Document:

ex106.htm

     

    EXHIBIT
10.6 

     

    SECOND MICRODEL AGREEMENT OF
JUNE 2009

     

    Pre-offering
Agreement – Baby’s Breath – Microdel

    This
agreement is not binding until signed by all parties

    

    Document of
Principles

    Made
and executed in Tel Aviv on June 24, 2009

    

    Between:                         Baby’s Breath,
Ltd.

    Company No. 51307694
(hereinafter, “The
Company”)

    Of
4 Hahadas Street, P.O. Box 42, Orr Akiva

    (Hereinafter,
“The
Company”)

    The first
party;

    And
between:                         Microdel, Ltd.

    Company No. 513577874
(hereinafter, “Microdel”)

    Of
2 Ben-Gurion Street, Ramat Gan

    (Hereinafter,
“Microdel”)

    The second
party;

    

    Whereas

     

    
      	
              (A)

            	
              An
      agreement for investing in the Company was signed between the parties on
      April 1, 2007 (hereinafter “the Primary
      Agreement”);

            

    

     

    
      	
              (B)

            	
              And
      Microdel is in the midst of actions the purpose of which is to raise funds
      for the Company, primarily by establishing a new company in the USA
      (hereinafter, “the
      Offered Company”), which will own all of the Company’s share
      capital (the shareholders of the Offered Company were, on the eve of the
      stock issue, identical to the shareholders in the Company on the eve of
      the stock issue) and whose shares will be registered for trading “over the
      counter” on the NASDAQ exchange in the United States where the source of
      the vast majority of the issue funds shall be from institutional entities
      in the USA which will invest sums of money in the Offered Company of at
      least USD 3 million according to a company value, prior to the money, of
      USD 12 million (hereinafter, “the Offering”), and
      which will be used to enable the Company to continue with its ongoing
      activities;

            

    

     

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
      	
              (C)

            	
              And
      the parties are interested in setting forth in writing their agreement in
      principle regarding the Offering process, its financing, and the
      significance derived therefrom following its success or in the event, God
      forbid, of its failure.

            

    

    

    
      	 
      	
              Therefore the parties have agreed and stipulated
      as follows:

            

    

     

    
      	
              1.  

            	
              The
      preamble to this agreement shall constitute an integral part
      thereof.

            

    

     

    
      	
              2.  

            	
              Total Investment by Microdel in the
      Company

            

    

     

    
      	 
      	
              The
      Parties hereby agree that the total monies (in money and monetary
      equivalent) that Microdel shall invest in the Company, as of the date upon
      which this Agreement is signed, shall be the sum of USD 314,000
      (hereinafter, “Microdel’s
      Investment Sum”).  Microdel’s Investment Sum includes USD
      100,000 for moulds whose production was funded by Microdel and which are
      located overseas.  Microdel undertakes to see to it that the
      Company is provided with undamaged and usable moulds within 90 days of the
      signing of this contract, pursuant to which the investment sum of USD
      100,000 shall be credited to Microdel.  In the event the moulds
      referred to in the Primary Agreement shall arrive from overseas damaged,
      or fail to arrive by the date noted above, then the sum of USD 100,000
      shall be deducted from Microdel’s Investment Sum and the number of
      unconditional shares, as described below, to which Microdel would be
      entitled to receive in the Company and in the Offered Company (in the
      event the Offering is successful) shall be reduced
      accordingly.  In any event the number of unconditional shares
      according to this paragraph shall be updated prior to the actual
      Offering.

            

    

     

    
      	
              3.  

            	
              Microdel’s Shares in the
      Company

            

    

     

    
      	
              3.1.  

            	
              In
      exchange for Microdel’s Investment Sum in the Company, Microdel shall be
      entitled to a number of shares of stock such that, according to the
      Primary Agreement, it shall be entitled to 1,878 ordinary shares in the
      Company, following the formulation of the Company’s Articles of
      Incorporation and once all the Company’s shares have become ordinary
      shares with equal rights according to the resolution to equalize the share
      rights, as described below in section 6.1.1.  Since Microdel has
      undertaken to assume all of the Offering expenses (except for the
      Company’s conditional participation sum, as understood below), 1,503
      ordinary shares shall be deducted in advance from this number of shares,
      which reflects an investment in the Company of USD 150,000 based on a
      company value of USD 4.5 million, shares that are to be allocated to the
      private investors as this is understood below; such that Microdel shall
      receive an allocation from the Company, subject to the provisions of
      section 2 above, of 75 ordinary shares (hereinafter, “the Unconditional
      Shares”).

            

    

     

     

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

     

    
      	
              3.2.  

            	
              If
      the Offering is successful the Company hereby agrees to allocate to
      Microdel 9,166 additional shares in the Company (hereinafter, “the Conditional
      Shares”), the quantity of which shall be calculated according to
      the principles of the Primary Agreement.  The Conditional Shares
      shall be allocated in fact following a process to equalize the rights of
      the Company’s shares, as described below, and shall be held in trust by
      Adv. Yaniv Shekel
      (hereinafter, “the
      Trustee”).  The number of Conditional Shares shall also
      include an investment in the amount of USD 10,000 per month (for the
      period between April 2009 and the end of November 2009, that is, the sum
      of USD 80,000), which Microdel has undertaken to invest in the Company for
      its current activity as stated below in section 8.  The Parties
      hereby give irrevocable instructions to the Trustee to act as follows with
      regard to the Conditional Shares:

            

    

     

    
      	
              3.2.1.  

            	
              Should
      the Offering succeed – The Trustee shall transfer the Conditional Shares
      to Microdel.

            

    

     

    
      	
              3.2.2.  

            	
              Should
      the Offering fail – The Trustee shall transfer the Conditional Shares to
      the Company’s current shareholders (at the time this contract is signed,
      except for Microdel) in exchange for NIS 0.01 per share, in accordance
      with the relative share of the current shareholders in the Company’s
      shares, such that this share shall be calculated among the present
      shareholders (except for Microdel), among
  themselves.

            

    

     

    
      	
              3.2.3.  

            	
              For
      the purpose of above the “Success of the
      Offering” means – Fulfillment of all conditions below as of the
      final date, as understood below – establishment of the Offered Company,
      raising of funds for the Offered Company of at least USD 3 million (but
      not to exceed USD 5 million with a company value, prior to the funding, of
      USD 12 million) and registration of the shares of the Offered Company for
      trading over the counter on the NASDAQ exchange in the USA, where the
      source of the vast majority of the issue funds shall be from institutional
      entities in the USA which will invest sums of money in the Offered
      Company

            

    

     

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	 
      	
              “Failure of the
      Offering” means – Non-fulfillment of all of the components of the
      “Success of the Offering” by the final date.  It is hereby
      clarified that fulfillment of some of the conditions for the Success of
      the Offering shall be considered as Failure of the
    Offering.

            

    

     

    
      	 
      	
              “Current Shareholders”
      means – Assaf Halamish, Dr. Israel Amirav, Dr. Michael Neuhaus, Prof.
      David Grusher, GPI Granot Project Development, Ltd., Life Support, Ltd.,
      Ramport, Ltd.

            

    

     

    
      	
              3.2.4.  

            	
              Microdel
      shall not be entitled to request any relief against the Trustee, including
      neither an order to act nor an order to desist from acting, and Microdel
      undertakes not to petition the courts with a motion and/or an appeal
      seeking to prevent the transfer of the Conditional Shares from the Trustee
      to the Current Shareholders in the event of the Failure of the
      Offering.  Furthermore, and without derogating from the
      generality of the above, Microdel shall not be entitled to prevent the
      transfer of the Conditional Shares from the Trustee to the Current
      Shareholders for any reason whatsoever, including a claim against the
      Current Shareholders and/or against the Company and/or its officers, and
      in any event of a Failure of the Offering, whatever the reason and whoever
      may be at fault, the Conditional Shares shall be transferred to the
      Current Shareholders as stated above without Microdel having any dispute
      and/or claim in this regard towards the Company, its shareholders, its
      managers and officers.

            

    

     

    
      	
              3.2.5.  

