Document:

Exhibit 10.5

 

FORM OF RESTRICTED STOCK
AWARD AGREEMENT

 

UNDER THE MAC-GRAY
CORPORATION

2005 STOCK OPTION AND INCENTIVE PLAN

 

	
  Name of
  Optionee:

  	
   

  
	
  No. of Option
  Shares:

  	
   

  
	
  Option Exercise
  Price per Share:

  	
   

  
	
  Grant Date:

  	
   

  
	
  Expiration Date:

  	
   

  
						

 

Pursuant to the Mac-Gray
Corporation 2005 Stock Option and Incentive Plan (the “Plan”) as amended
through the date hereof, Mac-Gray Corporation (the “Company”) hereby grants a
Restricted Stock Award (an “Award”) to the Grantee named above.  Upon acceptance of this Award, the Grantee
shall receive the number of shares of Common Stock, par value $0.01 per share
(the “Stock”) of the Company specified above, subject to the restrictions and
conditions set forth herein and in the Plan.

 

1.             Acceptance of Award.  The Grantee
shall have no rights with respect to this Award unless he or she shall have
accepted this Award prior to the close of business on the Final Acceptance Date
specified above by (i) making payment to the Company by certified or bank
check or other instrument acceptable to the Administrator (as defined in
Section 2 of the Plan) of the Purchase Price per Share, if any, times the
number of shares to be accepted, and (ii) signing and delivering to the
Company a copy of this Award Agreement. 
Upon acceptance of this Award by the Grantee, the shares of Restricted
Stock so accepted shall be issued and held by the Company’s transfer agent in
book entry form, and the Grantee’s name shall be entered as the stockholder of
record on the books of the Company. 
Thereupon, the Grantee shall have all the rights of a shareholder with
respect to such shares, including voting and dividend rights, subject, however,
to the restrictions and conditions specified in Paragraph 2 below.

 

2.             Restrictions and Conditions.

 

(a)           Any
book entries for the shares of Restricted Stock granted herein shall bear an
appropriate legend, as determined by the Administrator in its sole discretion,
to the effect that such shares are subject to restrictions as set forth herein
and in the Plan.

 

(b)           Shares
of Restricted Stock granted herein may not be sold, assigned, transferred,
pledged or otherwise encumbered or disposed of by the Grantee prior to vesting.

 

(c)           If
the Grantee’s employment with the Company and its Subsidiaries is voluntarily
or involuntarily terminated for any reason prior to the vesting of shares of
Restricted Stock granted herein, any shares of Restricted Stock that have not
vested as of such date shall automatically and without any notice to the
Grantee be deemed to have been reacquired by the Company at the original
purchase price (if any) from the Grantee or the Grantee’s legal representative
simultaneous with such termination of employment.

 

 

3.             Vesting of Restricted Stock.  The
restrictions and conditions in Paragraph 2 of this Agreement shall lapse
on the Vesting Date or Dates specified in the following schedule so long as the
Grantee remains an employee of the Company or a Subsidiary on such dates.  If a series of Vesting Dates is specified,
then the restrictions and conditions in Paragraph 2 shall lapse only with
respect to the number of shares of Restricted Stock specified as vested on such
date.

 

	
  Number
  of

  Option Shares Exercisable

  	
   

  	
  Exercisability Date

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (      %)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (      %)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (      %)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (      %)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (      %)

  	
   

  	
   

  

 

Subsequent to such
Vesting Date or Dates, the shares of Stock on which all restrictions and
conditions have lapsed shall no longer be deemed Restricted Stock.

 

4.             Dividends.  Dividends on shares of Restricted Stock shall
be paid currently to the Grantee.

 

5.             Incorporation of Plan. 
Notwithstanding anything herein to the contrary, this Agreement shall be
subject to and governed by all the terms and conditions of the Plan, including
the powers of the Administrator set forth in Section 2(b) of the Plan.  Capitalized terms in this Agreement shall
have the meaning specified in the Plan, unless a different meaning is specified
herein.

 

6.             Transferability.  This Agreement is personal to
the Grantee, is non-assignable and is not transferable in any manner, by
operation of law or otherwise, other than by will or the laws of descent and
distribution.

7.             Tax Withholding.  The Grantee shall, not later
than the date as of which the receipt of this Award becomes a taxable event for
Federal income tax purposes, pay to the Company or make arrangements
satisfactory to the Administrator for payment of any Federal, state, and local
taxes required by law to be withheld on account of such taxable event.  The Grantee may elect to have such minimum
tax withholding obligation satisfied, in whole or in part, by (i) authorizing
the Company to withhold from shares of Stock to be issued, or (ii) transferring
to the Company, a number of shares of Stock with an aggregate Fair Market Value
that would satisfy the withholding amount due.

 

8.             No Obligation to Continue Employment.  Neither the
Company nor any Subsidiary is obligated by or as a result of the Plan or this
Agreement to continue the Grantee in

 

 

2

 

employment and neither the Plan nor this Agreement
shall interfere in any way with the right of the Company or any Subsidiary to
terminate the employment of the Grantee at any time.

 

9.             Notices.  Notices hereunder shall be mailed or
delivered to the Company at its principal place of business and shall be mailed
or delivered to the Grantee at the address on file with the Company or, in
either case, at such other address as one party may subsequently furnish to the
other party in writing.

 

	
   

  	
  MAC-GRAY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  

 

	
  The foregoing Agreement is hereby accepted and the
  terms and conditions thereof hereby agreed to by the undersigned.

  

 

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
  Optionee’s Signature

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Optionee’s name and address:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

 

3<PAGE>

                                                                    EXHIBIT 10.1

         THIS SECURITIES PURCHASE AGREEMENT, dated as of the 31st day of May
2004, is entered into by and between MED-EMERG INTERNATIONAL INC., a corporation
registered in Ontario, Canada (hereinafter referred to as the "Company"), and
each individual or entity named on a signature page hereto (as used herein, each
such signatory is referred to as the "Buyer") under this Agreement.

                              W I T N E S S E T H:

         WHEREAS, the Company and the Buyer are executing and delivering this
Agreement in accordance with and in reliance upon the exemption from securities
registration for offers and sales to accredited investors afforded, inter alia,
by Rule 506 under Regulation D ("Regulation D") as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "1933 Act"), and/or Section 4(2) of the 1933 Act and
(ii) section 2.3 of Rule 45-501 of the Ontario Securities Commission; and

         AND WHEREAS, the Buyer wishes to purchase from the Company and the
Company desires to sell to the Buyers, upon the terms and subject to the
conditions of this Agreement, shares of the Common Stock, $.001 par value per
share, of the Company (the "Common Stock"), together with the New Warrants (as
defined below) exercisable for the purchase of shares of Common Stock, and
subject to acceptance of this Agreement by the Company;

         NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

                                    ARTICLE I

                        PURCHASE AND SALE OF COMMON STOCK

         Subject to the terms and conditions of this Agreement, the Buyers agree
to purchase and the Company agrees to sell and issue to the Buyers, an aggregate
of Thirty Nine Million Three Hundred Sixty Thousand Two Hundred Seventy Two
(39,360,272) shares (the "Shares") of the Company's Common Stock and the New
Warrants (as provided in Section 4.02 below). The purchase price per share of
Common Stock shall be $0.1144 and the aggregate purchase price for the Shares
and the New Warrants shall be an aggregate purchase price of Four Million Five
Hundred Thousand Dollars (US $4,500,000) (the "Purchase Price"). Each Buyer
shall purchase the number of Shares listed beside their name on Schedule 4.01.

                                   ARTICLE II

            REPRESENTATIONS, COVENANTS, AND WARRANTIES OF THE COMPANY

         As an inducement to and to obtain the reliance of the Buyer, except as
set forth on the schedules attached hereto (the " Company Schedules"), the
Company represents, warrants and certifies as follows:

2.01     ORGANIZATION AND TITLE

         The Company is a corporation [Corporate # 1162209] duly organized,
validly existing, and in good standing under the laws of the Province of
Ontario, Canada and has the corporate power and is duly authorized, qualified,
franchised, and licensed under all applicable laws, regulations, ordinances, and
orders of public authorities to own all of its properties and assets and to
carry on its business in all material respects as it is now being conducted,
including qualification to do business as a foreign corporation in the
provinces, states or countries in which the character and location of the assets
owned by it or the nature of the business transacted by it requires
qualification, except where failure to be so qualified would not have a Material
Adverse Effect, as defined below, on its business. Included in the Company
Schedules are complete and correct copies of the Articles of Incorporation (as
amended) and Bylaws of the Company as in effect on the date hereof. The
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby will not, violate any provision of the
Company's Articles of Incorporation or Bylaws. The Company has taken all actions
required by law, its Articles of Incorporation, or otherwise to authorize the
execution and delivery of this Agreement. The Company has full power, authority,
and legal right and has taken all action required by law, its Articles of
Incorporation, and otherwise to consummate the transactions herein contemplated.
<PAGE>
                                       2

         The Company owns and has valid title to its property and assets free
and clear of all mortgages, liens, loans and encumbrances. With respect to the
property and assets it leases, the Company is in compliance with such leases
and, to the best of its knowledge, holds a valid leasehold interest free of any
liens, claims or encumbrances. The Company does not own any real property.

2.02     CAPITALIZATION

         At the Closing the authorized and issued capitalization of Med-Emerg
International Inc. consists of an unlimited number of the following classes of
shares, options and warrants:

(a)      Preference shares, voting, non-redeemable, non-retractable, having a
         cumulative dividend of US$0.27 per share, convertible to common shares,
         of which 500,000 preference shares are currently issued and outstanding
         prior to their repurchase and redemption referred to in section 7.07;

(b)      Common shares of which 18,917,424 shares are currently issued and
         outstanding (includes common shares to be issued upon repurchase of all
         preference shares under section 7.07) prior to the issuance of the
         shares to Buyers as set forth in Section 4.01.

(c)      1,437,500 common shares purchase warrants entitling holder to purchase
         one share of common stock at a price of US $0.50 per share.

(d)      2,425,000 options (2,325,000 exercisable at $0.50 and 100,000
         exercisable at $1.00 per common share) currently outstanding for the
         purchase of common shares.

(e)      3,083,949 warrants issued upon repurchase of all preference shares
         under Section 7.07.

2.03     SUBSIDIARIES

         For the purposes of this Agreement (unless specifically excepted) the
word "Company" includes:

(a)      Wholly owned subsidiaries: 2036400 Ontario Inc., Med Emerg Health
         Centers Inc., Med Emerg Elmvale Clinic Inc., 927564 Ontario Inc.,
         927563 Ontario Inc., YFMC Healthcare Inc.; and

(b)      YFMC Healthcare (Alberta) Inc, a wholly subsidiary of YFMC Healthcare
         Inc. and Med-Emerg Inc., a wholly owned subsidiary of 927563 Ontario
         Inc.

