Document:

ex103.htm

Exhibit 10.3

    AGREEMENT

    

    This
Share Purchase Agreement (“Agreement”) signed on 13
November , 2005 by and between Pimi Marion Holdings Ltd,
(Company number 51-349712-3), incorporated in the State of Israel (“The Company”) and Mr. Nimrod Ben-Yehuda, I.D.
051795631  and Omdan
Consulting and Instructing LTD  private company no.
51-146831-6, (jointly and severally: the “Shareholders”) from one
side, and Mr. Alon Carmel
and JNS Capital
LLC (jointly and severally: “The Investors”) from the
other side.

    

    RECITALS

    

    
      	
              Whereas

            	
              The
      parties have executed a term sheet pursuant to which they now wish to
      execute this Agreement, and;

            

    

    

    
      	
              Whereas

            	
              The
      Investors after having conducted due diligence of the Company business
      inter alia by
      experts, and after being involved in the Company business and activity
      (including trade show and negotiations) desire to invest in The Company
      against the issuance of The Company’s Ordinary and Management shares in
      accordance with the terms set forth in this
  Agreement.

            

    

    

    

    Now
therefore the parties agree to the following:

    

    
      	
              1.

            	
              DEFINITIONS
      AND EXHIBITS

            

    

    

    For the
purpose of this Agreement, capitalized words shall have the meanings as
specified below or as defined in other parts of this Agreement.

    

    “Business Plan” - Financial
and non-financial targets that the Company believes it can meet, on a quarterly
basis in the years 2005, 2006 and 2007 – all of which are incorporated in a
document titled the Business Plan which is attached to this agreement as Appendix “A”.

    

    “Investment” - A total of US
$900,002 to be funded in quarterly installments as provided for in the Business
Plan against the issuance of 120,000 Ordinary Shares of the Company at the price
of $7.50 per shares, and 2 Management Shares at the price of $1.00
each.

    

     “The Loan Agreement” –
the loan agreement dated February 7, 2005 and as amended on May 11, 2005
attached hereto as Appendix
“B”.

    

    “The Loan” - Investors have
previously made four loans to the Company totaling $180,000 pursuant to The Loan
Agreement.

    

    “Intellectual Property” - The
Patents and Patent applications described in Appendix “C”, as well as any
and all related intellectual property, including knowledge, technologies and
know-how that have been developed, registered and/or accumulated by Mr. Nimrod
Ben-Yehuda, in relation to the Patents and Patents applications which
Intellectual Property is currently owned by the Company or will be transferred
to the ownership of the Company without any consideration – excluding rights to
use and/or benefit from that portion of the Intellectual Property that pertains
to the exclusive purpose of water treatment.

     

     

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
 

    
      	
              2.

            	
              SALE
      AND TRANSFER OF SHARES / SIGNING AND
CLOSING

            

    

    

    2.1           SHARES

    

    
      	
               
      

            	
              Subject
      to the terms and conditions of this Agreement (including, without
      limitation, subject to the fulfillment of the conditions and obligations
      set out in Sections 2.3 and 2.4 below), at the Closing, The Company shall
      issue and deliver the Investors the Shares, free and clear of all
      Encumbrances, and The Investors will invest the investment sums in The
      Company, as set out in Section 2.2
below.

            

    

    

    2.2           INVESTORS
UNDERTAKINGS

    

     

    
      	
               
      

            	
              (a)

            	
              The
      investment shall be in the total sum of US$ 900,002 (Nine hundred thousand
      and two US Dollars) (“The
      Investment”).

            

    

     

     

    
      	
              (b)  

            	
              The
      Investment shall be satisfied as
follows:

            

    

     

     

    
      	
              i)  

            	
              Pursuant
      to a previously signed Term Sheet, the Investors have increased their loan
      to the Company to US $110,000 on the same terms and conditions provided in
      the Loan Agreement dated February 7, 2005 and its addendum dated May 11,
      2005.

            

    

     

    
      	
              ii)  

            	
              On
      August 23 2005, the Parties have agreed to a new Business Plan, and
      therefore Investors have increased the loan to the Company to $140,000 on
      the same terms and conditions provided in the Loan Agreement dated
      February 7, 2005 and its addendum dated May 11,
  2005.

            

    

     

    
      	
              iii)  

            	
              On
      October 2005 the Investors have made an additional loan to the Company in
      the sum of $40,000 on the same terms and conditions provided in the Loan
      Agreement dated February 7, 2005 and its addendum dated May 11,
      2005.

            

    

     

    
      	
              (c)  

            	
              The
      investors shall convert any and all sums, which were furnished to the
      company as The Loan, to an investment to be deducted immediately from the
      funding obligations undertaken by
Investors.

            

    

     

     

    
      	
              (d)  

            	
              Pay
      to the Company the sum of $2.00 for the 2 Management Shares at the price
      of $1.00 per Management Share.

            

    

     

     

    
      	
              (e)  

            	
              Fund
      The Investment instalments according to the Business Plan. Each instalment
      shall be funded for the subsequent quarter, no later than 45 days prior to
      the end of each quarter, subject to clause 4.2(b)
    hereinafter.

            

    

     

     

    
      	
              (f)  

            	
              In
      the event that the Company exceeds the quarterly benchmarks provided in
      the Business Plan, Investors shall consider, favourably, the possibility
      to accelerate the funding of their Investment should Investors decide that
      such acceleration of funding assists the needs of the
    Company.

            

    

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	
              2.3  

            	
              COMPANY
      UNDERTAKINGS

            

    

    

    
      	
              (a)  

            	
              The
      Company shall issue to The Investors 24,000 Ordinary Shares against the
      funding of the Investment pursuant to Paragraphs 2.2 (b)(a) and 2.2
      (b)(b).

            

    

    

    
      	
              (b)  

            	
              In
      addition, The Company shall issue 96,000 Ordinary shares to an Escrow
      holder pursuant to the Escrow Clause set forth
  below.

            

    

    

    
      	
              (c)  

            	
              The
      Company shall issue 2 management shares to the Escrow holder pursuant to
      the Escrow Clause below.

            

    

    

    
      	
              (d)  

            	
              Subsequently,
      Company will provide to The Investors financial reports as
      following:

            

    

     

    
      	
              i)  

            	
              Management-prepared
      monthly reports – no later than on the 20th
      day of the subsequent month.

            

    

     

    
      	
              ii)  

            	
              Auditor-reviewed
      reports – no later than on the 45th
      day of the month subsequent to the end of each of the 1st,
      2nd
      and 3rd
      quarter of the year.

            

    

     

    
      	
              iii)  

            	
              Audited
      financial reports – no later than 120 days subsequent to the end of the
      year.

            

    

    

    
      	
              2.4  

            	
              ESCROW
      CLAUSE

            

    

    

     

    
      	
              (a)  

            	
              The
      parties shall appoint Advocate Yoel Levy of Twin Tower 1, 33 Jabotinsky
      st., Ramat Gan to act as escrow holder (“Escrow Holder”). At the signing
      of this Agreement, the Company shall issue  96,000 ordinary
      shares of NIS 0.01par value each and two (2) management shares of NIS 1
      par value each to the Escrow Holder. The Escrow Holder shall act in
      accordance with the following:

            

    

     

     

    
      	
              (b)  

            	
              Escrow
      shall deliver to Investors the Ordinary
Shares:

            

    

     

     

    
      	
              i)  

            	
              Upon
      notice from the Investors to Escrow, with a copy to the Company, of the
      funding of an instalment of the Investment accompanied by a receipt from
      the Company evidencing such instalment or a receipt
      evidencing a wire transfer of such instalment to the Company’s bank
      account Escrow shall deliver to Investors the number of shares that, at
      the price of $7.50 per share, corresponds to the amount of the
      instalment.

            

    

     

     

    
      	
              ii)  

            	
              All
      the shares held by Escrow upon notice, by Investors, of a Material Breach
      by Company, as defined hereinafter, and against payment to Escrow, by
      Investors, of the sum representing NIS 0.01 per share multiplied by the
      total number of shares held by Escrow, which sum Escrow will then deliver
      to the Company. The notice will be accompanied by an affidavit of one of
      the Investors that all the terms of section 4.2(iii) (b) have been
      fulfilled.

            

    

     

     

    
      	
              (c)  

            	
              Escrow
      shall deliver to Investors the 2 Management Shares held by Escrow as
      following:

            

    

     

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

     

     

    
      	
              i)  

            	
              One
      (1) Management Share shall be delivered to Investors upon notice from the
      Investors to Escrow, with a copy to the Company, that they have funded a
      total of $450,000 of the investment, accompanied by receipts from the
      company and/or wire transfer receipts evidencing funding of the entire
      $450,000 less the sums provided in Paragraphs 2.a and
  2.b.

