Shares by the Sellers to the
                                         Purchaser.

 

	 	2.3	Transactions at the Closing.At the Closing the following transactions
shall occur, which transactions shall be deemed to take place simultaneously and no transaction shall be deemed to have been completed
or any document delivered until all such transactions have been completed and all required documents delivered:

 

		2.3.1	The
                                         Purchaser shall transfer to the Sellers, in accordance with Section 1A.4 above, the Last
                                         Installment, in accordance with Section 1A above;

 

		2.3.2	Each
                                         Seller shall deliver to the Purchaser: (i) the original share certificates representing
                                         its respective Purchased Shares if any (or applicable affidavits of lost certificates
                                         in the absence thereof); and (ii) validly executed Deed of Transfer in respect of its
                                         respective Purchased Shares in the form attached hereto as Schedule 2.3.2;

 

		2.3.3	All
                                         directors appointed to the Board of Directors of the Company, shall deliver a resignation
                                         letter in a form attached hereto as Schedule 2.3.3.

 

		2.3.4	Company
                                         shall pay all debts detailed in Schedule 2.3.4 attached hereto; or alternatively
                                         reserve such amounts in the Company’s bank account at the Closing.

 

		2.3.5	A
                                         compliance certificate, in the form attached hereto as Schedule 2.3.5,
                                         dated as of the Closing and signed by the Company’s Chief Executive Officer, stating
                                         that: (i) except as set forth in Schedule 2.3.5(i), there have not been
                                         and there are no legal or administrative actions, suits, proceedings or investigations
                                         nor to the Company’s knowledge pending or threatened against the Company, or any
                                         such proceedings which are related in any material way to the Company or to the Company’s
                                         business, its assets and properties or against any of the Company’s employees,
                                         officers, shareholders or directors in their capacity as such, and the Company is not
                                         aware of any fact which may result in any such proceedings; (ii) except for the securities
                                         held by the Sellers and specified in the Capitalization Table in Schedule 3.7
                                         below, there are no securities issued or promised to be issued by the Company that have
                                         not been cancelled in accordance with Section 2.3.7 below; (iii) the bank account balance
                                         as of the Closing is positive and is sufficient to cover the debts set out in Schedule
                                         2.3.4, as far as such debts were not paid by the Company as set forth in Section
                                         2.3.4 above; (iv) all needed corporate actions and transactions made at the Closing on
                                         behalf of the Company have been fulfilled.

 

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		2.3.6	The
                                         Sellers shall establish their engagement with the Escrow, including letters of instructions
                                         to comply with the undertakings attributed to the Escrow in this Agreement. Such documents
                                         to be attached as Schedule 2.3.6. The Escrow shall also serve on behalf
                                         of the Company solely with respect to any withholding obligations.

 

		2.3.7	The
                                         Sellers and the Purchaser shall receive a Resolution of the Board cancelling all options
                                         exercisable into ordinary shares of the Company that were previously granted to Company's
                                         employees, consultants and services providers. Such resolution shall also include (i)
                                         the cancellation of all share certificates, if any; (ii) the registration of the transfer
                                         of all the Purchased Shares in the name of the Purchaser; and (iii) the issuance to the
                                         Purchaser of a share certificate representing all the Purchased Shares, all such actions
                                         to take place at the Closing. Such resolution to be attached hereto as Schedule 2.2.1.

 

		2.3.8	The
                                         Company shall cancel all pledges registered at the Companies Registrar (excluding one
                                         pledge registered with respect to one remaining leased car) and in any other applicable
                                         registry, all as set forth in the extract of the Company's Registrar attached hereto
                                         as Schedule 2.3.8.

 

		2.3.9	The
                                         Company shall receive all third parties approvals needed with respect to the sale of
                                         the Purchased Shares by the Sellers to the Purchaser, all as set forth in Schedule
                                         2.3.9 attached hereto.

 

		2.3.10	The
                                         Sellers and the Company shall terminate the shareholders agreement and any other agreement
                                         between the shareholders pertaining to their holdings in the Company. Such termination
                                         letter to be attached as Schedule 2.3.10
	 	 	 
	 	2.3.11	The Sellers shall cause the Company to provide the Purchaser with a share Certificate representing all the Purchased Shares in
a form attached hereto as Schedule 2.3.11.
	 	 	 
	 	2.3.12	 The Sellers shall cause the Company to provide the Purchaser with an updated Share Registry reflecting the sale and purchase of
the Purchased Shares in the form attached hereto as Schedule 2.3.12.

  

		2.3.13	The
                                         Purchaser and the Sellers shall sign the Fixed Charge Debenture and take any action required
                                         in order to carry out the creation of the first ranking fixed charge in favor of the
                                         Sellers, as set forth in Section 1A.2.9 above.

 

		2.4	Promptly
                                         following the Closing, the Company shall file to the Registrar of Companies a notice
                                         with respect to the transfer of the Purchased Shares from the Sellers to the Purchaser.

 

		3.	Representations and Warranties of the Sellers. 

 

Each
Seller represents and warrants to the Purchaser with respect to itself only, that at the Closing and the signing of this Agreement:

 

		3.1	The
                                         Purchased Shares. Currently and throughout the period until and at the Closing, the
                                         Purchased Shares shall be free, clear of all pledges, debts, security interests and other
                                         third party interests or rights, except for the first ranking fixed charge that will
                                         be created at the Closing in favor of the Sellers, in accordance with Section 1A.2.9
                                         above.

 

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		3.2	Entire
                                         Holdings. The shares as set out in Schedule 3.7, being sold by each Seller
                                         are the only securities the Seller has in the Company and such Seller has no additional
                                         rights to purchase or receive shares, options, warrants or other convertible securities
                                         from the Company.

 

		3.3	Litigation.
                                         To the Sellers' actual knowledge without making any investigation, except as set forth
                                         in Schedule 2.3.5(i), there have not been and there are no legal or administrative
                                         actions, suits, proceedings or investigations pending or threatened against the Company,
                                         the Sellers or against any of the Company’s employees, officers or directors in
                                         their capacity as such.

 

		3.4	No
                                         claims. The Seller has no claims, demands or rights of whatever nature against the
                                         Company, its officers or directors and the Seller hereby waives any such claims, demands
                                         or rights to the extent existing. Each Seller, for itself, its predecessors, heirs, executors,
                                         administrators, assigns, and successors, hereby confirms that the Company does not have
                                         any debt towards him.

 

		3.5	Economic
                                         Value and Tax implications. The Seller is capable and fully understands the economic
                                         value of selling the Purchased Shares pursuant to the terms of this Agreement and shall
                                         have no rights if in the future the Company’s valuation is considerably higher
                                         than the valuation reflected in this Agreement. The Seller agrees that all tax implications
                                         arising out of the sale of its Purchased Shares, and/or receipt of any other sums pursuant
                                         to this Agreement shall be borne by the Seller alone.

 

		3.6	Authorization.
                                         All acts and conditions required by law or agreement on the part of the Seller necessary
                                         for the authorization, execution and delivery of this Agreement and the transactions
                                         contemplated herein, and the performance of all obligations of the Seller hereunder,
                                         have been duly performed and obtained and this Agreement constitutes a valid and legally
                                         binding obligation of the Seller, enforceable in accordance with its terms.

 

		3.7	Capitalization.
                                         To the Sellers' best knowledge, the capitalization table attached hereto as Schedule
                                         3.7 (the “Capitalization Table”) sets forth the Company’s
                                         issued and paid-up share capital, the beneficial and registered holders thereof, and
                                         their respective percentage holdings in the Company - all as of the date hereof and immediately
                                         prior to the Closing.

 

		3.8	Technology.
                                         To the Sellers' best knowledge, the Company has developed and is the sole owner of the
                                         intellectual property rights in the technology as set forth in Schedule 3.8
                                         attached hereto (“Technology”) and has the capability, know-how,
                                         equipment, infrastructure and arrangements for the production of dispersion of silver
                                         nano particles and other products. For the avoidance of doubt it is hereby clarified
                                         that any intellectual property, know-how or other rights that the Company has in connection
                                         with the production of emulsions in ultrasound technology (the "Emulsions Technology"),
                                         shall not constitute a part of the Technology and shall be therein excluded. To the Sellers'
                                         best knowledge, (i) the Company's representations with respect to the Emulsions Technology,
                                         as set forth in the Technology Sale Agreement between the Company and Nano Em Ltd., dated
                                         November 28, 2009, are true and correct in all material respects; and (ii) as part of
                                         such Technology Sale Agreement there are no patents or patents applications of the Company,
                                         whether registered or pending, assigned or transferred from the Company to Nano Em Ltd.

 

		3.9	Company's
                                         Debts. To the Sellers' best knowledge, the content of Schedule 2.3.4 is true,
                                         correct and not misleading in any material way or manner.

 

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		4.	Reserved.
		 	 
		5.	Representations
and Warranties of the Purchaser. 

 

The
Purchaser hereby represents and warrants to the Seller as follows:

 

		5.1	Authorization.
                                         All acts and conditions required by law or agreement on the part of the Purchaser necessary
                                         for the authorization, execution and delivery of this Agreement and the transactions
                                         contemplated herein, and the performance of all obligations of the Purchaser hereunder,
                                         have been duly performed and obtained and this Agreement constitutes a valid and legally
                                         binding obligation of the Purchaser, enforceable in accordance with its terms.

 

		5.1A	Disclosure
                                         of Information. Without derogating from the representations of the Sellers
                                         set out above, Purchaser confirms and warrants that it has received and reviewed information
                                         about the Company, and has had an opportunity to discuss the Company’s business,
                                         management and financial affairs with its management. The Purchaser has conducted an
                                         independent due diligence examination (including legal, financial and technological examination)
                                         of the information and materials relating to the Company and/or the Purchased Shares,
                                         as the Purchaser and its advisors deemed necessary. In addition, the Purchaser used and
                                         examined the Technology in the Company’s facilities, and found it appropriate to
                                         its business needs.

 

		5.2	Shares
                                         Purchased “As Is”. Except for the representations and warranties set
                                         forth in Sections 3 hereof or otherwise expressly set out herein, Purchaser agrees that
                                         the Purchased Shares are being purchased “As Is” without warranties or representations
                                         of any kind with respect to the Company’s assets, liabilities, business, or operations.