            	
              Voting rights of holders of the
      Conditional Shares – Notwithstanding the provisions contained in
      the Company’s Articles of Incorporation, it is hereby agreed that during
      the interim period (that is, the period until the final date, as
      understood below), in any case where a vote is needed by virtue of the
      Conditional Shares at a general meeting of shareholders, the Trustee shall
      vote by virtue thereof provided the Conditional Shares are held by him, in
      accordance with a document signed by holders of most of the shares held by
      the Current Shareholders (except for Microdel), (hereinafter, “Voting Order”), and the
      parties hereby irrevocably instruct the Trustee to vote by virtue of the
      Conditional Shares in accordance with the Voting Order that shall be given
      as stated.  During the interim period, and provided the
      Conditional Shares as held by the Trustee shall not endow him the right to
      appoint a director to the Company’s board of directors.  Only
      after the Conditional Shares have been transferred to Microdel (following
      the Success of the Offering) or to the Current Shareholders (following the
      Failure of the Offering) as relevant, shall the holders of the Conditional
      Shares enjoy all of the rights endowed to those shareholders according to
      the Company’s Articles of
Incorporation.

            

    

     

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	
              3.2.6.  

            	
              Should
      the Offered Company be established, the Trustee shall hold in trust that
      quantity of Conditional Shares in the Offered Company, and all of the
      provisions above and below shall also apply, mutatis mutandis, to
      the Conditional Shares in the Offered
Company.

            

    

     

    
      	
              3.2.7.  

            	
              In
      any event, should the Trustee fail to act in accordance with the above the
      Company shall be entitled, without derogating from any other relief that
      may be available to the Current Shareholders, to forfeit the Conditional
      Shares and turn them into deferred shares without rights; and Microdel
      hereby gives its irrevocable consent to this procedure should the
      Company’s board of directors and Current Shareholders decide, by a
      majority, to take such measures.  It is hereby agreed that
      Microdel and its board of directors, as relevant, shall be prohibited from
      voting at the general meeting and at the Company’s board of directors
      regarding any decision that relates to the forfeiture of the Conditional
      Shares or their being turned into deferred
  shares.

            

    

     

    
      	
              3.2.8.  

            	
              A
      table of Company shares that includes the Unconditional Shares and the
      Conditional Shares is attached to this Agreement as “Appendix 3.2.8” and is
      an integral part thereof.

            

    

     

    
      	
              3.3.  

            	
              It
      is hereby agreed by the Parties that in the event of the Success of the
      Offering such that the Company’s issued shares are released to Microdel,
      and in the event that Microdel’s actions according to this Agreement shall
      be subject to VAT (paying attention to the nature of Microdel’s activities
      and the residence of the Offered Company), the Company shall indemnify
      Microdel pursuant to the said VAT from the Offering monies, provided that
      the Company shall be entitled to a reimbursement for Input Tax from the
      VAT Authorities in a manner that does not cause a monetary loss and in
      such a manner that the Company shall not have to pay this amount using any
      interim funding whatsoever.

            

    

     

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	
              4.  

            	
              Time
Table

            

    

     

    
      	 
      	
              The
      Company, through Microdel, shall act to the best of its ability to ensure
      that the Offering comes about by no later than November 31, 2009
      (hereinafter, “the Final
      Date”).  If the Offering is not completed by the Final
      Date and the Company’s shares are not registered for trade by the Final
      Date, but the American attorney whose services are being used for the
      purpose of the Offering shall affirm in writing, prior to the Final Date,
      that there is significant progress being made to promote the Offering and
      that he needs a bit more time, not to exceed two months, in order to
      complete the process while noting in his letter that it is almost certain
      that the Offering shall be completed within that period of time, then the
      Company shall agree to extend the Final Date for additional period of up
      to two months, provided that Microdel shall continue to fund the Company’s
      current activity as stated in section 7 below.  In the event of
      an extension as stated, the Final Date shall occur at the end of the
      extended period which shall be, in any event, not later than January 30,
      2010.  The board of directors shall be permitted, but not
      required, to extend the Final Date beyond January 30, 2010, provided that
      the decision pursuant to extending the Final Date beyond January 30, 2010
      is passed with a majority of 85% of the votes cast by the Company’s board
      of directors, wherein the directors appointed by Microdel shall be
      excluded from voting on this matter.  Failure to extend the
      Final Date shall not be considered, in any case, as an unreasonable
      decision and/or for unreasonable cause, and the failure to pass this
      decision shall not entitle Microdel and/or any other entity (including the
      private investors, the consultant, the employees and service providers who
      were hired ahead of the Offering) to any compensation
      whatsoever.  Should the Company not decide to extend the Final
      Date beyond November 30, 2009, then the Company undertakes not to use the
      services of the present offering consultant for a period of 9 months from
      the Final Date, unless it has received authorization for this from
      Microdel.

            

    

     

    
      	
              5.  

            	
              Offering
Expenses

            

    

     

    
      	
              5.1.  

            	
              Microdel
      undertakes to assume all of the Offering expenses, without
      exceptions.  Notwithstanding the above, following the Success of
      the Offering the Company shall assume the expenses that are conditioned
      upon the Success of the Offering, as understood
  below.

            

    

     

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	
              5.2.  

            	
              Since,
      when calculating the number of Unconditional Shares, all of the Offering
      expenses were taken into account, including expenses for consultants,
      attorneys, accountants, underwriters and other entities involved in the
      Offering process (and including expenses not in cash but through the
      offering of additional shares to entities involved in the Offering process
      and including costs for personnel the Company shall hire or did hire for
      its current activity until the date of Offering in the amount of USD
      150,000), then these expenses shall be paid by the Company provided that
      Microdel made sure that these monies were deposited, before assuming any
      undertaking towards these service providers, in a special account to be
      opened by the Company for this purpose and which shall be entirely
      dedicated to making these payments and for the purpose of continuing to
      finance the Company’s activities as specified in section 8 below
      (hereinafter, “the
      Special Account”).  It is hereby clarified that the
      Company shall not assume the Offering expenses in amounts that exceed
      those deposited for this purpose in the Special Account; and in any case
      where the Company shall assume any undertaking towards a third party at
      Microdel’s request, then Microdel shall indemnify the Company pursuant to
      any sum the Company shall be required to pay by virtue of this undertaking
      beyond the sums held in the Special
Account.

            

    

     

    
      	
              5.3.  

            	
              It
      is hereby agreed by the Parties that payment of the Offering expenses as
      described in section 5.1 above shall be executed only from different
      monies received from private investors and/or from Microdel prior to the
      Offering (provided that the sums received from private investors [as
      defined below] and from Microdel prior to the Offering shall be deposited
      into the Special Account).  If the monies from the private
      investors are insufficient to pay the said expenses, Microdel shall assume
      the expenses without the Company being required to reimburse these
      amounts, whether the Offering takes place or not for any reason
      whatsoever, and without these expenses being considered as Microdel’s
      investment in the Company and without Microdel being entitled to receive
      pursuant thereto holdings in the Company and/or rights and/or benefits of
      any kind.  Regardless of the above – if, following payment of
      the Offering expenses and any other payment that Microdel has undertaken
      to pay according to this contact, there remain any monies in the Special
      Account after the Offering and following payment of all the payments
      involved in the Offering procedure and provided that the Offering was
      successful – these monies shall revert to
  Microdel.

            

    

     

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	
              5.4.  

            	
              Since
      certain expenses pursuant to the Offering must be paid from the Company’s
      account and against the Company’s undertaking to pay them (for example,
      the American attorney Microdel selected to lead the offering process,
      payment of fees related to the Offering, and so on), and therefore the
      number of Unconditional Shares was reduced accordingly as if Microdel had
      assumed these expenses (up to the sum of USD 150,000) – it is hereby
      agreed that the Company shall undertake to make these payments only on
      condition that the undertaking monies are deposited beforehand by Microdel
      or by the private investors, as defined below, in the Special
      Account.  Up until the Final Date, Microdel’s representative
      shall have the right to sign on the Special Account together with the
      Company’s authorized signatories (as a second
      signature).  Following the determining date this signatory right
      shall become void and in the event of the Failure of the Offering the
      Company shall be entitled to use the monies in the Special Account for its
      own purposes, as it shall see fit, unless the provisions as stated in
      section 13.1 and/or 13.2 shall apply.  Should the Offering be
      successful and all debts to third parties pursuant to the Offering process
      are paid, the balance of the monies in the Special Account shall revert to
      Microdel, as stated in section 5.3
above.