            

    

     

     

    
      	
              ii)  

            	
              One
      (1) Management Share shall be delivered to Investors upon notice from the
      Investors to Escrow, with a copy to the Company, that they have completed
      the funding of their entire Investment obligation under the Investment
      Agreement, accompanied by receipts from the company and/or wire transfer
      receipts evidencing funding of the entire $900,000 less the sums provided
      in Paragraphs 2.a and 2.b.

            

    

     

     

    
      	
              iii)  

            	
              Upon
      receipt of notice from the Investors to Escrow, with a copy to the
      Company, of a Material Breach by Company, as defined hereinafter,
      accompanied by an affidavit of one of the Investors that all the terms of
      section 4.2(iii)(b) have been
fulfilled.

            

    

     

     

    
      	
              (d)  

            	
              In
      the event of a breach by the Investors, Escrow shall deliver all the
      Ordinary Shares and Management Shares then held by Escrow to the
      Company.

            

    

     

    

    2.5           Performances by Share
Holders:

    

    The
holders of the 2 Management Shares not allocated to Investors shall support the
creation by the Company of an Employee Stock Option Plan and the allocation of
24,000 of the authorized ordinary shares to such plan.

    

    2.6           SIGNING
AND CLOSING

    

    Acts to
be Performed Prior to the execution of this agreement:

    

    
      	
               
      

            	
              (a)

            	
              Immediately
      prior to the execution of this agreement, the Company and the Shareholders
      will present to The Investors for examination all the documents (“The
      Closing Documents"), as set out
below:

            

    

    

    
      	
               
      

            	
              (1)

            	
              Resolutions
      of The Company’s board of directors (“The Company’s Board of Directors“)
      resolving (i) to approve the execution of this Agreement; and (ii) to
      approve the issuing of the shares pursuant to this Agreement and to
      authorize the directors of The Company to sign the appropriate
      documentation;

            

    

    

    
      	
               
      

            	
              (2)

            	
              Share
      allocation forms conforming with the articles of association of The
      Company, in respect of the shares, duly executed by The Company and The
      Shareholders;

            

    

    

    

    
      	
              3.

            	
              REPRESENTATIONS
      AND WARRANTIES.

            

    

    

    The
Company and the Shareholders hereby represent and warrant, jointly and
severally, to The Investors the representations and warranties set forth in
Sections 3.1 through 3.6 (inclusive) (“The Warranties“) and undertake
that the Warranties are true and accurate in all respects as of the agreement
execution date, and acknowledge that The Investor has agreed to enter into this
Agreement relying, inter
alia, on the truth and accuracy of The Warranties. No representation or
warranty of The Company or the Shareholders in this Agreement omits to state a
material fact necessary to make the statements herein or therein, and is, in
light of the circumstances in which they were made, not misleading. It is hereby
clarified that the Investors have conducted due diligence of the Company
business, Know-How, and Patents by their own experts, and has escorted the
Company and took part in its activity since 1st of
January 2005.

     

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    
 

    

    
      	
              3.1

            	
              SHARE
      CAPITAL, TITLE, ORGANIZATION, AUTHORITY,
  COMPLIANCE

            

    

    

    
      	
              3.1.1

            	
              Share
      Capital and Title

            

    

    

    The
authorized share capital of The Company consists of 9,999,600 ordinary shares of
NIS 0.01 par value per share and 4 management shares of NIS 1.00 par value per
share, of which 120,000 ordinary shares and 2 management shares are issued and
outstanding, and constitute all of The Company’s shares prior to the issuance of
shares pursuant to this Agreement. The Shareholders are the registered owners
and holders of all the issued shares, free and clear of all encumbrances,
including, without limitation any encumbrances to the benefit of any beneficiary
owners.  Mr. Nimrod Ben-Yehuda, through Ash-Dor Assets Management and
Trusts Ltd is the owner of 75% of the Shares, comprising 90,000 Ordinary Shares
and 1 Management Share, and Mr. Eitan Shmueli through Omdan Consulting and
Instruction Ltd is the owner of 25% of the Shares, comprising 30,000 ordinary
shares and 1 management share. No reference to any purported Encumbrance appears
upon any certificate representing the share capital of The Company. All of the
outstanding share capital of The Company, has been duly authorized, validly
issued and is fully paid-up and non-assessable. There are no options, warrants
and/or any Contracts relating to the issuance, sale, or transfer of any shares
or other securities of The Company except for the obligation to eNitiatives
under section 3.3.8(iii) of this Agreement. None of the outstanding shares or
other securities of The Company was issued in violation of the Israeli Companies
Law, 1999 or any other legal requirement. The shares shall, upon their issuance
or transfer to The Investors, vest in The Company, free of any encumbrances, and
all rights (including voting rights, equity and all other rights) of
shareholders in The Company.

    

    
      	
              3.1.2

            	
              Subsidiaries

            

    

    

    The
Company does not own directly or indirectly, nor is entitled and/or required to
acquire, any shares or other securities of any Person pursuant to any Contract
or otherwise, nor does The Company have any direct or indirect equity or
ownership interest in any other business.

    

    
      	
              3.1.3

            	
              Organization
      and Good Standing

            

    

    

    
      	
              (a)

            	
              The
      Company is a corporation duly organized, validly existing, and in good
      standing under the laws of Israel, with full corporate power and authority
      to conduct its business as it is now being conducted, to own, lease or use
      the assets that it purports to own, lease or use, and to perform all its
      obligations under Contracts..

            

    

    

    
      	
              (b)

            	
              The
      minute books, and records of The Company are complete, correct and
      up-to-date in all respects and have been maintained in accordance with
      sound business practices and applicable legal requirements. The minute
      books of The Company contain accurate, complete and up-to-date records of
      all meetings held, and corporate action taken by the shareholders and the
      board of directors of The Company, and no meeting of any such shareholders
      or board of directors has been held for which minutes have not been
      prepared and are not contained in such minute books. At the agreement
      execution, all of those books and records will be in the possession of The
      Company.

            

    

    

    
      	
              (c)

            	
              The
      Disclosure Letter (Appendix “D”) contains
      complete copies of all Organizational Documents of The Company as
      currently in effect. The copies of the Articles of Association of The
      Company attached hereto as aforesaid, are complete, correct and up-to-date
      in all respects and have embodied in them or annexed thereto a copy of
      every shareholders’ resolution amending the Article of Association in any
      way.

            

    

    

    
      	
              (d)

            	
              The
      Disclosure letter sets out the name of each bank in or with which the
      Company has had accounts, credit lines or safety deposit boxes, and the
      names of all persons presently authorized to draw thereon or having access
      thereto, and a brief description of each such
  account.

            

    

    

    
      	
              (e)

            	
              The
      Disclosure letter sets out the names of all persons now holding any power
      of attorney from The Company and a summary of the terms
      thereof.

            

    

    

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
 

    
      	
              3.1.4

            	
              Authority

            

    

    

    This
Agreement (including all those agreements and documents, the execution of which
is contemplated under this Agreement) have been, or will have been upon the
execution of this Agreement, duly and validly executed by The Company and/or the
Shareholders and are, or as the case may be, will on Execution, constitute the
legal, valid, and binding obligation of The Company and the Shareholders, and
such other parties, and enforceable against The Company and Shareholders and
such other parties in accordance with their terms. The Company and the
Shareholders have the absolute and unrestricted right, power, authority, and
capacity to execute and deliver this Agreement and to perform their obligations
under this Agreement.

    

    
      	
              3.1.5

            	
              Compliance
      with Legal or Contractual
Requirements

            

    

    

    
      	
              (a)

            	
              Except
      as set forth in the Disclosure Letter (Appendix “D”), neither the
      execution and delivery of this Agreement nor the consummation or
      performance of any of the Contemplated Transactions will, directly or
      indirectly (with or without notice or lapse of
  time):

            

    

    

    
      
        	
                 
      

              	
                (i)

              	
                Contravene,
      conflict with, or result in a violation of (A) any provision of the
      Organizational Documents of The Company, or (B) any resolution
      adopted by the board of directors or the shareholders of The
      Company;

              
	 	 	 
	 	(ii)	Contravene,
      conflict with, or result in a violation of: (A) any rights of any
      Person, or (B) any Contracts to which any of the Shareholders are parties;
      or (C) any legal requirement or any Order to which The Company or any
      Shareholder, or any of the assets owned, leased or used by The Company,
      may be subject; or entitle any Governmental Body or other person to
      challenge any of the contemplated transactions or to exercise any remedy
      or obtain any relief under any legal requirement or any Order as
      aforesaid;
	 	 	 
	 	

                (iii)

              	

                Contravene,
      conflict with, or result in a violation of any of the terms or
      requirements of, or result in any Governmental Body revoking, withdrawing,
      suspending canceling, terminating, or modifying, any Governmental
      Authorization held by The Company, relating to the business of, or any of
      the assets owned, leased or used by, The Company;

              
	 	 	 
	 	

                (iv)

              	

                Cause
      the Company to become subject to, or to become liable for the payment of,
      any Tax;

              
	 	 	 
	 	

                (v)

              	

                Cause
      any of the assets owned by The Company to be reassessed or revalued by any
      taxing authority or other Governmental Body;

              
	 	 	 
	 	

                (vi)

              	

                Contravene,
      conflict with, or result in a violation or breach of, or entitle any
      Person to declare a default or exercise any remedy under, or to accelerate
      the maturity or performance of, or to cancel, terminate, or modify, any
      Contract and/or any provision thereof;

              
	 	 	 
	 	

                (vii)

              	

                Relieve
      any Person of any obligation to The Company (whether contractual or
      otherwise) or entitle any Person to terminate any obligation, right or
      benefit (whether contractual or otherwise) enjoyed by The
      Company;

              
	 	 	 
	 	

                (viii)

              	

                Result
      in the imposition or creation of any encumbrance upon or with respect to
      any of the assets owned, leased or used by The Company;
  or

              
	 	 	 
	 	

                (ix)

              	

                Cause
      any officer or key employee of The Company to leave their
      employment.

