Document:

ipcagmt_btn.htm

    AGREEMENT
REGARDING OWNERSHIP INTERESTS IN

    ISRAEL
PETROLEUM COMPANY, LIMITED

    

    THIS AGREEME
T REGARDING OWNERSHIP INTERESTS IN ISRAEL PETROLEUM COMPANY, LIMITED (this
"Agreement"), dated as of April
14, 2010, is by and amoung /International Three Crown Petroleum LLC, a Colorado
limited liability company ("ITC"), Israel Oil &
Gas Corporation (Previously, Bontan Oil &
Gas Corporation), an Ontario corporation ("Bontan"), Bontan Corporation
Inc., an Ontario corporation ("Bontan Parent"), Allied
jVen~uresIncorporated, a Belize corporation ("Allied") and Israel Petroleum
Company, Limite1, a Cayman Islands limited company (the "Company"), each,
individually, sometimes referred to
as a "Party" and collectively referred
to as the "Parties."

     

    RECITALS

     

    A. The
Company was formed to, among other things, acquire the Offshore Israel Project
(as defined in the Option Agreement) pursuant to that certain Option Agreement
for Purchase and Sale (the "Option Agreement"), dated October 15,
2009, between ITC and PetroMed Corporation, a Belize corporation ("PetroMed").

     

    B. In
connection with the formation of the Company, the Parties entered into that
certain Contribution and Assignment Agreement dated as of November 14, 2009 (the
"Contribution Agreement") and that certain
Stockholders Agreement of the Company dated as of Novemb er
14, 2009 (the "Stockholders Agreement" and together with the
Contribution Agree ten the "Original Agreements").

     

    C.
Certain disputes have arisen with respect to the Company's interest in the
OffshoI
re Israel Project and certain of the Parties have entered into the
Allocation of Rights and settlefent/ Agreement dated March _, 2010, by and among
the Company, ITC, H. Howard Cooper, Bontan, PetroMed, Emanuelle Energy Ltd. and
IDB-DT Energy (2010) Ltd. (the "Settlement Agreement") in
order to resolve those disputes.

     

    D. As a
result of the effects of the Settlement Agreement, the Parties desire to set
forth in this Agreement their agreement regarding their respective ownership
interests in the Com any, which agreements shall be effective, for all purposes,
as of the date of the Original Agreements.

     

    AGREEMENT

     

    N OW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which is ,acknowleged, the Parties agree as follows:

     

    
      	
              1.  

            	
               Ownership
      Interests. Effective as of November 14, 2009, for all purposes, and all
      times from such date through the date hereof: (i) ITC shall be deemed to
      have owned, and to currently own, a 23.21% equity
      interest in the Company represented by 2,321 ordinary shares of the
      Comp any (ii)
      Bontan shall be deemed to have owned, and to currently own, a 76.79%
      equity interest in the Company represented by 7,679 ordinary shares of the
      Company, and (iii) Allied shall be deemed not to have owned or to ever
      have owned, and not to currently own, any equity interest' the Company.
      For the avoidance of doubt, the 23.21 % equity
      interest owned by ITC and the 76.79% equity interest owned by Bontan as
      set forth herein shall be deemed to be, and to have represented at all
      times from November 14, 2009 to the date hereof, an equivalent interest in
      the los,, gain, loss and all other tax attributes of the Company for all
      purposes under, and with respect to, United States tax laws and
      regulations.

            

    

     

    
      	
              2.  

            	
              Representation
      and
      Warranties. Each
      Party represents and warrants to the other Parties that: (i) it is duly
      organized, validly existing and in good standing under the laws of the
      jurisdiction fits formation; (ii) all action on the part of the Party
      necessary for the authorization of the execution, delivery and performance
      of this Agreement by the Company has been taken; and (iii) this Agreement,
      when executed and delivered, will be the valid and binding obligation of
      the Party enforceable against the Party in accordance with its terms,
      except as limited by applicable bankruptcy, insolvency, reorganization,
      moratorium or other laws of general application affecting enforcement of
      creditors' rights and general principles of equity that restrict the
      availability of equitable remedies.

            

    

    

    
      	
              3.  

            	
              Further Assurances.  The
      Parties shall promptly execute and deliver any additional instruments or
      documents which may be reasonably necessary to evidence or better effect
      the agreements set forth herein, and shall take any and all action
      necessary or appropriate in connection therewith, including any action
      necessary to cause the stock certificates issued by the Comp ty to reflect
      the respective ownership interests of ITC and Bontan in the Company as set
      forth herein.

            

    

     

    
      	
              4.  

            	
              Counterparts. This
      Agreement may be executed in any number of counterparts and by each party
      on a separate counterpart or counterparts, each of which when so executed
      and delivered shall be deemed an original and all of which taken together
      shall constitute but one and the same
  instrument.

            

    

     

    
      	
              5.  

            	
              Governing
      Law. This Agreement shall be deemed to be an agreement made
      under the laws of the State of Delaware and for all purposes shall be
      governed by and construed in accordance with such
  laws.

            

    

     

    
      	
              6.  

            	
              Binding Effect.  This
      Agreement shall be binding upon and inure to the benefit of each of the
      parties and its successors and
assigns.

            

    

     

    
      	
              7.  

            	
              Effect on Original Agreements.  This
      Agreement is intended to modify and amend the Original Agreements. If any
      term or provision hereof is inconsistent with any term or provision of
      either of the Original Agreements, the terms and provisions of this
      Agreement shall be deemed to modify, amend and supersede (as
      appropriate) such inconsistent term or provision of such Original
      Agreement and shall control for all purposes. To the extent not modified,
      amended or superseded hereby, each of the Original Agreements shall remain
      in full force and effect subject, however, to the obligation of ITC upon
      execution hereof to enter into good faith negotiations with Bontan to
      revise the terms of the Original
Agreements.

            

    

    

    [Signature
Page Follows]

     

    WlITNESS
WHEREOF, the undersigned have executed this Restructuring Agreement as of th dat
first above written.

     

    INTERNATIONAL
THREE CROWN

    PETROLEUM
LLC, a Colorado limited liability company

     

    By: S/ H.
Howard Cooper

    Name: H.
Howard Cooper

    Title:
President and Manager

     

    ISRAEL
OIL &
Gas Corporation, an Ontario corporation

     

    By: S/
Kam Shah

       
Name: Kam Shah

    Title:
Chief Executive Officer

     

    

    BONTAN
CORPORATION INC., an Ontario corporation

    

      By: S/
Kam Shah

      Name: Kam
Shah

      Title:
Chief Executive Officer

    

     

                             ALLIED
VENTURES INCORPORATED, a Belize corporation

     

       
By:

    Name:

    Title:

     

    ISRAEL
PETROLEUM COMPANY, LIMITED, a Cayman Islands limited company

     

    By:
INTERNATIONAL THREE CROWN PETROLEUM LLC, a Colorado limited liability
company

     

    By: S/ H.
Howard Cooper

    Name: H.
Howard Cooper

    Title:
President and Manageripcownershipagmnt_btn.htm

    

      Execution
Copy

       

      ALLOCATION OF RIGHTS AND
SETTLEMENT AGREEMENT

       

      This
Allocation of Rights and Settlement Agreement (this "Agreement"), dated as of March
25, 2010, is
entered into by and among (1) International Three Crown Petroleum LLC C"ITC"), Israel Petroleum
Company, Limited ("IPC"), H. Howard Cooper
("Cooper") (collectively, the
"Plaintiffs"), and
Bontan Corporation Inc. ("Bontan", and collectively with the Plaintiffs, the
"IPC Parties"), on the one hand, and (2) PetroMed Corporation (“PetroMed"), Hagai Amir, Lyle
Durham (collectively, the "PetroMed Parties"), on the
second hand, and (3) Emanuelle Energy Ltd. ("Emanuelle") and IDB-DT Energy
(2010) Ltd. (in
formation by its promoters IDB Development Corporation Ltd. and Du-Tzah
Ltd.) ("IDB-DT"), on th6 thiIjd hand (Emanuelle and IDB-DT, the "Lead Investors"). The IPC
Parties, PetroMed Partle and the Lead Investors are referred to individually as
a Party or collectively herein as the “Parties”.  Cooper, Hagai
Amir and Lyle Durham are referred to collectively herein as the "Individual
Parties."

       

      RECITALS

       

      WHEREAS, ITC and PetroMed
entered into an option agreement dated October 15, 2009 (and closed on November
18, 2009) (the "Option
Agreement"), by which ITd purchased all of PetroMed's rights in the
acquisition, maintenance, development, exploration, commercialization of Israeli
Drilling Licenses nos. 348 (Sarah) and 347 (Myra), attached here to as Exhibit
1A and IB including licenses and/or permits thereto that may be issued
with respect to materially the same geographic area as Sara and Myra (the
"Licenses") and the exploration Permit no. 199 with priority rights (Benjamin),
including licenses and/or permits thereto that may be issued with respect to
materially the same geographic area as Benjamin, attached  hereto as
Exhibit 2 (the "Permit") (together, the Licenses and the Permit, the "Israel
Offshore Project");

       

      WHEREAS, PetroMed, ITC and IPC
(ITC's assignee to said rights) have been in .disputes, inter alia, with respect
to an alleged subsequent rescission of the transfer by PetroMed, and the
transfer of the Licenses in IPC's name in the Israeli Petroleum Registry
(“Registry”) has not occurred and the Israeli Petroleum Commissioner
("Commissioner") has deleted the Permit from the Registry;

       

      WHEREAS, Emanuelle and
PetroMed entered into a binding Term Sheet on Mar ) 10, 2010 with effect
beginning on March 8, 2010, a copy of which is attached hereto as Exhibit
3(the "Term Sheet"), by which Emanuelle was granted an option, inter
alia, to effectivelvi take control of PetroMed and/or all of its assets,
including all of its rights in the Israeli Offshore Project (the “PetroMed Asset Control
Option”);

       

      WHEREAS, in consideration for
the monies that the Lead Investors will pay unde this Agreement, the allocation
of overriding royalty rights contemplated hereunder and in furtherance of the
Parties' mutual interest in maintaining the Licenses and acting to have the
Permit reinstated or reissued to the Lead Investors and IPC in a like manner as
the allocation of the interests in the Licenses, all of the Parties hereto wish
to allocate portions of the 100% (95.5 % if the EMedCo Joinder is not timely
executed and delivered) the interest in the License1sand Permit among the Lead
Investors and IPC and allocate certain rights to Bontan, TCP (as defined
hereunder) and other persons or entities, all on the terms specified
hereunder;

       

                    WHEREAS, the
Lead Investors and IPC desire to regulate the relations among them with respect
to the acquisition, maintenance, development, exploitation and commercialization
of the Licenses and Permit, including under a Joint Operating Agreement until an
internationally reputable operator is included in the Israel Offshore Project,
on the terms and condition~ set out in this Agreement;

       

            WHEREAS, Emanuelle and the PetroMed Parties
wish to unconditionally and irrevocably agree to the exercise of the PetroMed
Asset Control Option in such manner as is specified herein, while retaining the
right of Emanuelle and not the obligation, to complete additional transactions
contemplated under the Term Sheet and extending, with PetroMed's consent
rendered hereunder by way of execution of this Agreement, the term of the
exercise period of the Term Sheet to the extent deemed advisable by the Lead
Investors;

       

                          
WHEREAS, the Lead Investors and IPC contemplate the possible joinder to
the allocation of rights and obligations created by this Agreement of Prentice
Tomlinson or through his controlled company named PBT Capital Partners LLC
("Tomlinson Entity" or
the "Joining Investor"), within up
to ninety (90) days following the date hereof, by way, inter alia, of the
purchase from the Lead Investors of a 9.25% working interest in Licenses and
Permit from the Lead Investors, in consideration for payment of US$2,220,000,
all as further specified in a joinder to be executed by all the Parties hereto
and Tomlinson Entity containing terms and conditions to be negotiated by them
but subject to the allocation of rights and obligations contained in this
Agreement (the "Tomlinson Joinder"); absent the execution
and delivery thereof as aforesaid, the Joining Investor shall not be deemed
party or beneficiary to this Agreement ab initio and no rights,
benefits; representations, warranties, covenants, waivers, releases or otherwise
referring to or mentioning any of the Joining Investor shall have an effect
whatsoever;

       