 

		5.3	Going
                                         Concern. Purchaser represents that following the Closing the Purchaser shall use
                                         reasonable commercial efforts to keep active the Company's business operation and to
                                         sell the Company’s Products (as such term is defined above) for a period of at
                                         least 2 years, and the Purchaser estimates (based on Company statements) that it shall
                                         be required to finance the Company's activities in an amount of at least US$900,000 per
                                         each year. Without derogating from the above, it is clarified that there is no certainty
                                         and no covenant by the Purchaser that the Company shall be successful and that Additional
                                         Consideration shall become due.

 

		5.4	OCS.
                                         Purchaser is aware that the Office of the Chief Scientist of the Ministry of Industry,
                                         Trade and Labor of Israel (“OCS”), has throughout the years, provided
                                         the Company with approximately US $___________ for funding of certain research and development
                                         projects of the Company's Technology and that the Company is subject to the provisions
                                         of The Encouragement of Research and Development in Industry Law 5744-1984 (the "R&D
                                         Law"). Purchaser is aware that the Company is required to pay royalties for
                                         products developed with the aid of the OCS, and undertakes to cause the Company to pay
                                         such royalties as required. The Purchaser is also aware of additional restrictions and
                                         undertakings towards the OCS including restrictions concerning the transfer of technologies
                                         outside of Israel, and Purchaser undertakes to comply with any of such restrictions,
                                         obligations and undertakings according to the provisions of the R&D Law.

 

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		5.5	Tami
                                         Imi R&D Institute Ltd. (“Tami”). Without derogating from other
                                         undertakings or agreements that the Company may be subject to, Purchaser is aware of
                                         the memorandum of understanding signed between the Company and Tami on December 14, 2005
                                         as an on-going obligation of the Company.

 

		5.6	Nano
                                         Em License Agreement & Technology Sale Agreement. Purchaser is aware of the Nano
                                         Em License Agreement, in which Nano Em Ltd. was originally granted by the Company a license
                                         to use the Emulsions Technology. Purchaser acknowledges that following the sale of the
                                         Emulsions Technology to Nano Em Ltd., including ,inter alia, the assignment to
                                         Nano Em Ltd of all rights and/or obligations towards the OCS in connection with the Emulsions
                                         Technology (if such rights and/or obligations are exist), and the cancellation of Nano
                                         Em License Agreement, the Company shall not have any rights in connection with the Emulsions
                                         Technology and or the Nano Em License Agreement, and Purchaser hereby waives any claim,
                                         demand or other right that it may have with respect thereto.

 

		5.7	Financing.
                                         Purchaser has, or will have sufficient cash, available lines of credit or other sources
                                         of immediately available funds to enable it to make payment of the Purchase Price and
                                         any other amounts to be paid by it hereunder.

 

		6.	Covenants
by the Purchaser and the Sellers

 

		6.1	Ordinary
                                         Course. From the date of the MOU and until the Closing, the Sellers have and shall
                                         continue to cause the Company to act in the ordinary course and to not assume new obligations,
                                         except as required for minimal day to day operations and except for such actions as are
                                         necessary to fulfill the conditions as provided in Section 2.3.4 above.

 

		6.2	Transition.
                                         At the Closing, the Sellers shall cause the Company to designate a representative, that
                                         together with a representative of the of the Purchaser shall effect a full and effective
                                         transfer of relevant details, for example keys and codes/passwords for the operation
                                         of the alarm and the computers in the Company's facilities, introduction with the lessor
                                         and the relevant contacts in the bank, etc..

 

		6.3	Full
                                         Cooperation. Each of the Sellers and Purchaser shall fully cooperate with each other,
                                         sign and execute any reasonably needed document, instrument or agreement in a timely
                                         manner and take all such reasonable measures to bring about the Closing without delay.

 

		6.4	One
                                         Representative. Each Seller represents and warrants that the Escrow is its sole and
                                         exclusive representative with respect to the receipt of the Purchase Price pursuant to
                                         this Agreement from the Purchaser and the distribution of the Purchase Price between
                                         the Sellers and/or in connection with the receipt of the Quarterly Reports and the Annual
                                         Reports. It is specifically agreed that payment of any sums to the Escrow shall be deemed
                                         due payment of such sums to the Sellers.

 

    	10

    	 

    

 

		6.5	Confidentiality.
                                         Each Seller, shall maintain the confidentiality of the Company information and not disclose
                                         it to any person or entity, nor use it. These undertakings shall apply for a period of
                                         five (5) years from the Effective Date.

 

		6.6	Compete:
                                         Each Seller undertakes that it and/or any of its Affiliate (as such term is defined in
                                         section 1A.2.1 above) shall not directly compete or assist others to compete, with the
                                         Technology of the Company during the shorter period between the Consideration Period
                                         or a period of four (4) years as of the Closing.

 

		7.	Reserved.

 

		8.	Indemnification;
                                         Limitation of Liability.

 

		8.1	Indemnification
                                         by each Seller. Each Seller, shall severally and not jointly be liable for and shall
                                         indemnify and hold the Purchaser harmless from and against all claims, actions, damages,
                                         costs, expenses and liabilities (including reasonable attorneys’ fees incident
                                         to the foregoing) (collectively referred to as “Damages”) actually
                                         incurred by the Purchaser and resulting from or arising out of:

 

		8.1.1	the
                                         failure of the representations and warranties of the Seller contained in Sections 3 of
                                         the Agreement to have been true at the Closing;

		8.1.2	the
                                         failure of the Seller to comply in all material respects with any of the Seller’s
                                         covenants contained in the Agreement, specifically as set out in Section 6.3, 6.4, 6.5
                                         and 6.6;

Indemnification
by off-set. Any indemnification by the Sellers pursuant to this Section 8.1 may be made by way of off-set by the Purchaser,
from any Additional Consideration due to the Sellers under this Agreement, all subject to Section 8.7 below.

 

Indemnification
Limitations. Notwithstanding anything to the contrary contained in this Agreement, (i) the Purchaser shall not be entitled
to seek indemnification from the Sellers unless and until the Damages sought by the Purchaser exceeds $US10,000, and if the Damages
exceed said amount the indemnification shall be made from the first dollar; and (ii) each Seller shall not be obligated to pay
any indemnification in the aggregate in excess of its pro-rata share of the Initial Consideration; (iii) no claim shall be brought
against the Sellers after the lapse of 24 months following the Closing, except for a claim, based on third parties' claim that
the Emulsions Technology infringes such third parties' intellectual property rights, that can not be brought against the Sellers
after the lapse of 36 months following the Closing.

		8.2	Indemnification
                                         by the Purchaser. The Purchaser shall be liable for and shall indemnify and hold
                                         the Sellers harmless from and against all Damages resulting from or arising out of:

 

		8.2.1	the
                                         failure of the representations and warranties of the Purchaser contained in Section 5
                                         of the Agreement to have been true at the Closing;
	 	 	 
		8.2.2	the
                                         failure of the Purchaser to comply in all material respects with any of the Purchaser’s
                                         covenants contained in the Agreement, specifically as set out in Section 6.3 and the
                                         obligation to pay any part of the Purchase Price when due;

 

    	11

    	 

    

 

Indemnification
Limitations. Notwithstanding anything to the contrary contained in this Agreement, (i) the Sellers shall not be entitled to
seek indemnification from the Purchaser unless and until the Damages sought by the Sellers exceeds $US10,000, and if the Damages
exceed said amount the indemnification shall be made from the first dollar. Notwithstanding the aforesaid, the above limitation
shall not apply to Damages resulting from the failure of the Purchaser to comply with its obligation to pay any part of the Purchase
Price when due; (ii) The Purchaser shall not be obligated to pay any indemnification to all the Sellers in the aggregate in excess
of the then unpaid and outstanding balance out of the Purchase Price; and (iii) no claim shall be brought against the Purchaser
after the lapse of 12 months following the termination of the Consideration Period.

 

Notwithstanding
the aforesaid, none of the limitations set forth in this Section 8.2 shall apply to Damages caused to the Sellers as a result
of third parties' claims.

 

		8.3	Conditions
                                         to Indemnification. The obligations to defend and indemnify a party against third
                                         party claims provided under Sections 8.1 and 8.2 above shall apply only if (i) the
                                         party requesting the indemnity (the “Indemnified Party”) promptly
                                         notifies the party obligated to provide the indemnity (“Indemnifying Party”)
                                         in writing of any claim; (ii) the Indemnified Party provides the Indemnifying Party
                                         with all reasonable assistance and information requested by the Indemnifying Party, at
                                         the Indemnifying Party’s expense, for the defense and settlement of any claim;
                                         and (iii) the Indemnified Party provides the Indemnifying Party with the exclusive
                                         right to control and the authority to defend and settle any claim, provided that the
                                         Indemnifying Party will not enter into any settlement that adversely affects the Indemnified
                                         Party’s rights or interest without the Indemnified Party’s prior written
                                         approval, which shall not be unreasonably withheld or delayed.

		8.4	LIMITATION
                                         OF LIABILITY. NEITHER PARTY SHALL BE LIABLE TO THE OTHER
                                         FOR SPECIAL, INDIRECT, INCIDENTAL, LOST PROFIT, TORT OR CONSEQUENTIAL DAMAGES OR PUNITIVE
                                         DAMAGES, REGARDLESS OF THE NATURE OF THE CLAIM. 
	 	 	 
		8.5	The
                                         indemnification provisions of Sections 8 shall be the sole and exclusive remedy of each
                                         of the Parties against any Damages arising from, or in connection with, this Agreement,
                                         except in the case of fraud, willful breach or intentional misrepresentation.

 

		9.	Miscellaneous

 

		9.1	The
                                         Preamble to this Agreement and any schedule attached hereto shall be deemed an integral
                                         part hereof.

 

		9.2	Governing
                                         Law; Jurisdiction. This Agreement shall be governed by and construed according to
                                         the laws of the State of Israel. Any dispute arising under or in relation to this Agreement
                                         shall be governed by and construed according to the laws of the State of Israel and exclusively
                                         resolved by the courts of the city of Tel Aviv, and each of the parties hereby submits
                                         irrevocably to such jurisdiction.

 

    	12

    	 

    

 

		9.3	Entire
                                         Agreement; Amendment and Waiver. This Agreement and the Schedules hereto constitute
                                         the full and entire understanding and agreement between the parties with regard to the
                                         subject matters hereof and thereof and terminates and cancels any prior agreement or
                                         understanding between the Parties, including the Terms Sheet signed between the parties
                                         on April 10, 2009 and amended on June 29, 2009. Any term of this Agreement may be amended
                                         and the observance of any term hereof may be waived (either prospectively or retroactively
                                         and either generally or in a particular instance) only with the written consent of the
                                         parties to this Agreement.