              

      

    

     

    
      	
              (b)

            	
              Except
      as set forth in the Disclosure Letter (Appendix “D”), The
      Company nor any of the Shareholders are and will not be required to give
      any notice to, or obtain any consent, approval, ratification, waiver or
      other authorization (including, without limitation, any governmental
      authorization) from any person in connection with the execution and
      delivery of this Agreement or the consummation or performance of any of
      the contemplated transactions.

            

    

    

    
      	
              (c)

            	
              All
      returns, particulars, resolutions, and documents required by the Israeli
      Companies Law, 1999 or any other legislation to be filed with the Israeli
      Registrar of Companies or with any other Governmental Body, have been duly
      filed.

            

    

    

    
      	
              3.2

            	
              FINANCIAL
      STATEMENTS AND ASSETS

            

    

    

    
      	
              3.2.1

            	
              Proper
      Accounting and Compliance with Israeli Generally Accepted Accounting
      Principles

            

    

    

    The books
of account and all records of the Company are or will be complete, correct and
up-to-date and have been maintained in accordance with sound business practices,
and generally accepted accounting principles in Israel (”Israeli GAAP“), including the
maintenance of an adequate system of internal controls.

    

    
      	
              3.2.2

            	
              Balance
      Sheets and Profit and Loss
Statements

            

    

    

    
      	
              (a)

            	
              General

            

    

    

    
      	
               
      

            	
              (i)

            	
              The
      Company has delivered to The
Investors:

            

    

    

    
      	
              (1)  

            	
              The
      unaudited trial balance of The Company as of August 31, 2005 and the
      related profit and loss statements (hereinafter the “Financial
      Statements").

            

    

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

     

    
      	
                 (ii) 

            	
              The
      Financial Statements (A) conform to the books and records of The Company
      in all material respects; (B) present a true, complete and correct view of
      the financial condition and the results of operations, changes in
      shareholders' equity, and cash flow of The Company as at the respective
      dates of and for the periods referred to therein, all in accordance with
      Israeli GAAP; (C) reflect the consistent application of Israeli GAAP
      throughout the periods involved. No financial statements of any Person
      other than The Company are required by Israeli GAAP to be included in the
      financial statements of The
Company.

            

    

     

    

    
      	
               
      (iii)

            	
              To
      the best of the Company’s and the Shareholders knowledge and of the
      knowledge of the officers of The Company, as of the date of the execution
      of this Agreement, there are no facts or circumstances which are material
      in relation to the assets, business or financial condition of The Company
      which do not appear from the Financial Statements and/or which have not
      been fully and fairly disclosed in the Disclosure Letter (Appendix
      “D”).

            

    

    

    

    
      	
              (b)

            	
              Without prejudice to and
      notwithstanding the generality of the above Section
      3.2.2(a):

            

    

    

    
      	
              (b1)

            	
              Title
      to Assets

            

    

    

    
      	
               
      

            	
              The
      Company owns, leases or has the legal right to use all assets used in the
      operation of its business and has good and marketable title to, or in the
      case of leased assets, valid leases in respect of, all the assets: (i (i)
      purchased or otherwise acquired by The Company since its organization,
      which assets purchased or acquired as aforesaid (other than inventory and
      short-term investments) are listed in the Disclosure Letter (Appendix “D”). All the
      assets owned, leased or used by The Company as aforesaid are free and
      clear of all Encumbrances and are not subject to any limitations of any
      nature, save as set out in the Disclosure Letter (Appendix
      “D”).

            

    

    

    
      	
              (b2)

            	
              Condition
      And Sufficiency Of Assets

            

    

    

    
      	
               
      

            	
              The
      Company owns, leases, or has the legal right to use all the assets that it
      needs in order to continue to run its business after the execution of this
      agreement in the same manner as it has during the 12 (twelve) months
      preceding that date.

            

    

    

    
      	
               
      

            	
              The
      equipment of The Company is structurally sound, in good operating
      condition and repair, and does not require any maintenance or repairs,
      except for routine maintenance and repairs, in the ordinary course of
      business, that are not material in nature or
  cost.

            

    

    

    

    Without
derogating from any other provision in this Agreement, it is recorded that all
office space (including shared storage space) occupied by The Company is validly
leased by The Company from Kibutz Alonim being registered owner thereof,
pursuant to a lease agreement dated 1/4/2005, which is in full force and effect.
The said Buildings are in good repair and fit for the purposes for which they
are used, and there is no material defect in the condition thereof, and the said
Buildings comply with all required planning and building permits. Save for the
said office space, The Company does not own, lease, occupy or use any other
immovable property in connection with its business.

    

    
      	
              (b3)

            	
              Accounts
      receivable

            

    

    

    All
accounts receivable of The Company reflected in the Financial Statements and in
the accounting records of The Company as of the date of this agreement execution
(collectively, the "Accounts receivable") represent valid obligations arising
from sales actually made or services actually performed in the ordinary course
of business. Unless paid prior to the execution date, the Accounts receivable
are, or will be, as of the execution date current and collectible net of the
respective reserves shown on the Financial Statements, respectively, or in the
accounting records of The Company as of the execution date (which reserves are
adequate and calculated consistent with the practice used for the year 2004 and,
in the case of the reserve as of the execution date, will not represent a
greater percentage of the Accounts receivable as of the execution date than the
reserve reflected in the 2004 Balance Sheet in respect of the Accounts
receivable reflected therein and will not represent a Material Adverse Change in
the composition of such Accounts receivable in terms of aging). Subject to such
reserves, each of the Accounts receivable either has been or will be collected
in full, without any set-off, within ninety days after the day on which it first
becomes due and payable. There is no contest, claim, or right of set-off, other
than returns in the ordinary course of business, under any Contract with any
obligor of an Accounts receivable relating to the amount or validity of such
Accounts receivable. The Disclosure Letter (Appendix “D”) contains a
complete and accurate list of all Accounts receivable as of 31.8.2005.
..

    

    
      	
               (b4)

            	
              Inventory

            

    

    

    All
inventory of The Company, whether or not reflected in the Financial Statements,
respectively, is in good and undamaged condition, and consists of a quality and
quantity usable and salable in the ordinary course of business, except for
obsolete items and items of below-standard quality, all of which have been
written off or written down to net realizable value in the Financial Statements,
respectively, or in the accounting records of The Company as of the execution
date, as the case may be. All inventories not written off have been priced at
the lower of cost or net realizable value. The quantities of each item of
inventory (whether raw materials, work-in-process, or finished goods) are not
excessive, but are reasonable in the present circumstances of The
Company.

     

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    
 

    (b5)                     Intellectual
Property

    

    (b5/1)
Know-How Necessary for the Business

    

    
      
        	
                 
      

              	
                (i)

              	
                Except
      as set forth in the Disclosure Letter (Appendix “D”), The
      Company is the owner of all right, title, and interest in and to each of
      the Intellectual Property Assets, whether or not reflected in the
      Financial Statements, necessary for the operation of its business as it is
      currently conducted and/or as reflected in the business plan given to The
      Investors, and such right, title, and interest is free and clear of all
      encumbrances, and other adverse claims, and has the right to use all such
      Intellectual Property Assets, without payment to, or the consent of any
      third party.

              
	 	 	 
	 	

                (ii)

              	

                Except
      as set forth in the Disclosure Letter (Appendix “D”), all
      former and current employees of The Company have executed written
      Contracts with The Company that assign without compensation to The Company
      all rights to any inventions, improvements, discoveries, or information
      relating to the business of The Company, if and to the extent that such
      assignment is not effected by operation of law under the law applicable to
      such Contract. No employee of The Company has entered into any Contract
      that requires the employee to transfer, assign, or disclose information
      concerning his work to anyone other than The
  Company.

