Document:

<PAGE>

[*] = Certain confidential information contained in this Exhibit 4.2, marked by
brackets with asterisks, has been omitted and filed separately with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.

                                                                    Exhibit 4.2

             CHOLESTEROL 1,2,3 - SKIN CHOLESTEROL MEASUREMENT SYSTEM
                     PRODUCT DEVELOPMENT, MANUFACTURING AND
                          MARKETING AND SALES AGREEMENT

     THIS AGREEMENT is made effective the 14th day of May, 1999 by and between
IMI INTERNATIONAL MEDICAL INNOVATIONS, INC., a corporation organized and
existing under the laws of Canada, with its principal office at 5955 Airport
Road, Suite 222, Mississauga, Ontario L4V 1R9 (telefax number: 905-677-4912),
and X-RITE, INC., a corporation organized and existing under the laws of the
State of Michigan, with its principal office at 3100 44th Street, Grandville,
Michigan 49418 (telefax number: 616-534-4160).

                                    PREAMBLE

     WHEREAS, IMI International Medical Innovations, Inc. has acquired and/or
developed technologies relating to a non-invasive skin cholesterol test and is
conducting clinical trials of the test in anticipation of seeking approval from
the United States Food and Drug Administration; and

     WHEREAS, X-Rite, Inc. is involved in the development and manufacture of
color measurement devices which appear to be capable of being used in
conjunction with the aforementioned technologies and packaged as a system for
use in "point of care" and "over the counter" applications; and

     WHEREAS, both parties are desirous of combining the complementary
technologies of each other to develop, manufacture and market and sell a total
system solution for non-invasive skin cholesterol testing.

     NOW, THEREFORE, the parties hereto agree to the following terms and
conditions in this Agreement:

                                    ARTICLE 1
                                   DEFINITIONS

     As used in this Agreement, the following definitions shall apply:

     1.1 Agreement. "Agreement" shall mean this agreement with respect to
Cholesterol 1,2,3 - Skin Cholesterol Measurement System Product Development,
Manufacturing, Marketing and Sales Agreement.

     1.2  IMI. "IMI" shall mean IMI International Medical Innovations, Inc., a
corporation organized and existing under the laws of Canada, with its principal
office at 5955 Airport Road, Suite 222, Mississauga, Ontario L4V 1R9.

                                       1

<PAGE>

     1.3  X-Rite. "X-Rite" shall mean X-Rite, Inc., a corporation organized and
existing under the laws of the State of Michigan, with its principal office at
3100 44th Street, Grandville, Michigan 49418.

     1.4  Party/Parties. "Party" shall mean IMI or X-Rite, as the case may be;
"Parties" shall mean IMI and X-Rite.

     1.5  IMI Technology. "IMI Technology" shall mean the IMI patents listed on
Schedule 1.5 and other patents and patent applications (and patents issued from
such applications) and all of IMI's know-how and technical information which in
any way relate to the non-invasive measurement of cholesterol on the surface of
human skin which, at this date, has been developed by IMI as a diagnostic test
kit consisting of a digitonin horseradish peroxidase conjugate reagent and an
indicator solution.

     1.6  X-Rite Product. "X-Rite Product" shall mean that color measuring
device and related software which X-Rite develops to IMI identified
specifications as contemplated in section 2.2 hereof.

     1.7  Cholesterol 1.2.3 System. "Cholesterol 1,2,3 System" shall mean that
product or system resulting from the combination (and combined use) of the IMI
Technology and the X-Rite Product.

     1.8  POC. "POC" shall mean point-of-care applications of the Cholesterol
1,2,3 System applied under the direction or supervision of medical practitioners
and clinicians.

     1.9  OTC. "OTC" shall mean all applications other than POC which shall
specifically include over-the-counter sales of the Cholesterol 1,2,3 System or a
derivative thereof for self-testing and as a home-use diagnostic tool (not
needing or requiring the assistance, direction or supervision of medical
practitioners or clinicians) and which is designed by the Parties especially for
that market.

     1.10  Functional Acceptance Date. "Functional Acceptance Date" as used
herein means the date on which the United States Food and Drug Administration
(`PDA") has approved the Cholesterol 1,2,3 System for release in POC
applications.