                         
WHEREAS, the Parties hereto contemplate the possible joinder to the
allocation of right and obligations and the settlement of the Disputes contained
in this Agreement of East Mediterranean Exploration Company Limited ("EMedCo") and David Peace
 (" Peace")
(collectively, the "EMedCo
Parties"), (in a joinder to be executed by the Parties and the EMedCo
Parties (the "EMedCo Joinder")) which will provide,
inter alia, for the relinquishment by EMedCo of its registered 4.5% working
interest in the Licenses and Permit, the ant to EMedCo of the EMedCo Overriding
Royalty (as hereinafter defined), and the termination and waiver of rights under
the existing consulting agreement dated January 1, 20g7 between PetroMed and
EMedCo (the "PetroMed -EmedCo
Consulting Agreement"); absent the execution and delivery thereof as
aforesaid, the EMedCo Parties shall not be deemed parties or beneficiaries to
this Agreement ab initio
and no rights, benefits, representations, warranties, covenants, waivers,
releases or otherwise referring to or mentioning any of the EMedCo Parties shall
have any effect whatsoever;

      

                        
WHEREAS, the Plaintiffs filed a lawsuit against the PetroMed Parties and
EMedCo Parties (the PetroMed Parties and EMedco Parties sometimes collectively
referred to herein as the (“Defendants”) t he District Court for the City and
County of Denver, CaseNo.10-dv-1190 (the "Colorado Lawsuit"), seeking a
declaratory judgment and variously alleging brech of contract, intentional
interference with contract and prospective business relations, defamation, civil
conspiracy, promissory estoppel, and negligence;

       

                         
WHEREAS, EMedCo filed counterclaims in the Colorado Lawsuit against IT
,IPC, and Cooper seeking a declaratory judgment and alleging intentional
interference with contractual relations (together with the claims of Plaintiff
against the EMedCo Parties in the Colorado Lawsuit, the "EMedCo Dispute"); 

       

                             
WHEREAS, the PetroMed Parties filed a lawsuit against lTC, Cooper and
Bontan in the United States District Court for the Western District of
Washington, Case No. CV 10-0107MJP (the "Washington Lawsuit"), alleging
claims of federal and state securities fraud, state common law rescission, fraud
in the inducement, money laundering, breach of contract, economic duress,
consumer protection violations, and negligent misrepresentation;

       

                             
WHEREAS, disputes have arisen among the Parties over responsibility and
liability for the expiration of the Permit (the "Benjamin
Dispute");

       

                             
WHEREAS, the Plaintiffs have put the controlling group of Emanuelle on
notice orally and in writing as to IPC's rights with respect to the Israel
Offshore Project and Emmanuelle has alleged that Cooper, IPC and Bontan entered
into a legally binding oral contract with Emanuelle with respect to an
allocation of rights in the Israel Offshore Project (the notice and all11gation
together are referred to herein as the "IPC-Emanuelle Dispute");
and

       

      

                             
WHEREAS, the Parties wish to settle the Washington Lawsuit, the Colorado
lawsuit, the Benjamin Dispute and the IPC-Emanuelle Dispute (collectively, the
"Disputes") as specified
herein.

       

                      
NOW, THEREFORE, in consideration of the foregoing recitals and of the
conditions, covenants and agreements set forth below, the amount and sufficiency
of which are hereby acknowledged, the Parties agree as follows:

       

      1.            Recitals.
The Recitals set forth above and all appendices and schedules thereto are
incorporated into and made a part of this Agreement.

       

      2.             Staging
and Consideration. Each Party, as identified below, shall carry out the
following actions required of it, at the time so specified, time being of
the essence:

       

      (i) Western Geeo Payment and Consent; Delivery of Data.
The term “Data” means2D and 3D seismic data and all other deliverables under the
Agreement for Marine Seismic Data Acquisition and Processing between PetroMed
and Western Geco International Ltd. "Wetstern Geco") dated July 15,
2009, as amended and assigned to IPC ("WG Agreement").

      

      
        	
                A.  

              	
                The
      Lead Investors shall pay to Western Geco, such that Western Geco shall
      receive the following amounts: (a) by no later than by March , 2010,
      18:00 (London time), with up to a three days grace, the aggregate sum of
      seven million US dollars (US$7,000,000))(the "First WG Installment"),
      by way of wire transfer in immediately available funds and (b)
      the aggregate sum of three million and five hundred thousand US dollars
      ($3,500,000) payable upon the delivery of the Data after being fully
      processed in the l l-week processing format (the "Second WG Installment"
      and together with the First WG Installment, the "Western GecoPayment"), all of which
      shall be confirmed in writing by Western Geco prior to March , 2010
      substantially in the form attached hereto as Exhibit 4 (the "WG Letter"). to the
      extent that IPC is not fully released of liability by WG under the WG
      Letter and the WG Agreement upon transfer of the First WG
      Installment, IPC shall execute the WG Letter but, as between Parties, IPC
      shall be responsible only for its pro rata portion based on Ownership WI
      Point for any unpaid portion of Western Geco and the other Owning Parties
      (as defined below ) shall contribute, immediately upon IPC's actual
      payment its prorated portion, all required monies to cover such liability
      in accordance with their respective Ownership WI Points. Nothing herein
      shall be deemed to imply that Bontan is responsible for any liability
      under the WG Agreement or WG Letter

              

      

       
 

      
        	
                B.  

              	
                 It
      is agreed that Western Geco shall deliver the Data to the Lead Investors
      and that the Data shall be available to be viewed by the Lead Investors
      and IPC in the respective offices. Any Data delivered by Western Geco
      shall be owned jointly by the Lead Investors, and IPC, pro rated to their
      Ownership WI Points specified in Section 2(vii) below and held under
      their joint control. The Lead Investors shall jointly decide, following
      consultation with IPC, upon the timing of the delivery of the Data
      received from Western Geco to the commissioner a view towards fulfilling
      the purposes hereof including the registration in the Registry of the
      ownership of the Licenses and Permit by Emanuelle, IDB-DT and IPC pro
      rated to their respective Ownership WI
  Points.

              

      

      

       

      
        	
                C.  

              	
                 The
      delivery of the First WG Installment to Western Geco as specified under
      this paragraph is a condition precedent to the remaining provisions of
      this Agreement, including obligations of paragraphs (ii) -(ix) of this
      Section 2 (the “Super-ConditionPrecedent”), and the
      failure of the Lead Investors to make payment of the First WG Installment
      by April 6 2010, for whatever reason, shall render this Agreement
      null and void, and no Party shall have any liability or claim toward any
      other Party arising under this
Agreement.

              

      

      

       

      
        	
                D.  

              	
                Notwithstanding
      clause (C) above, as between the PetroMed Parties and the Lead Investors,
      the term of the Term Sheet shall be extended to apply until September
      30, 2011, as
      provided in Section 2(ii)B herein below, regardless of the other
      provisions of this Agreement becoming
void.

              

      

      

      (ii)
Extension
of PetroMed Asset Control Option and Other Actions.

       

      

       

      
        	
                A.  

              	
                Assignment of Licenses. Upon execution hereof,
      PetroMed shall deliver duly executed irrevocable Deeds of Assignment with
      respect to the acquisition and allocation of the Israel Offshore Project,
      in the form attached hereto as Exhibit
      5.

              

      

      
        	
                B.  

              	
                Extension
      of PetroMed Asset Control Option. The PetroMed Parties
      hereby render their agreement to extend the PetroMed Asset Control Option
      and extend the period at which Emanuelle may elect if and how to effect
      the acquisition (such term being defined as t "Due Diligence Review
      Period" in the Term Sheet), until September 30, 2011. PetroMed agrees and
      acknowledges that (i) the Term Sheet shall continue to apply as between
      the PetroMed Parties and Emanuelle until September 30, 2011 so as to
      retain the right, and not the obligation, of Emanuelle to complete
      additional transactions contemplated under the Term Sheet; land ii) any
      payment made hereunder to PetroMed, PetroMed shareholders and or PetroMed
      creditors either in cash or in kind (e.g., overriding royalty rights)
      shall be deemed payment in consideration of the acquisition of 99.9% of
      the issued and outstanding share capital of PetroMed (via issuance of its
      shares or otherwise) and or the Israeli Offshore Project, to the extent
      that Emanuelle decides to exercise the PetroMed Asset Control Option of
      PetroMed, as shall be allocate at t e sole discretion by the Lead
      Investors.

              

      

       

      
        	
                C.  

              	
                Voting Agreement and Proxies. Upon execution
      of this Agreement, the PeoMed Parties shall furnish the Lead Investors
      duly executed Voting Agreements (including irrevocable proxies
      therein) of persons (excluding David Peace, Amy Diamond or any of their
      affiliates who, together, hold at least 20% of the outstanding shares of
      PetroMed (on an outstanding basis) attached hereto as Exhibit 6 (the
      "Voting Agreements"). The PetroMed Parties shall use their best efforts to
      deliver additional Voting Agreements so as securing duly executed Voting
      Agreements by the holders of at least 51% of the outstanding shares of
      PetroMed (on fully diluted basis), as soon as
  possible.

              

      

       

      
        	
                D.  

              	
                Powers of
      Attorney. Upon execution of this Agreement, PetroMed shall
      execute and deliver irrevocable powers of attorney to each of the Lead
      Investors and IPC and/or entities designated by them as attorneys in fact
      in the form attached hereto as Exhibit 7 (“Powers of Attorney”),
      allowing each of them individually to apply to have their respective
      rights (and those of its Permitted Transferees) in the Licenses and
      Permits be recorded at the Registry in accordance with and pro rated to
      their respective Ownership WI Points and to have the (and those of their
      designees') respective overriding royalty rights be recorded at the
      registry in accordance with their respective overriding royalty rights;
      and authorizing each of them to act for PetroMed in every respect
      (including by way of executing and delivering any and all instruments and
      other documents requested by the Conunissioner) in connection with the
      applications and in connection with causing PetroMed to perform its
      obligations under this Agreement.

              

      

       

      
        	
                E.  

              	
                Cancellation of Certain PetroMed Interests and
      Rights. Subject to compliance with all delivery obligations by the
      PetroMed Parties' of all deliverables specified in Section 2(ii and 3
      against delivery to Lead Investors of (i) all of the certificates
      representing the shares and warrants of Bontan-that PetroMed received at
      or in connection with the closing of the Option Agreement on November 18,
      2009 (the "PetroMed Bontan Shares and Warrants"), together with duly
      executed stock powers and any other documentation reasonably required by
      Bontan to cancel the PetroMed Bontan Shares and Warrants and (ii) the
      Overriding Royalty Agreement previously delivered to PetroMed by IPC at
      the Closing under the Option Agreement (the “Old PM Overriding Royalty
      Agreement”), then the Lead Investors shall deliver to PetroMed or a
      trustee (designated in writing by the Lead Investors) the New PetroMed
      Trust Overriding Royalty (as defined below) and PetroMed and IPC shall be
      deemed to have agreed at the Old PM Overriding Royalty is null and void
      for all intents and purposes.  Upoon receipt from PetroMed, the
      Lead Investors shall forthwith deliver the PetroMed Bontan Shares and
      Warrants and related stock powers to Bontan for cancellation and shall
      return the Old PM Overriding Royalty to
IPC.

              

      

       

       

      PetroMed
represents and warrants that it has not registered the Old PM Overriding
Royalty at the Registry or in any other public office in Israel or elsewhere,
has not sold or otherwise transferred, or made any promise or commitment to sell
or otherwise transfer, the Old PM Overriding Royalty or any interest therein,
other than pursuant to this Agreement, and that it is the sole owner of and has
the sale right to redeliver and cancel the Old PM Royalty Overriding
without consent of any other party.  PetroMed further represents that,
other than pursuant to this Agreement, it has not sold or otherwise transferred,
or made any promise or commitment to sell or otherwise transfer, any of the
PetroMed Bontan Shares and Warrants or any interest therein, and that it is the
sole owner of and has the sole right to redeliver and authorize cancellation of
the PetroMed Bontan Shares and Warrants.

       

      (iii)
Overriding Royalty Rights.

       

      
        	
                A.  