              

      

    

    

    
      
      

    

    

    
      	
               
      

            	
              (b/5.2)
      Patents and Trademarks

            

    

    

    
      	
               
      

            	
              (i)

            	
              The
      Company has registered patents, trademarks and/or is in the process of
      registering patents as detailed in Appendix
      “C”.

            

    

    

    

    
      	
               
      

            	
              (b5/3)
      Trade Secrets

            

    

    

    
      	
               
      

            	
              (i)

            	
              The
      Shareholders and The Company have taken all reasonable precautions to
      protect the confidentiality of their Trade
  Secrets.

            

    

    

    
      	
               
      

            	
              (ii)

            	
              The
      Company has good title and an absolute (but not necessarily exclusive)
      right to use the Trade Secrets. The Trade Secrets are not part of the
      public knowledge or literature, and, to Shareholder’s knowledge, have not
      been used, divulged, or appropriated either for the benefit of any Person
      (other than to The Company) or to the detriment of The Company. No Trade
      Secret is subject to any adverse claim or has been challenged or
      threatened in any way.

            

    

    

    
      	
              (b6)

            	
              Tax
      and Social Security Contributions

            

    

    

    
      	
               
      

            	
              (a)

            	
              The
      Company has filed or caused to be filed (on a timely basis since its
      incorporation) all Tax Returns and all Social Security Returns that are or
      were required to be filed by or with respect to The Company, pursuant to
      applicable legal requirements, and all such Tax Returns and Social
      Security Returns filed by The Company are true, correct, and complete, and
      there is no tax or social security sharing agreement that will require any
      payment by The Company after the execution date The Disclosure Letter
      (Appendix “D”)
      contains a complete and accurate list of, all such Tax and of all such
      Social Security Returns filed since its
  organization.

            

    

    

    
      	
               
      

            	
              (b)

            	
              The
      Company has fully and on a timely basis paid, or made full provision for
      the payment of, all Taxes and all Social Security Contributions that have
      become due, except such Taxes and/or Social Securities Contributions, if
      any, as are listed in the Disclosure Letter (Appendix “D”) and are
      being contested in good faith and as to which adequate reserves have been
      provided in the Financial Statements. The charges, accruals, and reserves
      with respect to Taxes and Social Security Contributions in The Company’s
      books are adequate (determined in accordance with Israeli GAAP) and are at
      least equal to The Company's liability for Taxes and Social Security
      Contributions. There exists no proposed Tax or Social Security
      Contribution assessment against The Company except as disclosed in the
      Financial Statements, respectively, or in the Disclosure Letter (Appendix “D”). All Taxes
      and/or Social Security Contributions that The Company is or was required
      by legal requirements to withhold or collect have been duly withheld or
      collected and, to the extent required, have been paid to the proper
      Governmental Body or other Person.

            

    

    

    To the
best of the Shareholders’ knowledge, no facts exist that could constitute
grounds for the assessment of any material liability for Taxes and/or Social
Security Contributions by any Governmental Body with respect to The Company. The
Company has taken all steps reasonably required by it to be taken prior to the
execution date, in order to obtain any Tax credits, or other Tax benefits,
whether available in respect of the period prior to or after the execution
date.

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
 

    
      	
              (b7)

            	
              Employee
      Compensations

            

    

    

    
      	
               
      

            	
              (a)

            	
              The
      Disclosure Letter (Appendix “D”) contains a
      complete and accurate list of the following information for each employee
      or director of The Company, including each employee on leave of absence or
      layoff status:

            

    

    

    
      
        	
                 
      

              	
                (i)

              	
                Employee
      name, job title, material terms of employment, (including, without
      limitation, particulars regarding, salary, linkage of salary, annual
      vacation, accrued vacation, Supplementary Education Fund (Keren Hishtalmut), sick
      pay, pension fund and provident fund or manager’s insurance, travel
      allowances), any agreements or promises, whether written or oral,
      regarding current or future profit-sharing, cash, shares or other bonus
      entitlements, fringe benefits, severance pay, retirement pay, accrued
      vacation pay, any change in compensation since January 1,
      2005;

              
	 	 	 
	 	

                (ii)

              	

                Service
      credited for purposes of vesting and eligibility to participate under The
      Company's pension, retirement, profit-sharing, thrift-savings, deferred
      compensation, share bonus, share option, cash bonus, employee share
      ownership (including investment credit or payroll share ownership),
      severance pay, insurance, medical, welfare, or vacation
    plan.

              

      

    

    

    
      
      

    

    

    
      	
              (b)  

            	
              Except
      as disclosed in article 3.2.2 (b7) The payments by The Company to pension
      and provident funds (including, without limitation, manager’s insurance),
      together with the relevant reserves reflected in the Financial Statements,
      respectively, fully cover the liability of The Company under law or under
      any collective agreement, individual employment agreement, or other
      employment agreement or arrangement with respect to its employees and
      directors as at the dates of the aforesaid balance sheets for pension,
      severance pay, vacation pay and similar Liabilities, and The Company has
      continued to make all current payments to such pension and provident funds
      (including, manager’s insurance) until the execution date. All of the
      employees and directors shall have been paid all amounts owing to them by
      The Company, and all amounts deductible from The Company’s employees shall
      have been duly deducted, as at the execution date. To the best of the
      Shareholders knowledge, there are no outstanding claims against The
      Company by any of its employees and/or
  directors.

            

    

    

    
      	
               
      

            	
              (c)

            	
              Except
      as disclosed in Part 3.2.2(b7) or in the Employment Agreements referred to
      in Section 2.3(ii) (5) of this Agreement, there exist no agreements or
      promises between The Company and any of its employees or directors,
      whether written or oral, with respect to any change in compensation,
      current or future profit-sharing, cash, shares or other bonus
      entitlements, fringe benefits, severance pay, retirement pay, accrued
      vacation pay, vacation accrued, and no service credited for purposes of
      vesting and eligibility to participate under The Company's pension,
      retirement, profit-sharing, thrift-savings, deferred compensation, share
      bonus, share option, cash bonus, employee share ownership (including
      investment credit or payroll share ownership), severance pay, insurance,
      medical, welfare, or vacation plan.

            

    

    

    

    3.3           NO
LIABILITIES

    

    
      	
              3.3.1

            	
              General

            

    

    

    Except as
set forth in any Part of the Disclosure Letter (Appendix “­D”) The Company
has no Liabilities or obligations of any nature whatsoever except for
Liabilities or obligations reflected or reserved against in the Financial
Statements, and Liabilities incurred in the ordinary course of business since it
organization.

    

    In
particular and without derogating from the generality of the foregoing, the
following is represented and warranted:

    

    
      	
              3.3.2

            	
              Compliance
      with Legal Requirements

            

    

    

    Except as
set forth the Disclosure Letter (Appendix “­D”), The
Company is, and at all times since its incorporation has been, in full
compliance with each legal requirement that is or was applicable to it or to the
conduct or operation of its business or the ownership or use of any of its
assets. To the best of the Company knowledge, no event has occurred, act been
performed or omission omitted which may result after the execution date in
violation by The Company of any of the laws referred to in this Section or in
the incurring by The Company of any Liability or cost in connection
therewith.

    

    
      	
              3.3.3

            	
              Contracts:
      No Defaults

            

    

    

    Except as
set forth the Disclosure Letter (Appendix
“­D”):

    

    
      	
              (a)

            	
              no
      officer, director, agent, employee, consultant, or contractor of The
      Company is bound by any Contract that purports to limit or which adversely
      affects or will affect (i) the ability of such individual or of The
      Company to engage in or continue any conduct, activity, or practice
      relating to the business of The Company, or (ii) the ability of such
      individual to assign to The Company any rights to any invention,
      improvement, discovery or other Intellectual Property
    Assets.

            

    

     

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
 

    
      	
              (b)

            	
              Each
      Contract is in full force and effect and is legal, valid and enforceable
      in accordance with its terms, and shall continue in full force and effect
      (and not be subject to termination by the counterparty thereto),
      notwithstanding the consummation of the transactions contemplated by this
      Agreement, and is, and has been, fully complied with by all of the parties
      thereto. None of the parties to any Contract is in breach or default
      thereof and no event has occurred or circumstance exists that may result
      in a violation or breach of any Contract, or give any party to such
      Contract the right to declare a default or an acceleration of maturity or
      performance, or to exercise any
remedy.

            

    

    

    
      	
              (c)

            	
              There
      are no renegotiations of, or outstanding rights to renegotiate any
      material amounts paid or payable to The Company under current or completed
      Contracts with any Person and no such Person has made oral or written
      demand for such renegotiation.

            

    

    

    
      	
              3.3.4

            	
              Employees

            

    

    

    
      	
              (a)

            	
              No
      director, officer, or other key employee of The Company intends to
      terminate its employment with The
Company.