         The Company is the registered and beneficial owner of all of the issued
and outstanding securities of each of its subsidiaries, and no person has any
agreement or option, or any right or privilege (whether by law, pre-emptive or
contractual) capable of becoming an agreement or option for the purchase or
transfer of any securities of any of the Company's subsidiaries. All of the
issued and outstanding shares of each of the subsidiaries have been validly
issued and are outstanding as fully paid and non-assessable. Neither the Company
nor any of its subsidiaries owns, directly or indirectly, or has agreed to
acquire outstanding securities of any other company or options to acquire
securities of any other company, other than marketable securities held in the
ordinary course of business, or a participating interest in any partnership,
joint venture or other business enterprise.

<PAGE>
                                       3

2.04     FINANCIAL INFORMATION

         (a)      Included in Company Schedules are (i) the audited balance
                  sheets of the Company and the related statements of operations
                  and cash flows as of and for the twelve (12) months ended
                  December 31, 2003 and the unaudited balance sheets of the
                  Company and the related statements of operations and cash
                  flows for the first calendar quarter of 2004 ending March 31,
                  2004.

         (b)      All such financial statements have been prepared in accordance
                  with generally accepted accounting principles consistently
                  applied throughout the periods involved. The Company balance
                  sheets present fairly and accurately as of their respective
                  dates the financial condition of the Company. As of the date
                  of such balance sheets, except as and to the extent reflected
                  or reserved against therein, the Company had no material
                  liabilities or obligations (absolute or contingent) which
                  should be reflected in the balance sheets or the notes thereto
                  prepared in accordance with generally accepted accounting
                  principles in Canada, and all assets reflected therein are
                  properly reported and present fairly the value of the assets
                  of the Company, in accordance with generally accepted
                  accounting principles. The statements of operations,
                  stockholders' equity and cash flows reflect fairly the
                  information required to be set forth therein by generally
                  accepted accounting principles.

         (c)      The Company has no liabilities with respect to the payment of
                  any federal, provincial, municipal, local or other taxes
                  (including any deficiencies, interest or penalties), except
                  for taxes accrued but not yet due and payable.

         (d)      The books and records, financial and otherwise, of the Company
                  are in all material aspects complete and correct and have been
                  maintained in accordance with good business and accounting
                  practices.

         (e)      All of the Company's assets are reflected on its financial
                  statements.

         (f)      The Company has filed all provincial , federal or local
                  income, franchise tax returns and or GST/PST tax submission
                  required to be filed by it from inception to the date hereof.
                  Each of such income tax returns and or GST/PST tax submissions
                  reflect the taxes due for the period covered thereby, except
                  for amounts which, in the aggregate, are immaterial.

2.05     INFORMATION

         The information concerning the Company set forth in this Agreement and
in the Company Schedules is complete and accurate in all material respects and
does not contain any untrue statement of a material fact or omit to state a
material fact required to make the statements made, in light of the
circumstances under which they were made, not misleading. In addition, the
Company has fully disclosed in writing to Buyer (through this Agreement or the
Company Schedules) all information and material facts relating to matters
involving the Company or its assets or its present or past operations or
activities which (i) indicated or may indicate, in the aggregate, the existence
of a greater than Twenty-Five Thousand Dollars ($25,000) liability or diminution
in value, or (ii) either alone or in aggregation with other information covered
by this Section, otherwise have led or may lead to a Material Adverse Effect on
the transactions contemplated herein or on the Company, its assets, or its
operations or activities as presently conducted or as contemplated to be
conducted after the Closing Date, including, but not limited to, information
relating to governmental, employee, environmental, litigation and securities
matters and transactions with affiliates.

<PAGE>
                                       4

2.06     OPTIONS OR WARRANTS

         Except as set forth in Section 2.02 and convertible debentures issued
by Company in September 2001, which are convertible into common shares at the
sole option of the Company (A) there are no outstanding options, warrants,
convertible securities, rights (including conversion, right of first refusal or
any preemptive rights) or agreements for the purchase or acquisition from the
Company of any shares of its capital stock or any future issuance of securities
by the Company; (B) there are no outstanding stock appreciation rights or other
rights to redeem for cash options or warrants of the Company; (C) there are no
bonds, debentures, notes or other indebtedness of the Company with voting rights
(or convertible into, or exchangeable for, securities with voting rights) on any
matters on which stockholders of the Company may vote. All outstanding shares of
capital stock of the Company are, and all shares which may be issued upon the
exercise of stock options will be, when issued, duly authorized, validly issued,
fully paid and non-assessable and not subject to preemptive rights.

2.07     ABSENCE OF CERTAIN CHANGES OR EVENTS

         Except as set forth in this Agreement or the Schedules, since March 31,
2004:

         (a)      there has not been any Material Adverse Effect caused by (i)
                  any change in the proposed business, operations, properties,
                  assets, or condition of the Company or (ii) any damage,
                  destruction, or loss to the Company (whether or not covered by
                  insurance) ;

         (b)      The Company has not:

                  (i)      amended its Articles of Incorporation or Bylaws;

                  (ii)     declared or made, or agreed to declare or make, any
                           payment of dividends or distributions of any assets
                           of any kind whatsoever to stockholders or purchased
                           or redeemed, or agreed to purchase or redeem, any of
                           its capital stock;

                  (iii)    waived any rights of value which in the aggregate are
                           outside of the ordinary course of business or
                           material considering the business of the Company;

                  (iv)     made any material change in its method of management,
                           operation or accounting;

                  (v)      entered into any other material transaction other
                           than sales in the ordinary course of its business;

                  (vi)     made any accrual or arrangement for payment of
                           bonuses or special compensation of any kind or any
                           severance or termination pay to any present or former
                           officer or employee;

                  (vii)    increased the rate of compensation payable or to
                           become payable by it to any of its officers or
                           directors or any of its salaried employees whose
                           monthly compensation exceeds One Thousand Dollars
                           ($1,000) excluding annual pay increases effective
                           April 1, 2004 of average of 5%; or

                  (viii)   made any increase in any profit sharing, bonus,
                           deferred compensation, insurance, pension,
                           retirement, or other employee benefit plan, payment,
                           or arrangement made to, for, or with its officers,
                           directors, or employees;

         (c)      The Company has not:
<PAGE>
                                       5

                  (i)      borrowed or agreed to borrow any funds or incurred,
                           or become subject to, any material obligation or
                           liability (absolute or contingent) in excess of
                           $5,000 except as disclosed herein and except
                           liabilities incurred in the ordinary course of
                           business;

                  (ii)     paid or agreed to pay any material obligations or
                           liability (absolute or contingent) other than current
                           liabilities, and current liabilities incurred in the
                           ordinary course of business and professional and
                           other fees and expenses in connection with the
                           preparation of this Agreement and the consummation of
                           the transactions contemplated hereby;

                  (iii)    sold or transferred, or agreed to sell or transfer,
                           any of its assets, properties, or rights (except
                           assets, properties, or rights not used or useful in
                           its business which, in the aggregate have a value of
                           less than Five Thousand Dollars [$5,000]), or
                           canceled, or agreed to cancel, any debts or claims
                           (except debts or claims which in the aggregate are of
                           a value of less than Five Thousand Dollars [$5,000]);
                           or

                  (iv)     made or permitted any amendment or termination of any
                           contract, agreement, or license to which it is a
                           party if such amendment or termination is material,
                           considering the business of the Company; and

         (d)      To the best knowledge of the Company, the Company has not
                  become subject to any law or regulation which now has, or in
                  the future may have, a Material Adverse Effect on the
                  business, operations, properties, assets, or condition of the
                  Company.

2.08     TITLE AND RELATED MATTERS

         No third party has any right to, and the Company has not received any
notice of infringement of or conflict with asserted rights of others with
respect to, any product, technology, data, trade secrets, know-how, proprietary
techniques, trademarks, service marks, trade names, or copyrights which,
individually or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a Materially Adverse Effect on the proposed
business, operations, financial condition, income, or business prospects of the
Company or any material portion of its current properties, assets, or rights.

2.09     LITIGATION AND PROCEEDINGS

                  There are no actions, suits, or proceedings pending or, to the
knowledge of the Company after reasonable investigation, threatened by or
against the Company or affecting the Company or its properties, at law or in
equity, before any court or other governmental agency or instrumentality,
domestic or foreign, or before any arbitrator of any kind which can have a
Material Adverse Affect on the Company. The Company does not have any knowledge
of any material default on its part with respect to any judgment, order,
injunction, decree, award, rule, or regulation of any court, arbitrator, or
governmental agency or instrumentality or of any circumstances which, after
reasonable investigation, would result in the discovery of such a default.

2.10     CONTRACTS

         (a)      There are no material contracts, agreements, franchises,
                  license agreements, debt instruments or other commitments to
                  which the Company is a party or by which it or any of its
                  assets, products, technology, or properties are bound other
                  than those incurred in the ordinary course of business (as
                  used in this Agreement, a "material" contract, agreement,
                  franchise, license agreement, debt instrument or commitment is
                  one which (i) will remain in effect for more than six (6)
                  months after the date of this Agreement and (ii) involves
                  aggregate obligations of at least Twenty-Five Thousand Dollars
                  ($25,000);
<PAGE>
                                       6

         (b)      All contracts, agreements, franchises, license agreements, and
                  other commitments, if any, to which the Company is a party and
                  which are material to the operations of the Company taken as a
                  whole are valid and enforceable by the Company in all
                  respects, except as limited by bankruptcy and insolvency laws
                  and by other laws affecting the rights of creditors generally;

         (c)      The Company is not a party to or bound by, and the properties
                  of the Company are not subject to, any contract, agreement,
                  other commitment or instrument; any charter or other corporate
                  restriction; or any judgment, order, writ, injunction, decree,
                  or award which materially and adversely affects, the business
                  operations, properties, assets, or condition of the Company;
                  and

         (d)      The Company is not a party to any oral or written:

                  (i)      contract for the employment of any officer or
                           employee which is not terminable on ninety (90) days,
                           or less notice;

                  (ii)     profit sharing, bonus, deferred compensation, stock
                           option, severance pay, pension benefit or retirement
                           plan;

                  (iii)    agreement, contract, or indenture relating to the
                           borrowing of money;

                  (iv)     guarantee of any obligation, other than one on which
                           the Company is a primary obligor, for the borrowing
                           of money or otherwise, excluding endorsements made
                           for collection and other guaranties of obligations
                           which, in the aggregate do not exceed more than one
                           (1) year or providing for payments in excess of
                           Twenty-Five Thousand Dollars ($25,000) in the
                           aggregate;

                  (v)      collective bargaining agreement; or

                  (vi)     agreement with any present or former officer or
                           director of the Company.