              	
                 The
      following persons and entities shall be entitled to overriding royalty
      rights in the Licenses and Permit as follows: (i) Three Crown Petroleum
      LLC (“TCP” an
      affiliate of Cooper, and a third party beneficiary hereof), an overriding
      royalty equal to 1% to be delivered at the Second Closing, but conditioned
      upon Cooper's concurrent cancellation of his overriding Royalty Agreement
      with IPC, under the TCP Overriding Royalty Agreement
      attached  hereto as Exhibit
      8 (the "TCP
      Overriding Royalty"); (ii) Israel Land Development Company Ltd.
      ("ILDe") and IDB-DT together, an overriding royalty equal to 2% ("Lead Inv
      stors Overriding Royalty") to be divided between them as follows: 66.56%
      to ILDC and 33.4 % to IDB-DT, to be delivered at the Second Closing, under
      the respective Overriding Royalty Agreements attached hereto as Exhibit
      9 and 10; (iii) EMedCo, an overriding royalty equal to 4.5% (the
      "Peace Overriding
      Royalty"), under an Overriding Royalty Agreement in the form
      attached hereto as Exhibit
      11 (or such other form substantially similar to which the Lead
      Investors, IPC and EMedCo Parties agree), to be delivered only upon
      execution and delivery of the EMedCo Joinder and delivery to the Lead
      Investors of a duly executed Voting Agreement; (iv) a Royalty Trust for
      the benefit of the current shareholders ofPetroMed (and the
      ~ransr.erees

              

      

      of said
shares), an overriding royalty equal to 3% (the "New PetroMed Trust Overriding
Royalty"), granted only against delivery of all items specified in
Section 2(ii), Sec ,ion and Section 5H (it being clarified that at no time shall
the Royalty Trust, PetroMed or its current shareholders immediately prior to the
date hereof (and the transferees of said shares» be deemed to hold a right to an
overriding royalty exceeding 3%), under an Overriding Royalty Agreements in the
form attached hereto as Exhibit
12: and (v) Langotsky Associates Ltd., an overriding royalty of up to 1%
(the "Langotsky Overriding
Royalty"), to be delivered only if a consulting  agreement is
entered into between the Lead Investors, IPC and Langotsky under an Overriding
Royalty Agreement on a substantially similar form to which the Lead Investors
and Langotsky agree.

       

      

       

      
        	
                B.  

              	
                Each
      such percentage of overriding royalties is expressed as a
      percentage of all oil,gas and as associated hydrocarbons produced,
      saved and sold under the terms of the Permit, the Licenses and any
      hydrocarbon leases issued thereunder, as substantially specified in the
      forms attached hereto as Exhibits
8-12.

              

      

       

      
        	
                C.  

              	
                ILDC
      and IDB-DT shall have an option (to be divided between them as follows:
      66.56% to ILDC and 33.44% to IDB-DT) for a period of five (5) years after
      registration of the Licenses in the name of the Lead Investors at the
      Registry, to purchase (a) the New PetroMed Trust Overriding Royalty for a
      sum of $12 Million by payment to PetroMed or the Royalty Trust holding
      said overriding royalty, and (b) to the extent that the EMedCo Parties
      execute and deliver the EMedCo Joinder (as contemplated above), to
      purchase half of the Peace Overriding Royalty, for a sum of $9 Million by
      payment to EMedCo (the “Override Call
      Options”). Each Override Call Option shall include a covenant
      not to pledge or otherwise encumber such r0rtion of the rights which are
      subject to each Override Call
Option.

              

      

       

      (iv)
Written Extension of Milestones for Licenses. The
Parties shall cooperate and use their best commercial efforts to obtain the
written approval from the Commissioner Of extensions of the 2010 milestones
(including the February 1, 2010 and the April 1, 2010 milestones] under the
Licenses to times reasonably sufficient to permit compliance
therewith.

       

      (v) Joint Operating Agreement.

       

      A. Form of JOA. No later than sixty (60) days following
the date of this Agreement, the Lead Investors and IPC shall enter into a Joint
Operating Agreement ("JOA"), substantially in the form of the AIPN International
Joint Operating Agreement, to govern operations pn the Licenses and Permit by
the owners thereof. The JOA shall include provisions regarding participation in
financing of the Israel Offshore Project and the customary
penalties entailed in the event a Party does not contribute its share in
the financing required.

       

      B. Steering Committee Serving as Operator. The JOA will
initially designate as Operator a steering committee comprised of
representative(s) of each of the Lead Investors and IPC (the "Steering
Committee"). ITC and Bontan agree that an individual appointed by I C shall be
IPC's representative on the Steering Committee. The right to appoint a member to
the Steering Committee shall expire when the designating holder(s) shall hold an
aggregate Ownership WI Point of less than 7.0%. Each member of the Steering
Committee shall have the voting power equal to the Ownership WI Points of the
Party appointing said member. If the Lead Investors determine that it would be
appropriate to add EMedCo and/or David Peace to the Steering Committee, IPC will
agree to such designation and the number of members of the Steering Committee
shall be increased. The JOA shall also provide that resolutions of the Steering
Committee shall be determined by a vote of two or more members, representing at
least a majority of the Ownership WI Points, calculated on a License-by-License
basis including the affirmative vote of the Lead Investors (as long as each Lead
Investor holds 50% of its original interests). It is agreed that the Steering
Committee shall not have the authority to require any party to dispose of,
encumber or take any action with respect to its ownership interest in the
Licenses and Permit, other than as provided herein below or in the JOA. Steering
Committee meetings will be held when requested by a Party represented on the
Steering Committee owing at least 7.0 Ownership WI Points on at least 4 days
notice to the other parties. Each Party shall bear all costs pertaining to
its representatives' participation in the Steering Committee meetings including
travel, lodging etc., provided however, the costs of the participation or EMetco
and/or David Peace, if applicable, will be borne by the Parties in accordance
with and prorated to their Ownership WI Points. The Party requesting the
meeting shall circulate to the other members of the Steering Committee an agenda
at least 24 hours in advance of the meeting. The steering Committee will provide
for the retention of an independent accounting firm selected from one of the
"big 4" accounting firms.

      

      C. Right of First
Refusal. The JOA will not contain a right of first refusal but, as
between the Lead Investors and IPC (the "JOA Parties"). It is agreed
that the JOA Parties shall have a right of first refusal in the event of a
disposition by any JOA Party in one or more transactions in respect of more than
50% of its Ownership WI Points in the Israel Offshore Project; provided,
however, that each such JOA Party is entitled to dispose of up to and including
provided, further, that the right of first refusal of IPC shall be limited to
the right to acquire its proportionate share (i.e., proportionate to its
Ownership WI Points) of any disposition by any of the Lead Investors; and
provided further that a holder shall be entitled to transfer ts il1terests
without being subject to the right of first refusal in the event of a transfer
to a Permitted Transferee, as defined below.The right
of first refusal granted in the preceding paragraph shall be exercise as
follows:   If
a JOA Party receives an offer for purchase or other disposition of all or any
part of such Party's Ownership WI Points in any of the Israel Offshore Project
that such J P Y is prepared to accept, or if a third party is willing to accept
a JOA Party's offer to dispose of art or all of its interest in the Israel
Offshore Project, such JOA Party shall notify in writing
the other JOA Parties (the "ROFR Notice") and shall
include in such notice full particulars of suc1ljoffer, including a copy of any
existing or proposed agreement covering such disposition. The JOA Parties
receiving such ROFR Notice ("Receiving Parties") shall have
an optional prior right, for a period of 30 days following receipt of such
notice, to elect to acquire the interest hat is the subject of the offer on the
terms and conditions of the offer or, if such terms cannot reasonably be matched
(such as payment of purchase price in stock of the offer or disposition of the
interest as part of a larger transaction covering other properties), on terms
and conditions that are substantially equivalent in value. If any of the
Receiving Parties timely delivers sue notice to the notifying JOA Party in
writing, the notifying JOA Party shall convey the subject interest to such
Receiving Party(ies), in proportion to their interest(s) (but subject to the
limitations contained in the preceding paragraph) on the terms and conditions of
the offer or their substantial equivalent, with closing to occur in the manner
provided in the disposition agreement. If the Receiving Party does not elect to
acquire such interest, the notifying JOA Party may proceed to consummate the
disposition on the terms offered, but if such disposition does not occur within
180 days following the delivery of the ROFR Notice or if the terms and
conditions off disposition change favorably from those notified to the Receiving
Parties, then their fight to mate the terms and conditions of disposition and
acquire the subject interest shall be revived.  The right
of first refusal shall not apply in the event a JOA Party encumbers its interest
by mortgage or lien to a reputable financial institution; provided that such
transferee shall be required to deliver a written undertaking by which it
confirms that if it forecloses and/or disposes of the interest, the aforesaid
rights of first refusal shall apply to that disposition.

       

      "Permitted Transferee" in
this Agreement
means (i) in the case of any incorporated Party (whether a company or a
partnership or any other legal entity) an Affiliate of such Party (an Affiliate
of IDB-DT shall include, for the avoidance of doubt, Modi'in Energy LP); or (ii)
in the case of a partnership or limited liability company, any other partnership
managed by the
same general partner or manager, and/or the limited or general partners or
members of such partnership or limited liability company and/or the
controlling shareholder of the general partner or manager; (it being agreed, for
the avoidance of doubt, that ITC and Bontan, and any subsidiaries of Bontan are
Permitted Transferees of IPC); provided that the
Permitted Transferee agrees in writing to be bound by and subject to the terms
and conditions of the JOA, and any other agreement between the transferor and
the party of theJOA or this Agreement which pertains to the Ownership WI Points
held by the transferor. An "Affiliate" of a party to the JOA shall mean any
entity which Controls, is Controlled by or is under common Control of said
party, where "Control" shall mean a holding of more than 50% of the voting or
economic rights in said entity.

       

      D. Transfer to International Operator; Drag-Along,
Tag-Along. With respect to any decision to convey rights in the Israel
Offshore Project by the Lead Investors to an international operating company
including the right to serve as operator of the Licenses and Permit, the Lead
Investors can require IPC to participate in a sale of its interest to such third
party in the same proportion and on the same terms as the Lead Investors have
agreed to sell their own interests, provided, that IPC cannot be required to
convey more than 66% of its Ownership WI Points in each of the Licenses and
Permit (as such Ownership WI Points exist immediately prior to the transfer to
such operator) without its written consent, which it may withhold in its
absolute discretion; and provided, further, that IPC shall have the right to
participate in such transaction for up to 66% of its Ownership WI Points in each
of the Licenses and the Permit on the same terms as the Lead Investors have
agreed to sell their own interests if the Lead Investors do not elect to include
IPC's interest in the transaction.

      

      (vi)
EMedCo Consulting Agreement.

       

      The
EMedCo Joinder will require, and PetroMed agrees, that EMedCo and PetroMed
shall be deemed to have cancelled and terminated or all intents and purposes the
PetroMed -EmedCo Consulting Agreement, and that the parties have waived all
rights and claims of either party to the other under said Consulting
Agreement, in addition to the mutual releases given in Section 11 hereof, and
may provide that EMedCo, the Lead Investors, I~t and the Joining Investor, if
any, shall then enter into a consulting agreement in form to agreed (the "New Peace Consulting
Agreement"), pursuant to which Peace/EMedCo shall perform services in
relation to the Israel Offshore Project as its Head Technical Advisor. For the
avoidance of doubt, it is clarified and agreed that should the New Peace
Consulting Agreement be executed, then the ongoing costs of such agreement shall
be borne by all Owning Parties in accordance with and prorated to their
respective Ownership WI Points.

       

      (vii)
Allocation of Rights in Offshore Israel
Project.

       

      A.            Upon
remittance of the First WG Installment by the Lead Investors in accordance with
Section 2(i) hereto, the Parties hereby stipulate and agree that the Lead
Investors and IPC shall be deemed to own irrevocably the following working
interest points (out of the total specified in the table below) in the Israel
Offshore Project, free and clear of any and all charges, claims or encumbrances
(except as specified herein) ("Ownership WI Points").