     1.11  Purchase. "purchased" as used herein means, in determining the date
on which X-Rite Products arepurchased, that date which is the earlier of (i) the
date on which X-Rite Products ordered by IMI from X-Rite have been shipped to
IMI and (ii) the date on which X-Rite Products ordered by IMI from X-Rite should
have been shipped to IMI as contemplated in Section 3.1 and Schedule 3.1 hereto
provided, however, if payment with respect to such X-Rite Products is or was not
effected by IMI within X-Rite's stated standard payment terms, or such other
payment terms which deviate from X-Rite's stated standard payment terms as IMI
and X-Rite shall agree upon from time to time, then such X-Rite Products shall
not be considered as having been "purchased".

                                       2

<PAGE>

                                    ARTICLE 2
                      CHOLESTEROL 1,2,3 SYSTEM DEVELOPMENT

     2.1  Scope of Development. IMI and X-Rite shall use their respective
reasonable commercial efforts and resources on the terms and conditions set out
herein to develop the Cholesterol 1,2,3 System for POC applications and to use
their reasonable commercial efforts to achieve the milestones, including a
Functional Acceptance Date, generally in accordance with and as described in
Schedule 2.1 and modified as necessary by the mutual agreement of the Parties
(negotiated, acting reasonably) during the term of this Agreement The Parties
recognize that such changes may require an adjustment in the timetable
contemplated herein.

     2.2  X-Rite Product. The X-Rite Product for POC applications shall be
designed by X-Rite to meet those product requirements and specifications set
forth on Schedule 2.2, or such other requirements and specifications IMI may
reasonably request (based upon the results of the testing and trials
contemplated in section 2.3) and as the Parties may mutually agree upon from
time to time (acting reasonably), and shall satisfy reasonable requirements
specified by the FDA. X-Rite shall manufacture and supply prototype X-Rite
Products for POC applications at the date and in the quantities specified on
Schedule 2.1.

     2.3  Regulatory Approval. IMI shall, subject to commercial reasonableness
and at its own expense, be responsible for undertaking all testing and clinical
trial activity which may be a prerequisite to seeking and obtaining regulatory
approval required for the marketing and sales of Cholesterol 1,2,3 Systems in
POC applications in the United States as well as using its reasonable commercial
efforts to seek and obtain regulatory approval to achieve a Functional
Acceptance Date. IMI shall promptly provide to X-Rite any and all communications
from any regulatory agency which would in any way relate to the responsibilities
of X-Rite under Section 2.2 above. Upon request of IMI, X-Rite shall, at its own
expense, provide all necessary documentation and test reports for submission to
the FDA, and reasonable assistance in answering requests for additional
information.

     2.4  Development Costs. The cost of development incurred to date and
hereafter incurred shall be the sole responsibility of the Party incurring the
cost, unless otherwise agreed.

     2.5  Ownership. IMI shall acquire no rights in the X-Rite Product and
X-Rite shall acquire no rights in the IMI Technology other than as expressly
provided herein. X-Rite shall acquire no tights to the Cholesterol 1,2,3 System.
IMI shall be entitled to utilize the X-Rite Product as contemplated herein,
including for the purposes of promoting, marketing and selling the Cholesterol
1,2,3, System.

     2.6  Confidentiality of Information Disclosed. The terms and conditions of
the Confidentiality Agreement between the Parties dated February 4, 1999 shall
continue in full force and effect notwithstanding the execution and delivery of
this Agreement.

                                       3

<PAGE>

                                    ARTICLE 3
                     X-RITE PRODUCT MANUFACTURING AND SUPPLY

     3.1  Requirements/Exclusive Supply for POC Applications. X-Rite shall, from
and after the Functional Acceptance Date, supply the X-Rite Product to IMI in
commercial quantities on terms and conditions set out on Schedules 3.1 and 3.4
hereto, [***].

     3.2  Relationship for OTC Applications. [***]. Except as hereinafter
provided in this section 3.2, if IMI proposes to enter into such negotiations,
IMI shall give written notice thereof to X-Rite. Unless X-Rite does not wish to
embark upon such negotiations, the Parties shall commence bona fide negotiations
with respect to the terms and conditions of such an arrangement, which
negotiations shall continue for not less than 60 days from the date of notice
from IMI. If the Parties reach agreement as a result of such negotiations, [***]
(such transactions being herein referred to as an "Alternate Arrangement")
[***].

     3.3  Payment to X-Rite. If, on any date which is three years or more after
the Functional Acceptance Date:

          (a) less than [***] X-Rite Products have been purchased by IMI for POC
     applications for the period between the date hereof and the date which is
     [***] following the Functional Acceptance Date; and

          (b) IMI shall have entered into an Alternate Arrangement as of such
     date

     X-Rite may elect, in the exercise of its sole discretion, to demand that
IMI pay, and IMI shall promptly pay X-Rite the sum of [***].