2.11     MATERIAL CONTRACT DEFAULTS

         The Company is not in default in any material respect under the terms
of any outstanding material contract, agreement, employment related obligation,
lease, or other commitment which is material to the business, operations,
properties, assets or condition of the Company and there is no event of default
in any material respect under any such contract, agreement, lease, or other
commitment in respect of which the Company has not taken adequate steps to
prevent such a default from occurring.

2.12     NO CONFLICT WITH OTHER INSTRUMENTS

         The execution of this Agreement and the consummation of the
transactions contemplated by this Agreement will not result in the breach of any
term or provision of, constitute an event of default under, or terminate,
accelerate or modify the terms of any material indenture, mortgage, deed of
trust, or other material contract, agreement, or instrument to which the Company
is a party or to which any of its properties or operations are subject.

2.13     GOVERNMENTAL AUTHORIZATIONS

         Where limited to only those territories wherein the Company is
currently commercially selling it various products and services the Company has
all licenses, franchises, permits, and other governmental authorizations that
are legally required to enable it to conduct its business in all material
respects as conducted on the date hereof. No authorization, approval, consent,
or order of, or registration, declaration, or filing with (except for required
security filings with OSC, SEC and Investment Review Division of Industry
Canada) , any court or other applicable governmental body is required in
connection with the execution and delivery by the Company of this Agreement and
the consummation by the Company of the transactions contemplated hereby.
<PAGE>
                                       7

2.14     COMPLIANCE WITH LAWS AND REGULATIONS

         To the best of its knowledge the Company has complied with all
applicable statutes and regulations of any federal, state, or other governmental
entity or agency thereof, except to the extent that noncompliance would not
materially and adversely affect the business, operations, properties, assets, or
condition of the Company or except to the extent that noncompliance would not
result in the occurrence of any material liability for the Company.

2.15     APPROVAL OF AGREEMENT

         The Board of Directors of the Company which is currently comprised of
five members has authorized the execution and delivery of this Agreement by the
Company and has approved this Agreement, the transactions and performance of
obligations contemplated hereby.

2.16     MATERIAL TRANSACTIONS OR AFFILIATIONS

         Set forth in the Company Schedules is a description, if applicable, of
every contract, agreement, or arrangement between the Company and any
predecessor and any person who was at the time of such contract, agreement, or
arrangement an officer, director, or person owning of record, or known by the
Company to own beneficially, five percent (5%) or more of the issued and
outstanding common stock of the Company and which is to be performed in whole or
in part after the date hereof or which was entered into not more than three (3)
years prior to the date hereof. Except as disclosed in the Schedules or
otherwise disclosed herein, no officer, director, or five percent (5%)
shareholder of the Company has, or has had during the previous 5 years, any
known interest, direct or indirect, in any transaction with the Company which
was material to the business of the Company. There are no commitments by the
Company, whether written or oral, to lend any funds, or to borrow any money
from, or enter into any other transaction with, any such affiliated person.

2.17     SCHEDULES

         Within twenty (20) days prior to the Closing the Company will deliver
to Buyer the following schedules, if such schedules are applicable to the
business of the Company, which are collectively referred to as the "Company
Schedules" and which consist of separate schedules dated as of the date of
execution of this Agreement, all certified by the chief executive officer of the
Company as complete, true, and correct as of the date of this Agreement in all
material respects:

         (a)      Schedule A - schedule containing complete and correct copies
                  of the Articles of Incorporation in effect as of the date of
                  this Agreement;

         (b)      Schedule B - schedule containing complete and correct copies
                  of the Bylaws of the Company in effect as of the date of this
                  Agreement;

         (c)      Schedule C - schedule containing any Corporate Resolutions of
                  the Shareholders of the Company;

         (d)      Schedule D - schedule containing Minutes of meetings or
                  resolutions of the Board of Directors of the Company;

         (e)      Schedule E - a certified Nobo list from DTC setting forth the
                  name and address of each shareholder of the Company together
                  with the number of shares owned by him, her or it; and

         (f)      Schedule F - a schedule setting forth a description of any
                  material adverse change in the business, operations, property,
                  inventory, assets, or condition of the Company since March 31,
                  2004;
<PAGE>
                                       8

         (g)      Schedule G - (e) copies of all licenses, permits, and other
                  governmental authorizations (or requests or applications
                  therefore) pursuant to which the Company carries on or
                  proposes to carry on its business (except those which, in the
                  aggregate, are immaterial to the present or proposed business
                  of the Company);

         (h)      a schedule listing the accounts receivable and notes and other
                  obligations receivable of the Company as of March 31, 2004, or
                  thereafter other than in the ordinary course of business of
                  the Company, indicating the debtor and amount, and classifying
                  the accounts to show in reasonable detail the length of time,
                  if any, overdue, and stating the nature and amount of any
                  refunds, set offs, reimbursements, discounts, or other
                  adjustments which are in the aggregate material and due to or
                  claimed by such debtor;

         (i)      a schedule listing the accounts payable and notes and other
                  obligations payable of the Company as of March 31 , 2004, or
                  that arose thereafter other than in the ordinary course of the
                  business of the Company, indicating the creditor and amount,
                  classifying the accounts to show in reasonable detail the
                  length of time, if any, overdue, and stating the nature and
                  amount of any refunds, set offs, reimbursements, discounts, or
                  other adjustments, which in the aggregate are material and due
                  to or claimed by the Company respecting such obligations;

         (j)      a schedule setting forth any other information, together with
                  any required copies of documents, required to be disclosed in
                  the Company Schedules by Sections 2.01 through 2.19.

         (k)      Schedule J - schedule setting forth any other information,
                  together with any required copies of documents, required to be
                  disclosed by the Company.

         THE COMPANY SHALL CAUSE THE COMPANY SCHEDULES AND THE INSTRUMENTS AND
DATA DELIVERED TO THE COMPANY HEREUNDER TO BE PROMPTLY UPDATED AFTER THE DATE
HEREOF UP TO AND INCLUDING THE CLOSING DATE.

         It is understood and agreed that not all of the schedules referred to
above have been completed or are available to be furnished by the Company. If
the Company cannot or fails to deliver the Company Schedules within the allotted
time, or if Buyer acting reasonably finds any such schedules or updates provided
after the date hereof to be unacceptable according to the criteria set forth
herein, Buyer may terminate this Agreement by giving written notice to the
Company within ten (10) days after the schedules or updates were due to be
produced or were provided. For purposes of the foregoing, Buyer may consider a
disclosure in the Schedules to be "unacceptable" only if that item would have in
Buyer's sole discretion, a `Material Adverse Effect' on the financial condition
of the Company, taken as a whole.

         "Material Adverse Effect" means an event or combination of events,
which individually or in the aggregate, would reasonably be expected to:

         (a)      adversely affect the legality, validity or enforceability of
                  this Agreement;

         (b)      have or result in a material adverse effect on the results of
                  operations, assets, prospects, or condition (financial or
                  otherwise) of the Company and its subsidiaries, taken as a
                  whole;

         (c)      adversely impair the Company's ability to perform fully on a
                  timely basis its obligations under any of this Agreement or
                  the transactions contemplated thereby; or
<PAGE>
                                       9

         (d)      materially and adversely affect the value of the rights
                  granted to the Buyer in this Agreement.

2.18     VALID OBLIGATION

         This Agreement and all agreements and other documents executed by the
Company in connection herewith constitute the valid and binding obligation of
the Company, enforceable in accordance with its or their terms, except as may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting
the enforcement of creditors' rights generally and subject to the qualification
that the availability of equitable remedies is subject to the discretion of the
court before which any proceeding therefor may be brought.

2.19     REPORTING REQUIREMENTS OF THE COMPANY

         The Company is subject to the reporting and filing requirements of the
Securities Exchange Act of 1934 ("the Exchange Act") including (1) the periodic
reporting requirements and (2) the Proxy Rules set forth thereunder. The Company
is a "reporting issuer" as that term is defined in the securities legislation of
each of the provinces of Quebec, Alberta and Ontario, and is not in default of
the requirements of such legislation or the regulations thereto excluding the
failure to mail quarterly financial statements to shareholders and failure to
file material change reports. The Company shall use its best efforts to maintain
at all times in good standing its status as a "reporting issuer" in each of the
aforementioned provinces and to comply with all applicable requirements of the
securities legislation thereof.

2.20     QUOTATION ON THE OTC BULLETIN BOARD

         The Company's Common Stock is quoted on the OTC Bulletin Board under
the symbol "MDER.OB" and the Company will retain such quotation on the OTC
Bulletin Board until the Closing of the transactions contemplated herein.

2.21     (a)      The Company has filed all reports required to be filed by it
                  with the SEC pursuant to the Exchange Act (the "SEC Reports").
                  The SEC Reports complied, at the time of filing, in all
                  material respects with the applicable requirements of the
                  Exchange Act. None of the SEC Reports, as of their respective
                  dates, contained any untrue statement of a material fact or
                  omitted to state a material fact required to be stated therein
                  or necessary in order to make the statements therein, in light
                  of the circumstances under which they were made, not
                  misleading, except to the extent superseded by an SEC Report
                  filed subsequently and prior to the date hereof. The Company
                  has filed with the SEC and delivered to Buyer the Company 's
                  annual report on Form 10-K for the year ended December 31,
                  2003 ("Annual Report"). As of Closing, there shall not be any
                  change in the business, assets, liabilities, financial
                  condition, results of operations or prospects of the Company
                  from the Annual Report which would have a Material Adverse
                  Effect on the Company. The Company has, on a timely basis,
                  duly filed or delivered all reports, filings, disclosures,
                  releases and other materials required to be filed or delivered
                  pursuant to the securities legislation (including all rules,
                  regulations, policies, orders and rulings ancillary thereto)
                  of each of the provinces of Ontario, Quebec and Alberta, and
                  none of the same contains any misrepresentation (as such term
                  is defined and construed for purposes of such legislation),
                  excluding the failure to mail quarterly financial statements
                  to shareholders and failure to file material change reports.

         (b)      The financial statements of the Company made part of the SEC
                  Reports have been prepared in accordance with Canadian
                  generally accepted accounting principles. All financial
                  statements made part of the SEC Reports present fairly the
                  consolidated financial position of the Company as of their
                  respective dates and the consolidated results of its
                  operations and its cash flows for the periods presented
                  therein subject, in the case of the unaudited interim
                  financial statements, to normal year-end adjustments that have
                  not been and are not expected to be material in amount.