            

    

     

    
      	
              5.5.  

            	
              Since
      it might become necessary to open an account in the USA on behalf of the
      Offered Company for the purpose of the Offering and to receive the
      Offering monies, should the opening of such an account be required the
      account shall be opened such that the signature rights therein shall be
      the same as those of the Special Account, as specified in section 5.4
      above.  Should the Offering be successful the signature rights
      to the said account shall be changed such that they shall be similar to
      the signature rights as determined by the Offered
  Company.

            

    

     

    
      	
              5.6.  

            	
              In
      the event the Company undertakes, at Microdel’s request, contractual
      obligations for payments connected with the Offering (and shall do so only
      provided the undertaking monies are deposited beforehand by Microdel in
      the Special Account), and should these undertakings exceed the sums that
      were planned between the parties and which served as a basis for
      calculating the number of Unconditional Shares (or if the monies in the
      Special Account shall be insufficient to pay these undertakings), then
      Microdel undertakes to pay the Company any amount the Company will be
      required to pay as stated, immediately upon the Company’s request, unless
      the Offering is successful, and up to a sum that shall not exceed USD
      80,000 to be paid, out of monies received as a result of the Offering, to
      various service providers the payment of which is contingent upon the
      Success of the Offering and which shall be paid by the Company out of the
      Offering monies and not from the monies in the Special Account; in the
      event of the Success of the Offering (hereinafter, “Participation Sum Contingent
      Upon the Success of the Offering”).  For this purpose,
      the “Success of the Offering” shall have the meaning ascribed in section
      3.2.3 above.  It is clarified that the Participation Sum
      Contingent Upon the Success of the Offering shall be paid by the Company
      only if the Offering is successful, and not under any other
      circumstances.

            

    

     

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      	
              6.  

            	
              Allocation of Company Shares and Changing the
      Articles of Incorporation

            

    

     

    
      	
              6.1.  

            	
              As
      a precondition for the Offering process, the minimum number of
      shareholders in the Company prior to the Offering must be 40 shareholders,
      and the Company’s shares must be uniform and with equal
      rights.  As part of the Offering process, in order to “vet” the
      Company ahead of the Offering and so as to enable the Company to pay some
      of the payments pursuant to the Offering that must be paid from the
      Company account, Microdel “enlisted” and is expected to enlist, several
      private investors, each one providing several thousand dollars, who have
      agreed to invest sums of money in the Company (hereinafter, “the Private Investors”)
      for a total sum of about USD 150,000 (hereinafter, “the Investment Sum of the
      Private Investors”).  For this purpose the Parties have
      agreed as follows:

            

    

     

    
      	
              6.1.1.  

            	
              Immediately
      upon the signing of this agreement the Company shall adopt a special
      resolution to change its Articles of Incorporation and to turn all of the
      Company’s shares into ordinary shares with equal rights (hereinafter,
      “the Resolution to
      Equalize the Share Rights”) and the Special Resolution shall
      include a provision to change Article 32(a) of the Company’s Articles of
      Incorporation dealing with the shareholders’ right to refuse to purchase
      the shares of another member, such that this right shall obligate every
      shareholder to first offer his shares to those holding at least 5% of the
      Company’s allocated capital such that the “offerees” according to this
      provision shall only be those holding at least 5% of the Company’s
      allocated capital.  Microdel knows that the said resolution is a
      special decision whose adoption requires a qualified majority at a general
      meeting of the Company’s shareholders.  Immediately upon signing
      this contract the Company’s board of directors shall convene a general
      meeting of shareholders, whose agenda shall include the adoption of the
      said Special Resolution.

            

    

     

     

    
      	
              6.1.2.  

            	
              Immediately
      following the adoption of the said Resolution to Equalize the Share
      Rights, if adopted, Microdel shall instruct the Company, in writing, to
      allocate to each one of the Private Investors a quantity of Company shares
      in exchange for the investment sum that shall be indicated in Microdel’s
      written instruction, provided that the sum of all the shares allocated to
      the Private Investors against the investment of USD 150,000 shall not
      exceed the number of shares deducted from Microdel in order to calculate
      the number of Unconditional Shares.  It is hereby clarified and
      agreed that shares allocated to the Private Investors against the
      Investment Sum of the Private Investors shall be deducted in advance from
      the number of Unconditional Shares such that the number of Unconditional
      Shares shall be calculated according to the shares that were expected to
      be allocated to the Private Investors.  It is agreed that since
      the monies from the Private Investors were designated, among other things,
      to help finance the various Offering costs, then:  (1) All of
      the investment monies from the Private Investors shall be placed into the
      Special Account;  (2) An investment agreement shall be signed
      with every Private Investor, the uniform wording of which shall be
      acceptable to the Company;  (3) At least 66% of the number of
      Private Investors, as part of the investment agreement with them, shall
      sign an irrevocable power of attorney authorizing the other shareholders
      as their proxy to vote at the Company shareholders’ meeting (such that all
      of the Private Investors together shall be represented by no more than 10
      representatives, including the investors themselves); and instructions to
      the Company to invite to the shareholders meetings the proxy, and that the
      proxy’s address shall be considered as the investor’s
      address.  The power of attorney shall be valid until the
      Offering, and even afterwards in the event of the Failure of the Offering,
      so long as the Private Investors and/or their transferees are shareholders
      in the Company.  If the Offering is successful the private
      investors shall be entitled to rescind the power of
    attorney.

            

    

     

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
      	
              6.1.3.  

            	
              Before
      adopting the Resolution to Equalize the Share Rights, an agreement shall
      be signed between all of the Current Shareholders in the Company,
      including Microdel, arranging the manner in which future dividend payments
      shall be divided among the Current Shareholders and which will coordinate,
      insofar as this is possible, their rights in Company class A and class B
      shares.  The agreement shall include, inter alia,
      instructions according to which the entire Company and/or its shareholders
      shall not be permitted to force upon a Current Shareholder (as defined in
      section 3.2.3 above) an order, according to which he would be subject to a
      contractual lock-up period on his shares beyond the lock-up period
      required by American law and by virtue of provisions of the Israeli income
      tax ordinance; and that all of the shares of every Current Shareholder in
      the Offered Company shall enjoy the same “registration rights” as those
      enjoyed by the shares allocated to the institutional investors and the
      shareholders to whom Company shares were allocated as part of the
      Offering.

            

    

     

    
      	
              6.1.4.  

            	
              Furthermore,
      the agreement between the shareholders noted above shall include an order
      according to which the Current Shareholders, with the exception of
      Microdel, shall be obligated towards GPI Project Development, Ltd.
      (hereinafter, “the
      Incubator”) as follows:

            

    

     

    
      	 
      	
              (1)

            	
              Insofar
      as a restriction applies on registering the Incubator’s shares for trading
      and/or their sale (similar to the lock-up period under American law)
      following the Offering (should this occur), then the Incubator’s shares
      shall be registered for trade at the first opportunity in which the
      Company shares of the other shareholders are registered following the
      termination of the said
restriction.

            

    

     

    
      	 
      	
              (2)

            	
              Notwithstanding
      the provisions of section (1) above, the Current Shareholders (except for
      Microdel) shall undertake towards the Incubator that so long as there is a
      restriction on the number of shares that can be registered for trade as
      part of the Offering so that not all of the Current Shareholders can be
      registered for trade, then the Current Shareholders (except for Microdel)
      shall waive their right to register their relative portion of their shares
      for trading and will allow the Incubator to register all of its shares for
      trading before they register their own shares for trading.  The
      waiver by the Current Shareholders (except for Microdel) among themselves
      shall be relative to the percentage of the holdings of the Current
      Shareholders (except for Microdel and the
  Incubator).