     3.4  Price. From and after the Functional Acceptance Date, the price for
the X-Rite Product for POC applications shall be that which is set forth on
Schedule 3.4. Prior to such date, X-Rite shall be responsible to supply the
X-Rite Product to IMI for IMI's use hereunder.

                                    ARTICLE 4
                      CHOLESTEROL 1,2,3 MARKETING AND SALES

     4.1  IMI Responsibility. IMI shall use its reasonable commercial efforts to
promote the Cholesterol 1,2,3 System in POC and OTC applications in such
jurisdictions and in such manner as IMI shall in its sole and absolute
discretion determine. All of the costs of sales and marketing efforts shall be
the sole responsibility of IMI.

     4.2  X-Rite Support. X-Rite shall, in an effort to maximize POC market
opportunities and OTC opportunities if X-Rite shall become the supplier of an
X-Rite Product for OTC application in accordance with Section 3.2 above, provide
to IMI and its distributors and licensees at X-Rite's own expense, technical and
marketing support reasonably requested by IMI and/or its distributors and
licensees.

                                       4

<PAGE>

                                    ARTICLE 5
                            MISCELLANEOUS PROVISIONS

     5.1  Other POC and OTC Test Products. [***].

     5.2  Indemnification Obligations. IMI agrees to indemnify and hold X-Rite
harmless from all claims, damages, losses or expenses (including, without
limitation, reasonable attorney's fees) ("Losses") arising out of or related to
the IMI Technologies aspect of the Cholesterol 1,2,3 System and X-Rite agrees to
indemnify and hold IMI harmless from all Losses arising out of or related to the
X-Rite Product.

     5.3  Independent Contractor Status. IMI and X-Rite shall for all purposes
hereunder be considered independent contractors. This Agreement is not intended
in any manner to create the relationship of principal and agent between IMI and
X-Rite, nor shall this Agreement be deemed to establish a partnership or joint
venture.

     5.4  Term/Termination. The term of this Agreement shall commence as of the
effective date set forth at the outset hereof, and shall continue for a period
of six (6) years from the date hereof or until any earlier termination of this
Agreement as follows:

          (a) Mutual written agreement of the Parties;

          (b) At the option of a Party in the event of the breach of any of the
     material provisions of this Agreement which has not been cured upon 60 days
     written notice of either the breach or non-compliance of such material
     provision;

          (c) At the option of a Party in the event of bankruptcy, receivership
     or insolvency proceedings against or on behalf of the other Party;
     admission in writing of the inability of the other Party to pay its debts
     as such financial obligations mature; general assignment for the benefit of
     creditors of the other Party or the other Party becoming subject to a
     direct control of a trustee, receiver or similar authority;

          (d) At the option of X-Rite in the event fewer than [***] Cholesterol
     1,2,3 Systems are purchased by IMI during any 12 month period from and
     after the Functional Acceptance Date; or

          (e) Without limiting the generality of item (b) above, at the option
     of IMI if X-Rite does not comply in all material respects (including as to
     matters of timing and quality) with its obligations to deliver X-Rite
     Product pursuant to the provisions of section 3.1 hereof.

     5.5  Non-assignment. Neither this Agreement nor any rights or obligations
hereunder may be assigned or otherwise transferred by either Party, in whole or
in part, whether voluntarily or by operation of law without the consent of the
other Party. Notwithstanding the foregoing, either Party may assign some or all
of the rights and obligations hereunder to a company which it owns more than 50%
of the equity securities of, provided that the assigning Party shall continue to
be responsible for its obligations hereunder notwithstanding such assignment.
For greater

                                       5

<PAGE>

certainty, and notwithstanding anything contained herein, any amalgamation or
merger of any Party with any other person shall not affect this Agreement.

     5.6  Agreement. This Agreement, together with the Schedules hereto and the
Confidentiality Agreement, contains the entire agreement of the Parties with
respect to its subject matter, and there are no promises, conditions,
representations or warranties except as expressly set forth herein. This
Agreement may be modified or amended only by written instrument executed by IMI
and X-Rite.

     5.7  Notices. Any notices contemplated or given under this Agreement, shall
be in writing and delivered personally or by courier or forwarded by facsimile
to the Parties at their respective addresses as shown at the outset hereof, or
at such other place as a Party may substitute by written notice. Any such notice
by facsimile shall be deemed to have been given on the date of transmittal. Any
such notice by delivery or courier shall be deemed to have been given on the
date it is received.