            

    

    

    
      	
              (b)

            	
              The
      Disclosure Letter (Appendix “­D”)
      contains a complete and accurate list of the following information for
      each retired employee or director of The Company, or their dependents,
      receiving benefits or scheduled to receive benefits in the future: Name,
      pension benefit, retiree medical insurance coverage, retiree life
      insurance coverage, and other
benefits.

            

    

    

    
      	
               
      

            	
              Except
      as disclosed in the Disclosure Letter (Appendix “­D”), such
      retired employees or directors, or their dependents, will not receive or
      are not scheduled to receive any pension benefits, retiree medical
      insurance coverage, retiree life insurance coverage, and other
      benefits.

            

    

    

    
      	
              3.3.5

            	
              Insurance

            

    

    

    
      	
              (i)  

            	
              All
      policies set out in the Disclosure Letter (Appendix “­D”) which
      are held by The Company or that provide coverage to any Shareholder, The
      Company or any director or officer of The Company: (i) are valid,
      outstanding, and enforceable, (ii) are issued by an insurer that is
      reputable to be financially sound, and (iii) taken together, provide
      adequate insurance coverage for the assets and the operations of The
      Company, (iv) are sufficient for compliance with all legal requirements
      and Contracts to which The Company is a party or by which any of them is
      bound, (v) will continue in full force and effect following the
      consummation of the Contemplated Transactions, and (vi) do not provide for
      any retrospective premium adjustment or other experienced-based liability
      on the part of The Company.

            

    

    

    
      	
              (ii)  

            	
              None
      of the Shareholders nor The Company has received (i) any refusal of
      coverage or any notice that a defense will be afforded with reservation of
      rights, or (ii) any notice of cancellation or any other indication that
      any insurance policy is no longer in full force or effect or will not be
      renewed or that the issuer of any policy is not willing or able to perform
      its obligations.

            

    

    

    
      	
              (iii)  

            	
              The
      Company has punctually paid all respective premiums due, and has otherwise
      performed all of its obligations, under each policy to which it is a party
      or that provides coverage to it or to any director
  thereof.

            

    

    

    
      	
              (iv)  

            	
              The
      Company has given timely notice to the insurer of all claims that may be
      insured thereby.

            

    

    

    
      	
              (v)  

            	
              The
      Shareholders are not aware of the occurrence of any act or omission, which
      could invalidate or impair such
insurance.

            

    

    

    
      	
              3.3.6

            	
              Environmental
      Matters

            

    

    

    Without
derogating from the provisions of Section 3.3.1 above, except as set forth in
the Disclosure Letter (Appendix
“­D”), The Company is, and at all times has been, in full compliance
with, and has not been and is not in violation of or has Liability or potential
Liability under, any legal requirement relating to environmental protection,
occupational, health and safety and similar laws.

     

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
 

    
      	
              3.3.7

            	
              Labor
      Relations; Compliance

            

    

    

    
      	
              Except
      as set forth in The Disclosure Letter (Appendix
      “­D”):

            

    

    

    
      	
              (i)  

            	
              There
      has not been, nor is there presently pending or existing, nor Threatened,
      any Proceeding against or affecting The Company relating to the alleged
      violation of any legal requirement pertaining to labor relations or
      employment matters. No event has occurred nor circumstance exists that
      could provide the basis for any labor
dispute.

            

    

    

    
      	
              (ii)  

            	
              The
      Company has complied in all respects with all legal requirements relating
      to employment, equal employment opportunity, nondiscrimination,
      immigration, wages, hours, benefits, collective bargaining, Occupational
      Safety and Health, and plant
closing.

            

    

    

    
      	
              3.3.8

            	
              Certain
      Payments / Finder's Fees

            

    

    

    
      	
              (i)  

            	
              Except
      as disclosed in the Disclosure Letter (Appendix “­D”):
      neither The Company, nor any director, officer, agent, employee of The
      Company, nor any other Person associated with or acting for or on behalf
      of any Company, has directly or indirectly (i) made any bribe, payoff,
      kickback, or other payment to any Person, private or public, regardless of
      form, whether in money, property, or services to obtain or reward special
      concessions, or favorable treatment in securing business for or in respect
      of The Company or in violation of any legal requirement, (ii) established
      or maintained any fund or asset that has not been recorded in the books
      and records of The Company.

            

    

    

    
      	
              (ii)  

            	
              Upon
      execution of the Investment the Company shall pay to eNitiatives – New
      Business Architects Ltd. (“eNitiatives”), within 30 days of the Investment
      Agreement, the sum of $18,000 plus VAT as consideration for eNitiatives’
      work done to facilitate the
Investment.

            

    

    

    
      	
              (iii)  

            	
              eNitiatives
      shall have the right to receive from The Company and The Company shall
      have the right to deliver to eNitiatives, 1,200 Ordinary Shares at a value
      of $7.50 per share, in lieu of 50% of the payment provided, in which case
      The Company shall only pay to eNitiatives the sum of $9,000 in addition to
      the delivery of the shares plus VAT on the entire value, the transaction
      to take place within 30 days of the execution of this
      Agreement.

            

    

    

    
      	
              (iv)  

            	
              The
      holders of the 2 Management Shares not held by Investors shall vote in
      support of Investors’ Management Shares regarding employment of
      eNitiatives and/or Mr. Reuven Marko, which employment shall be covered in
      a separate agreement.

            

    

    

    

    3.4           NO
PENDING OR THREATENED PROCEEDINGS

    

    Except as
set forth in the Disclosure Letter (Appendix
“­D”):

    

    (a)              There
is no pending Proceeding:

    

    
      	
               
      

            	
              (i)

            	
              That
      has been commenced by or against The Company or that otherwise relates to
      or may affect the business of, or any of the assets owned, leased or used
      by, The Company; or

            

    

    

    
      	
               
      

            	
              (ii)

            	
              That
      challenges, or that may have the effect of preventing, delaying, making
      illegal, or otherwise interfering with, any of the Contemplated
      Transactions; or

            

    

    

    
      	
               
      

            	
              (iii)

            	
              That
      Threatens to subject any officer, director, agent, or employee of The
      Company or any of its Subsidiaries to any Order that would prohibit such
      officer, director, agent, or employee from engaging in or continuing any
      conduct, activity, or practice relating to the business of The
      Company.

            

    

    

    
      	
              (b)

            	
              To
      the knowledge of The Company and the Shareholders: (i) no such
      Proceeding has been Threatened, and (ii) no event has occurred or
      circumstance exists that may give rise to or serve as a basis for the
      commencement of any such Proceeding. The Proceedings listed in the
      Disclosure Letter (Appendix “­D”) will
      not have a Material Adverse Effect on the business, operations, assets,
      condition, or prospects of The
Company.

            

    

    

    3.5           NO
MATERIAL ADVERSE CHANGE

    

    (a)              Since
January 1, 2005 and until the execution of this Agreement:

    

    
      	
               
      

            	
              (i)

            	
              No
      dividend, bonus or distribution (including without limitation, cash
      payment) has been declared, made or paid on or in respect of any share
      capital of, or otherwise to any shareholder (or any Related Persons
      thereof) of  The Company;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              Except
      as set forth in the Disclosure Letter (Appendix “­D”), The
      Company has conducted its business only in the ordinary course of
      business, and there has been no material adverse change, nor have there
      been any events or circumstances that may have a material adverse effect,
      including without limitation;

            

    

    

    
      	
               
      

            	
              (iii)

            	
              No
      change in The Company's authorized or issued share capital; grant of any
      share options; issuance of any security convertible into such share
      capital; grant of any registration rights; purchase, redemption,
      retirement, or other acquisition by The Company of any shares of such
      share capital;

            

    

    

    
      	
               
      

            	
              (iv)

            	
              No
      amendment to the incorporation documents of The Company was
      made;

            

    

    

    
      	
               
      

            	
              (v)

            	
              Except
      as detailed in Section 2.3(a)(5) no payment nor increase by The Company of
      any salaries, bonuses, or other compensation payable by The Company to any
      Shareholder, director, officer, or (except in the ordinary course of
      business) to any employee; or entry by The Company into any employment, or
      other similar Contract with any director, officer, or employee (except in
      the ordinary course of business), and no making, forgiveness or other
      change in the terms of any loan by The Company to any
      employee;

            

    

    

    
      	
               
      

            	
              (vi)

            	
              Except
      as detailed in Section 2.3(a)(5), no adoption of, or increase in the
      payments to or benefits under, any profit sharing, bonus, deferred
      compensation, savings, insurance, pension, retirement, or other employee
      benefit plan for or with any employees of The
  Company;

            

    

     

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    
 

    

    
      	
               
      

            	
              (ix)

            	
              No
      sale, transfer, lease, or other disposition of any asset of The Company
      outside the ordinary course of business, nor mortgage, pledge, or
      imposition of any lien or other Encumbrance on any material asset of The
      Company; and no amendment or modification of any agreement other than in
      the ordinary course of business;

            

    

    

    
      	
               
      

            	
              (xi)

            	
              No
      material change in the accounting methods, principles or practices
      followed by The Company;

            

    

    

    
      	
               
      

            	
              (xii)

            	
              No
      agreement, commitment, or undertaking, whether oral or written, by The
      Company to do any of the foregoing.