            

    

     

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    
      	 
      	
              (3)

            	
              Should
      a restriction apply in accordance with Israeli tax laws regarding the sale
      of the shares of the Current Shareholders (that is, a lock-up period that
      prevents them from selling their shares) and it isn’t possible to be
      released from this restriction in exchange for payment of the tax the
      Incubator shall be obligated to pay; or in the event the Israeli tax
      authority demands that each of the Current Shareholders shall be subject
      to restrictions it may impose as part of the “early approval” process,
      without exception and without enabling the Incubator to be “released” from
      this demand (even at the “cost” of its paying the tax, a demand to which
      the Incubator agrees); then, despite the fact that the Incubator is part
      of the aforementioned arrangement with the income tax authority, the
      provisions of sub-paragraph (1) and (2) above shall also apply in the
      event a restriction is imposed under Israeli tax
  laws.

            

    

     

    
      	 
      	
              (4)

            	
              The
      agreement outlined in this section above shall also apply in the event the
      Offering is carried out in a different format, using the services of the
      aforementioned Offering consultant as stated in section 10 below; however
      it shall not apply in the case of an offering or capital-raising that is
      not carried out through the said offering consultant and/or someone on his
      behalf, nor shall it apply to any other offering that might take place
      should the Offering referred to in this agreement not come to fruition and
      the Company shall decide to undertake a different offering
      procedure.

            

    

     

    
      	 
      	
              (5)

            	
              To
      remove all doubt, the rights of the Incubator according to this section
      shall apply even in a case in which, prior to the Offering, the Incubator
      transfers, subject to the provisions of the Company’s Articles of
      Incorporation, its shares in the Company to a third party and in the said
      case the third party transferee shall be entitled to rights under this
      section following the Offering (should it occur).  However, the
      said rights shall become void in the case where the shares are sold to a
      third party after the Offering.

            

    

     

    
      	
              6.1.5.  

            	
              The
      Company is aware of the shareholders’ agreement and undertakes to act to
      implement its provisions with regard to the relations between the Current
      Shareholders regarding the registration rights of the Company shares for
      trade and sale, as described above and in the agreement between the
      shareholders.

            

    

     

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    
      	
              6.2.  

            	
              It
      is hereby clarified that as part of the tax arrangement regarding the
      transfer of the shares of the Company shareholders to the Offered Company
      prior to the Offering process, there may be provisions that restrict the
      shareholders, including a two-year restriction on the sale of shares in
      the Offered Company, and a provision regarding the ownership of shares of
      shareholders in the Offered Company by the Trustee they appoint and who
      shall be responsible for the payment of tax in the event the shares are
      sold.  The Company shall act such that as part of the
      shareholders agreement described in section 6.1.3 above, the Current
      Shareholders shall agree to the provisions of the tax arrangement and
      these shall not be used as grounds for their disapproval of the Offering,
      and all subject to the provisions of section 6.1.4(3) regarding the
      Incubator.  This agreement is contingent upon the signing of the
      agreement between the shareholders as described above in section 6.1.3 and
      subject to the provisions of section 13.7
below

            

    

     

    
      	
              7.  

            	
              Hiring Personnel and Service Providers During the
      Interim Period (until the
Offering)

            

    

     

    
      	 
      	
              Subject
      to an undertaking by Microdel as described in section 8 below, and subject
      to the signing of an employment agreement that meets with the Company’s
      satisfaction, the Company agrees to act in order to fill the following
      positions and under the following
conditions:

            

    

     

    
      	
              7.1.  

            	
              The
      Company shall act to locate a director-general for the Company, whose
      identity and terms of employment (including the wording of the contract
      signed with him) shall be approved by the Company’s board of directors and
      who will work until the execution of the Offering, the scope of which
      shall be a part-time position.

            

    

     

    
      	
              7.2.  

            	
              The
      Company shall act to locate a Vice-president of Finances and a
      Vice-president of Technology, whose identity and terms of employment
      (including the wording of the contract signed with him) shall be approved
      by the Company’s board of directors and who will work until the execution
      of the Offering, the scope of which shall be part-time
      positions.

            

    

     

    
      	 
      	
              The
      aforementioned officers, as a condition of their employment, shall sign
      employment agreements that are worded and with conditions, including
      employment terms, that shall be approved by the Company’s board of
      directors after consulting with the Company’s legal
    advisor.

            

    

     

    
      	 
      	
              It
      is hereby clarified and agreed that the Company responded to Microdel’s
      request to engage these employees and to pay them their wages only on
      condition and provided that the provisions of section 8 below have been
      fulfilled, and in a manner such that the funding for the hiring of these
      employees until the Offering and/or until the Final Date (as extended, if
      extended) in the event the Offering fails to be executed, shall be
      financed by Microdel, whether from the investment monies that the Private
      Investors deposited into the Special Account in amounts that exceeded the
      Offering expenses that were not contingent upon the success of the
      Offering, which the Company imposed upon itself at Microdel’s request, as
      stated above; or whether from monies received for this purpose by the
      Company from Microdel (and which do not endow Microdel with the right to
      receive additional shares in the Company, whether the Offering shall be a
      success or a failure).

            

    

     

     

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    
      	
              7.3.  

            	
              The
      Company shall appoint service providers, at Microdel’s expense, as stated
      and under the conditions set forth in section 8.11 below, who will
      supervise the Offering process; and the contractual agreements shall
      include a provision that if the Offering process shall fail or cease for
      whatever reason whatsoever, the contractual agreements shall be terminated
      immediately.  The wording of the said contractual agreements
      with the services providers shall be authorized by Microdel and shall be
      approved by Microdel and by the
Company.

            

    

     

    
      	
              8.  

            	
              Continued Financing of the Company’s Ongoing
      Activities

            

    

     

    
      	 
      	
              Microdel
      hereby undertakes, absolutely and unconditionally, to finance the
      Company’s ongoing activity for the period until the Final Date (and
      extensions as described above, if extended) at the fixed monthly rate of
      USD 10,000 per month (hereinafter, “the Fixed Monthly
      Amount”).  Microdel shall deposit, at the signing of this
      contract, post-dated checks in the amount cited above, each check dated
      for the first of the month for the period between April 1, 2009 and until
      November 30, 2009.  (It is hereby clarified that should the
      Offering process be terminated for any reason prior to November 30, 2009,
      checks that have not been cashed that related to the ongoing financing
      pursuant to the period up until November 30, 2009 shall be returned, at
      Microdel’s request, to Microdel, and provided there are no financial
      obligations relating to these sums).  Furthermore, Microdel
      shall finance the cost of employing the personnel hired to work for the
      Company, as stated in section 7 above (hereinafter, “Amount of Funding for the
      Interim Period”).  The Amount of the Funding for the
      Interim Period may be covered by using the monies deposited in the Special
      Account from the funds invested by the Private Investors, provided that at
      any given time the balance in the Special Account shall be sufficient to
      cover all of the Company’s undertakings to third parties that are not
      contingent upon the outcome of the Offering.  It is clarified
      that sums that are paid by Microdel for the purpose of financing the
      employment of personnel hired in accordance with section 7 above pursuant
      to the period until the completion of the Offering shall not endow
      Microdel with the right to receive shares in the Company and the Company
      shall not be obligated to return it, and this amount shall be in addition
      to the minimum monthly sum of USD 10,000 as described above and in
      additional to ongoing financing as described below.  The sum of
      the Amount of Funding for the Interim Period (but not including funding
      for personnel and service providers hired as described in section 7
      above), provided it has been redeemed and paid, shall be considered as an
      investment by Microdel in the Company and shall entitle Microdel to
      Company shares in accordance with the principles of the Primary
      Agreement.  The Amount of USD 80,000 for Interim Funding for the
      period of April-November 2009 shall be taken into account as part of the
      Conditional Shares and shall not entitle Microdel to any additional
      shares.

            

    

     

     

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    
      	 
      	
              It
      is hereby clarified that financing for the Company’s ongoing activity
      during the period until the Offering date may exceed the monthly sum of
      USD 10,000.  Funding shall be carried out by Microdel and/or
      other shareholders.  In the event additional shareholders other
      than Microdel cannot be found to finance the Company’s activities,
      Microdel undertakes to finance the Company’s activities to the extent
      necessary in order to continue its operations on the one hand, and to
      ensure the success of the Offering on the other hand, provided that any
      expense funded by Microdel shall be part of the work plan until the
      Offering date.  This work plan shall be prepared by Microdel,
      the Company’s director-general and Golan
Gilead.