     5.8  Governing Law/Dispute Resolution. This Agreement shall be governed by
and construed and interpreted in accordance with the laws of the Province of
Ontario. IMI and X-Rite specifically agree that the provisions of United Nations
Convention on the International Sale of Goods shall not apply to the rights and
obligations under this agreement. The parties shall use their reasonable
efforts, including the involvement of the chief executive officer of each party,
to resolve any disputes during the 30 day period following the written request
by either party identifying that a dispute exists, the details of that dispute
and stating that a claim for arbitration will be filed absent resolution. In the
absence of resolution, any disputes relating to this Agreement shall be resolved
by arbitration in accordance with the International Arbitration Rules of the
American Arbitration Association by one arbitrator. If X-Rite shall initiate the
claim in arbitration, the arbitration shall take place in Toronto, Canada and if
IMI shall initiate the claim in arbitration, the arbitration shall take place in
Grand Rapids, Michigan. The language of any arbitration shall be English.

     IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the effective date set forth at the outset hereof.

                              IMI INTERNATIONAL MEDICAL
                              INNOVATIONS INC.

                              By:    /s/ Brent Norton
                              Name:  B. Norton
                              Title: President & CEO
                              Authorized Signing Officer

                              X-RITE, INC.

                                       6

<PAGE>

                              By:    /s/ Bernard J. Berg
                              Name:  Bernard J. Berg
                              Title: Sr. Vice President Engineering
                              Authorized Signing Officer

                                       7

<PAGE>

                                  SCHEDULE 1.5
                                   IMI PATENTS

U.S. Patent #5,489,510

U.S. Patent #5,587,295

Canada Patent #1,335,968

European Patent #0,338,189

                                       8

<PAGE>

                                  SCHEDULE 2.1

[***]

                                       9

<PAGE>

                                  SCHEDULE 2.2

System Description
------------------

[***]

Instrument Technical Specifications
-----------------------------------

          Spectral Sensor
          [***]

          Performance
          [***]

          [***]

          I/O connection
          [***]

          Environmental
          [***]

Software Technical Specifications
---------------------------------

          Operating environment
          [***]

          System Requirements:
          [***]

          Numeric Computation:
          [***]

          Languages Supported
          [***]

          Database capabilities
          [***]

                                       10

<PAGE>

                                  SCHEDULE 3.1

Ordering
--------

IMI will issue a [***] order to X-Rite specifying the quantity of instruments to
be purchased. X-Rite expects to ship these units within a [***] period.

Delivery
--------

IMI will submit to X-Rite specific release orders [***] in accordance with a
rolling horizon schedule comprised of the following Two (2) zones;

          Fixed Zone
          ----------
          [***]

          [***]

          Planning Zone
          -------------
          [***]

          [***]

Terms of Payment
----------------

X-Rite shall invoice IMI for equipment which meet specifications and are shipped
per this agreement. Payments shall be made by IMI within net 30 days after
receipt by IMI of a properly prepared and corrected invoice. Payment will be
made in United States Dollars.

Shipping Terms
--------------

Shipping terms are F.O.B. Grandville, Michigan.

Shipping Address
----------------

To be supplied by IMI at time of release.

Warranty and Service
--------------------

X-Rite warrants each instrument manufactured to be free of defects in material
and workmanship (excluding battery pack) for a period of twelve months from the
date of sale. X-Rite will repair or replace the instrument not satisfying this
warranty. THERE ARE NO WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE. X-RITE'S WARRANTY OBLIGATION IS LIMITED TO REPAIRING THE INSTRUMENT
RETURNED TO X-RITE OR AN AUTHORIZED SERVICE DEALER FOR THAT

                                       11

<PAGE>

PURPOSE. Service arising from the fault of the user caused by misuse or abnormal
conditions of operation will be billed at nominal cost. All returns for service,
including warranty repairs, shall be with transportation charges prepaid.

X-Rite Flat-Rate Service Program
--------------------------------

After the warranty period of 12 months, service will also be handled directly by
X-Rite for a flat fee. This fee is subject to yearly review and may change with
90 days of notice given. Upon completion of this service, the unit is returned
to the customer with an additional three (3) month unconditional warranty
(excluding lamps and batteries).

If your instrument is beyond the new warranty period, it will be serviced under
the X-Rite flat rate policy. The flat rate applies only if the instrument is
mechanically complete and unmodified. If parts are missing, modified or damaged
due to abuse, additional charges may apply.