       

      

       

      
        	
                Name

              	
                Ownership
      Working Interest Points (assuming no EMedCO and Joinder and PBT Joinder
      and Transfer) on basis of 100% of the Israel Offshore
    Project

              	
                Ownership
      Working Interest Points (before EMedCo Joiner and PBT Joinder and
      Transfer) on bais of 100% of the Israel Offshore Project

              	
                Ownership
      Working Interest Points (Assuming EMedCo Joinder and PBT Joinder and
      Transfer) on the basis of 100% of the Israel Offshore
    Project

              
	
                IPC

              	
                14.325
      Working Interest Points

              	
                14.325
      Working Interest Points

              	
                14.325
      Working Interest Points

              
	
                IDB-DT

              	
                28.650
      Working Interest Points

              	
                27.15
      Working Interest Points

              	
                25.560
      Working Interest Points

              
	
                Emanuelle

              	
                57.025
      Working Interest Points

              	
                54.025
      Working Interest Points

              	
                50.865
      Working Interest Points

              
	
                PBT

              	
                0.00
      Working Interest Points

              	
                0.00
      Working Interest Points

              	
                9.25
      Working Interest Points

              
	
                EMedCo

              	
                0.00
      Working Interest Points

              	
                4.50
      Working Interest Points

              	
                0.00
      Working Interest Points

              
	
                Total

              	
                100.0
      Working Interest Points

              	
                100.0
      Working Interest Points

              	
                100.0
      Working Interest Points

              

      

      Each
column of the specified a different scenario -the first column assumes points
out of 95.5% of the Israel Offshore Project, and the second and third columns
assume points out of 100% of the Israel Offshore Project, before the execution
of the EMedCo Joinder and Joining Investor Joinder and after the execution of
the EMedCo Joinder and Joining Investor Joinder, respectively..

       

      B.
Subject to the payment of the First WG Installment the Parties hereby transfer
and convey to each other the respective rights, titles, and interest in the
Licenses and Permit necessary to reflect the Ownership WI Points stated above.
It is understood that until the transfer of ownership of the Licenses and Permit
on the Registry and such transfer is approved by the Commissioner, PetroMed,
being the registered holder, shall hold ownership of the Licenses and Permit in
trust for the Lead Investors and IPC subject to their rights as provided in this
Agreement.

       

      C. The
Parties further agree to execute such other instruments and perform such other
acts as will accomplish the purposes of this paragraph and confirm the Ownership
WI Points of the Lead Investors and IPC in the Licenses and Permit, including,
at the Lead Investors' discretion and request, PetroMed's confirming the
transactions contemplated by the Option Agreement and IPC being the entity
transferring such rights in accordance with the ownership WI Point.

       

      
        	
                D.  

              	
                Solely
      as between ITC and Bontan, it is agreed that of the 14.325 Ownership WI
      Points in the Licenses and Permit to be owned by IPC, a net 3.325
      Ownership WI Points is allocated to ITC and the remaining 11 Ownership WI
      Points are allocated to Bon (which is inclusive of Allied Ventures'
      interests), to be owned by IPC on their behalf. No later than 21 days
      following execution of this Agreement, IPC shall pay to the Lead Investors
      the sum of $240,000; provided, however, that as between ITC and Bontan, if
      Bontan does not contribute the funds to IPC on a timely basis for such
      payment, ITC shall have the right to contribute such funds and thereby
      increase its allocated Ownership WI Points to 4.325 Ownership Points
      instead of 3.325 Ownership WI Points on account of Bontan (which will hold
      10 Ownership WI Points). Solely as between IPC and Bontan, in the event
      IPC issues publicly traded shares in Israel in one or more offerings, ITC
      shall serve as general partner or the equivalent in any such offering and
      shall receive customary compensation terms for publicly traded oi an
      gas partnerships or, if IPC finances its participation in the Israel
      Offshore Project through other means, ITC shall receive compensation for
      managing such financing comparable to a general partner compensation
      in publicly financed transactions.

              

      

       

      (viii)
Registration
of Rights on Petroleum Registry. Upon execution hereof, PetroMed
will execute, and deposit with the Lead Investors, a letter by which PetroMed
withdraws the rescission notice with respect to the Licenses, addressed to the
Petroleum Commissioner in the form attached as Exhibit 13 hereto (the
"PetroMed Withdrawal Letter").

       

      
        	
                A.  

              	
                 Following
      remittance of the First WG Installment, the Parties shall use their best
      efforts to effect the transfer of the rights in the Israel Offshore
      Project to the Lead Investors and IPC on the Registry in the manner
      required by law; it being understood that the Lead Investors shall have
      the discretion on the manner to effect the same, following consultation
      with IPC. The application to the Commissioner will be filed jointly by the
      Lead Investors and PC, with PetroMed's execution thereof as required by
      Lead Investors and IPC. The Parties (including, at Lead Investors’
      request, the Individual Parties as well) will attempt to expedite approval
      by the Commissioner and agree to cooperate in providing all information
      and materials required y the Commissioner to effect such approval,
      including, if required by the Commissioner, submittal of the PetroMed
      Withdrawal Letter, subject to the agreement that, without derogating from
      IPC’s obligations under the JOA, the Lead Investors agree that, solely in
      respect of IPC, for purposes of such and only such application, it is
      their entire obligation alone to prove (and onI to rove, without incurring
      any actual monetary obligation) financial capability condition as required
      by the Israeli Petroleum Law, in respect of IPC's interest (up to 14.325
      Ownership WI Points) of the Israel Offshore Project (the "Umbrella"), such
      that IPC will be exempt from proving financial capability; provided that
      this obligation will remain in force until the earlier of 5 (five) months
      from registration of the Licenses in the respective names of the Lead
      Investors and IPC in accordance with the Ownership Interests; or 30th
      June 2011 (the “Umbrella
      Period”).  For the avoidance of doubt said Umbrella shall
      be afforded solely with respect to the Sara and Myra Licenses. At the
      end of the Umbrella Period, if IPC has not established its independent
      financial capability to meet the requirements of the Commissioner, IPC
      shall elect one of the I following options (to be applied on a
      License-by-License basis):

              

      

       

      
        	
                 
      

              	
                a)
      IPC may offer to sell to the Lead Investors and the Lead Investors shall
      have the right but not the obligation, in proportion to their Ownership WI
      Points, its Ownership WI Point in the Licenses for which it has not
      established financial capability for a purchase price of $240,000 per each
      Ownership WI Points;

              

      

       

      
        	
                 
      

              	
                b)
      IPC can contract (by agreement entered into no later than the end of the
      five-month period) to sell or farmout or otherwise dispose of its
      Ownership WI Points in the affected-License and the Lead Investors shall
      have the right of first refusal to acquire any or all of the affected
      interest by exercise in the manner provided in Section 2(v)D above;
      or

              

      

      
        	
                 
      

              	
                c)
      IPC shall be obligated to participate in the first well drilled on th1
      affected License for which the Owning Parties are not carried for drilling
      costs, by paying 200% of its share of the drilling cost (100% as
      participation and 100%totheLead Investors), failing which it shall be
      deemed to have forfeited to the Lead Investors its Ownership WI Points in
      the affected License.

              

      

      

      If IPC
fails to consummate route (a) or (b) within 60 days following the

      Period in
a manner that will allow it to establish its independent financia1capability
(with respect to the remainder. of its working interest, if any are sold
pursuant to clause (a) or (b), it shall be deemed to have elected route
(c).

       

      

         B.          As
between ITC and Bontan, it is agreed that if Bontan does not establish financial
capability to the extent of its proportionate ownership of IPC in time
sufficient to meet the Umbrella Period, then ITC can provide such financial
capability on behalf of IPC on the r ownership shares of IPC between Bontan and
ITC will be readjusted to reflect the acquisition by ITC of Bontan's interest in
the affected License.

       

          C.           Immediately
following the execution of the Overriding Royalty Rights described in clause
(iii) above, the Parties shall use reasonable efforts to effect the registration
of the Overriding Royalty Rights on the Registry. Until such registration IS
accomplished, the Lead Investors, PetroMed and IPC agree to execute and deliver
such documents as necessary to register the Overriding Royalty Rights as alien
in the Registrar of Pledges.

      

       

      (ix)
Failure to Register Rights on Petroleum
Registry.

       

      A. General. Should the
transfer of the rights in the Licenses and/or Permits, or any part thereof,
on the Registry in the manner required by the Lead Investors and IPC in
accordance with the allocations set forth in sub-clause (vii) not be effected
promptly after the upcoming meeting of the Petroleum Council, then the Parties
agree to cooperate together to take allocation to re-apply under the same
allocations of interests and agreements contemplated her by taking advantage of
the joint control the Lead Investors and IPC of the Data received
from Western Geco. Unless and until such approvals are obtained for the
Lead Investors and IPC, the Pies continuing to be registered owners of the
Licenses and Permit shall act in all respects as fiduciaries and trustees, at
the direction of the Lead Investors in accordance with their sole discretion and
for the benefit of each of the Lead Investors of IPC as the real parties in
interest in ownership of the Licenses and/or Permit which were transferred
as above, and shall not take or refuse to take any reasonable act or deliver or
refuse to deliver any reasonable instrument necessary to protect the rights of
each of the Lead Investors and IPC to ownership of their respective rights in
the Licenses and Permit and to effect transfer of their respective Ownership
interests to them or otherwise. If the Commissioner fails to approve the
registration of IPCthe Lead Investors agree to deliver to IPC the PetroMed
Withdrawal Letter furnishes to it by-PetroMed for filing with the Commissioner.
The Parties acknowledge that each o the Lead Investors and/or IPC may initiate a
public offering.

          B. PetroMed Asset Control
Option. Without
derogating from the aforesaid, the Lead Investors, in their discretion after
consultation with IPC, shall be entitled, but not obligated to, act in one or
combination of the following manners: (i) Emanuelle may exercise
the option, granted under the Term Sheet, as extended hereunder, by
way of being issued 99.9% of /the issued and outstanding share capital on a
fully diluted basis of PetroMed and the voting rights and all other rights
necessary to provide the Lead Investors with complete control of PetroMed,
following which it will cause PetroMed to
issue shares to IDB-DT and IPC to reflect their Ownership WI Points described
above; and/or (ii) Emanuelle may exercise the Options rarited under the Term
Sheet, as extended hereunder, to acquire up to 100% of the issued and
outstanding share capital on a fully diluted basis of PetroMed and the voting
right, and all other rights necessary to provide the Lead Investors with
complete control of PetroMed, including by way of merger, consolidation, scheme
of arrangement or any other legal means available to effect such. By taking the
actions contemplated in this paragraph or any other actions to exercise the
PetroMed Asset Control Action, the Lead Investors shall not be deemed to have
assumed any obligation or liability of PetroMed, and the Lead Investors and IPC
shall not be deemed to have assumed any such obligation or liability by reason
of any actions taken under this Agreement to obtain ownership of the Licenses
and Permit, save and except the WG Payment a d those liabilities and obligations
attributable to such ownership that arise hereafter.

       

          C. Failure to Register IPC's
Rights on Petroleum Registry. Should the transfer of the rights in the
Licenses and/or Permit in the name of IPC on the Registry in accordance with the
allocations set forth in sub-clause (vii) not be effected promptly after the
upcoming meeting of the Petroleum Council whereas the transfer of such rights to
the Lead Investors shall have occurred, then IPC shall designate a trustee to
act in all respects as a fiduciary and step, at the direction of IPC, for the
benefit of IPC as the real party in interest in IPC's respective Ownership WI
Points in the Licenses and/or Permit, and the Lead Investors shall not take or
refuse to take any reasonable act or deliver or refuse to deliver any reasonable
instrument necessary to protect the rights of WC to ownership of its rights in
the Licenses and Permit and to effect transfer of its ownership interest to IPC,
to include if requested by IPC the delivery of the Commissioner of the
PetroMed Withdrawal Letter. For the avoidance of doubt, this arrrnger.ent shall
not be deemed a responsibility of the Lead Investors pursuant to which IPC may
make any claims and/or demands against the Lead Investors other than for their
compliance with the provisions of this paragraph.

       

      (x) Specific Performance.
Each of the Parties hereto hereby recognizes and acknowledges that a breach by
any other Party (the "Breaching Party") of any covenants
or, other commitments contained in Sections 2, 3, 5 and 11 of this Agreement
will causes the non-Breaching Party to sustain injury for which it would not
have an adequate remedy at law for money damages. Therefore, each of the
Parties hereto hereby agrees that, in the event of any such breach, the
non-Breaching Party shall be entitled to the remedy of specific performances be
of such covenants or commitments and provisional, interlocutory and permanent
injunctive and other equitable relief in addition to any other remedy to which
it may be entitled, at law or in equity and each of the Parties hereto further
hereby agree to waive any requirement for the securing or posting of any bond in
connection with the obtaining of any such injunctive relief other equitable
relief.