            

    

    

    
      	
              (b)

            	
              There
      is no fact known to any Shareholder or The Company (other than general
      economic or industry conditions) that has or will have a Material Adverse
      Effect or materially threatens, the assets, business, prospects, financial
      condition, or results of operations of The Company that has not been set
      forth in this Agreement or the Disclosure Letter (Appendix
      “D”).

            

    

    

    

    3.6     MR.
NIMROD BEN-YEHUDA:

    

    Mr. Nimrod Ben-Yehuda (“Nimrod”):

    

     

    
      	
              a)  

            	
              Will
      provide his services to The Company in the capacity of Chief Technology
      Officer for a period of no less than three years, starting on the date of
      execution of this Agreement.

            

    

     

    
      	
              b)  

            	
              Shall
      act as The Company’s Director of Business Development until such time as
      the board will resolve that the Company should hire a dedicated person to
      serve in the capacity of Director of Business
  Development.

            

    

     

    
      	
              c)  

            	
              Will
      substantially devote all his time and efforts to the business of The
      Company and to the continued development of its technology and
      intellectual property, as may be requested, from time to time, by The
      Company’s board of directors.

            

    

     

    
      	
              d)  

            	
              Nimrod
      shall not be involved, directly or indirectly, in any venture whose
      interests are deemed by The Company’s board of directors, in conflict with
      The Company or in the event such involvement is detriment to the business
      of The Company. To the extent that Nimrod is currently in any other
      venture or any other time-consuming activity and/or research and, to the
      extent that Nimrod currently own other patents and/or technologies,
      disclosure of same is made in the Disclosure Letter (Appendix
      “D”).

            

    

    Nimrod’s
compensation from The Company shall include the following:

    

     

    
      	
              e)  

            	
              Monthly
      gross salary of NIS 25,000 starting April 2005, including Twenty (20) paid
      vacation days per year, and specifically includes the compensation for the
      limitation undertaken under Section 6 herein
  below.

            

    

     

    
      	
              f)  

            	
              Executive
      insurance.

            

    

     

    
      	
              g)  

            	
              “Keren
      Hishtalmut at the rate of 10% (7.5% contribution by the
      Company).

            

    

     

    
      	
              h)  

            	
              Disability
      insurance at a rate not to exceed 2% with customary
    coverage.

            

    

     

    
      	
              i)  

            	
              A
      fully paid rental car (including taxes assessed for private
      use).

            

    

     

    
      	
              j)  

            	
              A
      company-provided mobile phone. The phone charges shall be fully covered by
      The Company.

            

    

     

    
      	
              k)  

            	
              A
      semi-annual bonus as following:

            

    

     

    
      	
              (i)  

            	
              NIS
      25,000 if the company meets its financial targets in the pertinent half
      year.

            

    

     

    
      	
              (ii)  

            	
              NIS
      60,000 if the company exceeds its financial targets by 30% or more in the
      pertinent half year.

            

    

     

    

    Nimrod
shall receive from The Company the following for the purpose of performing his
obligations in accordance with his employment with The Company:

    

     

    
      	
              l)  

            	
              A
      laptop computer paid by The
Company.

            

    

     

    
      	
              m)  

            	
              A
      company credit card to be used exclusively for company-approved expenses.
      The use of such credit card shall be audited, at the end of each year, by
      the Company’s auditors and any improper or un-approved use of the credit
      card, as determined by the auditors, shall be deducted from Nimrod’s
      salary as expediently as possible.

            

    

     

    
      	
              n)  

            	
              When
      traveling on business, the Company shall also
  pay:

            

    

     

    
      	
              (iii)  

            	
              Airfare
      in economy class;

            

    

     

    
      	
              (iv)  

            	
              Non-luxury
      hotels;

            

    

     

    
      	
              (v)  

            	
              Transportation;

            

    

     

    
      	
              (vi)  

            	
              Up
      to the sum of $100 per day for other
expenses.

            

    

     

    
      	
              (vii)  

            	
              The
      Company shall further pay for entertainment of customers and selected
      vendors and service providers hosted by
Nimrod.

            

    

    

    

    A breach,
by Nimrod, of any of these provisions shall be considered a Material Breach as
defined hereinafter and shall entitle the Investors to their remedies resulting
from a Material Breach as provided for hereinafter.

     

     

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    
 

     

    
      	
              4.

            	
              INDEMNIFICATION

            

    

    

    
      	
              4.1  

            	
              BREACHES
      BY THE COMPANY

            

    

     

    

     

    
      	
              (a)

            	
              The
      Company shall be deemed in “Breach” in the event
  that:

            

    

     

    (i)                 For
the period of July 1, 2005 through March 31, 2006:

     

    
      	
              1.  

            	
              The
      Company fails to deliver financial reports to Investors on the dates
      provided hereinbefore, provided the Company delivers such reports no later
      than 60 days subsequent to the dates provided
  hereinbefore.

            

    

     

    
      	
              2.  

            	
              Failure
      by the Company and/or Nimrod to fulfill their undertakings pursuant to
      this Agreement.

            

    

     

    (ii)                 At
any time subsequent to March 31, 2006:

     

    
      	
              3.  

            	
              It
      fails to meet 65% of its financial targets as provided in the Business
      Plan in any given quarter; and/or,

            

    

     

    
      	
              4.  

            	
              It
      fails to meet any of its quarterly non-financial targets as provided in
      the Business Plan.

            

    

     

    
      	
               (b)

            	
              The
      Company shall be deemed to be in a “Material Breach” in the event
      that:

            

    

     

    
      	
              (i)  

            	
              At
      any time subsequent to the execution of this Agreement, and provided the
      Investors are not in breach as provided
herein

            

    

     

    
      	
              (1)  

            	
              The
      Company fails to deliver financial reports to Investors on the dates
      provided hereinbefore, provided such failure is not remedied within 60
      days.

            

    

     

    
      	
              (2)  

            	
              The
      Company and/or Nimrod fail to rectify a breach within 45 days of receipt
      of a notice of breach from The
Investors.

            

    

     

     (ii)  Subsequent
to march 31, 2006 and provided Investors are not in breach, as provided
herein:

     

    
      	
              (1)  

            	
              It
      fails to meet at least 75% of its cumulative financial targets for any two
      consecutive quarters, as provided in the Business Plan;
    and/or

            

    

     

    
      	
              (2)  

            	
              It
      fails to meet any of its quarterly non-financial targets for any quarter,
      as provided in the Business Plan and fails to
      remedy such shortcomings, in addition to making the non-financial targets
      in the subsequent quarter;

            

    

     

    4.2            REMEDIES
GRANTED TO INVESTORS:

     

     (a)                 Unless
specifically agreed upon otherwise, The Company and the Shareholders, severally,
hereby undertake to indemnify and hold harmless The Investors or, at The
Investors option, The Company, for any Liability, loss, claim, damage
(including, without limitation, incidental and consequential damages), expense
(including, without limitation, costs of investigation, defense, reasonable
attorneys' fees, and other legal expenses) or diminution of value, whether or
not involving a third-party claim (collectively, "Damages"), arising, directly
or indirectly, from or in connection with:

     

                    

     

    
      
        	 	(i) 	any
      breach of any of the Shareholders’ Warranties;
	 	 	 
	
                 
      

              	
                (ii)

              	
                any
      breach by any Shareholder of any covenant or obligation of such
      Shareholder in this Agreement;

              
	 	 	 
	 	(iii)   	In
      case of Breach or Material Breach as defined
above:

      

    

     

                  

    
      (a)  In the
event of a Breach The Investors shall have the right, at their sole discretion,
to postpone the installment of the quarter subsequent to the breach until after
the last installment of the investment.

    

     

    
      (b)  In the
event of a Material Breach: Investors shall be under no obligation to further
invest in the Company and shall nonetheless receive from the Escrow holder the
Ordinary Shares and Management Shares then remaining in Escrow as provided in
the Escrow Provision – Provided, however, that the Company fails
to:

    

     

    
      	
               
      

            	
              (i)
      Rectify the Material Breach in the subsequent quarter in addition to
      meeting the subsequent quarter’s targets;
or

            

    

     

    
      	
               
      

            	
              (ii)
      Repurchase from Investors all their shares of the Company at the price of
      $7.50 per shares, within 1 year from such Material Breach (“Repurchase”).

            

    

    

    Notwithstanding
the foregoing, should the Company recruit a new investor or a purchaser for the
entire company at a price, or post-investment valuation of $5 million Dollars or
higher, The Company shall give Investors a notice of such investment and/or
purchase and the Investors shall have the right to cure the funding of the
Investment within 10 days of receipt of such notice and restore all their rights
provided in the Agreement.