<PAGE>
                                       10

         No cease trade order has been issued against the Company or its Common
Stock in any jurisdiction, and to the knowledge of the Company, no cease trade
order is pending or threatened.

         The Company has not made any confidential material change report
filings pursuant to the securities legislation of any of the provinces of
Quebec, Alberta and Ontario during the previous 36 months.

         The issuance of the Shares to the Buyers who qualify as `accredited
investors' as such term is defined in Section 3.11 above, will constitute a
distribution under the Securities Act (Ontario) (the "OSA") (as that term is
defined therein) that is exempt from the prospectus and registration
requirements of the OSA, provided that no unusual effort is made to prepare the
market or to create a demand for such securities and no extraordinary commission
or consideration is paid in respect of such trade. The Shares issued to the
Buyers hereunder will not be subject to any statutory hold period under
applicable securities laws of the Province of Ontario which exceeds four months
and one day from the Closing Date.

2.22     APPROVAL BY THE COMPANY'S SHAREHOLDERS

         The transactions contemplated by this Agreement do not require the
approval of the Company's shareholders and the Company is not required to file a
Schedule 14A or 14C with the Securities and Exchange Commission as a result of
the transactions contemplated herein.

2.23     Approval by the Company's shareholders of any of the transactions
contemplated hereunder is not required by (i) Ontario law (ii) the Company's
Articles of Incorporation or Bylaws or any amendments thereto (iii) the Exchange
Act (iv) the Securities Act (Ontario) or (v) any other applicable law or
regulatory requirement.

2.24     NO INTEGRATED OFFERING

                  Neither the Company nor any person acting on its or their
behalf has, directly or indirectly, at any time since June 1, 2003, made any
offer or sales of any security or solicited any offers to buy any security under
circumstances that would eliminate the availability of the exemption from
registration under Regulation D in connection with the offer and sale of the
Securities as contemplated hereby.

2.25     BOARD REPRESENTATION

         (a)      Following the Closing and so long as BXR Holdings Inc., Walt &
                  Co. Inc., Lillian Brachfeld, David J. Kassie and 1619271
                  Ontario Limited (individually or jointly the "Canadian
                  Investor") shall hold, in the aggregate, at all times
                  following the completion of the Closing, at least 10% of the
                  issued and outstanding shares of the Company's Common Stock
                  (the "Requisite Percentage"), the Investor shall be entitled
                  to designate that number of members of the Company's board of
                  directors (the "Board") which as a percentage of the total
                  number of members of the Board is not less than the percentage
                  of the issued and outstanding shares of the Company's Common
                  Stock held by the Investor; provided that, notwithstanding any
                  of the foregoing, so long as the Canadian Investor holds the
                  Requisite Percentage the Canadian Investor shall always be
                  entitled to designate at least one member of the Board and
                  provided, further, that in case of a fractional pro rata
                  entitlement the fractional number shall be `rounded down' to
                  the nearest whole number. Thus, for purposes of example only,
                  if the Canadian Investor holds 30% of the stock and the size
                  of the Board is 9 directors, the "rounding-down"-based
                  calculation will entitle the Canadian Investor to only 2
                  directors (i.e. 30% of 9 = 2.7 = 2). Such right shall then
                  continue in full force and effect so long as the Canadian
                  Investor shall hold the Requisite Percentage. The Canadian
                  Investor acknowledges and agrees that the director designated
                  by it to sit on the Company's Board shall be subject to
                  re-election by the Company's stockholders at the Company's
                  scheduled meetings for the election of directors.
<PAGE>
                                       11

         (b)      Following the Closing and so long as the Buyers other then
                  those listed in 2.25 (a) above (individually or jointly the
                  "International Investor") shall hold, in the aggregate, at all
                  times following the completion of the Closing, at least the
                  Requisite Percentage, the International Investor shall be
                  entitled to designate that number of members of the Board
                  which as a percentage of the total number of members of the
                  Board is not less than the percentage of the issued and
                  outstanding shares of the Company's Common Stock held by the
                  International Investor; provided that, notwithstanding any of
                  the foregoing, so long as the International Investor holds the
                  Requisite Percentage the International Investor shall always
                  be entitled to designate at least one member of the Board, and
                  provided, further, that in case of a fractional pro rata
                  entitlement the fractional number shall be `rounded up' to the
                  nearest whole number . Thus, for purposes of example only, if
                  the International Investor holds 30% of the stock and the size
                  of the Board is 9 directors, the "rounding-up"-based
                  calculation will entitle the International Investor to 3
                  directors (i.e. 30% of 9 = 2.7 = 3). Such right shall then
                  continue in full force and effect so long as the International
                  Investor shall hold the Requisite Percentage. The
                  International Investor acknowledges and agrees that the
                  director designated by it to sit on the Company's Board shall
                  be subject to re-election by the Company's stockholders at the
                  Company's scheduled meetings for the election of directors.

         (iii)    To the extent that the Canadian Investor in Section 2.25 (a)
                  or the International Investor in Section 2.25 (b), as the case
                  may be, has not exercised its rights to appoint its full
                  entitlement of Board seats, such failure shall not constitute
                  a waiver of any of its rights hereunder.

2.26     REGISTRATION RIGHTS

         (a)      Upon the written request, at any time and from time to time
                  but not more than once in any calendar year, of the Buyers
                  representing not less than 15% of the issued and outstanding
                  shares of the Company's Common Stock (the "Requisite
                  Percentage"), the Company shall file a registration statement
                  (the "Registration Statement"), with the Securities and
                  Exchange Commission (the "SEC") under the Securities Act of
                  1933 (the "Act") with respect to the Shares; provided, however
                  that such request must be for the registration of not less
                  than the Requisite Percentage. The Company shall use its best
                  efforts to: (i) file the Registration Statement with the SEC
                  within 45 days from the date of the request; (iii) cause the
                  Registration Statement to become effective within 120 days
                  after the date of the request; and (iv) to keep such
                  Registration Statement continuously effective under the
                  Securities Act until the date which is two years after the
                  date that such Registration Statement is declared effective or
                  such earlier date when all registered securities of Buyers
                  covered by such Registration Statement have been sold or may
                  be sold without volume restrictions pursuant to Rule 144(k) as
                  determined by the counsel to the Company pursuant to a written
                  opinion letter to such effect, addressed and acceptable to the
                  Company's transfer agent and the affected Buyers.

         (b)      At any time that the Company proposes to file a Registration
                  Statement with the SEC under the Act with respect to a sale of
                  its securities to the public, whether for its own account or
                  for the account of other holders of its securities or both
                  each such time it will give written notice to all Buyers of
                  its intention so to do. Upon the written request of any such
                  Buyer to do so, the Company will use its best efforts to cause
                  the Buyer's Shares to be included in the Registration
                  Statement to permit the sale of such Shares, subject to the
                  Buyers agreeing to any lock up or other restriction then
                  imposed on other registering holders.
<PAGE>
                                       12

         (c)      The Shares sought to be registered pursuant to (a) or (b)
                  above are hereinafter referred to as the "Securities". The
                  Buyer (also referred to hereinafter as the "Holder") shall pay
                  any and all underwriting commissions, if any, in connection
                  with the registration and sale of the Securities under this
                  Section 2.26, but the Company shall bear all fees and expenses
                  attendant to registering the Securities under federal, state
                  and any other securities laws, and any required filings with
                  the NASD, including, without limitation, all printing costs.

         (d)      The Company shall use its best efforts through its officers,
                  directors, auditors, and counsel to cause such registration
                  statement to become effective as promptly as practicable.

         (e)      The Company shall use its best efforts to cause the Securities
                  to be registered or qualified for sale under the securities or
                  blue sky laws of such jurisdictions as the Holder may
                  reasonably request; provided, however, that the Company shall
                  not by reason of this Section 2.26 be required to qualify to
                  do business in any state in which it is not otherwise required
                  to qualify to do business or to file a general consent to
                  service of process in such jurisdiction.

         (f)      Upon request, the Company shall furnish the Holder and its
                  counsel copies of all registration statements and amendments
                  and supplements thereto, each preliminary and final prospectus
                  and amendment and supplement thereto, comment letters from the
                  SEC, the National Association of Securities Dealers ("NASD")
                  and state securities commissions, and such other documents as
                  the Investor shall reasonably request to facilitate the
                  disposition of the Securities included in such registration.

         (g)      The Company will indemnify and hold harmless the Holder, and
                  each partner, officer, director, and controlling person of the
                  Holder, with respect to which registration, qualification or
                  compliance has been effected pursuant to this Agreement
                  against all claims, losses, damages and liabilities (or
                  actions in respect thereof under the Act, the Exchange Act,
                  common law or otherwise arising out of or based on any untrue
                  statement (or alleged untrue statement) of a material fact
                  contained in any prospectus, offering circular or other
                  document (including any related registration statement,
                  notification or the like as amended and supplemented) incident
                  to any such registration, qualification or compliance, or
                  based on any omission (or alleged omission) to state therein a
                  material fact required to be stated therein or necessary to
                  make the statements therein not misleading, or any violation
                  by the Company of any rule or regulation promulgated under the
                  Act or any state securities or blue sky laws applicable to the
                  Company and relating to action or inaction required of the
                  Company in connection with any such registration,
                  qualification or compliance, and will promptly reimburse the
                  Holder, and each partner, officer, director, and each
                  controlling person of the Holder, for any legal and other
                  expenses reasonably incurred in connection with investigating
                  or defending any such claim, loss, damage, liability or
                  action; provided, that the Company will not be liable to the
                  Holder or any partner, officer, director and controlling
                  person of the Holder, to the extent that any such claim, loss,
                  damage, liability or expense arises out of or is based on any
                  untrue statement or omission contained in information
                  furnished to the Company by the Holder in writing for use
                  therein.