      

      (xi)
Non-Circumvention:
Damages; Limitation of Liability.

       

      A. Non-Circumvention. No
Party shall take any action or omit to take such action the result of which will
be the circumvention of the express purposes of this Agreement. Should any Party
breach any of the above material provisions, it shall be liable for all damages
caused thereby to the other Parties and their reasonable attorneys' fees and
costs in enforcing is provision and the waivers and release under Section 11 shall be deemed null
and void vis-a-vis the Party breaching this provision. Without limiting the
foregoing and in addition to other rights and remedies provided in this
Agreement or under applicable law, should the PetroMed Parties not comply with
any of the above provisions on the dates and in the manner specified therein,
then without limiting the rights and remedies of such Party under this Agreement
under applicable law, they shall be deemed to have irrevocably waived and
relinquished the New PetroMed Trust Overriding Royalty and all other unpaid
payments otherwise pa able to PetroMed Parties and their agents shall be deemed
waived and relinquished; provided that the Lead Investors shall have
provided the PetroMed Parties with written notice of same, allowing the cure of
such non-compliance within fourteen (14) days following deliver of such
notice.

       

      B. Limitation of
Liability. Except in the event of fraud or willful misconduct, and
without derogating from Section 2(x) (specific performance), the maximum
monetary liability for breaches of this Agreement by each Party hereto
shall not exceed $10,000,000.

       

       

      (xii)
Joint Liability;
Cooperation.

       

      
        	
                A.  

              	
                The
      Owning Parties (as defined in Section 10(g) hereof) shall liable on a
      pro-rated basis to their respective Ownership WI Points in connection with
      any claims, demands, suits or causes of action of any kind whatsoever,
      asserted by either shareholders of PetroMed holding shares prior to the
      date hereof or by third party creditors against an Owning Party in
      connection with this Agreement, the transactions contemplated hereunder
      and/or the Licenses and Permit and/or the Term Sheet (effective as of
      March 8th,
      2010) as if they were a party to the Term Sheet (collectively. together
      with all costs and expenses, including reasonable legal fees, the "Shared Liabilities").
      Notwithstanding the (i) IPC shall have no liability whatsoever for any of
      the debts or accounts payable fd1 the Term Sheet, and (ii) if IPC
      Ownership WI Points are not registered on the Registry and the Ownership
      WI Points of the Lead Investors are registered on the Registry, then IPC
      shall have no liability with respect to the Shared Liabilities. Nothing
      herein shall be deemed to release the PetroMed Parties from the
      aforementioned Shared Liabilities and PetroMed shall have primary
      liability for the matters described in this paragraph. Each of the Parties
      shall cooperate in a joint defense against such claims and irrevocably
      agrees to pay the other Parties on a pro-rat db. is to their respective
      Ownership WI Points, on an as-incurred basis all costs in respect thereof
      din satisfaction of all such claims, demands, suits, manner of obligation,
      debt, liability, tort, covenant, contract, or causes of
      action.

              

      

       
 

      The
PetroMed Parties (excluding Hagai Amir and Lyle Durham) hereby jointly and
severally indemnify and agree to defend and hold harmless the Owning Parties
from and against all such Shared Liabilities. For the avoidance of doubt, the
Owning Parties shall be entitled to assert, and the PetroMed Parties hereby
grant, the right of set off against any obligation of the Owning Parties to the
PetroMed Parties, including payment of any amounts due under the New PetroMed
Trust Overriding Royalty, against any amounts paid by the Owning Parties
pursuant to this paragraph.

       

      B. To the
extent that the Joining Investor Joinder and EMedCo Joinder are not executed and
delivered as contemplated hereunder, then, at the Lead Investors' and IPF.'s
request,eachoftheParties hereto shall cooperate in a joint defense against any
claims of the EMedCo Parties and/or Tomlinson against the transactions
contemplated by this Agreement and subject to agreement of costs and expenses,
in pursuing claims against the EMedCo Parties and/or Tomlinson.

       

      3. Closings.

       

      A. Initial Closing.
Promptly upon execution hereof and, in any event, immediately prior to the date
upon which the Lead Investors are scheduled to deliver the First WG Installment
to Western Geco, the PetroMed Parties shall deliver to the Lead Investors, at
the office of Emauelle's counsel in Tel Aviv or such other place designated
by the Lead Investors, the items required to be delivered In this Agreement,
including the following, all duly executed and in form and substance
satisfactory to the Lead Investors and their counsel and with respect to ~tem
number 4 below, also satisfactory to IPC ("Initial Closing"):

       

      1 Deeds of
Assignment for the Licenses.

       

      2 Voting
Agreements (including Proxies) from the holders of the PetroMed
Percentage.

       

      3 Powers of
Attorney.

       

      4 PetroMed
Withdrawal Letter.

       

      5 Bontan
Shares and Warrants and related stock powers.

       

      6 The Old
PM Overriding Royalty.

       

      7 Board
resolutions reflecting approval of the transactions contemplated b~ this
Agreement in the manner required by applicable law, attached hereto
as Exhibit
14

      1 Opinion
of Belize counsel to PetroMed.

       

      2 Letter
requesting registration of the TCP Overriding Royalty, the LeadInvestors
Overriding Royalty and the other overriding royalty agreements delivered at the
Second Closing, attached hereto as Exhibit
15.

      

      
        	
                 
      

              	
                10.
      Certificate of Incumbency addressing, among PetroMed's
    Assets.

              

      

      

      
        	
                 
      

              	
                11.
      Letter to the Commissioner from the Lead Investors and IPC (and all other
      Parties requested to do so by the Lead Investors) requesting the
      Commissioner's approval of the transfer of the Licenses and Permit to the
      Lead Investors an~ IP9 in accordance with their Ownership WI Points as
      specified herein, attached here to as Exhibit
      16.

              

      

      
        	
                 
      

              	
                12.
      Letter to the Commissioner informing him of the transactions contemplated
      hereunder, substantially in the form attached hereto as Exhibit
      17.

              

      

       

      At the
Initial Closing, provided the PetroMed Parties furnish all items required of
them, the Lead Investors shall deposit the funds in escrow described in Section
S.H. to be used for discharge of PetroMed liabilities and obligations in the
manner determined by the Lead Investers td be appropriate, in accordance with
list of debts specified on the Settlement List provided by PetroMed to the Lead
Investors as required in the Term Sheet. For the purposes he of, ~PC declares
that the debt of RPS is not an IPC or ITC obligation and PetroMed declares that
the debt of RPS is not a PetroMed obligation.

       

      B. Second
Closing. Immediately following the Initial Closing, the Lead Investors and IPC
shall convene at the same location as the Initial Closing or such other location
as they shall agree and deliver the following items in form and substance as
required in this Agreement (the "Second
Closing"):

       

      1. The
Lead Investors shall deliver the First WG Installment to Western
Gece.

       

      2.
PetroMed, the Lead Investors and IPC shall deliver the TCP Overriding Royalty to
TCP (against Cooper's simultaneous delivery of the IPC Cooper ORR for
cancellation by IPC) and the Lead Investors Overriding Royalty to ILDC and
IDB-DT;

       

      3. The
Parties shall execute the Dismissals listed in Section 12 for filing the
respective courts.

      4. The
Parties shall send the Commissioner the following documents:

      a. Letter
to the Commissioner informing him of the transactions contemplated hereunder,
substantially in the form attached hereto as Exhibit
17.;

       

      

       

      b. Letter
to the Commissioner from the Lead Investors and IPC (and all other Parties
requested to do so by the Lead Investors) requesting the Commissioner's approval
of the transfer of the Licenses and Permit to the Lead Investors and IPC in
accordance with their Ownership WI Points as specified herein, attached hereto
as Exhibit
16; and

      c. Letter
requesting registration of the TCP Overriding Royalty the Lead
Investors Overriding Royalty and the other overriding royalty agreements
delivered at the Second Closing, attached hereto as Exhibit
15.

      

      4. Acknowledgment.
The Parties hereby acknowledge that there is no assurance that the
Commissioner will extend the Licenses or register the transfer thereof as
contemplated hereunder t

      d that
the Lead Investors are not making any assurance in this regard.

      5.
Covenants of PetroMed Parties. The PetroMed Parties covenant as
follows:

      

      
        	
                 
      

              	
                A)
      Between the date of this Agreement and the approval by the commissioner
       of the transfer of ownership rights to the Lead Investors and IPC,
      PetroMed will keep the Parties immediately informed of and obtain a
      written approval from the Lead Investors and IPC for any changes or
      matters affecting directly or indirectly the Israel Offshore
      Project.

              

      

       

      
        	
                 
      

              	
                B)
      Between the date of this Agreement and the approval by the
      Commissioner of the transfer of ownership rights to the Lead
      Investors and IPC, PetroMed s all not enter into any new agreements or
      commitments with respect to the Israel Offshore Project, shall not commit
      to or incur any expenditures with respect to any part of the Licenses and
      the Permit, shall not release all or any portion of any of the Licenses
      and the Permit, shall not modify or terminate the licenses or Permit or
      any contract relating to the Licenses and Permit or waive or
      relinquish any right thereunder, and shall not encumber, sell or dispose
      of any interest in the Israel Offshore Project or any right related
      thereto.

              

      

       

      
        	
                 
      

              	
                C)
      Between the date of this Agreement and the approval by the Commissioner of
      the transfer of ownership rights to the Lead Investors and lPC, Petro ed
      ~hall promptly notify the Lead Investors and IPC of any suit, action or
      9ther proceeding before any Israeli governmental authority and any cause f
      a9tion that relates to the Israel Offshore Project or that might result in
      impairment or loss of PetroMed's or the Lead Investors' or IPC's title to
      any portion of the Licenses and the Permit or the value thereof or that
      might hinder 9r impede the ability of PetroMed to perform its obligations
      hereunder. Between the date of this Agreement and September 30, 2011,
      PetroMed shall not (and the PetroMed Parties shall use their best
      endeavors to prevent the same) (i) amend or change .its Charter
      Documents; (ii) issue, deliver, sell, authorize, pledge or otherwise
      encumber any of its share capital, or any securities convertible into
      shares; or (iii) take any other actions that may impede transactions
      contemplated hereunder and/or the rights of Emanuelle der the' Term Sheet
      or make the representations made herein inaccurate in
    respect.

              

      

         

              D) PetroMed shall diligently
exercise all due care in safe guarding and disclose or make available such data
to any person or party, other than the Commissioner and his staff, without the
consent of the Lead Investors and IPC.

       

      
        	
                           

              	
                E)
      PetroMed will comply with all laws, rules, regulations, ordinances any
      orders of all governmental authorities and agencies having jurisdiction
      over the Licenses and the Permit at all times until the approval by the
      Commissioner of the transfer of the Licenses and Permit to the Lead
      Investors and IPC.

              

      

       

      
        	
                            

              	
                F)
      PetroMed shall take or cause to be taken all such actions as may be
      necessary or advisable to consummate and make effective the transfer of
      the Licenses and the Permit and the transactions contemplated by this
      Agreement and to assure that as of the date hereof and until the
      Commissioner has approved transfer of the Licenses and Permit to the Lead
      Investors and IPC it will not be under any corporate or contractual
      restriction that would prohibit or delay the timely consummation of such
      transactions. Such action shall include without limitation, the
      identification and obtaining of all necessary consents, permissions and
      approvals of third parties or governmental authorities in, connection
      with sale and transfer of the Licenses and
  Permit.

              

      

       

      
        	
                           

              	
                G)
      Until the approval by the Commissioner of the transfer of the Licenses and
      Permit to the Lead Investors and IPC and unless approved by the Lead
      Investors in writing, the PetroMed Parties will not (i) solicit, discuss,
      encourage or otherwise entertain, directly or indirectly (itself or
      through any agent, adviser, investment banker, stockholder, officer,
      director or other representative), any offer to acquire any interest in
      the Licenses and the Permit, (ii) provide information to
      others concerning the Israel Offs ore Project (except as required by
      governmental authorities) or (iii) enter into any negotiations with, or
      enter into any agreement that provides for acquisition of interest in the
      Israel Offshore Project or any portion thereof by, a person other than the
      Lead Investors or IPC or their
designees.