 

		9.4	Notices,
                                         etc. All notices and other communications required or permitted hereunder to be given
                                         to a party to this Agreement shall be in writing by registered mail, faxed, e-mailed,
                                         or otherwise delivered by hand or by messenger, addressed to such party's address as
                                         set forth below or at such other address as the party shall have furnished to each other
                                         party in writing in accordance with this provision. If sent by fax, e-mail or delivered
                                         by hand or messenger, the notice shall be deemed to have been delivered on the next business
                                         day after transmission, if sent by registered mail, the notice shall be deemed to have
                                         been delivered on the 3rd business day after it was sent by mail.

 

If
to the Purchaser to:

 

	 	P.V
        Nanocell Ltd.

        7
        Bialik St., Zichron Ya’akov, Israel

         
	With
        a copy to:

        Galia
        Amir Cheyne, Adv.

        Primes,
        Shiloh, Givon, Meir – Law Firm

        16
        Derech Hayam, Haifa 34741, Israel

 

If
to the Sellers:

 

	 	C/O
        Escrow

        Adv.
        Shuky regev

        45
        Reines st. Tel-Aviv 64597, Israel
	With
        a copy to:

        Inbal
        Sustiel, Adv.

        Furth,
        Wilensky, Mizrachi, Knaani – Law Offices

        1
        Azrieli Center, Tel Aviv 67021, Israel

 

			or
                                         such other address with respect to the Escrow or the Purchaser as they shall notify in
                                         writing.

 

		9.5	Delays
                                         or Omissions. No delay or omission to exercise any right, power, or remedy accruing
                                         to any party upon any breach or default under this Agreement, shall be deemed a waiver
                                         of any other breach or default theretofore or thereafter occurring. Any waiver, permit,
                                         consent, or approval of any kind or character on the part of any party of any breach
                                         or default under this Agreement, or any waiver on the part of any party of any provisions
                                         or conditions of this Agreement, must be in writing and shall be effective only to the
                                         extent specifically set forth in such writing. All remedies, either under this Agreement
                                         or by law or otherwise afforded to any of the parties, shall be cumulative and not alternative.

 

		9.6	Expenses.
                                         The Sellers and the Purchaser shall each bear its own expenses with respect to this
                                         agreement including due diligence costs by the Purchaser, setting up the Escrow by the
                                         Sellers, etc.

 

		9.7	Counterparts.
                                         This Agreement may be executed in any number of facsimile counterparts, each of which
                                         shall be deemed an original and enforceable against the parties actually executing such
                                         counterpart, and all of which together shall constitute one and the same instrument.

 

    	13

    	 

    

 

IN
WITNESS WHEREOF, each of the parties has signed this Share Purchase Agreement as of the date first hereinabove set forth.

 

The
Purchaser:

 

	/S/ Dr. Fernando de la Vega	 
		 	 
	P.V. Nanocell Ltd.

	 
	 	 
	By:
    	Dr.
Fernando de la Vega
	 
	Name: 
	 	 
	Title:
    	CEO	 

 

    	14

    	 

    

 

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Purchase Agreement – Sellers signature page]

 

The
Seller:

 

	By
        (signature):

        /S/
        Yuval Eitan
	 
	Signed
        by:

        Yuval
        Bitan, Manager, A.M.S Investments and Holdings LTD
	 
	511005183	 

 

	Address:	 	 
	Name
    of Addressee:	SIH
    Investments and Holdings LTD	 
	Attention
    of:	Yuval
    Eitan	 
	Address:	31
    Habarzel St. TLV	 
	 	 	 
	 	 	 
	 	 	 
	Tel:	+972-3
    -6474006	 
	Fax:
    	+972-3-6474196	 
	E-mail:
        reesimex@netvision.net.il

 

    	15

    	 

    

[Share
Purchase Agreement – Sellers signature page]

 

The
Seller:

 

	By
        (signature):

        /S/
        Y.L.A.M. Duivenvoorde
	 
	Signed
        by:

        MR.
        Y.L.A.M. Duivenvoorde
	 
	 	 

 

	Address:	 	 
	Name
    of Addressee:	Duma
    Corporate Services B.V.	 
	Attention
    of:	 	 
	Address:	Postbus
    71389	 
	 	1008
    BJ Amsterdam	 
	 	 	 
	 	 	 
	Tel:	+267-7132478	 
	Fax:
    	 	 
	E-mail:
    

 

    	16

    	 

    

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Purchase Agreement – Sellers signature page]

 

The
Seller:

 

	By
        (signature):

        /S/
        Serge Fass
	 
	Signed
        by:

        Serge
        Fass
	 
	 	 

 

	Address:	 	 
	Name
    of Addressee:	 	 
	Attention
    of:	 	 
	Address:	21766
    Phakalane, Gaborone	 
	 	Botswana	 
	 	 	 
	 	 	 
	Tel:	 	 
	Fax:
    	 	 
	E-mail:
        Serge.Fass@gmail.com

 

    	17

    	 

    

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Purchase Agreement – Sellers signature page]

 

The
Seller:

 

	By
        (signature):

        /S/
        Eliav Illan
	 
	Signed
        by:

        Eliav
        Illan, chairman of Katmag
	 
	054523980	 

 

	Address:	 	 
	Name
    of Addressee:	אליאב אילן

	 
	Attention
    of:	קמת"ג

	 
	Address:	קיבוץ מעלות

	 
	 	ד.נ. מנשה

	 
	 	37855	 
	 	 	 
	Tel:	+972-04-6375558	 
	Fax:
    	+972-04-6375557	 
	E-mail:    
    eliava@maanit.org.il

 

    	18

    	 

    

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Purchase Agreement – Sellers signature page]

 

The
Seller:

 

	By
        (signature):

        /S/
        Yohanan Flishman
	 
	Signed
        by:

        Yohanan
        Flishman
	 
	030573091	 

 

	Address:	 	 
	Name
    of Addressee:	 	 
	Attention
    of:	 	 
	Address:	Povarski
    st. 3	 
	 	Bnei
    Brak	 
	 	 	 
	 	 	 
	Tel:	+972-03-5705825	 
	Fax:
    	 	 
	E-mail:    
    Yfo603@012.net.il

 

    	19

    	 

    

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Purchase Agreement – Sellers signature page]

 

The
Seller:

 

	By
        (signature):

        /S/
        Evgeny Markhasin
	 
	Signed
        by:

        Evgeny
        Markhasin P.H.D.
	 
	307467639	 

 

	Address:	 	 
	Name
    of Addressee:	Evgeny
    Markhasin	 
	Attention
    of:	 	 
	Address:	Tidhar
    st. 12/12	 
	 	Migdal
    Haemek	 
	 	23046
    Israel	 
	 	 	 
	Tel:	+972-04-6440987	 
	Fax:
    	+972-04-6440987	 
	E-mail:    
    marhasines@gmail.com

 

    	20

    	 

    

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Purchase Agreement – Sellers signature page]

 

The
Seller:

 

	By
        (signature):

        /S/
        Victor Pecker
	 
	Signed
        by:

        Victor
        Pecker
	 
	306653536	 

 

	Address:	 	 
	Name
    of Addressee:	Victor
    Pecker	 
	Attention
    of:	 	 
	Address:	100
    Sierra Vista #203	 
	 	Mountain
    view	 
	 	CA
    94043	 
	 	USA	 
	Tel:	+650-691-0867	 
	Fax:
    	 	 
	E-mail:
        vicpecker@gmail.com

 

    	21

    	 

    

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Purchase Agreement – Sellers signature page]

 

The
Seller:

 

	By
        (signature):

        /S/
        Juri Melnik
	 
	Signed
        by:

        Juri
        Melnik
	 
	316996024	 

 

	Address:	 	 
	Name
    of Addressee:	Juri
    Melnik	 
	Attention
    of:	Juri
    Melnik	 
	Address:	#
    116, 5520 Riverbend Rd.	 
	 	Edmonton,
    AB, T6H 5G9	 
	 	Canada	 
	 	 	 
	Tel:	1-780-4864560	 
	Fax:
    	 	 
	E-mail:    
    yurimelnik@yahoo.com

 

    	22

    	 

    

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Purchase Agreement – Sellers signature page]

 

The
Seller:

 

	By
        (signature):

        /S/
        Marina Grintsov
	 
	Signed
        by:

        Marina
        Grintsov
	 
	316996065	 

 

	Address:	 	 
	Name
    of Addressee:	Marina
    Grintsov	 
	Attention
    of:	Marina
    Grintsov	 
	Address:	#
    116, 5520 Riverbend Rd.	 
	 	Edmonton,
    AB, T6H 5G9	 
	 	Canada	 
	 	 	 
	Tel:	1-780-4864560	 
	Fax:
    	 	 
	E-mail:    
    yurimelnik@yahoo.com

 

    	23

    	 

    

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Purchase Agreement – Sellers signature page]

 

The
Seller:

 

	By
        (signature):

        /S/
        Benjamin Kahn
	 
	Signed
        by:

        Benjamin
        Kahn
	 
	26036277	 

 

	Address:	 	 
	Name
    of Addressee:	 	 
	Attention
    of:	 	 
	Address:	Aba
    Hillel 16	 
	 	Ramat
    Gan	 
	 	 	 
	 	 	 
	Tel:	+972-03-5762726	 
	Fax:
    	 	 
	E-mail:    
    benzi@bkholding.com

 

    	24

    	 

    

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Purchase Agreement – Sellers signature page]

 

The
Seller:

 

	By
        (signature):

        /S/
        Yues Nasan
	 
	Signed
        by:

        Yues
        Nasan - director
	 
	Belgian
    Passport 083098	 

 

	Address:	 	 
	Name
    of Addressee:	De
    Keyseelei 5 bus 59 - ICT NV	 
	Attention
    of:	______
    Alasan	 
	Address:	Antwerp
    2018	 
	 	Belgium	 
	 	 	 
	 	 	 
	Tel:	+32-3-2069020	 
	Fax:
    	+32-3-2332680	 
	E-mail:    
    ict@ictnv.com

 

    	25

    	 

    

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Purchase Agreement – Sellers signature page]

 

The
Seller:

 

	By
        (signature):

        /S/
        Daniel Mazin Mor
	 
	Signed
        by:

        Daniel
        Mazin Mor
	 
	AB505589	 

 