            

    

     

    
      	
              9.  

            	
              Appointing an Attorney and an Accountant to
      Execute the Offering and Changing the Composition of the Board of
      Directors, including the Chairman of the
  Board

            

    

     

    
      	
              9.1.  

            	
              The
      Company shall resolve, through the Company’s board of directors, to
      appoint Adv. Jerry Gruenbaum from the United State to serve as the
      attorney who will lead the company, and will sign a contract with him as
      appearing in Appendix
      “9.1” of this agreement, and provided that Microdel makes certain
      to deposit, in advance, the sum of USD 52,500 into the Special Account
      (including investment monies from the Private Investors), plus VAT as
      applicable under the law.

            

    

     

    
      	
              9.2.  

            	
              The
      Company shall resolve, through the Company’s board of directors, to
      appoint the firm of Gai, Goffer, Yahav, Guilman, Udem & Co. CPAs
      (hereinafter, “CPA
      Mario”) as the Company controller and the firm of HLB CPA Canada as
      the controller for the Offering; and if the Offering is completed
      successfully the total fee for its work on the Offering process shall be
      USD 35,000.  CPA Eitan Mond shall continue to serve as the
      Company’s accountant during the interim period until the Final
      Date.  It is hereby clarified that the agreement for payment of
      the fees for CPA Mario or any foreign accountant working on his behalf or
      assisting him in with the Offering shall be signed between the Company and
      the aforementioned CPAs, provided that the fee pursuant to the Offering
      process and which is not contingent upon the outcome of the Offering are
      first deposited into the Special Account by Microdel.  Microdel
      undertakes that until the sums of money needed to pay the CPA’s fees are
      deposited into the Special Account, it shall assume the payment of the
      fees (that are not contingent upon the outcome of the Offering) to the
      said CPAs, provided that the sum of the Company’s participation in the
      Offering expenses in the event of the success of the Offering shall not
      exceed the sum of the expenses that are contingent upon the success of the
      Offering.

            

    

     

     

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    
      	
              9.3.  

            	
              To
      the extent that this is within the Company’s power, the Company shall act
      such that the composition of the board of directors ahead of the Offering
      shall be changed and shall be as outlined in Appendix 9.3; and the
      Company, with the assistance of Microdel, shall act, as may be necessary,
      to change the composition of the board of directors and to appoint outside
      advisors to the board of directors.  The number of directors and
      outside advisors and their identity shall be agreed upon
      separately.

            

    

     

    
      	 
      	
              It
      is hereby agreed that in any event the appointment shall be made in
      exchange for a letter of agreement to serve as a director, which shall be
      signed by every said director and advisor.  Until the completion
      of the Offering the directors and the advisors shall not be entitled to
      receive any wages whatsoever.  The voting power of each director
      shall be as appears in the Company’s Articles of
      Incorporation.

            

    

     

    
      	
              9.4.  

            	
              The
      Company shall act so that its shareholders, in accordance with the powers
      granted by the Articles of Incorporation, shall appoint Mr. Yossi De Levie
      as chairman of the board of directors.  The Company’s board of
      directors shall be permitted, by an ordinary majority, to replace the
      chairman of the board.  The directors appointed by Microdel
      shall not participate in this vote.  Subject to the above
      provisions regarding the right of the board of directors to replace the
      chairman, it is hereby agreed that if the Offering does not go into effect
      the position of the chairman of the board shall become void and the board
      of directors shall appoint another chairman to replace Mr. De
      Levie.

            

    

     

    
      	
              9.5.  

            	
              Furthermore,
      so long as the Offering process remains unchanged, two directors shall be
      appointed to the Company’s board of directors as per Microdel’s request –
      Mr. Yossi De Levie and Mr. Alon Tzifroni, and this despite the fact that
      according to the Company’s Articles of Incorporation Microdel is not
      permitted to appoint two directors, but rather only one
      director.  It is clarified that the weight attributed to the
      votes of the two directors together shall be the same as the relative
      weight of the number of Unconditional Shares relative to the total number
      of Company shares allocated.  Should the Offering process fail
      Microdel’s right in this regard shall become void immediately, its
      directors shall cease to serve as such and Microdel shall be entitled to
      appoint directors in accordance with the Company’s Articles of
      Incorporation, and this shall be the case in the event the Offering is
      successful.  In the event the Offering is successful this
      section shall become void and the appointment of the directors shall be
      according to the Company’s Articles of
  Incorporation.

            

    

     

     

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    
      	
              10.  

            	
              Appointing the Offering
      Consultant

            

    

     

    
      	 
      	
              The
      Company’s board of directors shall resolve to appoint a company to
      represent Microdel (above and hereinafter, “the Consultant” or
      “the Offering
      Consultant”) and to consult and direct the Offering; and undertakes
      during the period of time until the Final Date not to contract with any
      other entity for the purpose of executing the Offering unless the Offering
      Consultant informs us that he is no longer handling the Offering process
      or in fact ceases to handle and/or promote the Offering, in accordance
      with an agreement to be approved by the Company’s board of directors and
      which shall include the provision that the Company shall not make any
      undertakings vis-à-vis the Offering Consultant whatsoever and shall not
      pay him a salary or grant him any benefit pursuant to his services, except
      for the issuing of shares of stock if the Offering is successful, and
      provided that these shares shall be less than the number of Conditional
      Shares as understood above.  Furthermore, the Company shall sign
      the agreement appointing the Offering Consultant for this period, whose
      formulation shall be approved by the Company’s board of directors and
      shall be subject to the provisions of this
  agreement.

            

    

     

    
      	
              11.  

            	
              Appointing the firm of Shekel and Associates as
      the Offering Attorney

            

    

     

    
      	 
      	
              The
      Company’s board of directors shall resolve to appoint the firm of Shekel
      and Associates as the attorney handling the Offering, provided that Adv.
      Shekel shall confirm in writing that his fee shall not be paid by the
      Company and the he shall not have any claim and/or dispute against the
      Company with regard to his fee.  The Company shall also appoint
      Adv. Lieor Schops from the firm of Ayal Shenhav and Company (hereinafter,
      “the Consulting
      Attorney”) as the attorney to advise the Company’s board of
      directors on all matters pertaining to the preparation and contents of the
      prospectus, and as an expert in public offerings in the United
      States.  In any case it is hereby agreed that the fee for Adv.
      Shekel and the Consulting Attorney shall be paid by Microdel, which shall
      be permitted to pay him from the Special Account provided that the Special
      Account shall actually have sufficient funds to cover all of the Company’s
      undertakings related to the Offering.  In the event that the
      Special Account does not have sufficient funds as stated, Microdel shall
      pay the fee for the Consulting Attorney, and any other expense related to
      the Offering process, from its own
sources.

            

    

     

     

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    
      	
              12.  

            	
              Approving
      the Business Plan and Arranging for Liability Insurance for the
      Officers

            

    

     

    
      	
              12.1.  

            	
              The
      Company undertakes to examine the business plan prepared by Microdel, to
      make any comments it may have and to approve it following its correction,
      as such correction may be required; to submit it to American funds and
      institutions once it has been determined that the information contained
      therein faithfully reflects the facts and the Company’s status and that
      its remarks and criticisms have been amended.  The Company shall
      be entitled to perform the said examination through the Consulting
      Attorney.  The parties have chosen the Consulting Attorney for
      this matter, and the scope of his employment shall be defined by the
      Company.  The Company’s representatives, including members of
      its board of directors, shall be permitted to contact the Consulting
      Attorney directly and to ask him for clarifications and answers to their
      questions.  The cost of the Consulting Attorney’s fee shall be
      paid by Microdel as stated in section 11 above out of the monies in the
      Special Account, provided that the Special Account shall actually have
      sufficient funds to cover all of the Company’s undertakings related to the
      Offering.  In the event that the Special Account does not have
      sufficient funds as stated, Microdel shall pay the fee for the Consulting
      Attorney, and any other expense related to the Offering process, from its
      own sources.   The Company shall make every effort to
      approve the business plan not later than June 18, 2009, provided this is
      possible in terms of the Company’s attorney and the Consulting
      Attorney.