              

      

      
        	
                           

              	
                H)
      Subject to the deposit by no later than March 21, 2010 (with a three days
      grace) of the sum of US$3,550,OOO with Confino Luchtenstein Trust Company
      Ltd. in escrow pursuant to the irrevocable Letter of Instructions attached
      hereto as Exhibit
      18, and without derogating from Section 3 hereof the PetroMed
      Parties hereby undertake, to immediately secure 11 of the undertakings
      detailed in section A) through G) above, as
  follows:

              

      

       

                (I) To
appoint as of the date hereof David Cohen ID 05974~0711 as a member of the board
of directors of PetroMed (the “New Directors”), as designated
by the Lead Investors.

       

                (II) To
change the signatory rights in PetroMed so that PetroMed may not be bound
for all intents and purposes without the signature of at least two of the
New Directors (the "New
Signatory Rights”).

      

                (III) To
provide the irrevocable resignation letters of all board members and officers of
PetroMed, which directors shall declare upon their resignation that they have no
claim or demand against PetroMed, except as expressly set forth in such letters
of resignation for each board member and officer, as are attached hereto as
Exhibit
20.

      

       

                (IV) To
furnish the Lead Investors with a legal opinion from a Belize lawyer reasonably
acceptable to the Lead Investors in form reasonably acceptable to the Lead
Investors confirming the following:

       

       (1) PetroMed is a corporation
duly incorporated, organized land validly existing and in good standing under
the laws of Belize;

       

      (2)
PetroMed has the corporate power, authority and capacity to enter into this
Agreement and to carry out and complete its obligations under this
Agreement;

       

      (3) this
Agreement and the obligations of PetroMed under this Agreement and the
transactions contemplated thereby have been duly and validly authorized by all
requisite corporate or other proceedings and constitute, legal, valid
and binding obligations of PetroMed, subject to the limitations with
respect to enforcement imposed by applicable law in connection with bankruptcy,
insolvency, li uida ion, reorganization or other laws affecting the enforcement
of creditors' rights generally and subject to the avai bili of equitable
remedies such as specific performance and injunction which are only available in
the discretion of the court from which they are sought; 

      

       

      (4) to
the best of his knowledge PetroMed (i) has no ma e an assignment in favor of its
creditors or a proposal in bankruptcy to its creditors or any class thereof; (i
) have not had any petition for a receiving order presented in respect
compromise or arrangement with its creditors or for its winding up, liquidation
or dissolution; and (i ) it has provided to the Lead Investors a complete
and accurate list of all material creditors of PetroMed as of the date of this
Agreement and will be complete and accurate in all material
respects.

       

      (5) The
adoption and validity of the New Signatory Rights in PetroMed as of the
date hereof.

      
 

      6. Representations
and Warranties.

       

      A. Representations and
Warranties by the PetroMed Parties. The PetroMed Parties represent and
warrant to the Lead Investors and IPC that as of the date of this Agreement and
as of the date of the approval of the transfers of the Licenses and Permit to
the 1ead Investors and IPC:

       

      1.
Neither the entering into nor the delivery of this Agreement nor the completion
by PetroMed of the transactions contemplated thereby by will conflict with, or
constitute a material default under, or result in a material violation of: (i)
any of the provisions of the entity formation documents or by­laws of
PetroMed; or (ii) any applicable laws or (iii) other than as a result t of the
Disputes being released hereunder, any agreement or instrument to which PetroMed
is a party or by which PetroMed or the Licenses and the Permit are bound,
or (iv) any applicable laws applicable to the Licenses and the
Permit;

      2.
PetroMed (i) is not "insolvent" and will not be rendered insolvent by the
transactions contemplated hereunder; (ii) has not made an assignment in favor of
its creditors or a proposal in bankruptcy to its creditors or any class
thereof;

      (iii) has
not had any petition for a receiving order presented in respect of it; and (iv)
has not initiated proceedings with respect to a compromise or arrangement with
its creditors or for its winding up, liquidation or dissolution; and (v) it has
provided to the Lead Investors a complete and accurate list of all material creditors
of PetroMed as of the date of this Agreement and will be complete and
accurate in all material respects as of the registration of the Licenses in the
name of the Lead Investors and IPC. As used in this section, "insolvent" means
that the sum of the debts and other probable liabilities and obligations of
PetroMed exceeds the present fair saleable value of PetroMed’s assets. Based on
the consolidated financial condition of PetroMed, averaging effect to the
receipt by PetroMed of the consideration hereunder the fair saleable value of
its assets exceeds the amount that will be required 0 be paid on or in respect
of its existing debts and other liabilities (including known contingent
liabilities) as they mature;

      3.
PetroMed is under no obligation, contractual or otherwise, to request or obtain
the consent of any person, and no permits, licenses, certifications,
authorizations or approvals of, or notifications to, any federal, state,
municipal or local government or governmental agency, board, commission or
authority are required to be obtained by PetroMed in connection with the
transactions as contemplated herein, except for consents that must be obtained
from Israeli governmental authorities, and PetroMed has notified the Lead
Investors and IPC of all material communications from the Commissioner with
respect to the Licenses and Permit;

      4.
PetroMed is not a party to any oral contract, agreement, or other arrangement
which, if reduced to written form, would affect its ownership and the in full or
part, directly or indirectly of the Israel Offshore Project;

      5.PetroMed
is registered on the Registry as the holder of the undivided 95.5% interest in
the Licenses forming part of the Israel Offshore Project, an except for the
rights assigned to IPC that are the subject of the Disputes, sue holding is free
and clear of all encumbrances or claims, and except for rights claimed by EMedCo
and the ORR of 5% security of TGS/Spectrum (which is voidable upon payment
estimated at not more than $1,250,000) PetroMed has never granted any other
person any security interest, option, right of first r fuS~1or other rights with
respect to the Offshore Israel Project. Without derogating from the foregoing,
other than the Old PM Overriding Royalty and e RR security of TGS, as defined
above, which shall become null and void in accordance with the terms hereof,
PetroMed has not granted any third party overriding royalty rights in the
Licenses;

      6.Except
for the Colorado Lawsuit and the Washington Lawsuit, there is no litigation,
claim or proceeding, including appeals and applications fo rev~.ew, in progress,
pending or, to the best of the knowledge of PetroMed, threatened against
PetroMed relating to the Israel Offshore Proj.ect be pre any governmental
authority or arbitration panel, and there is not presently outstanding against
PetroMed any judgment, decree, injunction, rule or order of any governmental
authority or arbitrator which would (i) have material adverse affect on the
Israel Offshore Project, including, without limitation the value thereof,
(ii) prevent PetroMed from satisfying its obligations hereunder; or (iii)
prevent PetroMed from fulfilling in any material respect its obligations
..contained in this Agreement or arising from this Agreement.

      7.PetroMed's
execution, delivery and performance of the Term Sheet and the Option Agreement
and the transactions contemplated hereunder, including the sale and transfer of
the Licenses and Permit, have been duly auth rized by all requisite corporate
action, including, in case of the Option Agreement by the shareholders of
PetroMed at the requisite majority under applicable law, and no other corporate
proceedings were or are necessary to approve and authorize the execution of the
Term Sheet or to consummate the t sac ions contemplated thereby.

      8.The
authorized capital stock of PetroMed is 100 million shares, each bearing par
value of US$O.OOl, of which 52,754,262 are issued and outstanding and are owned
beneficially and of record by the persons/entities set forth in Schedule 8.
There are no other share capital, preemptive rights, convertible securities,
outstanding warrants, options or other rights to subscribe for, purchase or
acquire from PetroMed any share capital and there are no any contracts or
binding commitments providing for the issuance of, or the granting of rights to
acquire, any share capital of PetroMed or under which it is, or may become,
obligated to issue any of its securities.

      9.They
are not aware of any other persons that claim, have claimed or may claim rights
in the Israel Offshore Project which are not waiving such rights under Section
II herereof. Other than as contemplated in the Term Sheet, hereunder, the Option
Agreement and the EMedCo alleged right of first refusal, PetroMed has full right
to transfer and assign all of Israel Offshore Project, free and clear of any
liens.

       

      B. Representations and
Warranties of IPC Parties. Each of the IPC Parties (except Cooper)
warrants to the other Parties that as of the date of this Agreement and as of th
dat~ of approval by the Commissioner to the transfer of the Licenses and Permit
to the Lead Investors and IPC:

       

      1. It has
all necessary corporate power, authority and capacity to enter into this
Agreement and all other agreements contemplated by this Agreement and to carry
out and complete its obligations under this Agreement and all other agreements
contemplated by this Agreement and no shareholder approval is required
therefor;

      2. It is
duly incorporated, organized and validly existing and, where applicable, in good
standing under the laws of the place of its organization;

      3. This
Agreement and the obligations of such Party hereunder and' the documents and
transaction contemplated therein have been duly an validly authorized by all
requisite corporate proceedings and constitute legal and binding obligations of
the respective IPC Party, enforceable against it in accordance with their terms,
subject to the limitations with respect to enforcement imposed by
applicable laws in connection with bankruptcy, insolvency, liquidation,
reorganization or other laws affecting the enf rcenp.ent of creditors' rights
generally and subject to the availability of equitable remedies such as specific
performance and injunction which are only available in the discretion of the
court from which they are sought;

      4.
Neither the entering into nor the delivery of this Agreement completion by said
IPC Party of the transactions. contemplated hereunder will conflict with, or
constitute a material default under, or result in a material violation of (i)
any of the provisions of the entity formation documents or by-­laws of such
Party, or (ii) any applicable laws, or (iii) or any agreement or instrument to
which such Party is a party or by which such Party is bound, or (iv) subject to
the obligation to obtain approval of the transfer of the Licenses and the Permit
from the Israeli government authorities, any judgment decree, order, law, rule
or regulation applicable to such Party or the Licenses and the
Permit;

      5. Other
than the Colorado Lawsuit and the Washington Lawsuit, there is no outstanding
suit, action, litigation, claim or legal proceeding, including appeals and
applications for review, m progress relating to IPC b for anycourt, commission,
board or arbitration panel which, if determined adversely against it,
would:

      a.
prevent IPC from satisfying its obligations hereunder; or

      b.
prevent IPC from fulfilling in any material respect its obligations
contained in this Agreement or arising from this Agreement.

      6. Such
IPC Party has not granted any other person any security interest, option,
right of
first refusal or other rights with respect to its interest in the Offshore
Israel
Project (except for the avoidance of doubt Bontan's pledge in some of
its IPC
shares). Without derogating from the foregoing, other than the Old PM
Overriding Royalty, as defined above, which shall become null void In
accordance with the terms hereof, and the Old Cooper Overriding Royalty
to be
released as provided herein, such IPC Party has not granted any third
party
overriding royalty rights in the Licenses.

       7. 
It is not aware of any other persons that claim, have claimed or may claim
rights in the Israel Offshoe Project which are not waiving such rights under
Section 11 hereof, other than the EMedCo Dispute.

      
        	
                 
      

              	
                 

                 

              

      

             C. Representations and
Warranties of the Lead Investors. Each of the Lead Investors warrants
respectively as to itself and represents to the other Parties that as of the
date of this Agreement and as of the date of approval by the Commissioner to the
transfer of the licenses and Permit to the Lead Investors and IPC:

       

      1 Each has
all necessary corporate power, authority and capacity to enter into this
Agreement and all other agreements contemplated by this Agreement and to carry
out and complete its obligations under this Agreement and all other agreements
contemplated by this Agreement;

       

      2 Each is
duly incorporated, organized and validly existing and, where applicable, in good
standing under the laws of the place of its organization, except that IDB-DT is
currently in formation.

       

      3 This
Agreement and the obligations of such Party hereunder and the documents and
transaction contemplated therein have been duly and validly authorized all
requisite corporate proceedings and constitute legal, valid and binding 0tliga
ions of each Lead Investor, enforceable against it in accordance with their
terms, subject to the limitations with respect to enforcement imposed by
applicable laws in connection with bankruptcy, insolvency, liquidation,
reorganization or their laws affecting the enforcement of creditors' rights
generally and subject to the availability of equitable remedies such as
specific performance and in conjunction which are only available in the
discretion of the court from which they are sought;

       

      4 Neither
the entering into nor the delivery of this Agreement nor the completion by Lead
Investor of the transactions contemplated hereunder will conflict with, or
constitute a material default under, or result in a material violation of (i)
any of the provisions of the entity formation documents or by-laws of such
Party ,or (ii) any applicable laws, or (iii) or any agreement or instrument to
which such Party is a party or by which such Party is bound, or (iv) subject to
the obligation 0 ob ain approval of the transfer of the Licenses and the Permit
from the Israeli government authorities, any judgment, decree, order, law, rule
or regulation applicable to such Party or the Licenses and the
Permit;

       

             D.  Representations of
Emanuelle. Emanuelle represents and warrants to Plaintiffs that Emanuelle
entered into the Term Sheet.