	Address:	 	 
	Name
    of Addressee:	Daniel
    Mazin Mor	 
	Attention
    of:	 	 
	Address:	C/Velazquez
    15, 5 izda	 
	 	28001
    Madrid	 
	 	Spain	 
	 	 	 
	Tel:	+34-91-4320720	 
	Fax:
    	+34-91-4314239	 
	E-mail:    
    dmazin@dazia.com

 

    	26

    	 

    

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Purchase Agreement – Sellers signature page]

 

The
Seller:

 

	By
        (signature):

        /S/
        Shmuel Weissberger
	 
	Signed
        by:

        Shmuel
        Weissberger
	 
	51511160	 

 

	Address:	 	 
	Name
    of Addressee:	Shmuel
    Weissberger	 
	Attention
    of:	 	 
	Address:	Gott
        Levin 30/18

        Haifa
        32922
	 
	 	 	 
	 	 	 
	 	 	 
	Tel:	+972-04-8230382	 
	Fax:
    	+972-04-8230382	 
	E-mail:    
    Inbalw86@gmail.com

 

    	27

    	 

    

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Purchase Agreement – Sellers signature page]

 

The
Seller:

 

	By
        (signature):

        /S/
        Mario Horacio Birnbaum
	 
	Signed
        by:

        Mario
        Horacio Birnbaum - Chairman
	 
	11068566N	 

 

	Address:	 	 
	Name
    of Addressee:	BEC
    BUSINESS ENTERPRICES CORPORATION	 
	Attention
    of:	MARIO
    HORACIO BIRNBAUM	 
	Address:	27
    DE FEBRERO #329	 
	 	TORRE
    ELITE	 
	 	SUITE
    #701	 
	 	SANTO
        DOMINGO

        DOMINICAN
        REPUBLIC
	 
	 	 	 
	Tel:	+809-472-6489	 
	Fax:
    	+809-683-5658	 
	E-mail:    
    mario@bec-holdings.com

 

    	28

    	 

    

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Purchase Agreement – Sellers signature page]

 

The
Seller:

 

	By
        (signature):

        /S/
        Tzahi Berezovsky
	 
	Signed
        by:

        Tzahi
        Berezovsky
	 
	 	 

 

	Address:	 	 
	Name
    of Addressee:	Intes
    Ltd.	 
	Attention
    of:	 	 
	Address:	36
    Magac	 
	 	Savyon	 
	 	Israel	 
	 	 	 
	Tel:	+972-03-5342637	 
	Fax:
    	 	 
	E-mail:
        

 

    	29

    	 

    

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Purchase Agreement – Sellers signature page]

 

The
Seller:

 

	By
        (signature):

        /S/
        Michael Sharan
	 
	Signed
        by:

        Michael
        Sharan
	 
	010142529	 

 

	Address:	 	 
	Name
    of Addressee:	Tabor
    Eng. Equlp. Co. ltd	 
	Attention
    of:	 	 
	Address:	POB
    292	 
	 	Haifa
    31002	 
	 	Israel	 
	 	 	 
	Tel:	+972-052-3202303	 
	Fax:
    	 	 
	E-mail:    
    Msharan@dagon.co.il

 

    	30

    	 

    

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Purchase Agreement – Sellers signature page]

 

The
Seller:

 

	By
        (signature):

        /S/
	 
	Signed
        by:

         
	 
	 	 

 

	Address:	 	 
	Name
    of Addressee:	Systech
    Worldwide Ltd.	 
	Attention
    of:	 	 
	Address:	Bvi
    429295	 
	 	P.O.Box
    3152	 
	 	Road
    Town Tortula	 
	 	 	 
	Tel:	 	 
	Fax:
    	 	 
	E-mail:
        

 

    	31

    	 

    

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Purchase Agreement – Sellers signature page]

 

The
Seller:

 

	By
        (signature):

        /S/ 
	 
	Signed
        by:

         
	 
	 	 

 

	Address:	 	 
	Name
    of Addressee:	Software
    Holdings	 
	Attention
    of:	 	 
	Address:	Panama
    City 7498	 
	 	Comusa
    Building ave.	 
	 	Samuel
    Levis	 
	 	Panama
    City, Panama	 
	Tel:	 	 
	Fax:
    	 	 
	E-mail:
    

 

    	32

    	 

    

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Purchase Agreement – Sellers signature page]

 

The
Seller:

 

	By
        (signature):

        /S/
	 
	Signed
        by:

         
	 
	 	 

 

	Address:	 	 
	Name
    of Addressee:	Saray
    Offshore	 
	Attention
    of:	 	 
	Address:	BVI
    P.O.Box 3152	 
	 	Road
    Town	 
	 	Tortola	 
	 	 	 
	Tel:	 	 
	Fax:
    	 	 
	E-mail:
        

 

    	33

    	 

    

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Purchase Agreement – Sellers signature page]

 

The
Seller:

 

	By
        (signature):

        /S/
	 
	Signed
        by:

         
	 
	 	 

 

	Address:	 	 
	Name
    of Addressee:	Fieldway
    International	 
	Attention
    of:	 	 
	Address:	BVI
    511900	 
	 	P.O.Box
    3136	 
	 	Road
        Town

        Tortola
        BVI
	 
	 	 	 
	Tel:	 	 
	Fax:
    	 	 
	E-mail:
    

 

    	34

    	 

    

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Purchase Agreement – Sellers signature page]

 

The
Seller:

 

	By
        (signature):

        /S/
	 
	Signed
        by:

         
	 
	 	 

 

	Address:	 	 
	Name
    of Addressee:	RTCOM
    Investments Ltd.	 
	Attention
    of:	 	 
	Address:	BVI
    481129	 
	 	P.O.Box
    3136	 
	 	Road
    Town	 
	 	Tortola	 
	 	 	 
	Tel:	 	 
	Fax:
    	 	 
	E-mail:
    

 

    	35

    	 

    

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Purchase Agreement – Sellers signature page]

 

The
Seller:

 

	By
                                         (signature):

        /S/
        Yasuhiro Asada
	 
	Signed
                                         by:

        Yasuhiro
        Asada - Senior Executive Managing Director
	 
	 	 

 

	Address:	 	 
	Name
    of Addressee:	Yasuhiro
    Asada	 
	Attention
    of:	Shima
    Trading co., Ltd.	 
	Address:	12-14
    Ginza z-chome	 
	 	Chvo-kv
    Tokyo	 
	 	Japan	 
	 	 	 
	Tel:	+81-3-3542-3111	 
	Fax:
    	+81-36-3546-3955	 
	E-mail:    
    y-asada@shima-tra.co.il	 

 

 

 

36Exhibit 10.3

 

CONVERTIBLE LOAN AGREEMENT

 

THIS CONVERTIBLE LOAN AGREEMENT
(this “Agreement”) made as of the 28th day of October, 2010, by and between P.V. Nano Cell Ltd.,
an Israeli company, having its principal offices at 28 HaNapach st., South Industrial Zone, Migdal Ha’emek, 23100 Israel
(the “Company”) and Israel Electric Corporation, having its principal offices at POBox 10, Haifa, 31000, Israel
(the “Investor”).

 

W I T N E S S E T H:

 

WHEREAS, the Company
requires an infusion of funds in order to finance its operations as set forth herein; and

 

WHEREAS, the Investor
desires to invest in the Company and make funds available to the Company in the form of a convertible loan, on the terms and subject
to the conditions more fully set forth in this Agreement;

 

NOW, THEREFORE,
the parties hereto, intending to be legally bound, hereby agree as follows:

 

		1.	LOAN 

 

1.1          
The Investor agrees to lend to the Company the principal amount of up to NIS 2,000,000 (the “Principal Amount”),
on the terms and subject to the conditions of this Agreement. Subject to Section 7.3 below, following the Closing (as defined below)
and until the lapse of the Conversion Period, the Principal Amount shall bear interest at an annual rate of eight percent (8%),
compounded annually, plus VAT, if applicable (“Interest” and together with the Principal Amount, the “Loan
Amount”), to be calculated on the basis of the actual amount paid to the Company, the number of days elapsed from the
date of payment of the Principal Amount and a year of 365 days. Following the lapse of the Conversion Period or earlier as set
out in Section 7.3 below, the Interest shall decrease to an annual rate of four percent (4%), provided however, that in
the event that the minimal interest rate set by the Israel Tax Authority according to which the notional interest on the Principal
Amount shall be taxed (the “Minimal Rate”) is or becomes higher than 4% per annum, the interest rate shall be
set at the Minimal Rate.

 

1.2          
The indebtedness evidenced by this Agreement is hereby expressly senior and first in right of payment to any current
or future indebtedness for borrowed money of the Company, except for financial credit lines granted by financial institutions.
The Company shall not take on debt senior to the loan hereunder without the prior written consent of the Investor. 

 

    	

    	 

    

 

		2.	DISBURSEMENT

 

2.1          
The Principal Amount shall be transferred by the Investor to the Company in accordance with and subject to the achievement
of the milestones (each a “Milestone” and collectively, the “Milestones”), set forth in Schedule
A attached hereto, within the time frame set forth in Schedule A for the achievement of each Milestone. Notwithstanding,
if the Company achieves a Milestone prior to such Milestone Deadline (as defined below), the Investor shall pay the Company the
applicable portion of the Principal Amount as set forth below, provided that the total period of time for achievement of all Milestones
is no less than 12 months following the date hereof. Upon the achievement of each Milestone, the Company shall provide the Investor
with written notice (the “Milestone Notice”) of its achievement of such Milestone and shall provide the Investor
with a copy of the relevant documents evidencing the achievement of such Milestone. To facilitate payment at the Milestones, the
Company shall provide the Investor, on a quarterly basis, actual versus planned/forecast budget results, approved by the Company’s
CEO or CFO according to the Investor’s reporting procedures as set forth in Schedule B. The Investor shall pay the
Company the applicable portion of the Principal Amount, as set forth in Schedule A, for the achievement of such Milestone, within
thirty (30) days from the date of the approval of the Milestone Notice by the Investor (which approval process shall not be longer
than 14 days from the date the Milestone Notice was received by the Investor), or at such other time and place as the Company and
the Investor agree upon in writing. If within the 14 days period from receipt of the Milestone Notice no rejection notice is received,
the Milestone Notice shall be deemed approved. Notwithstanding, in the event the Company fails to achieve a Milestone (a “Milestone
Default”) within the time frame set for the achievement of such Milestone in Schedule A (the “Milestone Deadline”),
the Investor shall have the right, but not the obligation, within ninety (90) days following such Milestone Deadline, to transfer
that portion of the Principal Amount that would have been payable to the Company upon achievement of such Milestone. The Investor
may waive the achievement of any Milestone and shall be entitled to transfer all or any part of the Principal Amount, even if the
Milestone has not been achieved by the Company.