Under this policy you will be charged a fixed fee regardless of the defect found
in the instrument. The flat rate is your final cost including 2nd day shipping.

                                       12

<PAGE>

                                  SCHEDULE 3.4
                                PRICING SCHEDULE

The initial price for the [***] after the Functional Acceptance Date, will be
[***] for each X-Rite Product purchased. The per unit pricing for each
subsequent [***] period will be based upon the number of X-Rite Products
purchased during the immediately prior [***] period, based on the following
schedule.

         [***] Quantity                         Pricing
         --------------                         ------
         [***]                                  [***]

         [***]                                  [***]

         [***]                                  [***]

         [***]                                  [***]

The prices listed above are firm during the [***] of the agreement. Thereafter,
the price per unit will be negotiated by X-Rite and IMI based upon market
conditions but in no event will it exceed [***] per unit.

                                       13<PAGE>

                                                                    Exhibit 4.3

                              EMPLOYMENT AGREEMENT

         THIS AGREEMENT made as of the 4th day of February, 1998 BETWEEN:

         IMI International Medical Innovations Inc., a corporation incorporated
         under the laws of Canada

         (hereinafter called "IMI")

                                       and

         Mr. Ron Hosking, of the City of Toronto, in the Province of Ontario
         (hereinafter called

         the "Employee").

         WHEREAS IMI and the Employee wish to enter into a written agreement
which contains the agreed upon terms and conditions of employment for their
mutual benefit;

         NOW THEREFORE in consideration of the mutual covenants and agreements
contained in this agreement and for other good and valuable consideration, the
adequacy of which is hereby acknowledged, the parties to this agreement do
mutually covenant and agree as follows:

ARTICLE 1 - DUTIES OF EMPLOYMENT

1.1   Position - The Company agrees to continue to employ the Employee in the
position of Vice-President Finance and Chief Financial Officer, to serve in such
capacity as IMI's needs may, from time to time, require and as are made known to
him by IMI or its authorized representatives. In this capacity, the Employee
shall perform such services as are required from time to time by the President
and Board of Directors of IMI (the Board) provided, however, that without the
Employees prior written consent, the Employee shall not be required to perform
services other than those comparable in scope and dignity to those the Employee
is presently performing.

1.2   Duties - The Employee accepts the office on the terms and conditions set
forth in this Agreement and acknowledges that as Vice-President Finance and
Chief Financial Officer, he has the responsibility for the general financial
management of the business of IMI, subject to the authority of the President and
Board. Throughout the term of his employment, the Employee agrees to devote
substantially all of his business time and effort to carry out the performance
of his duties under this Agreement and shall conform to all lawful instructions
and directions given to him by the President and Board, or its authorized
designees, and obey and carry out the by-laws of IMI, as well as all written
rules, policies and practices now or hereafter established and amended from time
to time by IMI for the conduct of its affairs and brought to the attention of
the Employee.

<PAGE>

ARTICLE II - AUTHORITY

2.1   The Employee shall have, subject always to the general or specific
instructions and directions of the President and Board, or its authorized
designees, including, without limitation, subject to the provisions and
limitations of any budget approved by the Board, full power and authority to
manage and direct the business and affairs of IMI consistent with the Employee's
position as set out in Section 1.1.

ARTICLE III - TERMS OF EMPLOYMENT

3.1   Term - The provisions of the Agreement shall have effect from the date
hereof and shall continue in effect until January 12, 1999, or until terminated
in accordance with the provisions of this Agreement. Subject to the provisions
of this Agreement, thereafter, this Agreement shall be automatically renewed for
successive one-year periods if no written notice has been given by either party
to the other on or before 60 days before the end of the term stating such
party's intention to terminate this Agreement.

ARTICLE IV - EMPLOYEE'S COMPENSATION AND BENEFITS

4.1   Compensation - The annual base salary payable to the Employee for the
Employees services hereunder for the term of this Agreement shall be $100,000
(gross), exclusive of bonuses, benefits and other compensation. The annual base
salary payable to the Employee pursuant to the provisions of this Article IV
shall be payable in equal monthly installments, in arrears, in accordance with
existing practice, or in such other manner as may be mutually agreed upon, less,
in any case, any deductions or withholdings required by law.

4.2   Salary Review - The Employee's salary and benefits shall be as stated in
Article IV but shall be reviewed on October 31, 1998 and annually thereafter
during the term of this Agreement and any renewal of this Agreement.