    It is
hereby clarified that if the Investors decided to act according to this section
they will not be able to act in accordance with section 4.2(i) or 4.2(ii)
above.

     

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

     

    4.3           Breaches by Investors and
Remedies granted to Company:

     

    
      	
              (a)  

            	
              Breach:
      Investors sole obligation is to fund the Investment in accordance with the
      Investment Agreement, unless The Company is in
      breach.  Investors shall be deemed in breach if Investors
      default on their funding obligations and fail to
      cure such default within 37 days of receipt of a notice of default from
      the Company.

            

    

     

    
      	
              (b)  

            	
              Remedy: In the
      event of a breach by Investors, Investors shall lose their right to
      complete the investment and lose their right to the Management Shares held
      by the Escrow at such time – all of which shall be returned by Escrow to
      the Company’s pursuant to the Escrow
Provision.

            

    

    

    
      	
              5       TIME
      LIMITATIONS

            

    

    

    
      	
              (i)  

            	
              Subject
      to the clause (ii) below, Shareholders liability (for indemnification or
      otherwise) with respect to any of their Warranties, or covenant or
      obligation in this Agreement shall continue until and be time barred in
      accordance with the Israeli statute of
  limitation.

            

    

     

    
      	
              (ii)  

            	
              The
      Shareholders acknowledge and agree that the Investors is and/or was under
      no obligation or duty whatsoever to investigate, inspect or examine the
      Shares and/or The Company for defects or deficiencies at any time before,
      on or after the execution date, except for the examination of all
      documents and/or materials and/or other information presented by the
      Shareholders to the Investors.

            

    

    

    
      	
              6

            	
              NON-COMPETITION
      BY SHAREHOLDERS

            

    

    

    6.1           COVENANT
NOT TO COMPETE

    

    
      	
              (a)

            	
              For
      a period of 3 years after the date of signing of this Agreement, and in
      case of Nimrod 3 years after the date of termination of his employment
      with the Company, which ever is
later:

            

    

    

    
      	
               
      

            	
              (i)

            	
              Each
      Shareholder will not, directly or indirectly, engage or invest in, own,
      manage, operate, finance, control, or participate in the ownership,
      management, operation, or control of, be employed by, associated with, or
      in any manner connected with, lend such Shareholders’ name or any similar
      name to, lend such Shareholders’ credit to, or render services or advice
      to, any business whose products or activities compete in whole or in part
      with the products or activities of The Company in Israel (boundaries as of
      execution date), provided, however, that any Shareholder may purchase or
      otherwise acquire up to (but not more than) one percent of any class of
      securities of any enterprise (but without otherwise participating in the
      activities of such enterprise) if such securities are listed on any
      national or regional securities exchange. Each Seller agrees that this
      covenant is reasonable with respect to its duration, geographical area,
      and scope;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              Each
      Shareholder will not, directly or indirectly, either for himself or any
      other Person, (A) induce or attempt to induce any employee of The
      Company to leave its employ, (B) employ, or otherwise engage as an
      employee, independent contractor, or otherwise, any employee of The
      Company, or (D) induce or attempt to induce any customer, supplier,
      licensee, or business relation of The Company to cease doing business with
      such Company, or in any way interfere with the relationship between any
      customer, supplier, licensee, or business relation of The
      Company.

            

    

    

    
      	
              (b)

            	
              In
      the event of a breach by any Shareholder of any covenant set forth in
      clause (a) above, the term of such covenant will be extended by the period
      of the duration of such breach.

            

    

    

    
      	
              (c)

            	
              Each
      Shareholder will, for a period of 3 years after the date of signing of
      this Agreement (as defined hereinafter), within ten days after accepting
      any employment, advise The Investors of the identity of any employer of
      such Shareholder. The Investors or The Company may serve notice upon each
      such employer that such Shareholder is bound by the non-competition
      covenant of this Agreement (Section 6.1) and furnish each such employer
      with a copy of Sections 6 and 5.1 of this Agreement or relevant portions
      thereof.

            

    

    

    
      	
              (d)

            	
              The
      restrictions under (a), (b) and (c) above shall apply also to the
      Investors mutatis mutandis.

            

    

    

    
      	
              7.

            	
              GENERAL
      PROVISIONS

            

    

     

     

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    
 

    7.1         EXPENSES

    

    Except as
otherwise expressly provided in this Agreement, the Investors, the Shareholders
and The Company will bear their respective expenses incurred in connection with
the preparation, execution, and performance of this Agreement and the
contemplated transactions, including all fees and expenses of agents,
representatives, counsel, and accountants. stamp duty, if any, payable in
respect of this Agreement shall be paid by the Shareholders and/or The Company.
The Shareholder will ensure that The Company does not bear or incur any fees and
expenses of agents, representatives, counsel, and accountants

    

    7.2        CONFIDENTIALITY
/ PUBLIC ANNOUNCEMENTS

    

    This
Agreement and its contents shall be kept confidential by the parties hereto. The
contents of any communication about this Agreement to third parties shall be
mutually agreed upon by the parties. Any public announcement, press release or
similar public communication with respect to this Agreement will, however, be
issued at such time and in such manner as shall be mutually
determined.

    

    7.3        ENTIRE
AGREEMENT AND MODIFICATION

    

    Save for
The Loan Agreement, this Agreement replaces and supersedes all prior agreements,
term sheets or any other document or previous understanding between the parties
with respect to its subject matter and constitutes (along with all its Exhibits
which are an integral part of it) a complete and exclusive statement of the
terms of the agreement between the parties with respect to its subject matter.
This Agreement may not be amended except by a written agreement executed and
signed by the parties to be charged with the amendment, and any waiver of this
provision shall only be valid and binding if executed in writing by the party
giving the waiver.

    

    7.4        DISCLOSURE
LETTER

    

    In the
event of any inconsistency between any provisions of and/or the statements in
this Agreement and those in the Disclosure Letter (Appendix “D”) (unless
otherwise specifically stated in the Disclosure Letter with respect to a
specific representation or warranty), the provisions or statements in this
Agreement shall prevail.

    

    7.5        ASSIGNMENTS,
SUCCESSORS, AND NO THIRD-PARTY RIGHTS

    

    Neither
party may assign any of its rights under this Agreement without the prior
consent of the other parties, except that The Investors may assign any of their
rights (but not obligations) under this Agreement to any related person or
entity. Subject to the above said, this Agreement will apply to, be binding in
all respects upon, and inure to the benefit of the successors and permitted
assigns of the parties.

    

    7.6        SEVERABILITY

    

    If any
provision of this Agreement is held invalid or unenforceable by any court or
arbitral tribunal of competent jurisdiction, the other provisions of this
Agreement will remain in full force and effect, and the invalid or unenforceable
provision shall be substituted by a valid and enforceable provision closest to
the economic intent intended by the parties with the invalid or unenforceable
provision which achieves, as far as possible, the original business purposes of
the excluded provision.

    

    7.7        GOVERNING
LAW AND ARBITRATION

     

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

     

    
      	
              7.7.1

            	
              Governing
      Law and Jurisdiction

            

    

    

    This
Agreement shall be governed by and construed according to the laws of Israel and
the authorized courts of Tel-Aviv, Israel, shall have the sole and exclusive
jurisdiction over any dispute arising between the parties hereto.

    

    

    7.8         ENTRY
INTO FORCE / COUNTERPARTS

    

    
      	
              (a)

            	
              This
      Agreement shall come into force as of the date last below written, once
      duly executed by all the parties.

            

    

    

    
      	
              (b)

            	
              This
      Agreement and its Exhibits may be executed in 3 original sets (one such
      set for each party).

            

    

    

    

    IN
WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date last below written.

    

    
      
        
          
            
              	Pimi Marion Holdings
      Ltd	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	
                      /s/
      Eitan Shmeuli

                    	 	 	
                       

                    	 
	
                      Name:
      Eitan Shmeuli

                    	 	 	
                       

                    	 
	
                      Title:
      President

                    	 	 	
                       

                    	 

            

          

        

      

    

    
      
        
          
            
              
                
                  	 	 	 	 	 
	Omdan Consulting and
      Instructing LTD	 	 	 	 
	 	 	 	/s/
      Nimrod Ben-Yehuda	 
	
                          /s/
      Eitan Shmeuli

                        	 	 	
                          Nimrod
      Ben-Yehuda

                        	 
	
                          Eitan Shmeuli

                        	 	 	
                           

                        	 
	 	 	 	 	 
	
                          JNS Capital LLC
      

                        	 	 	
                           

                        	 

                

              

            

          

        

      

      
        	 	 	 	 	 
	
                /s/
      Joe Shapira

              	 	 	
                /s/
      Alon Carmel
      

              	 
	
                Managing
      Member

              	 	 	
                Alon
      Carmel      12/01/05

              	 
	
                 

              	 	 	
                 

              	 

      

     

    Agreed to
by:

    
      
        
          
            
              	 	 	 	 	 
	eNitiatives – New Business
      Architects Ltd.	 	 	 	 
	 	 	 	 	 