 

2.2          
 The Investor shall have no claim or demand against the Company in the event that one or more Milestones is not achieved
or shall not be achieved, other than the right not to transfer a portion of the Principal Amount in accordance with Section 2.1.
Such non-achievement shall not be deemed a breach of this Agreement.

 

2.3          
Payments on account of the Principal Amount shall be made to a bank account designated in writing by the Company.

 

2.4          
Any conversion of the Loan Amount under this Agreement shall be of the Principal Amount only, and all interest accrued
to the Principal Amount, which is outstanding at the time of conversion shall be at the sole discretion of the Company either:
(i) repaid by the Company to the Investor in cash, upon such conversion of the Principal Amount; or (ii) converted into securities
on the same terms as the Principal Amount is converted and in lieu of payment of all outstanding interest in cash. In each such
case, withholding of taxes if required by applicable laws and if no exemption is provided by the Investor, shall be made out of
the accrued interest sum prior to its repayment and/or conversion, and the Company shall provide to the Investor the relevant documents
showing such deduction.

 

		3.	AUTOMATIC CONVERSION UPON A QUALIFIED FINANCING

 

3.1          
Subject to the prior receipt of Regulatory Approvals, in the event that the Company consummates a Qualified Financing
(as defined below) within the Conversion Period, then, and upon the closing of such Qualified Financing, the then-outstanding Principal
Amount shall be automatically converted (the “Automatic Conversion”) into an equity investment in the Company,
on the same terms and conditions applicable to the Qualified Financing except that the price per share applicable thereto shall
be the Conversion Price (as defined below) applicable to such conversion as determined pursuant to Section ‎5 below (including
without limitation, the same liquidation preference and anti-dilution protection (which shall be applied with respect to the Conversion
Price, mutatis mutandis), registration rights, preemptive rights, right of first refusal, voting and veto rights, or other
rights, pro-rata to the respective amounts of investment) and the Investor shall be deemed an investor in the Qualified Financing
such that the Investor shall receive, in consideration for the conversion of the Principal Amount, such number of fully-paid and
non-assessable shares of the Company, of the same type of securities as received by the investors in such Qualified Financing,
equal to the quotient received by dividing the then-outstanding Principal Amount by the Conversion Price (the “Qualified
Shares”).

 

    	2

    	 

    

 

3.2          
The Automatic Conversion shall be conditional upon, and concurrent with, the closing of the Qualified Financing and
will finally settle and discharge the Loan Amount.

 

3.3          
The Company shall notify the Investor of the Qualified Financing and provide the Investor with all documents and
other reasonably required information, not later than two (2) business days following execution by the Company of the term sheet
or other relevant document relating to the Qualified Financing.

 

3.4          
As used herein, the term “Qualified Financing” means an equity investment in the Company of at
least US$ 1,500,000 (excluding conversion of any portion of the then outstanding Loan Amount), in one closing or a series of related
closings (provided that all such transactions consummated upon such related closings are substantially under the same terms and
conditions).

 

In the event that
the Qualified Financing is consummated by a series of related closings, then, the then outstanding Principal Amount shall be converted
as aforesaid at the first closing to occur at which all conditions precedent to the qualification of such financing as a Qualified
Financing have been satisfied (irrespective if the entire US$ 1,500,000 has been paid to the Company at such closing, as long as
the Company has received a commitment for an unconditional investment of the entire US$ 1,500,000, it being clarified that a pre-condition
of no material adverse effect occurring prior to a future closing shall not be deemed to revert the commitment to a conditional
commitment).

 

In the event that
the Qualified Financing is consummated by a series of related closings and the transactions consummated in such closings are not
on the same terms and conditions and/or involve the issuance of more than one type of the Company’s securities, then, the
then outstanding Principal Amount shall be converted as aforesaid into an equity investment on the most favorable terms to the
Investor, at the Conversion Price, with the securities issued therefor being of the type that confers upon its holders the most
favorable (when taken as a whole) rights, preferences and privileges.

 

		4.	CONVERSION UPON AN UNQUALIFIED FINANCING

 

4.1          
Subject to the prior receipt of Regulatory Approvals, at any time following Closing, but prior to the earliest of:
(i) four (4) years from the date of the Closing; (ii) an M&A Transaction; and (iii) an IPO (the “Conversion Period”),
in the event that, the Company consummates a financing round (not including the Series A Preferred Shares of the Company issued
to Terra Venture Partners S.C.A. SICAR and Terra Venture Partners, L.P), that does not qualify as a Qualified Financing (an “Unqualified
Financing”), then, the Investor shall have the right, but not an obligation to convert the then-outstanding Principal
Amount, or any portion thereof, into an equity investment in the Company on the same terms and conditions applicable to the Unqualified
Financing (including without limitation the same liquidation preference and anti-dilution protection (which shall be applied with
respect to the Conversion Price, mutatis mutandis), registration rights, preemptive rights, right of first refusal, voting
and veto rights, or other rights, pro-rata to the respective amounts of investment) and the Investor shall be deemed an investor
in the Unqualified Financing such that the Investor shall receive, in consideration for the conversion of the Principal Amount,
such number of fully-paid and non-assessable shares of the Company, of the same type of securities as received by the investors
in such Unqualified Financing, equal to the quotient received by dividing the then-outstanding Principal Amount by the Conversion
Price (the “Unqualified Shares”).

 

4.2          
Such Optional Conversion shall be conditional upon, the closing of the Unqualified Financing and will finally settle
and discharge the Principal Amount.

 

    	3

    	 

    

 

4.3          
The Company shall notify the Investor of the Unqualified Financing (the “Unqualified Financing Notice”)
and provide the Investor with all documents and other reasonably required information, not later than two (2) business days following
execution by the Company of the term sheet or other relevant document relating to the Unqualified Financing and assuming Regulatory
Approvals were previously received, the Investor shall elect whether to convert the Principal Amount into such Unqualified Financing
within thirty (30) days of the delivery of the Unqualified Financing Notice or shall no longer be entitled to convert the Principal
Amount or any portion thereof into such Unqualified Financing.

 

4.4          
In the event that the Unqualified Financing is consummated by a series of related closings and the transactions consummated
in such closings are not on the same terms and conditions and/or involve the issuance of more than one type of the Company’s
securities, then, the then outstanding Principal Amount may be converted as aforesaid into an equity investment on the most favorable
terms to the Investor, at the Conversion Price, with the securities issued therefor being of the type that confers upon its holders
the most favorable (when taken as a whole) rights, preferences and privileges.

 

		5.	CONVERSION PRICE

 

5.1          
For purposes hereof, the term “Conversion Price” shall mean a price per share equal to the lowest
price per share paid by the investors participating in such Qualified Financing or Unqualified Financing, as applicable for the
most favorable type of Securities issued thereat (and, if consummated in a series of related closings - the lowest price per share
paid in such closings), provided however that commencing upon a date that is six (6) months from the Closing and
until the lapse of the Conversion Period, the Conversion Price shall be reduced by 25%.

 

		6.	CONVERSION UPON A LIQUIDATION EVENT

 

6.1          
Subject to the prior receipt of Regulatory Approvals, in the event that prior to an Automatic Conversion or an Optional
Conversion, the Company consummates an M&A Transaction or an IPO, the then-outstanding Principal Amount shall be automatically
converted into an equity investment in the Company such that the Investor shall receive, in consideration for the conversion of
the Principal Amount, (i) if Unqualified Shares have been issued, such number of fully-paid and non-assessable Unqualified Shares
(and in the event that by such date more than one Unqualified Financing is completed, the Investor shall be entitled to elect the
series and class of Unqualified Shares into which the Principal Amount shall be converted into) equal to the quotient received
by dividing the then-outstanding Principal Amount by the Conversion Price applicable to such conversion as determined pursuant
to Section 5.1 above, or (ii) if no Unqualified Shares have been issued, automatically converted into Series A Preferred Shares
of the Company at the last price per share paid by Terra Venture Partners S.C.A. SICAR and Terra Venture Partners, L.P (the “Liquidation-Related
Conversion”).

 

A Liquidation-Related
Conversion shall be conditional upon, and concurrent with, the closing of an M&A Transaction or an IPO, as applicable, and
will finally settle and discharge the Principal Amount.

 

6.2          
The conversion of the Principal Amount, or any portion thereof, into an equity investment in the Company pursuant
to the provisions of Subsection 6.1, shall be made on the same terms and conditions applicable to the most favorable (investor-wise,
taken as a whole) financing round in which the securities of the type issued to the Investor upon such conversion were theretofore
issued, including without limitation, liquidation preference and anti-dilution protection (which shall be applied with respect
to the Conversion Price, mutatis mutandis), registration rights, preemptive rights, right of first refusal, voting and veto
rights, or other rights, pro-rata to the respective amounts of investment, such that the Investor shall be deemed an investor for
all purposes under such financing, including without limitation with respect to the right to receive any other securities, warrants
or other rights issued or provided as part of such financing.

 

    	4

    	 

    

 

In the event that
such most favorable financing is or was consummated by a series of related closings and the transactions consummated in such closings
are not on the same terms and conditions and/or involves the issuance of more than one type of Company’s securities, then,
the then outstanding Principal Amount shall be converted as aforesaid into an equity investment on the most favorable terms to
the Investor, at the applicable Conversion Price, with the securities issued therefor being of the type that confers upon its holders
the most favorable (when taken as a whole) rights, preferences and privileges.

 

6.3          
The Company shall notify the Investor of the M&A Transaction or IPO, as applicable, and provide the Investor
the material information relevant to the transaction, not later than thirty (30) days prior to the closing of the M&A Transaction
or the IPO, as applicable. It is clarified that the Company shall disclose the information it has at the time and update such information
taking into account that information such as the price per share in such M&A Transaction or IPO, as applicable, may not be
available until the closing of such M&A Transaction or IPO, as applicable.

 

6.4          
Notwithstanding the provisions of this Section 6, subject however, to the terms of Section 7 below, in the event
that the Investor has not obtained the Regulatory Approvals by the time the Company consummates an M&A Transaction, then the
Investor shall have the right to receive a repayment of the Principal Amount which shall be calculated as if the Investor has converted
the Principal Amount in accordance with the mechanism set forth in subsection 6.1 above, and the Company shall be obligated to
secure such benefits as part of the transaction documents.