         (h)      In connection with any registration statement in which the
                  Holder is participating, the Holder shall furnish to the
                  Company in writing such information and affidavits as the
                  Company and any underwriter reasonably requests for use in
                  connection with any such registration statement or prospectus
                  and shall indemnify the Company, its directors and officers
                  and each person who controls the Company (within the meaning
                  of the Securities Act) against any losses, claims, damages,
                  liabilities and expenses resulting from any untrue or alleged
                  untrue statement of material fact contained in the
                  registration statement, prospectus or preliminary prospectus
                  or any amendment thereof or supplement thereto or any omission
                  or alleged omission of a material fact required to be stated
                  therein or necessary to make the statements therein not
                  misleading, but only to the extent that such untrue statement
                  or omission is contained in any information or affidavit so
                  furnished in writing by the Holder.
<PAGE>
                                       13

         (i)      If the indemnification provided for in subparagraph (h) above
                  is held by a court of competent jurisdiction to be unavailable
                  to an indemnified party with respect to any loss, liability,
                  claim, damage, or expense referred to therein, then the
                  indemnifying party, in lieu of indemnifying such indemnified
                  party hereunder, shall contribute to the amount paid or
                  payable by such indemnified party as a result of such of loss,
                  liability, claim, damage, expense in such proportion as is
                  appropriate to reflect the relative fault of the indemnifying
                  party on the one hand and of the indemnified party on the
                  other in connection with the statements or omissions that
                  resulted in such loss, liability, claim, damage, or expense as
                  well as any other relevant equitable considerations. The
                  relative fault of the indemnifying party and of the
                  indemnified party shall be determined by a court of competent
                  jurisdiction by reference to, among other things, whether the
                  untrue or alleged untrue statement of a material fact or the
                  omission to state a material fact relates to information
                  supplied by the indemnifying party or by the indemnified party
                  and the party's relative intent, knowledge, access to
                  information, and opportunity to correct or prevent such
                  statement or omission.

         (j)      With a view to making available the benefits of certain rules
                  and regulations of the SEC, which may permit the sale of
                  restricted securities (as that term is used in Rule 144 under
                  the Act), to the public without registration, the Company
                  undertakes to use its best efforts to:

                  (i)      make and keep public information available as those
                           terms are understood and defined in Rule 144 under
                           the Act;

                  (ii)     file with the SEC in a timely manner all reports and
                           other documents required of the Company under the Act
                           and the Exchange Act at any time after it has become
                           subject to such reporting requirements; and

                  (iii)    so long as the Holder owns any restricted Securities,
                           furnish to the Holder promptly upon a written request
                           by the Holder as to the Company's compliance with the
                           reporting requirements of Rule 144 (at any time from
                           and after ninety days following the effective date of
                           the first registration statement filed by the Company
                           for an offering of Securities to the general public),
                           and of the Act and Exchange Act, a copy of the most
                           recent annual or quarterly report of the Company, and
                           such other reports and documents so filed as the
                           Holder may reasonably request in availing himself,
                           herself or itself of any rule or regulation of the
                           SEC allowing the Holder to sell any such Securities
                           without registration.

         (k)      Notwithstanding the forgoing, if at any time or from time to
                  time after the date of effectiveness of the Registration
                  Statement, the Company notifies the Holder in writing of the
                  existence of a Potential Material Event, the Holder shall not
                  offer or sell any Securities, or engage in any other
                  transaction involving or relating to the Securities, from the
                  time of the giving of notice with respect to a Potential
                  Material Event until either the events or circumstances
                  comprising such Potential Material Event have been disclosed
                  to the public or no longer constitute a Potential Material
                  Event; provided however, that the Company may not so suspend
                  the right to the Holder during the periods the Registration
                  Statement is required to be in effect other than during a
                  Permitted Suspension Period. The term "Permitted Suspension
                  Period" means one or more suspension periods during any
                  consecutive 12-month period and the term "Potential Material
                  Event" shall mean any of the following: (i) the possession by
                  the Company of material information not ripe for disclosure in
                  a registration statement, which shall be evidenced by
                  determinations in good faith by the Board of Directors of the
                  Company that disclosure of such information in the
                  registration statement would be detrimental to the business
                  and affairs of the Company; or (ii) any material engagement or
                  activity by the Company which would, in the good faith
                  determination of the Board of Directors of the Company, be
                  adversely affected by disclosure in a registration statement
                  at such time, which determination shall be accompanied by a
                  good faith determination. Notwithstanding anything to the
                  contrary contained herein, the provisions hereof shall not
                  apply to the extent that any of the Securities then included
                  in such Registration Statement may be sold or otherwise
                  transferred under Rule 144 under the Act or are transferred in
                  a private non-brokerage transaction.

                  This Section 2.26 is a material inducement to the Buyer to
enter into this Agreement.

<PAGE>
                                       14

                                   ARTICLE III

               REPRESENTATIONS, COVENANTS, AND WARRANTIES OF BUYER

         Each of the Buyers hereby represents, warrants and certifies with
respect to itself only and not with respect to any other Buyer as follows and
hereby acknowledges and confirms that the Corporation is relying on such
representations, warranties and certificates in accepting the purchase of Shares
hereunder:

3.01     AUTHORIZATION, COMPLIANCE WITH LAWS AND CHARTER DOCUMENTS

         The Buyer has full power and authority to enter into this Agreement.
This Agreement constitutes a valid and binding obligation of the Buyer
enforceable against the Buyer in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors' rights generally. The
execution, delivery and performance of the Agreement and the consummation of the
transactions contemplated hereby will not result in any such violation or
default, or be in conflict with or constitute, with or without the passage of
time or the giving of notice or both, either a default under the Buyer's
organizational documents (if a company), as currently in effect, or an event
which results in the creation of any lien, charge or encumbrance upon the
capital stock or any asset of the Buyer, or a default under any agreement or
contract of the Buyer, or a violation of any laws, rules, regulations,
judgments, decrees or orders, except in the case of any of the foregoing, such
default(s), lien(s) charge(s), encumbrance(s) or violation(s) as would not have
a material adverse effect on the Buyer and all other companies (if Buyer is a
company) directly or indirectly owned by Buyer, considered as a whole.

3.02     PURCHASE ENTIRELY FOR OWN ACCOUNT

         The Buyer is acquiring the Shares for investment for its own account,
not as a nominee or agent, and not with a view to, or for the resale or
distribution of any part thereof. The Buyer has no present intention of selling,
granting any participation in, or otherwise distributing the same. The Buyer
further represents that it does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participations to such
person or to any third person, with respect to any of the Shares.

3.03     DISCLOSURE OF INFORMATION

         The Buyer has received all of the information that it considers
necessary or appropriate for deciding whether to purchase the Shares. The Buyer
further represents that it has had an opportunity to ask questions and receive
answers from the Company regarding the terms and conditions of the offering of
the Shares.
<PAGE>
                                       15

3.04     ACCREDITED INVESTOR

         The Buyer is an "accredited investor" within the meaning of Rule 501 of
Regulation D, as presently in effect.

3.05     RESTRICTED SECURITIES

         The Buyer acknowledges that, because the Shares have not been
registered under the Securities Act, the Shares, must be held indefinitely
unless the resale of which is subsequently registered under the Securities Act
or an exemption from such registration is available. The Buyer is aware of the
provisions of Rule 144 promulgated under the Securities Act which permits
limited resale of securities purchased in a private placement subject to the
satisfaction of certain conditions.

3.06     POSSESSION OF MATERIAL NON-CONFIDENTIAL INFORMATION

         Buyer acknowledges, in connection with Buyer 's purchase of the Shares
and discussions and negotiations with respect thereto, that the Investor may be
in possession of material non-public information and, accordingly, agrees that
it may not transfer any securities owned by it unless in compliance with
applicable securities laws and regulations.

3.07     LEGENDS

         The Buyer understands that until:

         (a)      the Shares may be sold by the Investor under Rule 144(k); or

         (b)      such time as the resale of the Shares have been registered
                  under the Securities Act, or the certificates representing the
                  Shares will bear a restrictive legend in substantially the
                  following form:

                  THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
                  REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
                  THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE
                  SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE
                  ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
                  SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR UNLESS
                  OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN OPINION FROM
                  COUNSEL THAT SUCH OFFER, SALE OR TRANSFER FALLS WITHIN AN
                  AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENT OF THOSE
                  LAWS.

                  THE BUYER FURTHER UNDERSTANDS THAT THE CERTIFICATES
                  REPRESENTING THE SHARES WILL BEAR A LEGEND, OR AN OWNERSHIP
                  STATEMENT ISSUED UNDER A DIRECT REGISTRATION SYSTEM OR OTHER
                  ELECTRONIC BOOK-ENTRY SYSTEM ACCEPTABLE TO THE ONTARIO
                  SECURITIES COMMISSION WILL BEAR A LEGEND RESTRICTION NOTATION,
                  STATING AS FOLLOWS:

                  UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF
                  THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE THE DATE THAT
                  IS FOUR MONTHS AND ONE DAY AFTER CLOSING DATE.

3.08     The Buyer is a resident at the address indicated at the end of this
         Agreement and has no other residency.

3.09     If an individual, the Buyer has obtained the age of majority and is
         legally competent to execute this Agreement and complete the purchase
         for Shares hereunder.
<PAGE>
                                       16

3.10     The Buyer has not received any document purporting to describe the
         business and affairs of the Company that has been prepared primarily
         for delivery to and review by the Buyer so as to assist the Buyer to
         make an investment decision in respect of the Shares being sold.

3.11     The Buyer (provided for the purposes of this Section 3.11 the Buyer
         shall mean only residents of Canada and Koby Ofek and Sinclair Montrose
         Trust Ltd.) qualify as an "accredited investor", as such term is
         defined in Ontario Securities Commission Rule 45-501 Exempt
         Distributions (the "Rule"), and as such the Buyer is one of the
         following:

         (a)      an individual who beneficially owns, or who together with a
                  spouse (which term, in relation to an individual, means
                  another individual to whom that individual is married, or
                  another individual of the opposite sex or the same sex with
                  whom that individual is living in a conjugal relationship
                  outside marriage) beneficially own, financial assets (being
                  cash, securities, or any contact of insurance or deposit or
                  evidence thereof that is not a security for purposes of the
                  Act) having an aggregate realizable value that, before taxes
                  but net of any related liabilities (being liabilities incurred
                  or assumed for the purpose of financing the acquisition or
                  ownership of financial assets and liabilities that are secured
                  by financial assets), exceeds $1,000,000.00; or

         (b)      an individual whose net income before taxes exceeded
                  $200,000.00 in each of the two most recent years or whose net
                  income before taxes combined with that of a spouse exceeded
                  $300,000.00 in each of those years and who, in either case,
                  has a reasonable expectation of exceeding the same threshold
                  net income level in the current year; or

         (c)      a company, limited partnership, limited liability partnership,
                  trust or estate, other than a mutual fund or non-redeemable
                  investment fund, that had net assets of at least $5,000,000.00
                  a reflected in its most recently prepared financial statements
                  (as prepared in accordance with generally accepted accounting
                  principles); or

         (d)      a person or company in respect of which all of the owners of
                  interests, direct or indirect, legal or beneficially, are
                  persons or companies that qualify under any one or more of the
                  above categories; or

         (e)      a person, company or other entity that qualifies under any one
                  of the "accredited investor" categories listed in the Rule,
                  and the Buyer agrees to provide specifics thereof.