4.3   Vacation - The Employee shall be entitled to vacation with pay of four (4)
weeks during each calendar year of this Agreement. Vacation not taken in one
year may not be carried over into subsequent years and shall expire at the end
of the applicable year unless agreed upon in advance by the President.

4.4   Benefits - The Employee shall participate in all benefit plans which IMI
provides to its Employees, including extended health, medical and dental. In the
event that such benefit plans include additional benefits and/or coverage for
executives, then the Employee shall be entitled to such additional benefits.

4.5   Additional Compensation - The Employee shall also receive bonuses and
options to purchase shares of IMI as may be granted by the Board, in their
discretion, from time to time.

4.6   Expenses - IMI shall reimburse the Employee forthwith for all proper and
reasonable out-of-pocket expenses actually incurred by the Employee in the
performance of his duties upon presentation of supporting statements, receipts
or vouchers. Subject to the provisions of IMI s

<PAGE>

governing corporate legislation, IMI agrees to indemnify and save the Employee
harmless from and against any and all demands, claims, costs, charges and
expenses, including an amount paid to settle an action or satisfy a judgment,
reasonably incurred by him in respect of any civil, criminal or administrative
action or proceeding to which the Employee is made a party by reason of having
been a director or officer of IMI or of any affiliated company, whether before
or after termination if:

      (a)   the Employee acted honestly and in good faith with a view to the
            best interests of IMI; and

      (b)   in the case of a criminal or administrative action or proceeding
            that is enforced by a monetary penalty, the Employee had
            reasonable grounds for believing that his conduct was lawful.

ARTICLE V - TERMINATION

5.1   Notwithstanding anything contained in this Agreement, IMI and the Employee
agree that this Agreement and the employment of the Employee may be terminated
as follows:

(a)   immediately by IMI at its option, at any time, and without notice or pay
in lieu of such notice, for cause. For the purposes of this Agreement, cause
shall include the following:

      (i)   a material breach by the Employee of the provisions of Article VI
      at any time;

      (ii)  conviction of the Employee of a criminal offense punishable by
      indictment, or summary conviction where such cause is not prohibited by
      the law and where such conviction brings into question the Employee's
      ability to perform his duties under this Agreement honestly and
      effectively or where such conviction could adversely affect the
      reputation and goodwill of IMI; and

      (iii) in the event of death or any disability , as such term is defined
      in any disability insurance policy of IMI or if no such policy is in
      place, disability shall mean mental or physical disability or serious
      illness of the Employee which results in the Employee being unable to
      substantially perform his duties for a continuous period of 180 days or
      for periods aggregating 225 days in any period of 365 days;

(b)   at any time by IMI, without cause by paying, in lieu of notice, an amount
      equal to 6 months of the Employee's current annual salary, payable in a
      lump sum; or

(c)   at any time by the Employee upon 60 days written notice to IMI.

5.2   Effect of Termination

(a)   Upon termination of this Agreement, the employment of the Employee shall
be automatically terminated and the Employee shall have no claims against IMI
for failure to give

<PAGE>

reasonable notice of termination or otherwise except in respect of payment of
salary or accrued vacation pay to the date of termination and payments
specifically provided for herein.

(b)   Upon termination of employment, the Employee shall immediately resign all
offices (including directorships) held in IMI and the Employee shall not be
entitled to receive any additional severance pay or compensation for loss of
office or otherwise by reason of resignation (other than as otherwise provided
for herein). If the Employee fails to resign as mentioned, IMI is irrevocably
authorized to appoint some person in the Employee's name and on his behalf to
sign any documents or do any thing necessary or requisite to give effect to it.

(c)   If the Employee is terminated without cause, all options, which were
originally granted at market price, to acquire shares of IMI held by the
Employee shall immediately and automatically become fully vested and shall be
exercisable by the Employee within the time period which is thirty (30) days
from the date of such termination and, after such 30 day period, all unexercised
options held by the Employee shall expire and shall be canceled by IMI.

(d)   if the Employee is terminated with cause, all options, whether vested or
otherwise, shall immediately expire and shall be canceled at the date of such
termination.

(e)   The provisions of subsections (c) and (d) above shall apply to all options
to acquire shares of IMI granted previously or hereafter to the Employee unless
the terms of such options specifically state that such subsections do not apply.