       

      8. [RESERVED).

       

      9. Benjamin
Permit. The
Steering Committee shall determine whether (to pursue an administrative appeal
with the Commission r or the Ministry of Infrasucture to preserve the Benjamin
Permit and convert the Permit to one or more drilling licenses and, if such
effort is unsuccessful, whether to pursue a judicial appeal or (b) to apply for
a new permit covering any part of the area covered by Benjamin in the event
Benjamin is not preserved or converted to licenses for the benefit of
the Lead Investors and IPC. The provisions of this Agreement shall apply to the
Permit and to any permit or drilling license subsequently issued by the Israeli
government in replacement of the Permit or any part thereof to which any Party
acquires an ownership interest, provided however, if any such replacements
and/or acquisition require the investment of additional funds, a party shall be
entitled to a part of the Ownership WI Points, subject to remittance of
each party's respective portion of said investment requirements and to each of
the Parties shall have the required financial capability to the extent that such
capability is required; provided, however, that the Umbrella to ITC's 3.32
Ownership WI Points for the duration of the Umbrella Period for financial
capability allocable to the Ownership WI Points of ITC, and it is agreed
between ITC and Bontan that if Bontan does not establish.financial capability
attributable to its Ownership WI Points, ITC shall have the right to
provide such financial capability and thereby to acquire sole rights to the
Ownership WI Points of Bontan in the Permit or successor permit or license
acquired, and the interests of Bontan and ITC in IPC shall be adjusted to
reflect such allocation.

      

      10. Mutual
Releases.

       

      (a)
Effective upon the due and timely completion and consummation of the Initial
Closing and the Second Closing, the PetroMed Parties, on behalf of themselves
and their current and former owners, partners, parents, members, employees,
principals, officers, directors,­ shareholders, affiliates, predecessors,
successors, and assigns, hereby irrevocably, unconditionally, fully, completely
and finally waive, release, remise, acquit, and forever discharge and covenant
not to sue IPC Parties, the Lead Investors and, conditioned upon-Execution of
the EMedCo Joinder, EMedCo Parties, as well as their respective affiliates,
subsidiaries, divisions, predecessors, and their respective current and former
parent, partners,  employees, principals, officers, directors,
shareholders, members, successors and, assigns of and from any and all claims,
demands, suits, manner of obligation, debt, liability, tort, covenant, contract,
or causes of action of any kind whatsoever, at law or in equity, known or
suspected or unsuspected, that they had, presently have, may have, or claim or
assert to have hereafter have, may have, or claim or assert to have, including
without limitation, all claims causes of action arising out of or in any way
relating to the Disputes, and/or any claims that the PetroMed Parties could have
asserted in the Disputes against IPC Parties or, conditioned upon their
execution of the EMedCo Joinder, EMedCo Parties, including any claims to rights
and or interests in the Israel Offshore Project, and/or any claims that the
PetroMed Parties may have or claim or assert to have, or hereafter have, may
have, or claim or assert to have against Lead Investor, and excepting only IPC
Parties' and EMedCo Parties' respective obligations under this Agreement.
PetroMed Parties warrant and represent that they have not assigned or otherwise
transferred any claim or cause of action released by this
Agreement.

       

      (b)
Effective upon consummation of the Initial Closing and the Second Closing, IPC
Parties, on behalf of themselves and their current and former owners, partners,
parents, members, employees, principals, officers, directors, shareholders,
affiliates; predecessors, successors, and assigns, hereby irrevocably,
unconditionally, fully, completely and finally waive, release, remise, acquit,
and forever discharge and covenant not to sue the PetroMed Parties, the Lead
Investors and, conditioned upon their execution of the Me Co Joinder, the EMedCo
Parties, as well as their respective affiliates, subsidiaries, divisions, and
their respective current and former parents, partners, employees, principals,
officers, directors, shareholders, members, successors and, assigns, of and from
an and all claims, demands, suits, manner of obligation, debt, liability, tort,
covenant, contract, or causes of action of any kind whatsoever, at law or in
equity, known or unknown, suspected or unsuspected, that they had, presently
have, may have, or claim or assert to have, or hereafter have, any have, or
claim or assert to have, including without limitation, all claims and causes of
action "sing out of or in any way relating to the Disputes, and/or any claims
that IPC Parties could have asserted in the Disputes against the PetroMed
Parties or, conditioned upon their execution of the EMedCO Joinder, the EMedCo
Parties, and/or any claims that the IPC Parties may have, or claims or assert to
have, or hereafter have, may have, or claim or assert to have against the Lead
Investor, and excepting only the PetroMed Parties' and the EMedCo Parties'
respective obligations Jude this Agreement. IPC Parties warrant and represent
that they have not assigned or btherwise­transferred any claim or cause of
action released by this Agreement.

       

                (c) The
PetroMed Parties acknowledge that a portion of the consideration given for this
Agreement is being given for the full and final release of any and all losses,
claims, costs, expenses, damages, and fees, which may have occurred in the past,
and are not yet known, or which may occur in the future. The PetroMed Parties
agree to voluntarily and knowingly assume the risk of any mistake of fact,
either mutual or unilateral, with respect to slid losses, claims, costs,
expenses, damages, and fees, and shall not, under any circumstance, seek to
present further claims on behalf of themselves against the IPC Parties and/or
the Lead Inv stars arising out of or related to the Disputes and/or arising out
of or related to this Agreement r the Israel Offshore Project. The PetroMed
Parties recognize that they may here after discover claims or facts in addition
to or different from those which it now knows or believes to exist with respect
to the subject matter of this Agreement and which, if known or suspected at the
time of executing this Agreement, may have materially affected
this settlement. Nevertheless, the PetroMed Parties hereby waive any right
claims or causes of action that might arise as a result of such different or
additional claim or facts. Other than the promises and terms set forth herein,
the PetroMed Parties are not relying on any statements made by any other Party
indefinitely to enter into this Agreement. The PetroMed Parties acknowledge that
their adversary relationship with IPC Parties precludes any obligation of
disclosure by the IPC Parties to the PetroMed Parties.

       

      (d) The
IPC Parties acknowledge that a portion of the consideration this Agreement is
being given for the full and final release of any and all losses, claim
expenses, damages, and fees, which may have occurred in the past, and are not
yet which may occur in the future. IPC Parties agree to voluntarily and
knowingly assume the risk of any mistake of fact, either mutual or unilateral,
with respect to said losses, said losses, expenses, damages, and fees, and shall
not, under any circumstances, seek to preserve claims on behalf of themselves
against the PetroMed Parties and/or the Lead Investor arising out of or
related to the Disputes and/or arising out of or related to this Agreement or
Israel Offshore Project. IPC Parties recognize that they may hereafter discover
claims or fact in addition to or different from those which it now knows or
believes to exist with respect to the subject matter of this Agreement and
which, if known or suspected at the time of executing is Agreement, may have
materially affected this settlement. Nevertheless, IPC Partise hereby waive any
right, claims or causes of action that might arise as a result of such different
or additional claim or facts. Other than the promises and terms set forth
herein, IPC parties are not relying on any statements made by the PetroMed
Parties and/or Lead Investors in d1idin to enter into this Agreement. The IPC
Parties acknowledge that their adversary the PetroMed Parties precludes any
obligation of disclosure by the PetroMed Parties to the IPC
Parties.

      

      

      (e) The
EMedCo Joinder will contain releases, waivers and other provisions substantially
in the form contained in paragraphs (a) -(d) of this Section 10 with respect t9
the PetroMed Parties, the IPC Parties and the Lead Investors.

      

           (f) Effective upon
consummation of the Initial and Second Closing, IPC Parties and Emanuelle,
on behalf of themselves and their current and former owners, partners, parents,
members, employees, principals, officers, directors, shareholders, fil~'1tes;
predecessors, successors, and assigns, hereby irrevocably, unconditionally,
fully, completely and finally waive, release, remise, acquit, and forever
discharge and covenant not to sue on and her, as well as their respective
affiliates, subsidiaries, divisions, predecessors, and their respective current
and fanner parents, partners, employees, principals, officers, directors,
shareholders; members, successors and, assigns, of and from any and all claims,
demands, suits, manner of obligation, debt, liability, tort, covenant, contract,
or causes of action of any kind what oev r,..at law or in equity, known or
unknown, suspected or unsuspected, that they had, presently have, may have, or
claim or assert to have, or hereafter have, may have, or claim or assert to
have, including without limitation, all claims and causes of action arising out
of or in any way relating to the IPC -Emanuelle Dispute and/or any claims to
rights and/or interests in the Israel Offshore Project, and/or any claims that
IPC Parties or Emanuelle could have respectively asserted i the
IPe -Emanuelle Dispute against each other and/or any claims to rights and/or
inter~sts~' the Israel Offshore Project, and excepting only the IPC Parties' and
Emanuelle's respective obligations under this Agreement. IPC Parties and
Emanuelle respectively warrant and represent that they have not assigned or
otherwise transferred any claim or cause of action released by this
Agreement.

       

      (g) To
the extent not paid and discharged by the PetroMed Parties (excluding the Lead
Investors IPC) who shall have primary liability for the matters describe in this
paragraph (and nothing in this paragraph shall be deemed to release the PetroMed
Parties from such liability) the Parties entitled to any of the Ownership WI
Points in the Licenses an Permit (the "Owning Parties"), hereby
agree, on behalf of themselves and their current and former owners,
partners, parents, members, employees, principals officers, directors,
shareholders, affiliates, predecessors, successors, and assigns, to bear, ill
accordance to their respective Ownership WI Points Interests, their respective
proportionate shares of any and all class, demands, suits, manner of obligation,
debt, liability, tort, covenant, contract, or causes of action of any kind
whatsoever, at law or in equity, known or unknown, suspected or unsuspected, at
any person (other than the Owning Parties), including but not limited to persons
holding shares of PetroMed that were issued and outstanding prior to the date
hereof, had, presently have, may have, or claim or assert to have, or hereafter
have, may have, or claim or assert to have against any of the Owning Parties as
a result of or including, without limitation, all claims and causes of action
arising out of this Agreement and the Term Sheet, and excepting only the
PetroMed Parties obligations under this Agreement. Each of the Owning Parties
shall cooperate in a joint defense against such claims and irrevocably agree to
pay the other Owning Parties on a pro rated

      'basis to
the irrespective Ownership WI Point, on an as-incurred basis all costs in
respect thereof and in satisfaction of all such claims, demands, suits, manner
of obligation, debt, liability, tort, covenant, contract, or causes of action.
The PetroMed Parties hereby jointly and eventually indemnify and agree to defend
and hold harmless the Owning Parties from and a against all liabilities,
costs, obligations, costs, expenses, and claims borne by the Owning Parties
after this paragraph. The Owning Parties shall been titled to assert, and the
PetroMed Parties hereby grant, the right of set off against any obligation of
the Owning Parties to the PetroMed Parties, including payment of any amounts due
under the New PetroMed Trust Overriding Royalty, against any amounts paid by the
Owning Parties pursuant to this paragraph. Notwithstanding the above, IPC shall
have no liability whatsoever for any of the debts or accounts payable under the
Term Sheet.

       

      (h) The
PetroMed Parties shall indemnify and save and hold harmless the Lead
Investors and the IPC Parties from and against all claims, demands, suits,
manner of obligation, debt, liability, tort, covenant, contract, or causes of
action arising or accruing with respect to (a) the obligations or liabilities of
PetroMed or any of its officers and directors (except for those directly
attributable to the ownership of the Licenses and Permit), including but not
limited to those listed on the Settlement List to be delivered under the Term
Sheet dose arising out of or related to the consummation of the transactions
contemplated by this event or (b) any representation of the PetroMed Parties
contained herein being untrue or a reach of any warranty or covenant of the
PetroMed Parties contained herein or (c) the breach or failure to perform any
obligation of the PetroMed Parties under this Agreement. The Parties shall be
entitled to assert, and the PetroMed Parties hereby grant, the right of set off
against any obligation of the Parties to the PetroMed Parties, including payment
of any amounts due under the New PetroMed Trust Overriding Royalty, against any
amounts owed by the PetroMe Parties pursuant to this paragraph.