3.12     Further, the Buyer acknowledges that:

         (a)      the Shares are subject to transfer and resale restrictions
                  pursuant to the OSA and the regulation, rules, orders,
                  instruments and published policy statements applicable
                  thereunder, including Multilateral Instrument 45-102 Resale of
                  Securities;

         (b)      the Buyer's purchase of the Shares has not been made through
                  or as a result of and the distribution of the Shares is not
                  being accompanied by an advertisement or general solicitation
                  in printed or public media, or general or regular print
                  circulation, radio or television or telecommunications,
                  including electronic display of any other form of
                  advertisement; and

         (c)      the Buyer is generally responsible for obtaining such legal
                  advice as the Buyer considers appropriate in connection with
                  the execution, delivery and performance of this Agreement and
                  any subsequent transfer or resale of the Shares.
<PAGE>
                                       17

                                   ARTICLE IV

                                     CLOSING

4.01     On the terms and subject to the conditions set forth in this Agreement,
         on the Closing Date the Buyers will receive the Shares listed beside
         their name in Schedule 4.01, representing Seventy Five Percent (75%) of
         the Company's then outstanding Common Stock on a fully diluted basis,
         excluding however 1,437,500warrants (exercisable at $0.50 per common
         share) and 2.425 million options (2,325,000 exercisable at $0.50 and
         100,000 exercisable at $1.00 per common share) currently outstanding
         for the purchase of common shares of MEI (collectively the
         "Warrant(s)").

4.02     On the terms and subject to the conditions set forth in this Agreement,
         on the Closing Date the Buyers shall receive the warrants in accordance
         with Schedule 4.02, whereby for each common share of the Company issued
         upon exercise of a Warrant, the Buyers shall be issued (pro rata to
         each of their Company holdings), at the same price per share as the
         exercise price of the common share of the Company issued upon exercise
         of a Warrant, three common shares of the Company. The form of warrant
         issued to Buyers is set out in Schedule 4.02 and such warrants shall be
         referred to as "New Warrants".

4.03     CLOSING

         The closing ("Closing") of the transaction contemplated by this
Agreement shall be on a date and at such time as the parties may agree ("Closing
Date") but not later than May 31, 2004, subject to the right of the Company or
the Buyer to extend such Closing Date by up to an additional ten (10) days. Such
Closing shall take place at a mutually agreeable time and place. At Closing, the
following will occur:

         (a)      The Company will issue and deliver 39,360,272 newly issued
                  treasury shares of the Company's Common Stock in the name of
                  Buyers in accordance with this Agreement;

         (b)      The Company will issue and deliver the New Warrants in
                  accordance with this Agreement;

         (c)      At Closing, Ramesh Zacharias, Lewis MacKenzie and John Yarnell
                  shall remain on the Board and Frank Baillie and William
                  Thomson shall resign as a Board member and the Buyers shall
                  designate Sidney Braun, Michael Sinclair, Kobi Ofek and
                  Manfred Walt to be appointed to the Board of Directors (the
                  "Buyers' Designees"). Upon the appointment of Buyers'
                  Designees, the Company will have a total of seven (7)
                  Directors. Other than Ramesh Zacharias, Koby Ofek, Michael
                  Sinclair and Sid Braun, the directors shall be paid a per
                  annum fee of Cdn$20,000;

         (d)      At the Closing, the Company shall execute and deliver
                  Certified resolutions of the Board of Directors of the Company
                  in the form attached hereto as Schedule Section 4.03(d)
                  authorizing the consummation of the transactions contemplated
                  by this Agreement; and appointing and electing the persons
                  designated by Buyers as officers and directors of the Company
                  effective as of the Closing Date;

         (e)      Non-Competition. At or prior to Closing the current directors
                  and officers, who are not resigning pursuant to Section 4.03
                  (c) above, of each of the Company who are not resigning
                  pursuant to Section 4.03(c) above and Buyers' Designees shall
                  undertake in the form attached, as Schedule Section 4.03(e),
                  that for a period of one (1) year from the date they cease
                  activities on behalf of the Company they will not provide
                  services or products that compete with those being marketed or
                  sold by the Company.

         (f)      At the Closing, the Company shall execute, acknowledge, and
                  deliver (or shall ensure to be executed, acknowledged, and
                  delivered) any and all certificates, opinions, financial
                  statements, schedules, agreements, resolutions, rulings or
                  other instruments required by this Agreement to be so
                  delivered at or prior to the Closing, together with such other
                  items as may be reasonably requested by the parties hereto and
                  their respective legal counsel in order to effectuate or
                  evidence the transactions contemplated hereby. Among other
                  things, the Company shall provide an opinion of counsel
                  acceptable to Buyer as to such matters as Buyer may reasonably
                  request, which shall include, but not be limited to, a
                  statement, to the effect that to such counsel's best
                  knowledge, after reasonable investigation, that the execution,
                  delivery and performance of the Agreement by the Company and
                  the performance of its obligations thereunder do not and will
                  not constitute a breach or violation of any of the terms and
                  provisions of, or constitute a default under or conflict with
                  or violate any provision of (i) the Company's incorporation
                  documents, each as currently in effect, (ii) any indenture,
                  mortgage, deed of trust, agreement or other instrument to
                  which the Company is a party or by which it or any of its
                  property is bound, (iii) any applicable statute or regulation
                  (such compliance including, but not being limited to, the
                  filing of all reports to date with federal and state
                  securities authorities), or (iv) any judgment, decree or order
                  of any court or governmental body having jurisdiction over the
                  Company or any of its property.
<PAGE>
                                       18

4.04     ANTI-DILUTION

                  The number of shares of the Company's Common Stock issuable at
Closing shall be appropriately adjusted to take into account any other stock
split, stock dividend, reverse stock split, re-capitalization, or similar change
in the Company's Common Stock which may occur between the date of the execution
of this Agreement and the Closing Date.

4.05     TERMINATION

         (a)      This Agreement may be terminated by the Board of Directors of
                  either the Company or Buyer at any time prior to the Closing
                  Date if:

                  (i)      there shall be any actual or threatened action or
                           proceeding before any court or any governmental body
                           which shall seek to restrain, prohibit, or invalidate
                           the transactions contemplated by this Agreement and
                           which, in the judgment of such Board of Directors,
                           made in good faith and based upon the advice of its
                           legal counsel, makes it inadvisable to proceed with
                           the Exchange;

                  (ii)     any of the transactions contemplated hereby are
                           disapproved by any regulatory authority whose
                           approval is required to consummate such transactions
                           or in the judgment of such board of directors, made
                           in good faith and based on the advice of counsel,
                           there is substantial likelihood that any such
                           approval will not be obtained or will be obtained
                           only on a condition or conditions which would be
                           unduly burdensome, making it inadvisable to proceed
                           with the Exchange; or

                  In the event of termination pursuant to this paragraph, no
                  obligation, right or liability shall arise hereunder, and each
                  party shall bear all of the expenses incurred by it in
                  connection with the negotiation, drafting, and execution of
                  this Agreement and the transactions herein contemplated.

         (b)      This Agreement may be terminated by the Buyer at any time
                  prior to the Closing Date if:

                  (i)      the Buyer determines in good faith that one or more
                           of Buyer's conditions to Closing has not occurred,
                           but only after the offending party has been given ten
                           days notice and an opportunity to cure, through no
                           fault of the Buyer.

                  (ii)     the Buyer takes the termination action specified in
                           Section 2.17 as a result of Company Schedules or
                           updates thereto which Buyer finds unacceptable; or

                  (iii)    the Company shall fail to comply with any of its
                           covenants or agreements contained in this Agreement
                           or if any of the representations or warranties of the
                           Company contained herein shall be inaccurate , where
                           such noncompliance or inaccuracy can have a Material
                           Adverse Affect on the Company and has not been cured
                           within ten (10) days after written notice thereof.
<PAGE>
                                       19

                  (iv)     there shall have been any change after the date of
                           the latest balance sheet of the Company in the
                           assets, properties, business or financial condition
                           of the Company which could have a Material Adverse
                           Effect on the financial statements of the Company
                           listed in Section 2.04(a) and 2.04(b) taken as a
                           whole, except any changes disclosed in the Company
                           Schedules.

                  (v)      on or before April 30, 2004, if Buyer notifies the
                           Company that Buyer 's investigation pursuant to
                           Section 5.01 below has uncovered information which it
                           finds unacceptable by the same criteria set forth
                           herein;

                  If this Agreement is terminated pursuant to this paragraph,
                  this Agreement shall be of no further force or effect, and no
                  obligation, right or liability shall arise hereunder.

         (c)      This Agreement may be terminated by the Board of Directors of
                  the Company at any time prior to the Closing Date if:

                  (i)      the Board of Directors of the Company determines in
                           good faith that one or more of the Company's
                           conditions to Closing set forth in Article VI has not
                           occurred, but only after the offending party has been
                           given twenty days notice and an opportunity to cure,
                           through no fault of Company;

                  (ii)     Buyer shall fail to comply with any of its covenants
                           or agreements contained in this Agreement or if any
                           of the representations or warranties of the Buyer
                           contained herein shall be inaccurate, where such
                           noncompliance or inaccuracy can have a material
                           adverse affect on the rights being granted to the
                           Company hereunder and has not been cured within ten
                           (10) days after written notice thereof.

                  If this Agreement is terminated pursuant to this paragraph,
                  this Agreement shall be of no further force or effect, and no
                  obligation, right or liability shall arise hereunder.

                                    ARTICLE V

                                SPECIAL COVENANTS

5.01     ACCESS TO PROPERTIES AND RECORDS

         The Company to the officers and authorized representatives of the Buyer
full access to the properties, books and records of the Company in order that
each may have a full opportunity to make such reasonable investigation as it
shall desire to make of the affairs of the Company, and Company will furnish the
Buyer with such additional financial and operating data and other information as
to the business and properties of the Company, as the Buyer shall from time to
time reasonably request. Any such investigation and examination shall be
conducted at reasonable times and under reasonable circumstances, and Company
shall cooperate fully therein. No investigation by Buyer shall, however,
diminish or waive in any way any of the representations, warranties, covenants
or agreements of the Company under this Agreement. In order that Buyer may
investigate as it may wish the business affairs of the Company, the Company
shall furnish the Buyer during such period with all such information and copies
of such documents concerning the affairs of it as the Buyer may reasonably
request, and cause its officer, employees, consultants, agents, accountants, and
attorneys to cooperate fully in connection with such review and examination, and
to make full disclosure to the Buyer all material facts affecting its financial
condition, business operations, and the conduct of operations.
<PAGE>
                                       20

5.02     THIRD PARTY CONSENTS AND CERTIFICATES

         The Company agrees to cooperate with Buyer in order to obtain any
required third party consents to this Agreement and the transactions herein
contemplated.