 

“M&A
Transaction” shall mean (a) any merger of the Company with or into another company or entity where the Company is not
the surviving entity (other than a reorganization in which the shareholdings in the surviving entity are substantially the same
as those of the Company prior to such transaction); (b) the sale of all or substantially all of the assets of the Company; or (c)
the sale of all or substantially all of the issued and outstanding share capital of the Company.

 

“IPO”
shall mean the Company's first firmly underwritten public offering of its Ordinary Shares.

 

6.5          
Upon conversion of the entire Principal Amount and payment or conversion of the entire accrued Interest as detailed
above, the Loan Amount shall be deemed finally settled and discharged. If the provisions of Section 6.4 are applied with respect
to an M&A Transaction, the payment of sums pursuant to Section 6.4 shall be deemed full repayment of the Loan Amount and the
Loan Amount shall be deemed finally settled and discharged.

 

	7.	REGULATORY APPROVAL.

 

7.1          
Notwithstanding anything to the contrary herein, any conversion of the Principal Amount by the Investor under this
Agreement shall be subject to the Investor first obtaining the required regulatory approvals from (i) the government of Israel
in accordance with any requirements under the Government Companies Law, 5735-1975, and (ii) the General Director of the Israel
Antitrust Authority (collectively, the “Regulatory Approvals”). Investor shall inform the Company in writing
within 14 days of the receipt of such Regulatory Approvals of the same.

 

    	5

    	 

    

 

7.2          
Notwithstanding anything to the contrary herein, if prior to the receipt of Regulatory Approval, a Qualified Financing
takes place (and an Automatic Conversion would have taken place had the Regulatory Approval been in place), then immediately following
the receipt of the Regulatory Approval, the then-outstanding Principal Amount shall be automatically converted into an equity investment
in the Company, on the same terms and conditions applicable to such first Qualified Financing to occur (including without limitation,
the same liquidation preference and anti-dilution protection which shall be applied with respect to the Conversion Price, mutatis
mutandis), registration rights, preemptive rights, right of first refusal, voting and veto rights, or other rights, pro-rata
to the respective amounts of investment), and the Investor shall be deemed an investor in the Qualified Financing such that the
Investor shall receive, in consideration for the conversion of the Principal Amount, such number of fully-paid and non-assessable
shares of the Company, of the same type of securities as received by the investors in such Qualified Financing, equal to the quotient
received by dividing the then-outstanding Principal Amount by the Conversion Price in effect on the date the Automatic Conversion
should have been applied (the closing of the Qualified Financing). In the event that prior to the receipt of the Regulatory Approval
one or more Unqualified Financings have taken place, the Investor may only convert the Principal Amount into the Unqualified Financing
it has indicated pursuant to Section 4.3 above, and if not indicated, the Investor may convert only to the last Unqualified Financing
prior to the receipt of the Regulatory Approvals. The Investor shall notify the Company within 14 days of the receipt of Regulatory
Approvals if to convert the Principal Amount into the Unqualified Financing in accordance with the preceding sentence.

 

7.3          
Interest
Accrual. If upon the Closing of a Qualified Financing, M&A or IPO the Principal Amount is not converted because the Investor
has yet to receive Regulatory Approvals, the Interest rate shall decrease to an annual rate of four percent (4%) provided however,
that in the event that the Minimal Rate shall be higher than four percent (4%), the Interest rate shall be the Minimal Rate.

 

		8.	REPRESENTATIONS AND WARRANTIES OF THE COMPANY 

 

The Company hereby represents and warrants
to the Investor as follows, and the Company hereby acknowledges that the Investor is relying on the Company’s representations
and warranties in consummating the transaction contemplated by this Agreement:

 

8.1          
Organizations and Standing; Corporate Documents. The Company is a corporation duly organized and validly existing
under the laws of the State of Israel. No bankruptcy, dissolution, liquidation, winding-up, appointment of receiver and/or similar
proceedings have been instituted or threatened by or against the Company, and it has no knowledge or information indicating the
possibility of such proceedings being instituted against the Company.

 

8.2          
Capitalization. The authorized and issued share capital of the Company on a fully diluted as converted basis
as of the Closing is as set forth on Schedule 8.2 hereto (the “Cap Table”). Except as set forth in the
Cap Table and in this Agreement, there are no outstanding or authorized securities, subscriptions, options, warrants, calls, rights,
commitments, or any other agreements of any character directly or indirectly obligating the Company to issue (a) any additional
shares; or (b) any securities convertible into, or exchangeable for, or evidencing the right to subscribe for, any shares.

 

8.3          
Authorization. All corporate action on the part of the Company, its directors and shareholders necessary for
the due authorization, execution, amendment, delivery, filing and performance by the Company of this Agreement and the consummation
of the transactions contemplated herein and therein has been taken or will be taken prior to the Closing. The Agreement is a legal,
valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization and moratorium laws and other laws of general application affecting enforcement of creditors’
rights generally.

  

    	6

    	 

    

 

8.4          
Consents. No consent, approval, qualification, order or authorization of, or filing with, any governmental
authority other than the Companies Registrar and the OCS is required in connection with the Company’s valid execution, delivery
or performance of this Agreement and the consummation of the transactions contemplated herein and therein.

 

8.5          
No Breach. Neither the execution and delivery of this Agreement nor compliance by the Company with the terms
and provisions hereof or thereof, will conflict with, or result, in a breach or violation of (with due notice or lapse of time
or both), any of the terms, conditions and provisions of: (i) the Company's Articles of Association or other governing documents
as currently in effect, (ii) any instrument or contract to which it is a party where such violation may have a material adverse
effect on the condition, financial or otherwise, operations, assets, business or prospects of the Company, taken as a whole on
the Company, or (iii) applicable law. Neither the execution and delivery of this Agreement nor compliance by the Company with the
terms and provisions hereof or thereof, will conflict with, or result, in a breach or violation of (with due notice or laps of
time or both), any of the terms, conditions and provisions of any judgment, order, injunction, decree, or ruling of any court or
governmental authority, domestic or foreign.

 

8.6          
Liabilities. The Company was incorporated on June 24, 2009, and, to date, has not prepared any financial statements
or reports. Other than as set forth in Schedule 8.6, the Company has not incurred any liabilities, debts or obligations,
whether accrued, absolute or contingent in excess of US$ 5,000. Other than as set forth in Schedule 8.6, since formation
of the Company, there has not been any material adverse change in the business, condition (financial or otherwise), assets, properties
or operations of the Company.

 

8.7          
Litigation. Except as set forth in Schedule 8.7, No claim, action (civil, or criminal), proceedings,
arbitration, governmental inquiry or investigation is pending or, to the knowledge of the Company, threatened, against the Company,
or any of its officers, directors or employees (including claims on which the Company may be vicariously liable).

 

8.8          
Intellectual Property.

 

8.8.1         Schedule 8.8.1 sets forth all patents, trademarks, copyrights and other registered rights owned by the Company
or in which the Company has any ownership interest, and all applications for any of the foregoing (the aforesaid, together with
all know-how, technology and related intellectual property and proprietary information of the Company, collectively, the “Intellectual
Property Rights”).

 

8.8.2         The Intellectual Property Rights are the property solely of the Company. Except as set forth in Schedule 8.8.2,
no Intellectual Property Right is subject to any law, outstanding order, stipulation or agreement restricting the use or licensing
thereof. Except as set forth in Schedule 8.8.2, no person other than the Company has any ownership right, title, interest in, lien
on or claim in, any of the Intellectual Property Rights. To the Company’s knowledge, no third party is infringing or violating
any of the Intellectual Property Rights. Except as set forth in Schedule 8.8.2 the Company has not granted, and there are
not outstanding, any options, licenses or agreements of any kind relating to any of the Intellectual Property Rights, nor is the
Company bound by or a party to any option, license or agreement of any kind with respect to any of the Intellectual Property Rights.
Except as set forth in Schedule 8.8.2, the Company is not obligated to pay any royalties or other payments to third parties
with respect to the marketing, sale, distribution, manufacture, license or use of any Intellectual Property Rights or any other
property or rights.

 

8.8.3         Except as set out in Schedule 8.8.3 at no time in the course of the conception of or reduction of any of
the Company’s Intellectual Property Rights, were Fernando De La Vega and Mr. Eli Klien (the “Founders”)
or any current or former employee or service provider of the Company at that time, operating under any grants from any governmental
entity or agency or private source, or subject to any employment agreement, or invention assignment or nondisclosure agreement,
or other engagement or obligation with any third party, in each case, that could affect or limit any right of the Company in or
to the Intellectual Property Rights owned by or licensed to the Company, or which the Company has the right to use. 

 

    	7

    	 

    

 

8.8.4         The Company has taken security measures to protect the secrecy, confidentiality and rights in its Intellectual Property
Rights, which measures are reasonable and customary in the industry in which the Company operates and in relation to companies
at the stage of the Company. Each of the Company's current and former employees and service providers have entered into confidentiality,
assignment of intellectual property and non-competition agreement with the Company, protecting the Company's Intellectual Property
Rights.

 

8.8.5         To the Company's knowledge, the Company has not violated or infringed, is not currently violating or infringing,
and the Company has not received any communications alleging that it (or any of its employees or consultants) has violated or infringed
or, by conducting its business as presently conducted and as presently proposed to be conducted, would violate or infringe, any
rights - including intellectual property rights - of any person.

 

8.9        
Employees. To the best of the Company’s knowledge, no employee of the Company is in violation of any
term of any employment contract, non-disclosure agreement, non-competition agreement, or any other contract or any restrictive
covenant or any other common law obligation to a former employer relating to the right of any such employee to be employed by the
Company because of the nature of the business conducted or to be conducted by the Company or to the use of trade secrets or proprietary
information of others, and the employment of the Company’s employees does not subject the Company or the Investor to any
liability in connection with the employment of any such person. There is no pending or, to the Company’s knowledge, threatened
action, suit, proceeding or claim, or to its knowledge any basis therefor or threat thereof, with respect to any contract, covenant
or obligation referred to in the preceding sentence.

 

8.10      
Material Agreements. Schedule 8.10 contains a list of the material agreements the Company is a party
to, copies of which have been provided to the Investor.

 

8.11      
Brokers. No agent, finder or broker acting on behalf of or under the authority of the Company or the Founders,
is or will be entitled to any broker’s or finder’s fee or any other similar commission or fee in connection with the
transactions contemplated hereby.