            

    

     

    
      	
              12.2.  

            	
              The
      parties undertake to take out liability insurance for the officers, which
      will insure the liability of the Company’s officers including their
      involvement in the Offering process, in the amounts that are standard in
      these types of proceedings and in accordance with the opinion of the
      Consulting Attorney.  The policy will be issued upon approval of
      the Offering by the American Securities and Exchange Commission, and shall
      be a prerequisite for executing the offering.  The officers’
      liability insurance shall be issued by the Offering date in the amounts
      and with coverage as required by the Offering process as advised by the
      Consulting Attorney, and Microdel shall assume the costs of the said
      officers’ insurance until the Offering date from the monies deposited in
      the Special Account, provided that this account shall have sufficient
      funds to pay the expenses that are not contingent on the outcome of the
      Offering which the Company has undertaken to
  pay.

            

    

     

     

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    
      	
              13.  

            	
              General

            

    

     

    
      	
              13.1.  

            	
              The
      parties shall cooperate with each other for the purpose of executing the
      Offering; however, it is hereby agreed that the Company’s consent to
      cooperate with Microdel to execute the Offering does not constitute its
      consent to any demand that may be raised in the future by professionals
      hired and chosen by Microdel to direct the Offering and/or its consent to
      any demand that may be raised by the institutional
      investors.  Should the Company refuse to respond to a demand
      that may be raised in the future, even if such refusal should impede the
      execution of the Offering, Microdel shall not be entitled to any relief
      whatsoever against the Company, its officers and/or its shareholders; and
      these entities are aware that the risk regarding non-execution of the
      Offering is solely Microdel’s.  Nevertheless, it is hereby
      agreed that the Company shall not refuse to respond to future demands on
      unreasonable grounds.  It is hereby clarified that even if the
      arbitrator shall determine that the board of directors refused Microdel’s
      demand on unreasonable grounds, the only relief that Microdel shall be
      entitled to receive, as final and exhaustive relief, shall be against the
      Company only, according to which the sums actually paid by Microdel to
      third parties (less a sum of USD 55,000 by which the Company shall
      indemnify Microdel pursuant to its participation in the cost of the
      Offering Consultant as stated in section 13.3, to the extent the said
      amount is paid as indemnification in accordance with the terms of the said
      section), but not more than USD 80,000 for the purpose of executing the
      Offering, shall be calculated as the sum of its investment in the Company;
      and in exchange for this sum, Microdel shall be entitled to shares in the
      Company in accordance with the key set forth in the Primary
      Agreement.  It is clarified that the aforementioned shall not
      constitute accepted compensation but rather a limitation on the Company’s
      liability in the event it is decided that the response by the Company’s
      board of directors to Microdel’s demands regarding the Offering process
      were not reasonable or logical.  Moreover, in addition to the
      said offering of shares, Microdel shall be entitled to withdraw in such a
      case the funds remaining in the Special Account beyond those unconditional
      amounts the Company undertook to pay to third parties (monies in the
      Special Account earmarked to cover the Company’s undertakings to third
      parties shall not be returned to Microdel).  The abovementioned
      in this section is the final relief available to Microdel subject to the
      provisions of section 13.3 below.  In any case and in no case
      shall Microdel have any claims or disputes against members of the board of
      directors or the Company’s
shareholders.

            

    

     

    
      	
              13.2.  

            	
              In
      the event the Offering process does not result in an offering by the Final
      Date, for any reason whatsoever, Microdel shall pay all of the Offering
      expenses, without exception, beyond the sums deposited in the Special
      Account; and shall indemnify the Company for any claim brought against it
      in connection with undertakings assumed by the Company, at Microdel’s
      request, to pay sums related to the Offering process (beyond the sums
      found in the Special Account).  In such a case Microdel shall
      have no claims and/or demands against the Company and/or against any of
      its offers, except as stated above in this sub-section; and Microdel shall
      not have any right to invest monies in the Company in exchange for shares
      of Company stock.  The Primary Agreement will be terminated, the
      Conditional Shares will be transferred by the Trustee to the Current
      Shareholders (except for Microdel) as stated above in section 3.2 and
      Microdel shall be entitled to continue to own only the Unconditional
      Shares.  And all of these stipulations are subject to the
      provisions of section 13.1 above and section 13.3 below – reliefs Microdel
      may receive from the Company only in the cases described in the said
      sections.  Beyond the reliefs described in these sections,
      Microdel shall have no right to any relief vis-à-vis the Company; with
      regard to its officers and its shareholders, Microdel shall not have the
      right to any relief whatsoever, in any
case.

            

    

     

     

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    
      	
              13.3.  

            	
              Notwithstanding
      the stipulations of section 13.2 above, in this section it is agreed that,
      subject to the fulfillment of Microdel’s undertakings in this agreement,
      including payment of the Funding for the Interim Period, in the event the
      Offering process is terminated because the Company’s board of directors
      initiates a decision to halt the process prior to the Final Date due to
      the Company’s desire to convert the Offering process into an alternative
      process to raise capital funding (hereinafter, “Initiated Termination due to
      Alternative Capital Raising”); or in the case where the Company
      deliberately obstructs the Offering process with a clear intention to
      thwart the Offering (hereinafter, “Deliberate
      Termination”), then the provisions of section 13.1 above shall
      apply (that is, additional shares will be issued to Microdel pursuant to
      the sums it actually paid to finance the Offering less the sum of USD
      55,000, up to a ceiling as specified in this sub-section, and the balance
      of the monies in the Special Account will be returned to Microdel
      regarding sums the Company did not undertake to pay to third parties);
      additionally, the company shall indemnify Microdel in the amount of USD
      55,000 in order to pay compensation to the Consultant.; and this
      compensation amount shall be paid, in the event of an Initiated
      Termination due to Alternative Capital Raising, only from the monies
      received through the said alternative capital raising.  The
      burden of proof in the event of a Deliberate Termination shall be a
      greater burden of proof and shall apply to Microdel, while hereby
      clarifying that only the objection of the Company and/or its officers
      and/or any of its shareholders to the demands that have been expressly
      agreed to in this contract, or new, inconsequential demands that are
      raised about the Offering that imply minor restrictions but which do not
      jeopardize at all, or jeopardize only slightly, the rights of the
      shareholders and/or the Company and which causes the termination of the
      Offering process – shall be considered a Deliberate
      Termination.  The amount of the compensation contained in this
      section shall be the final and exhaustive compensation, and except for
      this Microdel shall have no right to claim and/or right to relief of any
      kind vis-à-vis the Company and its officers.  This relief is a
      relief that Microdel is entitled to receive from the Company only, and not
      from its officers.  The provisions of this section replace any
      decision and/or undertaking and/or document, if any, relating to an
      undertaking for compensation to Microdel in the event the Offering process
      is terminated.

            

    

     

    
      	
              13.4.  

            	
              Microdel
      states that the institutional bodies that are slated to invest funds in
      the Offered Company have not raised any demands regarding the lock-up
      period that will apply to the shares of all the Current Shareholders in
      the Company, such that the lock-up period shall not extend beyond the
      period required by American law and the provisions of the Israeli Income
      Tax Ordinance, without any additional period of time.  Microdel
      further states that it has been made clear by the Consultant that the
      registration rights for the shares of the Current Shareholders in the
      Offered Company shall be identical to the registration rights of the
      institutional shareholders.

            

    

     

     

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    
      	
              13.5.  

            	
              In
      the event of a dispute regarding the interpretation, implementation or
      fulfillment of this agreement and any other matter related thereto, the
      parties are authorized to appoint an acceptable arbitrator to serve as
      sole judge.  In the event the parties cannot agree between
      themselves regarding the identity of the arbitrator within 14 days after
      either party requests to appoint an arbitrator, then the arbitrator shall
      be appointed by the chairperson of the Tel Aviv district of the Israel Bar
      Association after being contacted by either of the parties.  The
      arbitrator shall not be bound by the laws of evidence or the rules of
      procedure, and shall not be required to justify his ruling.  It
      is hereby clarified that the only relief to which Microdel is entitled
      vis-à-vis the Company shall be the reliefs cited in sections 13.1 and/or
      13.2 above, and that aside from realizing these reliefs Microdel shall not
      be entitled to any relief.