       

      11. Dismissal of Litigation. If the First WG Installment
is not made at the time and in the manner provided herein, the hearing for
preliminary injunction hall be rescheduled at the earliest possible time. If the
First WG Installment is paid at the time and in the manner provided herein
then immediately thereafter, all claims asserted by any of the Parties against
any other of the Parties in any of the Disputes shall be dismissed with
prejudice, with each party to pay its own attorney fees and costs.

       

      a.           Stipulated
Motion to Dismiss the Colorado Lawsuit, which executed by the attorneys of
record for all of the Parties in that matter, is attached Exhibit· 21. The
proposed Order of Dismissal, which shall be filed with the Court Stipulated
Motion to Dismiss, is attached hereto as Exhibit
22.

      b.           
A Stipulated Motion t~ Dismiss the Washington Lawsuit, which I shall be executed
by the attorneys of record for all of the Parties in that matter, is attached
direct Gas Exhibit 23. The proposed Order of Dismissal, which shall be filed
with the Court with the Stipulated Motion to Dismiss, is attached hereto as
Exhibit
24.

       

      12. No
Admission.

       

      A. Nothing in this Agreement shall be
construed as an admission of liability or fault by any Party. If the Initial and
Second Closings do not occur in the manner and at the time required in this
Agreement, the execution of this Agreement and the negotiation of this Agreement
shall not be considered a waiver or acknowledgement of
any claim or defense by a Party in any of the Disputes, and nothing in this Agreement
or in the negotiations leading to this
Agreement shall be admissible in any court for the purpose of establishing or contesting
liability.

      

      B.
Unless otherwise determined by the Lead Investors, nothing in his Agreement, the
negotiation of this Agreement or its execution (or of the ancillary documents
herein) shall be construed as an admission of the Parties or any other person
that the transactions contemplated hereunder require the approval of PetroMed
shareholders and nothing in this Agreement or in the negotiations leading to
this Agreement shall be admissible in any court for the purpose of establishing
or cont tin the same.

      

       

      C.
Effective as of the Second Closing, and unless otherwise determined by the Lead
Investors following consultation with IPC, nothing in this Agreement, the
negotiation of this Agreement or its execution (or of the ancillary documents
her in) hall be construed as an admission of the Parties or any other person
that the transactions contemplated under the Option Agreement are void or
voidable, rescinded or otherwise, and nothing in this Agreement or in the
negotiations leading to this Agreement shall be admissible in any court for the
purpose of establishing or contesting the same.

       

      13.
Authority. The Parties represent and warrant that they possess full
authority to enter into this Agreement and to lawfully and effectively release
the opposing Party as set forth herein, free of any rights of settlement,
approval, subrogation, or other condition or impediment. This undertaking
includes specifically, without limitation, the representation and warranty
that no third party has now acquired or will acquire rights to present or p
claims arising from or based upon the claims that have been released
herein.

       

      14. Entire
Agreement. The Parties represent and agree that no promises, inducements,
or agreements other than those expressed herein have been made to them any of
the other Parties. This Agreement, while in full force and effect, together with
its Schedules and Exhibits supersedes all prior agreements and understandings
between the Parties with respect to the subject matter hereof, and contains the
entire agreement between the Parties with respect to the subject matter
hereof.

      

       

      15. Voluntary
and Informed Assent. The Parties represent and agree that they each have
read and fully understand this Agreement, that they are fully competent to
manage their own personal and business affairs and to enter into and sign this
Agreement, and that they are executing this Agreement voluntarily, free of any
duress or coercion.

       

      16. Governing
Law. Consent to Jurisdiction. The laws of the State of Israel shall
solely and exclusively apply to and control any interpretation, construction,
performance or enforcement of this Agreement or any disputes arising there
from or in connection herewith.  The Parties agree that exclusive
jurisdiction to resolve any dispute arising under this Agree enter in connection
here with shall reside in the district courts of Tel Aviv, Israel, and all
parties submit to the jurisdiction of said courts for such purpose. Each party
to this Agreement irrevocably consents to service of process in the manner
provided for notices in Section 27. Nothing this Agreement shall affect the
right of any party to this Agreement to serve process in any other manner
permitted by law.

       

      17. Construction.
This Agreement and its exhibits shall be construed as if the Parties jointly
prepared them, and any uncertainty or ambiguity shall not be interpreted against
anyone Party.

       

      18. Modification.
No verbal agreement, statement, promise, undertaking, understanding,
arrangement, act or omission of any Party, occurring subsequent to the date
hereof may be deemed an amendment or modification of this Agreement unless
reduced to writing and signed by the affected Parties hereto or their respective
successors or assigns, Nothing herein shall prevent the Lead Investors and IPC
from entering into the JOA or any other agreement with respect to the ownership
of the Licenses and Permit and any act or operation related thereto without the
consent of the other Parties.

       

      19. Severability.
The Parties agree that if, for any reason, a provision of this Agreement is held
unenforceable by any court of competent jurisdiction, this Agreement shall be
automatically conformed to the law, and otherwise this Agreement shall continue
in full force and effect.

       

      20. Number.
Whenever applicable within this Agreement, the singular include the plural and
the plural shall include the singular.

      

      21. Headings.
The headings of paragraphs herein are included solely for convenience of
reference and shall not control the meaning or interpretation of any of the
provisions of this Agreement.

       

      22. Counterparts.
This Agreement may be executed in several counterparts and all counterparts so
executed shall constitute one agreement binding on all Parties hereto,
notwithstanding that all the Parties are not signatories to the original or the
same co te I art. Facsimile signatures and a scanned attachment sent by
electronic mail shall be accepted he s me as an original signature. A photocopy
of this Agreement may be used in any action b ought to enforce or construe this
Agreement. 

       

      23. No
Waiver. No failure to exercise and no delay in exercising any right,
power or remedy under this Agreement shall impair any right, power or remedy
which Party may have, nor shall any such delay be construed to be a waiver of
any such rights, power or remedies or an acquiescence in any breach or
default under this Agreement, nor shall waiver of any breach or default of any
Party be deemed a waiver of any default or breach subsequently
arising.

       

      24. Further
Assurances. Each of the Parties shall from time I to hereafter and upon
any reasonable request of any other Party, make or cause to be made all further
acts, deeds, assurances and things as may be required or necessary to more
effectually implement and carry out the true intent and meaning of this
Agreement, including but not limited to all assignments and other instruments
and items required to be delivered and take all action as requested by the
Lead Investors to confirm that this Agreement constitutes the completion of the
Lead Investor's and IPC's acquisition of the Israel Offshore
Project.

       

      25. Successors
and Assigns. This Agreement shall be binding upon and shall inure to the
benefit of the Parties hereto and their respective successors and assign (if
any). No party may assign any of its rights or obligations under this Agreement
to any other person without obtaining the written consent or approval of the
other Parties hereto; except that the Lead Investors and IPC may assign their
rights and/or obligations (in whole or in part) under this Agreement, at any
time, to any Permitted Transferee; provided that if any
obligations  being assigned, they shall have furnished the other
Parties with a written assumption agreement by assignee.

       

      26. Limitation
on Individual Parties. The Individual Parties are expecting this
Agreement solely for the purpose of (i) agreeing to execute and deliver the
releases described in section 10 hereof; (ii) the covenants (excluding the
indemnity covenants) set forth herein, provided that, without derogating from
Section 2(x) (specific performance), such are being made by the applicable
Individual Party solely as a "reasonable effort" undertaking (it being
understood that the signing of a document shall be considered a "reasonable
effort") and (iii) the representations set forth herein provided that such are
being made to the best of the applicable Individual Party's
knowledge.

      27. Notices.
All notices and other communications hereunder shall be in writing and
shall be on the date of delivery if delivered personally by messenger service,
(ii) on the date of confirmation of receipt (or, the first busies following such
receipt if the date is not a business day) of transmission by facsimile, or (iii
the date of confirmation of receipt (or, the first business day following such
receipt if the date is not a business day) if delivered by a nationally
recognized courier service. All notices h re der shall be delivered as set forth
in Schedule
I hereto, or
pursuant to such other instruction as may be designated in writing by the party
to receive such notice.

      28. Public
Announcement. No
public disclosure shall be made wit to this Agreement, except as may be required
to comply with any legal requirement; which case the disclosing Party will
attempt to inform the other Party prior to such disclose; 0p:er than, in the
case of the Lead Investors, Bontan and IPC (and their transferees),
disclosure be made pursuant to securities laws and regulations and/or stock
exchange rules, whether with respect to comply with ongoing reporting and
disclosure requirements, prospectuses or otherwise.

       

      29..Survival.
The representations, warranties and covenants Agreement shall survive the
completion of the Initial Closing and the Second Closing delivery of documents
and other items in connection therewith.

      

      (SIGNATURES
FOLLOW)

       

      INTERNATIONAL
THREE RO PETROLEUM LLC

       

      By: H.
Howard Cooper Its: President and Manager

       

      ISRAEL
PETROLEUM COMPANY LIMIIED By International Three Crown Petroleum LCJ its sole
director

       

      By: H.
Howard Cooper .Its: President and Manager

       

      H. HOWARD
COOPER

       

      PETROMED
CORPORATION

       

      By: Hagai
Amir Its: CEO

       

      LYLE
DURHAM

       

      By: Lyle
Durham

       

      SIGNATURE
PAGE OF ALLOCATION OF RIGHTS AND SETTLEMENT AGREEMENT

       

      By: S/Kam
Shah

       

       

      BONTAN
CORPORATION INC.

       

      By:
KamShah Its: CEO

      

      

      

      

      

      

      APPROVED SOLELYAS TO
FORM

      Howard
Boigon, Esq. Counsel for Plaintiffs

       

      Barak
Luchten Counsel for Emmanuelle Energy Ltd.

       

      John
Tollefson, Esq. Counsel for the PetroMed Parties

       

      Ido
Zemach, Adv. Counsel for IDB-DT (2010) Energy Ltd. (information)

       

      Jeffrey
C. Robbins, Esq. 1Counsel for Bontan Corporation Inc.

       

      

      SIGNATURE
PAGE OF ALLOCATION OF RIGHTS AND SETTLEMENT AGREEMENT

      
        	
              
	
                Execution
      Copy

              
	
                BONTAN
      CORPORATION INC.

              	
                INC.

              
	
                By:

              
	
                Its:

              
	
                APPROVED

              	
                SOLELY
      AS TO FORM

              
	
                Jeffrey
      C. Robbins, Esq.

              
	
                Counsel
      for Bontan Corporation

              	
                Inc.

              
	
                SIGNATURE

              	
                PAGE
      OF ALLOCATION

              	
                OF
      RIGHTS AND
      SETTLEMENT

              	
                AGREE

              

      

      	
              Execution
      Copy

            
	
              BONTAN
      CORPORATION

            	
              INC.

            
	
              By:

            
	
              Its:

            
	
              APPROVED

            	
              SOLELY
      AS TO FORM

            
	
              Jeffrey
      C. Robbins, Esq.

            
	
              Counsel
      for Bontan Corporation

            	
              Inc.

            
	
              SIGNATURE

            	
              PAGE
      OF ALLOCATION

            	
              OF
      RIGHTS AND
      SETTLEMENT

            	
              AGREE

            

    

    
    

    

    EMANUELLE
ENERGY LTD.

     

    By: Ofer
Nimrodi

    Its:
Chairman

     

    41T
(2010) ENERGY LTD.

     

    Its:

     

    BONTAN
CORPORATION INC.

     

    By: Kam
Shah Its: CEO

    APPROVED
SOLELY AS TO FORM

     

    Howard
Boigon, Esq.

    Counsel
for Plaintiffs

     

    John
Tollefson, Esq.

    Counsel
for the PetroMed Parties

     

    Barak
Luchtenstein, Adv .. Counsel for Emanuelle Energy Ltd.

     

    Ido
Zemach, Adv, Counsel for lDB~DT (2010) Energy Ltd. (in formation)

     

    Jeffrey
C. Robbins, Esq. Counsel for Bontan Corporation Inc.

     

    SIGNATURE
PAGE OF ALLOCATION OF RIGHTS AND SETTLEMENT AGREEMEN

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