 

8.12      
Disclosure. All facts and information with regard to the condition and business of the Company that would
reasonably be considered as material for disclosure to an entity intending to provide to the Company funds in the amount of the
Principal Amount have been disclosed to the Investor in this Agreement (and its schedules). This Agreement and the Schedule of
Exceptions, taken as a whole, do not contain any untrue statement of a material fact and do not omit to state a material fact
necessary in order to make the statements contained therein or herein not misleading. There is no material fact or information
relating to the condition (financial or otherwise), current affairs, current operations, or assets of the Company that has not
been disclosed to the Investor in this Agreement (and its schedules).

 

8.13      
Effectiveness; Survival; Indemnification.

 

8.13.1       
Each representation and warranty herein is deemed to be made on the date of this Agreement and at the Closing, and
shall survive and remain in full force and effect following the Closing until 3 years from the date of the Closing (except with
respect to a claim made by an Indemnified Party (as defined below) prior to such date, which claim shall survive until finally
resolved between the parties), or with respect to Sections 8.2, 8.3, and 8.5 until the expiration of the applicable statute of
limitations.

 

    	8

    	 

    

 

8.13.2       
The Company (the “Indemnitor”) agrees to indemnify, defend and hold harmless the Investor, including
any of the Investor’s affiliates, officers, directors, shareholders, employees or agents (each, an “Indemnified
Party”) and hold them harmless from and against all claims, actions, suits, losses, liabilities, damages, judgments,
settlements, costs of investigation or other expenses (collectively, “Losses”) based upon, arising out of or
otherwise in respect of any breach of any warranty or representation made by the Company. Notwithstanding the aforesaid, other
than in respect of fraud or willful misrepresentation, (i) no claim or claims for monetary indemnification under this Section 8.12
shall be brought unless the aggregate amount of such claim(s) shall exceed US$10,000, provided that in case of a claim or claims
in excess of the aforesaid threshold, the claim can be submitted for the entire amount; and (ii) the total monetary liability under
this Section 8.12.2 shall be limited to the amount actually paid by Investor pursuant to the transactions contemplated hereunder,
plus an amount of the Interest per annum, compounded annually, from the date on which any payment was made, plus out of pocket
expenses and reasonable legal fees incurred by such Indemnified Party in connection with any claim or Loss hereunder.

 

8.13.3       
Other than in respect of fraud or willful misrepresentation, the indemnification provided pursuant to this Section
8.12 shall be the sole and exclusive monetary remedy available to the Indemnified Parties against the Indemnitors for any Losses
based upon, arising out of or otherwise in respect of any breach of any warranty or representation made by the Company. The aforesaid
shall not limit the Indemnified Parties in respect of any alternative or additional non-monetary remedies from the Company (such
as the issuance to them of additional shares for no additional consideration in the event of a misrepresentation regarding the
share capital of the Company).

 

		9.	REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

 

The Investor represents
and warrants to the Company as follows:

 

9.1          
Authorization. The Investor has taken all actions necessary to authorize it (i) to execute, deliver and perform
all of its obligations under this Agreement, (ii) to perform all of its obligations under this Agreement and (iii) to consummate
the transactions contemplated hereby. This Agreement is a legally valid and binding obligation of the Investor, enforceable (assuming
due execution hereof by the Company) against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization
and moratorium laws and other laws of general application affecting enforcement of creditors’ rights generally.

 

9.2          
Experience. The Investor is experienced in evaluating and investing in newly organized, emerging high tech
companies such as the Company, is able to fend for itself in the transactions contemplated by this Agreement, has such knowledge
and experience in financial business matters as to be capable of evaluating the merits and risks of its investment and has the
ability to bear the economic risks of its investment.

 

9.3          
Brokers. No agent, finder or broker acting on behalf of or under the authority of the Investor, is or will
be entitled to any broker’s or finder’s fee or any other similar commission or fee in connection with the transactions
contemplated hereby.

 

9.4          
Disclosure of Information. The Investor believes it has received all the information it considers necessary
or appropriate for deciding whether to provide the loan hereunder. The Investor further represents that it has had an opportunity
to ask questions and receive answers from the Company regarding business, properties, prospects and financial condition of the
Company. The foregoing, however, does not limit or modify the representations and warranties of the Company in Section 8 of
this Agreement or the right of the Investor to rely thereon.

 

9.5          
Confidentiality. The Investor undertakes to keep in strict confidence and not use (except for the benefit
of the Company and in order to monitor its rights pursuant to this Agreement) any information relating to the Company’s,
now and future, trade secrets, processes, patents and patent and trademark applications, product development, price, customer and
supplier lists, pricing and marketing plans, policies and strategies, details of client and consultant contracts, operations methods,
product development techniques, business acquisition plans, new personnel acquisition plans and all other confidential or proprietary
information with respect to the business of the Company. Said information shall not include information that is within the public
domain.

 

    	9

    	 

    

 

		10.	CLOSING; CONDITIONS TO CLOSING

 

10.1      
Time and Place. The closing of this Agreement and the transactions contemplated hereby (the “Closing”)
shall take place at a closing meeting to be held at the offices of Herzog, Fox, Neeman, Law Office, on the third business day after
the date on which the conditions listed in this Section 10 are satisfied or waived by the appropriate party (provided that the
Company shall have provided the Investor, after such satisfaction or waiver of conditions, with at least 24-hour prior notice regarding
such expected time of Closing), or at such other time and place as the Company and the Investor agree upon orally or in writing
provided such other time does not precede the date on which the conditions listed in this Section 10 are satisfied or waived by
the appropriate party (the time and date of the Closing being herein referred to as the “Closing Date”).

 

10.2  
Conditions to Closing. The obligation of the Investor to pay the Principal Amount to the Company on the Closing
is subject to the satisfaction, at or prior to the Closing, of each of the following conditions:

 

10.2.1        Board and Shareholder Approvals. The Company’s Board of Directors (the “Board”) and
Shareholders shall have approved (i) the execution, delivery and performance by the Company of this Agreement in accordance with
applicable law, and (ii) the adoption of new signatory rights.

 

10.2.2        Representations and Warranties Correct. The representations and warranties made by the Company herein and
pursuant hereto shall have been true and correct in all respects when made, and shall be true and correct in all respects on the
Closing with the same force and effect as if they had been made at and as of the Closing.

 

10.2.3        Waiver of Preemptive Rights. The Company shall have obtained waivers of any applicable rights to participate
in the provision of the Principal Amount hereunder (preemptive rights) from such of the Company’s shareholders who have such
rights and who shall have not exercised same (in part or in full) in connection herewith or such rights have expired without having
been exercised in accordance with the Company’s articles of association. 

 

10.2.4        Indemnification Agreement. The Company shall have entered into indemnification agreements with each of the
members of the Board in the form attached hereto as Schedule 10.2.4 duly executed by the Company (the “Indemnification
Agreement”).

 

10.2.5        Budget. The budget for the Company for the two years following the date set forth above, attached hereto as
Schedule 10.2.5, shall have been submitted to and approved by the Investor (the “Budget”).

 

10.2.6        Each of the covenants and agreements set forth in Section 11 of this Agreement shall have been complied with and
performed.

 

		11.	BOARD; OBSERVER; INFORMATION AND VISITATION RIGHTS

 

		11.1	The parties agree that each Founder shall vote (or shall cause to be voted) all shares owned or
controlled by such Founder (including any shares hereafter acquired), at any regular or special meeting of shareholders of the
Company, shall take all action by written consent in lieu of such meeting of shareholders, and shall take all other actions necessary,
to ensure:

 

		11.1.1	that for as long as the Investor Director (as defined below) is a member of the Board, the Board
shall consist of at least four (4) members; and

 

		11.1.2	that until the closing of a Qualified Financing, (i) one (1) member of the Board shall be designated
by the Investor (the “Investor Director”); and (ii) the Company’s signatory rights shall not be amended
without the consent of the Investor Director;

 

    	10

    	 

    

 

		11.1.3	that following the lapse of the Investor’s right to appoint the Investor Director under section
11.1.2 above, one (1) observer shall be designated by the Investor.

 

		11.2	Removal. The parties agree that for as long as the Investor has a right to designate the
Investor Director, the Investor Director may only be removed from office (by written notice) by the Investor.

 

		11.3	Information Rights. The Investor shall be entitled to the following Information Rights:

 

	 	11.3.1	Delivery of Financial Statements. The Company shall deliver to the Investor:

 

		(b)	to the extent there is a legal obligation to prepare quarterly financial reports, as soon as practicable,
but in any event within sixty (60) days after the end of each of the first three (3) quarters of each fiscal year of the Company,
an unaudited, income statement, statement of cash flows for such fiscal quarter and an unaudited balance sheet as of the end of
such fiscal quarter, and in the case of the first, second and third quarterly periods, for the period from the beginning of the
current fiscal year to the end of such quarterly period, setting forth in each case in comparative form the figures for the corresponding
period of the previous fiscal year, all in reasonable detail, in English, and United States dollar-denominated;

 

		(c)	a monthly management report (in a form agreed by the Board, which report shall include a financial
and business update and overview) within thirty(30) days after the end of each month;

 

		(d)	such other materials as are generally distributed to the Company’s shareholders;

 

		11.3.2	Inspection. The Company shall permit the authorized representatives of the Investor to visit and
inspect the Company’s properties, to examine its books of account and existing records all at such reasonable times and upon
reasonable notice and not more than twice per year and subject to customary confidentiality obligations as may be required by the
Board of Directors. The Board of Directors may prevent or limit any inspection by the Investor, if the Board believes that it is
against the best interest of the Company to allow such inspection. The inspection rights set out above do not include the right
to inspect the Company’s confidential intellectual property unless the Board specifically agrees otherwise.

		11.3.3	Termination of Information and Inspection Covenants. The covenants set forth in Sections ‎11.3.1
and 11.3.2 shall terminate as to the Investor and be of no further force or effect upon the closing of an IPO (as such term is
defined in the Company’s Article of Association) or when the Company first becomes subject to the periodic reporting requirements
of Sections 12(g) or 15(d) of the 1934 Act, whichever event shall first occur, or if the Loan Amount is repaid in full without
being converted to shares.

 

    	11

    	 

    

 

		12.	DEFAULT

 

12.1      
anything herein to the contrary notwithstanding, the outstanding portion of the Loan Amount shall, unless otherwise
directed by the Investor, immediately become due and payable in cash upon the occurrence of a Default Event (as defined below),
which repayment shall be made prior and in preference to any payments made to any of the holders of any classes of shares of the
Company by reason of their ownership thereof.