            

    

     

    
      	
              13.6.  

            	
              Microdel
      shall be entitled to decide at any time to terminate the Offering process,
      without the Company and/or any of its shareholders having any grounds for
      suit against Microdel or anyone it its behalf; provided that Microdel
      assumes all of the expenses, without exception, that were caused and may
      be caused to the company as a result of the Offering
    process.

            

    

     

    
      	
              13.7.  

            	
              Section
      6 of the Primary Agreement shall be voided, and upon signing this
      agreement, Microdel shall not have the right to invest any monies in the
      Company according to the Primary
Agreement.

            

    

     

    
      	
              13.8.  

            	
              Microdel
      knows that his agreement is contingent upon the signing of an agreement
      between the shareholders who agree, unanimously, to execute the Offering
      in the manner described in this agreement, and to the restrictions and
      impediments contained therein (hereinafter, “the Suspending
      Condition”).  Non-fulfillment of the Suspending Condition
      shall not constitute a breach of this contract by the Company and shall
      not entitle Microdel to any relief whatsoever; however, if the Suspending
      Condition is not fulfilled by June 30, 2009, this Agreement shall be
      considered null and void and the parties shall have not claims or demands
      one against the other in connection with the Offering
    process.

            

    

     

    And in witness thereof the
parties have affixed their signatures

     

    

    
      	 
      	 
      
	
              Baby’s
      Breath, Ltd.

            	
              Microdel,
      Ltd.

            

    

    

     

     

     

    

     

    
 

     

    

    20

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    

     

    
      
        
        

      

      
        
        

        
          

        

      

       

    

     

    

    
      Court
Square Building

      116 Court
Street, Suite 707

      New
Haven, Connecticut 06511

       

      
      

       

      
        	 888.760.7770
      Toll Free  	 Hedge Funds,
      Securities, Corporate,
	 203.222.9333
      Tel     	 Tax,
      International, Mergers and
	 203.226.8645
      Fax 	 Acquisitions
      and Related Matters
	 secattorneys.com   	  *           *           *

      

       

       

      April 23, 2009

       

      Sent by e-mail

       

      Yossi
DeLevi, 

      Chairman
Baby’s Breath Ltd Ha’hadas St. 

      Bldg #5
North Industrial Area 

      P.O.B
42

      Or-Akiva
30600, Israel

       

      Re: Legal Retainer for Taking
Company Public in the United States 

       

      Dear Mr.
DeLevi:

       

      This
letter sets forth our understanding whereby you have engaged this firm to
represent Baby’s Breath Ltd, an Israeli company, (the “Company”) in connection
with going public in the United States on the Over-the-Counter Bulletin Board
[OTC:BB] by our preparation and filing on your behalf a registration statement
on Form S-1 with the U.S. Securities and Exchange Commission (the “SEC”);
engaging a Market Maker and preparing the Form 15c-21 1, incorporating a parent
company in the United States under the name New-Air, Inc.; initial set-up with
the transfer agent, engaging a qualified Certified Public Accounting firm to
perform the audit, and all filings and EDGAR work (the “Matters”). In connection
with the foregoing, our understanding and agreement is as follows:

       

      
        	
                 
      

              	
                In
      connection with the foregoing, our understanding and agreement is as
      follows: 1. Included in our fee, we will:

                 

              

      

      
        	
                a.  

              	
                Draft,
      file and pay the fees to incorporate a parent company New-Air, Inc. in the
      United States, in the State of Delaware or Maryland (your
      choice).

                 

              

      

      
        	
                b.  

              	
                Provide
      you with a choice of at least three PCAOB qualified CPA firm to perform
      the audit of the company going public. You may choose one of these firms
      or may choose one of your own choices. The audit fees are to be negotiated
      between the Company and the audit firms and are not part of the services
      we provide.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        Yossi DeLevi,
Chairman

        Baby's
Breath Ltd.

        April 23,
2009

        Page
two

      

       

       

      
        	
                c.  

              	
                Draft
      the Form S-1, EDGARize the Form S-1, file and pay the fees with the SEC
      for registration up to $10,000,000 of
shares.

              

      

      
        	
                d.  

              	
                Setup
      and pay the initial costs for a licensed transfer
  agent.

              

      

      
        	
                e.  

              	
                Draft
      the Form 15c-21 1 and file through a registered Market Maker – probably
      Westminster Securities Corporation with the
  NASD.

              

      

      
        	
                f.  

              	
                Introduce
      the newly formed public companies to additional financing and provide the
      legal services required to undertake the outside financing as needed
      including PIPE, PPM and Option Plan Agreements for the newly formed
      companies.

              

      

      
        	
                g.  

              	
                On
      a best efforts basis we will assist you to prospect investors,
      underwriters, transfer agents, and Investor Relations/Public Relations
      companies.

              

      

      
        	
                h.  

              	
                We
      anticipate the time frame to complete the above services to be around six
      months.

              

      

       

      2. We will
undertake this Matter on a flat fee of $100,000. Such amount shall be payable as
follows: (i) $15,000 with the signing of this Agreement, (ii) $37,500 when the
S-1 is filed with the SEC and the 15c-21 1 is filed by the Market Maker and
(iii) $47,500 subject to and only when New-Air, Inc. has a trading symbol, is
listed on and is trading on the OTC:BB.

       

      3. At your
request, we may also undertake to represent you with respect to the ongoing
legal services and ongoing filing requirements for New Air, Inc. once you are
public, reporting and trading. These filings include the Form 10-Q for the three
Quarterly Reports, the Form 10-K Annual Report, the Form 8-K throughout the year
for Current Reports, as well as the various other miscellaneous reports
including the EDGAR filing services. We will undertake this Matter on a flat fee
of $50,000 per year.

       

      4. The fees
set forth above includes our out-of-pocket and incidental costs and expenses
such as photocopying, filing fees, computer research fees, messenger or express
delivery charges, EDGAR service fees and the like.

       

      5. This
Agreement shall be governed by the laws of the State of Connecticut and venue
for any action hereunder shall be in Fairfield County, Connecticut. In the event
there is a fee dispute, you may be entitled to have the dispute resolved through
arbitration in Fairfield County, Connecticut. Connecticut law shall
apply.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Yossi DeLevi,
Chairman

      Baby's
Breath Ltd.

      April 23,
2009

      Page
three

       

      If this
arrangement meets with your approval, please countersign in the space provided
below and return the countersigned letter to us as soon as
possible.

       

      Thank you
and we look forward to a successful working relationship.

       

       

      
        
          	 	
                  Very truly yours,

                   

                  SEC ATTORNEYS, LLC

                	 
	 	 	 	 
	
                	
                  By:
      

                	/s/ Jerry
      Gruenbaum	 
	 	 	Jerry
      Gruenbaum, Esquire	 
	 	 	
                	 
	 	 	 	 

        

         

        Agreed
and Accepted this 5th
day of July, 2009

      

       

       

      
        
          	 	 	 	 	 
	
                  /s/
      Yossi DeLevi

                	 	 	
                	 
	
                  Yossi
      DeLevi, Chairmanex1011.htm

    Exhibit
10.11

     

    Jerusalem,
25.3.01

    Approval:
26577

    Group
17

    Ministry
of Trade and Industry

    To:
Yozmot Technological incubator

    Granot
Industries, Hadera

    Granot
(Hefer) 38100

    

    Letter of
Acceptance as an Incubator project

    

    
      	
              1.  

            	
              We
      wish to inform you that the committee for technological projects has
      discussed your request from 08/11/00 to approve the annual program for
      research and development, and decided on 28/12/00 to approve the
      plan.

            

    

    
      	
              a.  

            	
              Subject
      of the Plan: A device for delivery of aerosol
  medication

            

    

    
      	
              b.  