5.3   Company's Property

The Employee acknowledges that all items of any and every nature or kind created
or used by the Employee pursuant to the Employee's employment under this
Agreement, or furnished by IMI to the Employee, and all equipment, credit cards,
books, records, reports, files, manuals, literature, confidential information or
other materials shall remain and be considered the exclusive property of IMI at
all times and shall be surrendered to IMI, in good condition, promptly on the
termination of the Employee's employment irrespective of the time, manner or
cause of termination. All personal effects used by the Employee in carrying out
his duties will remain the property of the Employee and shall be removed by him
on termination of his employment.

ARTICLE VI - CONFIDENTIAL INFORMATION AND NON-COMPETITION

6.1   Confidential Information

(a)   The Employee acknowledges that throughout the course of his employment
with IMI the Employee may have access to and be entrusted with confidential
information, trade secrets and know-how concerning the business and property of
IMI and with information, trade secrets and know-how which other persons shall
require IMI and its employees, agents and consultants to treat as confidential
(all of which information, trade secrets and know-how of IMI and others shall be
collectively defined as Confidential Information).

<PAGE>

(b)   The Employee agrees that disclosure of any of the Confidential Information
or any use of the Confidential Information other than on behalf of or for the
direct benefit of IMI is and will be highly detrimental to IMI and that the
right to maintain the confidentiality of the Confidential Information
constitutes a proprietary right which IMI is entitled to protect or is an
obligation which IMI must observe. Accordingly, the Employee hereby agrees that:

      (i)   he shall keep confidential all of the Confidential Information for
      the exclusive benefit and use of IMI and will faithfully do all in his
      power to assist IMI in keeping the Confidential Information confidential
      until IMI shall make the same public either by obtaining patent rights,
      copyrights or otherwise;

      (ii)  he shall not, directly or indirectly, disclose or divulge any of the
      Confidential Information to any person, firm, corporation or other entity
      of any kind whatsoever;

      (iii) he shall not, directly or indirectly, either individually or in
      partnership with, or jointly with one or more persons, firms, corporations
      or any other entity of any kind whatsoever as principal, agent, employee,
      shareholder or in any other capacity or manner whatsoever, use any of the
      Confidential Information other than on behalf of or for the direct benefit
      of IMI;

      (iv)  he shall not divulge, disclose or communicate to any person, firm or
      corporation the name of any customer of IMI and/or the Business (as
      hereinafter defined); and

      (v)   he shall not use for his own purpose any Confidential Information
      relating to IMI and/or the Business.

(c)   The Employee acknowledges that the restrictions contained herein for the
benefit of IMI are reasonable and not excessive in the circumstances of the
Employee's knowledge and the scope of his employment.

6.2   Non-Competition - The Employee agrees that the Employee will not, without
the prior written consent of IMI, while employed by IMI and for a period of one
(1) year after the date of termination for cause:

(a)   directly or indirectly, in any manner whatsoever, including, without
limitation, either individually or in partnership or jointly, or in conjunction
with any other person or persons, firm, association, syndicate, company or
corporation, as principal, agent, shareholder or in any other manner whatsoever,
carry on or be engaged in any business similar to or competitive with the
business of IMI (the Business) in any country where IMI operates, or be
concerned with or interested in or lend money to, guarantee the debts or
obligations of or permit his name or any part thereof to be used or employed by
any person, persons, firm, association, syndicate, company or corporation
engaged in, concerned with or interested in any competitive business except that
the Employee may own no more than 5% of the total issued and outstanding capital
stock of a publicly-held or private corporation engaged in, concerned with or
interested in any competitive business;

<PAGE>

(b)   directly or indirectly solicit, interfere with or endeavor to direct or
entice away from IMI any customer or any person, firm or corporation in the
habit of dealing with IMI, and/or the Business; or

(c)   interfere with, entice away or otherwise attempt to obtain the withdrawal
of any employee or independent contractor of IMI or, following termination of
the Employee s employment, any employee who was in the employ of IMI during the
one (1) year period, as the case may be, preceding termination for cause.

6.3   The Employee hereby acknowledges and agrees that all covenants, provisions
and restrictions contained in this Article VI hereof are reasonable and valid
and all defenses to the strict enforcement thereof by IMI are waived by the
Employee.

6.4   The Employee further acknowledges and agrees that in the event of a
violation of the covenants, provisions and restrictions contained in this
Article VI, IMI shall be authorized and entitled to obtain from any court of
competent jurisdiction preliminary and permanent injunctive relief and an
accounting of all profits and benefits arising out of such violation, which
rights and remedies shall be cumulative and in addition to any other rights or
remedies to which IMI may be entitled.