 

12.2      
 For the purpose hereof, the term “Default Event” shall mean (i) a breach by the Company
of any material term of this Agreement, which breach has not been cured within fourteen (14) days of the written notice from the
Investor of such breach; (ii) the commencement by the Company of any bankruptcy or liquidation proceedings or the adoption of a
winding up resolution by the Company, or the appointment of a receiver or trustee over the whole or any part of the Company's assets,
or the calling by the Company of a meeting of creditors for the purpose of entering into a scheme or arrangement with them, provided
that any of the aforementioned actions or proceedings is not canceled within 60 days of its initiation (and the Company shall notify
the Investor within two business days of any such event); (iii) the commencement by third parties of any bankruptcy or liquidation
proceedings of the Company which shall not have been cancelled within 60 days thereafter (and the Company shall notify the Investor
within two business days of any such event); (iv) the levy of an attachment or the institution of execution proceedings against
the whole or a substantial part of the Company's assets, where such attachment or execution proceeding is not discharged within
45 days (and the Company shall notify the Investor within two business days of any such attachment or proceeding).

 

		13.	PAYMENT OF ROYALTY; MOST FAVORED CUSTOMER 

 

13.1      
 Royalty. The Company shall pay Investor a royalty of 2% of (i) the total Net Sales of the Company’s
products; and (ii) the Services Revenues (together, the “Royalties”), in connection with or related to Company’s
current products and any future products owned or licensed by the Company until the Royalties Cap is attained. The Royalties shall
become payable by the Company to the Investor on a quarterly basis, within ten (10) days after the end of each such preceding quarter.
The right to receive the Royalties shall remain in effect until the total amount of Royalties paid has reached NIS 8,000,000 (the
“Royalties Cap”).

 

13.2      
 Most Favored Customer. The Company agrees and covenants that commencing on the Company’s first commercial
sale of any of its products and until a period of ten (10) years thereafter, Investor shall be entitled to purchase the Company’s
products, licenses and services, at prices which are at the lowest rate then offered or provided by the Company to any other of
its customers for the same products, licenses or services (excluding demo units, pilot units, samples, and other customary promotional
discounts which are sporadic in nature and do not represent on-going commercial basis prices with respect to the client), given
similar quantities and commercial conditions, to be calculated for delivery ex-works. If the Company offers or provides the products,
licenses or services to any other of its customers for a lower price than the price being charged to the Investor (taking into
account similar quantities and commercial conditions), then the price per product or service being charged to Investor shall be
automatically reduced to commensurate with such more favorable price as of the date such more favorable price is first provided
to such other customer, for purchase orders received for the Investor thereafter. This right is granted specifically to the Israel
Electric Company and is non-assignable.

 

    	12

    	 

    

 

13.3      
 Company will annually provide the Investor with written certificate concerning Company’s compliance with Section
13 certified by the Company’s auditors which respect to the Royalty base, the Royalties paid and confirmation that the prices
provided to the Investor are compliant with the terms of Section 13.2.

 

13.4      
 In this Section 13, the following terms shall have the following respective meanings (such meanings being equally
applicable to both the singular and plural form of the terms defined).

 

“Net
Sales” means the ex-factory invoice price actually received by the Company for sale of products or licenses, less
the following deductions to the extent actually allowed or incurred with respect to such sales: (i) customary trade, quantity,
or cash discounts to the extent actually allowed and taken provided they are granted in good faith as part of an arm’s length
transaction; (ii) customs, duties, sales and similar taxes, if any (to the extent not refundable in accordance with applicable
law), but not including taxes assessed against the income derived from such sale; (iii) freight, packing, shipping, insurance and
similar charges provided they are stated separately on the invoices. All of the foregoing shall be calculated by Company in accordance
with generally acceptable accounting principles employed and published by the applicable accounting principals the Company provides
its financial statements.

 

“Services
Revenue” means the amounts invoiced by the Company for providing the Company’s services and actually paid,
less the following deductions to the extent allowed or incurred with respect to such services: (i) authorized and reasonable out
of pocket expenses incurred by the Company during and for the purpose of providing the services provided such expenses are documented
by invoices of third party suppliers or service providers; (ii) customary trade, cash discounts to the extent actually allowed
and taken provided they are granted in good faith as part of an arm’s length transaction and (iii) sales and similar taxes,
if any (to the extent not refundable in accordance with applicable law), but not including taxes assessed against the income derived
from such services.

 

“Sell”, “Sale”
and “Sold” means to sell, license, or otherwise transfer or dispose of the Company’s products or any part
thereof to a customer or a distributor in any market. For purposes of payment and accounting for Royalties due pursuant to this
Agreement a “Sale” of a Company product shall be deemed to have occurred, as of the date of receipt by Company or its
affiliates of the consideration due to the Company for such sale.

 

13.5      
Services. The Investor shall offer the Company administrative and logistic services, including access to Investor’s
experts, labs and other equipment and installations. These services shall be provided, based on availability of equipment or staff,
at the rates to be agreed by the Parties and reflect at least 10% discount on the market prices (e.g. the Technion) for such services.
Company may elect to receive these services from a third party.

 

		14.	NOTICES

 

All
notices or other communications provided for in this Agreement shall be in writing and shall be given in person, by registered
mail (registered air mail if mailed internationally), by an overnight courier service which obtains a receipt to evidence delivery,
by facsimile transmission (provided that written confirmation of receipt is provided), addressed as set forth below:

 

	 	Company:	
        At the addresses set forth in the preface above;

        attn: Dr. Fernando De La Vega

        With a copy to:

        

        Primes, Shiloh, Givon, Meir – Law Firm

        

        16 Derech Hayam, Haifa 34741, Israel

        Fax: 04-8381401

        Attn. Galia Amir Cheyne, Adv. 

   

    	13

    	 

    

 

 

	 	Investor:   	
        Israel Electric Corporation Ltd.

        POBox 10, Haifa, 31000, Israel

         

        With a copy to:

        Herzog Fox & Neeman, Law Office

        4 Weizmann St.

        Tel-Aviv 64239, Israel

        Fax: +972 3 6966464

        Attn: Boaz Mizrahi, Adv.

 

or such other
address as any party may designate to the other in accordance with the aforesaid procedure. All notices and other communications
delivered in person or by courier service shall be deemed to have been given as of one business day after sending thereof, those
given by facsimile transmission with confirmation or receipt shall be deemed to have been given as of the date of transmission
thereof (provided that such date is a business day in the country of receipt and if not, the next business day), and all notices
and other communications sent by registered mail shall be deemed given three (3) days after posting.

 

		15.	ASSIGNMENT

 

This Agreement
may not be assigned by the Company, without the prior written consent of the Investor. Subject to the foregoing restriction, this
Agreement shall inure to the benefit of and be binding upon the Company, the Investor, and their respective successors, assigns
and representatives.

 

		16.	USE OF PROCEEDS.

 

The Company agrees
to use the Principal Amount in accordance with the Budget attached hereto as Schedule 10.2.6.

 

    	14

    	 

    

 

		17.	MISCELLANEOUS

 

17.1      
Upon conversion of any portion of the Loan Amount into equity investment in the Company, the Company shall not make
any repayment to the Investor on such converted portion of the Loan Amount, and the obligations represented by such portion of
the Loan Amount shall be considered fully repaid and discharged upon the issuance of the applicable securities.

 

17.2      
This Agreement may not be amended, supplemented, discharged, terminated or altered except in writing signed by the
Company and the Investor.

 

17.3      
This Agreement constitutes the sole and entire understanding and agreement between the parties with regard to the
subject matter hereof, and supersedes all prior agreements between the parties hereof with regard to such subject matter.

 

17.4      
No failure or delay by any party to this Agreement to enforce at any time any of the provisions hereof, or to exercise
any power or right hereunder, shall operate as or be construed to be, a waiver of any such provision, power or right. Any waiver
of any provision hereof or any power or right hereunder shall be in writing, and shall be effective only in the specific instance
and for the purpose for which given.

 

17.5      
This Agreement shall be governed for all purposes by the laws of the State of Israel, regardless of any applicable
conflict of laws provisions. The parties hereby submit themselves to the exclusive jurisdiction of the competent courts of the
Tel-Aviv-Jaffa district, Israel, with respect to any matter arising in connection with this Agreement.

 

17.6      
This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.

 

[Remainder of Page Intentionally Left
Blank]

 

    	15

    	 

    

 

IN WITNESS WHEREOF
the parties have signed this Convertible Loan Agreement as of the date first set forth above.

 

	THE COMPANY	 
	 	 	 
	By:	/S/ Dr. Fernando de la Vega 	 
	Name:	Dr. Fernando de la Vega	 
	Title:	Director and CEO	 
	 	 	 
	THE INVESTOR:	 
	 	 	 
	By:	/S/ Dr. Adriano Biano	 
	Name: 	Dr. Adriano Biano	 
	Title:	VP of Strategic Resources	 

 

    	16

    	 

    

 

Schedule A

 

Milestones

 

The Principal Amount shall be disbursed
to the Company as follows:

 

	 	Amount Paid at Milestone	Milestone	Estimated time line
	1	NIS 600,000	At the Closing	 
	2	NIS 300,000	Submission of a report showing the Company’s ability to produce nano-copper that did not oxidize for one month. 	Three months following Closing
	3	NIS 300,000	Submission of a report containing the chosen method to produce Nano-copper.	Seven months following Closing 
	4	NIS 400,000	First full ink prototype.	Eleven months following Closing 
	5	NIS 400,000	First printed prototype using nano-copper ink.	Fifteen months following Closing

 

    	17

    	 

    

 

Schedule B

 

Investor’s Reporting Procedures

 

		●	Technical progress report vs. the original approved plan.

		●	Use of proceeds report vs. the original approved plan - list of expenses
for which the money was used, approved by the company's accountant, CFO or CPA and classified into groups such as: G&A, salaries,
capital equipment, materials, patents, legal, financial, consultants etc.

		●	Cash balance in the Company’s bank account

		●	Employees monthly attendance report.

		●	Cover letter reporting the achievement of the relevant milestone and requesting
the money transfer of the next installment.

 

    	18

    	 

    

 

Schedule 10.2.5

 

Schedule A shall be considered as Budget
for the purpose of this Agreement, until a new Budget will be approved by the Board of Directors.

 

 

 

 

 

 

19

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