            	
              Approved
      executor of the plan: Yozmot Technological incubator Granot Initiative
      center for research and development No.
  580204568

            

    

    
      	
              c.  

            	
              Expenses
      of the Research and development approved to carry out the approved will be
      up to an amount of 718300 Shekels (in words seven hundred and eighteen
      thousand three hundred shekels.

            

    

    
      	
              d.  

            	
              85%
      of research and development expenses approved is the amount of 610,555
      Shekels (hereinafter "the Grant")

            

    

    
      	
              2.  

            	
              The
      approval depends on the adherence to the regulations as determined by the
      office of the Chief Scientist and the Director for Industrial Research and
      Development in the matter of technological projects for Incubators and
      subject to the following:

            

    

    
      	
              a.  

            	
              The
      approved plan will be carried out as detailed in your request within a
      period of 12 months from 01/04/01 to 31/03/02 (hereinafter "the
      term")

            

    

    
      	
              b.  

            	
              (1)           You
      are obliged to notify the offices of the chief Scientist of any changes of
      25% or more in the company shares and / or one of the following means of
      control: (a) voting rights at general meetings of the company; (b) rights
      to appoint managers in the company; (c) rights to participate in profits
      of the company.

            

    

    
      
        	
                 

              	
                (2)
      Transfer of any percentage of the controls as defined in section 2b(1) to
      a foreign citizen or foreign company requires the prior approval of the
      research committee.

              

      

    

    
      	
              c.  

            	
              Additional terms:

              Terms
      for continuing to the second year:  presentation of the project
      to potential investors and reporting on their
  feedback.

            

    

     

    
      
        	 	 	 	 	 
	
                /s/
      Gideon Geva

              	 	 	
                /s/  Carmel
      Varnea

              	 
	
                Name:
      Gideon Geva

              	 	 	
                Name:  Carmel
      Varnea 

              	 
	
                Title:  Comptroller

              	 	 	
                Title:  Chief
      Scientist

              	 

      

    

     

                                                                          

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    

    Commitment
Document and notice of commencement of approved R&D plan at the Technology
innovation center

    

    
      	
              Subject:
      Delivery of Aerosol Medication

            
	
              File
      No: 29174

            
	
              Bank
      Account:
      880044             Bank:12
      Poalim             Branch:
      620

            
	
              Ref:
      Approval notice 257/07/2002

            

    

    

    We The
Yozmot Granot Technological Incubator

    (hereinafter
Yozmot) declare and agree as follows:

    

    
      	
              1.  

            	
              On
      01/09/2002 the approved R&D plan concerning the above was begun
      (hereinafter "the plan") according to the approval referenced document
      (hereinafter "the approval")

            

    

    
      	
               
      

            	
              The
      program will be carried out by Israel Amirav (hereinafter "the
      innovator")

            

    

    

    
      	
              2.  

            	
              We
      are aware that the grant approved in the approval will be paid in
      accordance with the terms of the  approval and the following
      conditions:

            

    

    
      	
              a.  

            	
              The
      agreement for carrying out the R&D project as an incubator project
      signed by us with the State of Israel on 01/06/2002 will be fully legally
      upheld in accordance with the terms and is an integral part of this
      commitment.

            

    

    
      	
              b.  

            	
              The
      attached budget framework, in all its terms details and inclusions is
      binding. Additional expenses that are beyond this framework will not be
      recognized, unless approved by the Manager for Industrial Research
      (hereinafter "the center").

            

    

    
      	
              c.  

            	
              The
      program will be carried out at the Innovation center by a group of
      researchers to be organized and registered as a company, within one year
      of date of commencement.(hereinafter "the
  developer").

            

    

    
      	
              d.  

            	
              At
      least 50% of those employed by the Innovation center while carrying out
      the project must be new immigrants.

            

    

    
      	
              e.  

            	
              The
      researchers of the Developer who are not part of the project will be
      guaranteed at least 10% of ownership rights in the company to be set up by
      the Developer as described in section
2c.

            

    

    
      	
              f.  

            	
              Innovation
      center will receive a grant to carry out the program and shall keep the
      funds in a separate account in trust as defined by the Trust law of
      1979.

            

    

    
      	
              g.  

            	
              Innovation
      center will sign the agreement with the innovator, defining the
      relationship between them, and the rights and obligations of each party to
      carry out the project and commercialize the results. This agreement shall
      include a clause that the State of Israel is a third party to the
      agreement, meaning the Law of
Contracts.

            

    

    
      	
              h.  

            	
              Innovation
      center will be entitled to an advance payment for the project which shall
      not exceed 25% of the approved grant, provided that actual work on the
      project has begun, or to be paid in accordance with a financial
      report.

            

    

    
      	
              i.  

            	
              Any
      further payment will be made as against a detailed financial report as
      required by the Center and approved as being accurate by an authorized
      representative of the Innovation center. The payment will be made after
      the report has been verified by the Center. A financial report will be
      submitted to the Center at least once every three
  months.

            

    

    
      	
              j.  

            	
              A
      detailed technical report will be submitted to the Center at least once
      every 6 months.

            

    

    
      	
              k.  

            	
              The
      advance payment will be subtracted from the payments owing for the
      financial reports, except for 17% that shall remain as an ongoing
      advance.

            

    

    
      	
              l.  

            	
              All
      payments for the grant will be advance payments only, that until the final
      report is received and approved, as detailed in section
  m.

            

    

    
      	
              m.  

            	
              The
      final Financial report approved by the relevant authority at the
      Innovation center and the final Technical report of the project
      (hereinafter "the final reports") will be submitted not later than three
      months before the end of the program. The final reports will be checked
      and approved by professional examiners of the
  Center.

            

    

    
      	
              n.  

            	
              The
      accounting books of the Innovation center and of the Developer shall be
      available for investigation by the Center for five years from the
      beginning of the program, or four years from submitting the final
      financial report, whichever later.

            

    

    
      	
              o.  

            	
              The
      Center will have the right to subtract from the grant any amount owing the
      Innovation center, by the innovator and/or the
  developer.

            

    

    
      	
              p.  

            	
              The
      project will not be terminated unless in writing by the Center. If the
      project is terminated without approval, the center will have the right to
      demand a return of the grant in addition indexation differentials and
      interest as allowed by law.

            

    

    
      	
              q.  

            	
              The
      Center is entitled to demand additional technical reports during the
      carrying out of the project.

            

    

    
      	
              r.  

            	
              An
      expense will not be approved unless paid for, with the exception of
      appendage expenses as approved.

            

    

    
      	
              s.  

            	
              The
      Center is entitled to demand indexation differentials and interest as
      allowed by law on any amount owing by the Innovation center, the innovator
      or the developer.

            

    

    
      	
              t.  

            	
              Separate
      and special accounting books for the purpose of the project will be
      direct, primary, and all to be
documented.

            

    

    
      	
              u.  

            	
              The
      State shall receive royalties on sales of the product or from the
      technology developed during the project, or from the sale of any rights up
      to the amount of the grant paid in real terms, and according to the rules
      of the steering committee of the technological innovation centers
      (hereinafter "the steering
committee").

            

    

    
      	
              v.  

            	
              We
      will ensure that:

            

    

    
      	
              1.  

            	
              The
      manufacture of the product developed as a result of the R&D of the
      project will be carried out only in Israel, unless decided otherwise by
      the steering committee.

            

    

    
      	
              2.  

            	
              The
      knowhow arising from the R&D of the program and or the rights therein
      will not be transferred to another body whether directly or indirectly
      unless decided otherwise by the steering
  committee.

            

    

    
      	w. 	
              1.
       

            	The
      decrees of the R&D Law will apply to the granting of grants,
      with changes requiring an approval in writing and this letter
      of commitment as per the rules a s laid out by the steering
      committee.

    

    
      	
            	
              2.
       

            	
              As
      stated in w. 1 above, the terms of this letter of commitment do not
      detract from the decrees of any law regarding the giving of this
      grant.

            

    

    
    

    
    

     

     

    
 

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

     

    
      	 
      	
              Avram
      Afori

            	
              Manager

            	 
      
	
              Signature
      of Yozmot Center

            	
              Name

            	
              Job
      Title

            	
              Stamp

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