6.5   It is understood by the Parties hereto that the covenants in this Article
VI by the Employee not to enter into competition with IMI are essential elements
to this Agreement and that, but for the agreement of the Employee to enter into
such covenants, IMI would not have retained the Employee.

ARTICLE VII - CLAUSES SURVIVING TERMINATION

7.1   Any confidentiality and non-solicitation clauses in Article VI of this
Agreement shall survive the termination of this Agreement, as shall Sections 4.6
and 5.2 hereof.

ARTICLE VIII - PLAIN ENGLISH

8.1   This Agreement is intended to be written in plain English. When words or
expressions of a general nature are employed herein, it is intended that they be
comprehensive, unless the context clearly dictates otherwise.

ARTICLE IX - GENERAL

9.1   General - Any notice, document or other communication required or
permitted to be given in respect of this Agreement shall be sufficiently given
if delivered to the party personally, or if sent by prepaid ordinary mail posted
in Canada, by courier, or faxed, to such party addressed as follows:

<PAGE>

IMI:        IMI International Medical Innovations Inc.
            5955 Airport Road
            Suite 222
            Mississauga, Ontario L4V lR9
            Telecopier No: (905) 677-4912
            Attention:  President

Employee:   Ron Hosking
            30 Hatherton Crescent
            Don Mills, Ontario

            M3A 1P7

Any party may at any time change its address hereunder by giving notice of such
change of address to the other party or parties in the manner specified in this
paragraph. Any such notice or other written communication shall, if mailed or
sent by courier, be effective on the day it is delivered or an attempt is made
to deliver it to the address of the addressee and, if -given by personal
delivery, shall be effective on the day of actual delivery.

9.2   Severability - If any covenant, provision or restriction contained in this
Agreement is found to be void or unenforceable in whole or in part, it shall not
affect or impair the validity of any other covenant, provision or restriction
and without limitation, each of the covenants, provisions and restrictions
contained herein are hereby declared to be separate and distinct covenants,
provisions and restrictions.

9.3   Waiver of Performance - The Employee and IMI may, in writing, extend the
time for performance or waive non-compliance or non-performance by the other of
the others obligations, covenants and agreements under this Agreement. No act or
failure to act of the Employee or IMI shall be deemed to be an extension or
waiver of timely or strict performance by the other of his/its obligations,
covenants and agreements under this Agreement.

9.4   Governing Law - This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the law of Canada
applicable therein and each of the parties hereby irrevocably attorn to the
jurisdiction of the courts of the Province of Ontario.

9.5   Entire Agreement - This Agreement set forth the entire agreement among the
parties hereto pertaining to the employment of the Employee and supersedes all
prior agreements, understanding, negotiations and discussions, whether oral or
written, of the parties hereto, and there are no warranties, representations or
other agreements between the parties hereto in connection with the subject
matter hereof except as specifically set forth therein. No supplement,
modification, waiver or termination of this Agreement shall be binding unless
executed in writing by the parties to be bound thereby.

9.6   Assignment - This Agreement is personal to the Employee and may not be
assigned by him without the prior written consent of IMI, which consent may be
unreasonably withheld. This Agreement may not be assigned by IMI without the
prior written consent of the Employee, which consent may be unreasonably
withheld. Subject to the foregoing, this Agreement shall

<PAGE>

ensure to the benefit of and be binding upon the Parties and their respective
successors, heirs, executors, administrators, personal representatives and
permitted assigns.

9.7   Headings - The headings used in this Agreement are for convenience only
      and are not to be construed in any way as additions to or limitations of
      the covenants and agreements contained herein.

9.8   Currency - All dollar amounts referred to in this Agreement shall be in
Canadian funds.

9.9   Time of Essence - Time is and shall always remain the essence of this
Agreement.

      IN WITNESS WHEREOF the parties hereto have executed this Agreement on the
day and year first above written.

                                      IMI International Medical Innovations Inc.

                                      Per /s/ Brent Norton              c/s
                                         ----------------------------

SIGNED, SEALED AND DELIVERED        )
         In the presence of:        )
                                    )
Witness /s/ Anderson                )         /s/ Ron Hosking
        -------------------------             --------------------------
                                    )         Ron Hosking

By signing, the Employee acknowledges he understands the contents of this
Agreement, and in particular Article V relating to termination and that he has
been given the opportunity to obtain independent legal advice and has either
done so or chosen not to obtain such advice.

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