5.03     EXCLUSIVE DEALING RIGHTS UNTIL 5:00 P.M. EASTERN DAYLIGHT TIME ON MAY
         31, 2004

         In recognition of the substantial time and effort which Buyer has spent
and will continue to spend in investigating the Company and its business and in
addressing the matters related to the transactions contemplated herein, each of
which may preempt or delay other management activities, neither the Company, nor
any of its officers, employees, representatives or agents will directly or
indirectly solicit or initiate any discussions or negotiations with, or, except
where required by fiduciary obligations under applicable law as advised by
counsel, participate in any negotiations with or provide any information to or
otherwise cooperate in any other way with, or facilitate or encourage any effort
or attempt by, any corporation, partnership, person or other entity or group
concerning any merger, sale of substantial assets, sale of shares of capital
stock, (including without limitation, any public or private offering of the
common stock of the Company) or similar transactions involving the Company (all
such transactions being referred to as "Company Acquisition Transactions"). If
the Company receives any proposal with respect to a Company Acquisition
Transaction, it will immediately communicate to Buyer the fact that it has
received such proposal and the principal terms thereof.

5.04     ACTIONS PRIOR TO CLOSING

         (a)      From and after the date of this Agreement until the Closing
                  Date and except as set forth in the Company Schedules or as
                  permitted or contemplated by this Agreement, the Company
                  (subject to paragraph (b) below) will :

                  (i)      carry on its business in substantially the same
                           manner as it has heretofore;

                  (ii)     maintain and keep its properties in states of good
                           repair and condition as at present, except for
                           depreciation due to ordinary wear and tear and damage
                           due to casualty;

                  (iii)    maintain in full force and effect insurance
                           comparable in amount and in scope of coverage to that
                           now maintained by it;

                  (iv)     perform in all material respects all of its
                           obligations under material contracts, leases, and
                           instruments relating to or affecting its assets,
                           properties, and business;

                  (v)      use its best efforts to maintain and preserve its
                           business organization intact, to retain its key
                           employees, and to maintain its relationship with its
                           material suppliers and customers; and

                  (vi)     fully comply with and perform in all material
                           respects all obligations and duties imposed on it by
                           all federal and state laws and all rules,
                           regulations, and orders imposed by federal or state
                           governmental authorities.

         (b)      From and after the date of this Agreement until the Closing
                  Date, the Company will not:

                  (i)      make any changes in their Articles of Incorporation
                           or Bylaws, except as otherwise provided in this
                           Agreement;

                  (ii)     take any action described in Section 2.07 in the case
                           of the Company (all except as permitted therein or as
                           disclosed in the applicable party's schedules);
<PAGE>
                                       21

                  (iii)    enter into or amend any contract, agreement, or other
                           instrument of any of the types described in such
                           party's schedules, except that a party may enter into
                           or amend any contract, agreement, or other instrument
                           in the ordinary course of business involving the sale
                           of goods or services; or

                  (iv)     sell any assets or discontinue any operations, sell
                           any shares of capital stock or conduct any similar
                           transactions.

         (c)      Prior to Closing the Company shall enter into a written
                  agreement, acceptable to Buyers n their sole discretion, with
                  Canada Customs and Revenue Agency for the repayment of the
                  Company's debt in regards to GST.

5.05     INDEMNIFICATION

         Subject to Section 8.12 the Company hereby agrees to indemnify Buyer
and each of the officers, agents, and directors of Buyer and each of the Buyer's
shareholders as of the date of execution of this Agreement against any loss,
liability, claim, damage, or expense (including, but not limited to, any and all
expense whatsoever reasonably incurred in investigating, preparing, or defending
against any litigation, commenced or threatened, or any claim whatsoever), to
which it or they may become subject arising out of or based on any inaccuracy
appearing in or misrepresentation made by the Company under this Agreement. The
indemnification provided for in this paragraph shall survive the Closing and
consummation of the transactions contemplated hereby and termination of this
Agreement. In no event shall damages awarded to Buyers exceed $5million.

                                   ARTICLE VI

               CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY

         The obligations of the Company under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:

6.01     ACCURACY OF REPRESENTATIONS AND PERFORMANCE OF COVENANTS

         The representations and warranties made by Buyer in this Agreement were
true when made and shall be true at the Closing Date with the same force and
effect as if such representations and warranties were made at and as of the
Closing Date (except for changes therein permitted by this Agreement). Buyer
shall have performed or complied with all covenants and conditions required by
this Agreement to be performed or complied with by Buyer prior to or at the
Closing.

6.02     NO GOVERNMENTAL PROHIBITION

         No order, statute, rule, regulation, executive order, injunction, stay,
decree, judgment or restraining order shall have been enacted, entered,
promulgated or enforced by any court or governmental or regulatory authority or
instrumentality which prohibits the consummation of the transactions
contemplated hereby.

                                   ARTICLE VII

                  CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER

         The obligations of the Buyer under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:

7.01     ACCURACY OF REPRESENTATIONS AND PERFORMANCE OF COVENANTS

         The representations and warranties made by the Company in this
Agreement were true when made and shall be true as of the Closing Date (except
for changes therein permitted by this Agreement) with the same force and effect
as if such representations and warranties were made at and as of the Closing
Date. Additionally, the Company shall have performed and complied with all
covenants and conditions required by this Agreement to be performed or complied
with by the Company and shall have satisfied all conditions set forth herein
prior to or at the Closing. Buyer shall have been furnished with certificates,
signed by duly authorized executive officers of the Company and dated the
Closing Date, to the foregoing effect.
<PAGE>
                                       22

7.02     OFFICER'S CERTIFICATE

         Buyer shall have been furnished with certificates dated the Closing
Date and signed by the duly authorized executive officer of the Company, to the
effect that no litigation, proceeding, investigation or inquiry is pending, or
to the best knowledge of the Company threatened, which might result in an action
to enjoin or prevent the consummation of the transactions contemplated by this
Agreement or, to the extent not disclosed in the Company Schedules, by or
against the Company, which might result in any material adverse change in any of
the assets, properties or operations of the Company.

7.03     NO MATERIAL ADVERSE CHANGE

                  Prior to the Closing Date, there shall not have occurred any
change in the financial condition, business or operations of the Company nor
shall any event have occurred which, with the lapse of time or the giving of
notice, is determined to be unacceptable using the criteria set forth in Section
2.18.

7.04     NO GOVERNMENTAL PROHIBITION

         No order, statute, rule, regulation, executive order, injunction, stay,
decree, judgment or restraining order shall have been enacted, entered,
promulgated or enforced by any court or governmental or regulatory authority or
instrumentality which prohibits the consummation of the transactions
contemplated hereby.

7.05     CONSENTS

         All consents, approvals, waivers or amendments pursuant to all
contracts, licenses, permits, trademarks and other intangibles in connection
with the transactions contemplated herein, or for the continued operation of the
Company after the Closing Date on the basis as presently operated shall have
been obtained.

7.06     OTHER ITEMS

         Buyer shall have received further opinions, documents, certificates, or
instruments relating to the transactions contemplated hereby as Buyer may
reasonably request.

7.07     REPURCHASE OF PREFERENCE SHARES

         All preference shares issued and outstanding shall have been be
converted to 9,348,000 common shares and warrants to purchase 3,083,949 common
shares of the Company.

                                  ARTICLE VIII

                                  MISCELLANEOUS

8.01     The Company acknowledges that the obligations of each Buyer under this
         Agreement and other agreements delivered in connection herewith
         (collectively "Transaction Documents") are several and not joint with
         the obligations of any other Buyer, and no Buyer shall be responsible
         in any way for the performance of the obligations of any other Buyer
         under the Transaction Documents. The Company acknowledges that the
         decision of each Buyer to purchase securities pursuant to this
         Agreement has been made by such Buyer independently of any other Buyer
         and independently of any information, materials, statements or opinions
         as to the business, affairs, operations, assets, properties,
         liabilities, results of operations, condition (financial or otherwise)
         or prospectus of the Company which may have been made or given by any
         other Buyer or by any agent or employee of any other Buyer, and no
         Buyer or any of its agents or employees shall have any liability to any
         Buyer (or any other person) relating to or arising from any such
         information, materials, statements or opinions. The Company
         acknowledges that nothing contained in any Transaction Document, and no
         action taken by any Buyer pursuant hereto or thereto shall be deemed to
         constitute the Buyers as a partnership, an association, a joint venture
         or any other kind of entity, or create a presumption that the Buyers
         are in any way acting in concert or as a group with respect to such
         obligations or the transactions contemplated by the Transaction
         Documents. The Company acknowledges that each Buyer shall be entitled
         to independently protect and enforce its rights, including without
         limitation, the rights arising out of the Transaction Documents, and it
         shall not be necessary for any other Buyer to be joined as an
         additional party in any proceeding for such purpose. The Company
         acknowledges that they have elected to provide all Buyers with the same
         terms and Transaction Documents for the convenience of the Company and
         not because Company was required or requested to do so by the Buyers.
         The Company acknowledges that such procedure with respect to the
         Transaction Documents in no way creates a presumption that the Buyers
         are in any way acting in concert or as a group with respect to the
         Transaction Documents or the transactions contemplated thereby.
<PAGE>
                                       23

8.02     NO BANKRUPTCY AND NO CRIMINAL CONVICTIONS

         None of the Parties to the Agreement, nor their officers, directors or
affiliates or control persons, nor any predecessor thereof have been subject to
the following:

         (a)      Any bankruptcy petition filed by or against any business of
                  which such person was a general partner or executive officer
                  within the past five (5) years;

         (b)      Any conviction in a criminal proceeding or being subject to a
                  pending criminal proceeding (excluding traffic violations and
                  other minor offenses);

         (c)      Being subject to any order, judgment, or decree, not
                  subsequently reversed, suspended or vacated, of any court of
                  competent jurisdiction, permanently or temporarily enjoining,
                  barring, suspending or otherwise limiting his involvement in
                  any type of business, securities or banking activities; and

         (d)      Being found by a court of competent jurisdiction (in a civil
                  action), the Securities and Exchange Commission (the "SEC") or
                  the Commodity Futures Trading Commission to have violated a
                  federal or state securities or commodities law, and the
                  judgment has not been reversed, suspended, or vacated.

8.03     BROKERS

         No broker's or finder's fee will be paid in connection with the
transaction contemplated by this Agreement. The Company and Buyer agree that
there were no brokers or finders involved in bringing the parties together or
who were instrumental in the negotiation, execution or consummation of this
Agreement.

8.04     GOVERNING LAW AND ARBITRATION

         This Agreement shall be governed by, enforced, and construed under and
in accordance with the laws of the Province of Ontario. All controversies,
disputes or claims arising out of or relating to this Agreement shall be
resolved by binding arbitration.

         (a)      Rules. The arbitration shall be conducted on a confidential
                  basis in accordance with the Rules of Procedure for the
                  Conduct of Arbitration of the Arbitration and Mediation
                  Institute of Ontario Inc. (the "Rules"). If there are no Rules
                  in effect at the time of the commencement of the arbitration,
                  the arbitration shall proceed in accordance with the
                  provisions of the Arbitrations Act, 1991 (Ontario).
<PAGE>
                                       24

         (b)      Initiation. The arbitration process may be commenced by any
                  party giving written notice to the other parties specifying
                  particulars of the matters in dispute.

         (c       ) Arbitrator. The arbitration shall be conducted by a single
                  arbitrator agreed to by the Parties. If the Parties are unable
                  to agree upon an arbitrator, then an arbitrator shall be
                  appointed in accordance with the Rules.

         (d)      Location. The arbitration shall be conducted in the City of
                  Toronto, Ontario.

         (e)      Combination. If there is more than one matter to be
                  arbitrated, all such matters shall, to the extent possible, be
                  combined in one arbitration.

         (f)      Co-Operation. Each of the parties shall co-operate with the
                  arbitrator and provide him or her with all information in its
                  possession and under its control necessary or relevant to the
                  matter in dispute.

         (g)      Timing. Subject to the arbitrator's availability and
                  discretion, the arbitration shall be completed within 30 days
                  of the commencement of the arbitration hearing and the
                  arbitrator shall deliver a written decision within 10 days of
                  the completion of the arbitration hearing.

         (h)      Judgment. Judgement upon the arbitrator's award may be entered
                  into any court having jurisdiction.

         (i)      No Appeal. The decision of the arbitrator shall be final and
                  binding upon the parties and there shall be no appeal from the
                  decision of the arbitrator.

         (j)      Costs. The quantum of the costs of arbitration shall be
                  determined by the arbitrator and shall be borne by the
                  unsuccessful party(ies).

8.05     NOTICES

         Any notice or other communications required or permitted hereunder
shall be in writing and shall be sufficiently given if personally delivered to
it or sent by telecopy, overnight courier or registered mail or certified mail,
postage prepaid, addressed as follows:

         If to the Company, to:           Med-Emerg International Inc.
                                          6711 Mississauga Road - Suite 404
                                          Mississauga, Ontario
                                          L5N 2W3
                                          Attention:  Bill Danis
                                          Fax: 905-858-1399

                  with copies to:         Conway Kleinman Kornhauser, LLP
                                          Barristers & Solicitors
                                          390 Bay Street  - Suite 1102
                                          Toronto, Ontario
                                          M5H 2Y2
                                          Attention:  David Kornhauser
                                          Fax: 416-368-5454

         If to Buyers to address beside their names on Schedule 4.01
<PAGE>
                                       25

                  with copies to:         Aboudi & Brounstein, Law Offices
                                          3 Gavish St, Kfar saba
                                          Israel 44641
                                          Attention:  Gerald Brounstein
                                          Fax: 972-9-764-4833

                                          Goldman, Spring, Kichler & Sanders LLP
                                          40 Sheppard Avenue West - Suite 700
                                          Toronto, Ontario
                                           M2N 6K9
                                          Attention:  Joseph Maierovits
                                          Fax: (416) 225-4805

or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given (i) upon receipt, if personally delivered, (ii) on
the second day after dispatch, if sent by night courier, (iii) upon dispatch, if
transmitted by telecopy and receipt is confirmed by telephone and (iv) ten (10)
days after mailing, if sent by registered or certified mail.

8.06     ATTORNEY'S FEES

         In the event that either party institutes any action or suit to enforce
this Agreement or to secure relief from any default hereunder or breach hereof,
the prevailing party shall be reimbursed by the losing party for all costs,
including reasonable attorney's fees, incurred in connection therewith and in
enforcing or collecting any judgment rendered therein.

8.07     SCHEDULES; KNOWLEDGE

         Each party is presumed to have full knowledge of all information set
forth in the other party's schedules delivered pursuant to this Agreement.

8.08     THIRD PARTY BENEFICIARIES

         This contract is strictly between the Company and Buyer, and, except as
specifically provided, no director, officer, stockholder , employee, agent,
independent contractor or any other person or entity shall be deemed to be a
third party beneficiary of this Agreement.

8.09     EXPENSES

         Each of the Parties shall be responsible for its own costs and
expenses, including the fees and expenses of counsel and accountants, incurred
in connection with the Contemplated Transactions, if the transactions are not
consummated. In the event that the transactions are consummated the remaining
entity shall pay for all such expenses for both parties.

8.10     ENTIRE AGREEMENT

         This Agreement represents the entire agreement between the parties
relating to the subject matter thereof and supersedes all prior agreements,
understandings and negotiations, written or oral, with respect to such subject
matter.

8.11     SURVIVAL; TERMINATION

         The representations, warranties, and covenants of the respective
parties shall survive the Closing Date and the consummation of the transactions
herein contemplated for a period of two (2) years.
<PAGE>
                                       26

8.12     COUNTERPARTS

         This Agreement may be executed in multiple counterparts, each of which
shall be deemed an original and all of which taken together shall be but a
single instrument.

8.13     AMENDMENT OR WAIVER

         Every right and remedy provided herein shall be cumulative with every
other right and remedy, whether conferred herein, at law, or in equity, and may
be enforced concurrently herewith, and no waiver by any party of the performance
of any obligation by the other shall be construed as a waiver of the same or any
other default then, theretofore, or thereafter occurring or existing. At any
time prior to the
<PAGE>
                                       27

Closing Date, this Agreement may by amended by a writing signed by all parties
hereto, with respect to any of the terms contained herein, and any term or
condition of this Agreement may be waived or the time for performance may be
extended by a writing signed by the party or parties for whose benefit the
provision is intended.

8.14     BEST EFFORTS

         Subject to the terms and conditions herein provided, each party shall
use its best efforts to perform or fulfill all conditions and obligations to be
performed or fulfilled by it under this Agreement so that the transactions
contemplated hereby shall be consummated as soon as practicable. Each party also
agrees that it shall use its best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
this Agreement and the transactions contemplated herein.

8.15     FAXED COPIES

         For purposes of this Agreement, a faxed signature will constitute an
original signature.

8.16     SEVERABILITY

         The invalidity or unenforceability of any term, phrase, clause,
paragraph, restriction, covenant, agreement or other provision of this Agreement
shall in no way affect the validity or enforcement of any other provision or any
part thereof.

8.17     INTERPRETATION

         Words importing the singular number only shall include the plural and
vice versa, words importing the masculine gender shall include the feminine and
neuter genders and words importing persons shall include firms and corporations
and vice versa. For purposes of this Agreement the word `person' includes
individuals, corporations, limited partnerships, general partnerships, joint
stock companies, joint ventures, associations, companies, trusts or other
organizations, whether or not legal entities.

8.18     PRESS RELEASES

         Prior to the making, issuance or dissemination of any publication,
presentation, public announcement or press release which includes the name of a
Buyer the Company shall obtain the Buyer's prior written consent. The Company's
disclosure of the name of Buyer in accordance with its obligation under the
Securities Exchange Act of 1934, as amended, shall not be deemed to be a
violation of this Section 8.18.

         IN WITNESS WHEREOF, the corporate parties hereto have caused this
Agreement to be executed by their respective officers, hereunto duly authorized,
as of the date first-above written.

MED-EMERG INTERNATIONAL INC.

----------------------
By:
Title:
I have authority to bind the company.

<PAGE>
                                       28

<TABLE>
<CAPTION>

NAME OF BUYER                               ADDRESS
<S>                                         <C>

Sinclair Montrose Trust Ltd.                SMT, 9 Mandeville Place, London, W1V 3AT, UK

---------------------
By:
Title:
I have authority to bind the company.

                                            Flat 6, 11 Hyde Park Garden, London  W2 2LU, UK
---------------------
Sidney Braun

                                            21 Har Dafna Street, Savyon, Israel
---------------------
Koby Ofek

BXR1 Holdings Inc.                          175 Bloor Street East, South Tower, Suite 705, Toronto, Ontario M4W 3R8

---------------------
By:
Title:
I have authority to bind the company.

Walt & Co. Inc.                             152 Bradgate Drive, Thornhill, Ontario L3T 7L8

---------------------
By:
Title:
I have authority to bind the company.

                                            175 Bloor Street East, South Tower, Suite 705, Toronto, Ontario M4W 3R8
---------------
Lillian Brachfeld

                                            254 Warren Road, Toronto, Ontario, M4V 2S8
---------------
David Kassie

                                            4, Dov Hausner Street, Tel Aviv, Israel
----------------
Yosi Pinson

                                            49 Kensington Court, Suite 6, London W8 5DB, UK
----------------
Eastkings RBS

                                            5 St. Mary Abbots Place, 1st Floor, London W8 6LS UK
----------------
David Frost RBS

                                            6, Rue de Hesse, 1204 Geneva Switzerland
----------------
Albert Azoulai

</TABLE>

<PAGE>
                                       29

<TABLE>
<CAPTION>

NAME OF BUYER                               ADDRESS
<S>                                         <C>

                                            26, Hazayit Street, Tel Mond 40600, Israel
---------------
Avi Gabbay

                                            8, Zartizky Street, Tel Aviv, Irael
----------------
Yigal Solomon

                                            5, Meridor Street, Tel Aviv 62411, Israel
----------------
Amir Yorav

                                            PIM Ltd., 15 St. James's Place, London SW1A 1NP, UK
----------------
David Morrisson

                                            Brooms, Langley Lower Green, Saffron Walden CB11 4SB, UK
----------------
Andrew Fearon

                                            Serge Hill, Serge Hill Lane, Bedmond, Hertfordshire WD5 0RY, UK
----------------
Kate Docherty

                                            4a, Maor Margalit Street, Tel Aviv 69401, Israel
-----------------
Yoav Shnitzer

                                            84a, Azar Street, Kfar Saba, Israel
-----------------
Ran Artzi

The Holding Co.                             Unit 2, Finchley Ind. Center, 879 High Road, North Finchley, N12 8QA, UK

----------------
By:
Title:
I have authority to bind the company.

</TABLE>

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