	
                      /s/
      

                    	 	 	
                       

                    	 
	
                      Name:
      Reuven Marko

                    	 	 	
                       

                    	 
	
                      Title: General
      Manager

                    	 	 	
                       

                    	 

            

          

        

      

    

    

     

    16ex104.htm

Exhibit 10.4

    Addendum
to An Investment Agreement Dated 13.11.2005

    

    Signed in
______, on the 15, of November, 2006

    

    Between

    

    
      	
              1.  

            	
              Pimi
      Marion Holdings Ltd ("The Company")

            

    

    
      	
              2.  

            	
              Nimrod
      Ben-Yehuda

            

    

    
      	
              3.  

            	
              Omdan
      Consulting and Instructing Ltd

            

    

    (Jointly and severally: "The
Shareholders")

    On the
first Party

    And
Between

    

    Alon
Carmel ("Alon")

    On the
second Party

    And
Between

    

    JNS
Capital LLC ("JNS")

    On the
third  Party

    

     

    
      	
              Whereas

            	
              On
      the 13th
      of November 2005, the parties have signed an Investment Agreement
      (hereinafter: "The
      Agreement"), under which Alon and JNS undertook to invest the sum
      of US$ 900,002, against the issuance of 2 Management Shares and 120,000
      Ordinary Shares (hereinafter: "The Investment");
      and

            

    

     

    
      	
              Whereas

            	
              Until
      the execution of this Addendum, Alon  invested US$ 485,000 and
      JNS invested US$ 300,000 in the Company and the Company has issued 24,000
      Ordinary Shares to Alon and 24,000 Ordinary Shares to JNS on account of
      the shares that they are entitled to pursuant to The Agreement and their
      respective investments; and

            

    

     

    
      	
              Whereas

            	
              The
      Company is in need for further investment in order to finance its
      activities; and

            

    

     

    
      	
              Whereas

            	
              Alon
      has agreed to invest an additional sum in the Company above the Investment
      on certain conditions (hereinafter: "The Additional
      Investment"); and

            

    

     

    
      	
              Whereas

            	
              In
      order to induce Alon to further invest in The Company, the parties have
      agreed to improve the conditions of The Investment and to modify The
      Agreement, in accordance with the terms of this
  Addendum;

            

    

     

    
      	
               
      

            	
              Now
      therefore the Parties have agreed as
follows:

            

    

     

    
      	
              1.  

            	
              The
      Preamble to this Addendum is one and integral part of
  it.

            

    

     

    
      	
              2.  

            	
              JNS
      shall be released from any further obligation to invest in The Company.
      Upon signing of this Addendum, The Company shall issue to JNS, pursuant to
      the below said, an additional amount of shares reflecting its investment
      of US$ 300,000 (i.e. 40,000 shares) in The Company as well as 1 management
      share.

            

    

     

     

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

     

     

    
      	
              3.  

            	
              Alon
      and JNS shall be entitled, subject to the completion of The Investment by
      Alon as set forth in The Agreement, to receive 120,000 Preferred Shares of
      0.01 NIS each, of the Company instead of 120,000 Ordinary Shares of 0.01
      NIS each. The shares already issued shall be converted. The shares will be
      issued to Alon and JNS respectively to their investment in The Company.
      The "Preferred
      Shares"- shall have all rights attached to the Ordinary Shares and
      in addition will entitle their holders to priority in the distribution of
      the company assets and/or  dividends in case of liquidation of
      the Company or termination of its business, over any other shareholder of
      the Company in a way that until the holder of a Preferred Share will
      receive the full amount of his Investment in The Company as dividends or
      as proceeds of the sale of the Company's assets no other shareholder will
      receive any dividend in
liquidation.

            

    

     

    
      	
              4.  

            	
              3.  The
      Company shall issue to, Adv. Amos Hacmun, 1 Decisive Share of 0.01 NIS.
      The "Decisive
      Share"- will entitle its holder to participate in The Company`s
      Shareholders assemblies and/or The Board of Directors meetings upon the
      request of any Director or Shareholder as the case may be, and in a case
      of a dead-lock situation only, the Decisive Share holder`s vote shall be
      the overbalancing vote. In case of a board decision only, the Decisive
      Share holder shall use its discretion and vote as what he considers as the
      benefit of The Company.

            

    

     

    The
parties hereby acknowledge and agree that Adv. Amos Hacmun does not act as any
kind of trustee, and that he as well as Heskia-Hacmun Law Firm provided and/or
may provide in the future legal services and represent Alon and/or JNS and/or
eNitiatives – New Business Architects Ltd. and that they may continue to
represent them and/or have any other business relations with same without any
limitation or duty to disclose same to any party to this Addendum, including the
representation of Alon and/or JNS in case of a future dispute between any of the
parties to this Addendum. The parties further confirm that they have been
notified that Adv. Amos Hacmun and/or a related company have a shareholding
interest in eNitiatives – New Business Architects Ltd.

     

    The
parties further and irrevocably agree that such relations shall not be
considered in any event as neither relations of a trustee with The Company and
The Shareholders nor as a conflict of interest and they explicitly and
irrevocably waive any argument and claim against Adv. Hacmun and/or
Heskia-Hacmun Law Firm and/or Alon and/or JNS and/or Enitiatives – New Business
Architects Ltd. and/or whom on their behalf in this matter or any matter
resulting thereof.

     

    
      	
              5.  

            	
              The
      Shareholders undertake to convene a special assembly for the purpose of
      amending the Company's Article Of Association in accordance with the above
      Paragraphs 2 and 3, and to convert the 48,000 Ordinary Shares that were
      issued to Alon and JNS, to 48,000 Preferred Shares. The assembly
      resolution shall be made pursuant to the requirements of part 6 of chapter
      5 of The Companies Law [5759-1999].

            

    

     

    
      	
              6.  

            	
              Alon
      undertakes to transfer to the Company US$ 215,000, from which US$ 115,000
      is the balance of  The Investment and US$ 100,000 is an
      "Additional Investment" :

            

    

     

    
      	
              a.  

            	
              The
      sum of US$ 15,000 will be transferred to The Company's bank account
      immediately after this Addendum has been signed by the
      Parties.

            

    

     

    
      	
              b.  

            	
              The
      sum of US$ 100,000 shall be transferred to The Company's bank account no
      later than 01.01.2007.

            

    

     

    
      	
              c.  

            	
              The
      sum of US$ 100,000 shall be transferred to The Company's bank account no
      later than 01.03.2007.

            

    

     

    Notwithstanding
the above, the Company may waive to Alon the obligation to invest US$ 80,000 out
of the sum mentioned in clause (c) of this section, in case of improvement in
its financial situation or, in case there is another investor who is ready to
invest in the Company a sum of at least US$ 80,000 at a valuation of US$
3,000,000 (pre-money) and provided such investor will commit himself to invest
in the Company before 1.2. 2007.

     

    
      	
              7.  

            	
              The
      parties agree, that against each installment of US$ 20,000 by Alon, of the
      Additional Investment, Alon shall be entitled to receive and the Company
      shall issue to Alon such amount of Preferred Shares of 0.01 NIS each
      reflecting 1% of The Company's issued share capital (not including
      management shares) as shall be after the completion of The Investment and
      the Additional Investment.

            

    

     

    In
addition any other Shareholder has the right until the 1.2.2007 to notify the
Company on his willingness to participate in the Additional Investment in
accordance with his prorated his shareholding in the Company under the same
terms and conditions as described in this section above. In such a case the
investment obligation of Alon will be reduced accordingly provided that such
shareholder has transferred his share in the Additional Investment until the
1st
of March 2007.

     

    Alon and
JNS and any other Shareholder who have notified and has made the investment as
described above , shall each respectively be entitled to full protection against
dilution due to the issuance of the Preferred Shares for the Additional
Investment so that The Company shall issue a corresponding amount of Preferred
Shares of 0.01 NIS to Alon and JNS or to the other Shareholder respectively to
their holdings of The Company's shares as should be after completion of The
Investment.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    

     

    
      	
              8.  

            	
              The
      Company shall deposit all materials concerning its product intellectual
      property including but not limited to the product formula, ingredients,
      composing, manufacturing process etc, with Heskia-Hacmun Law Firm who
      shall be allowed to release such materials to Alon and JNS in case that
      The Company shall enter liquidation or terminate its business. The above
      shall also apply to any future changes, updates or modifications of the
      said materials.

            

    

    

    
      	
              9.  

            	
              Omdan
      Consulting and Instructing Ltd. through Mr. Eitan Shmueli, declares that
      until a new investor will invest in the Company, Sadot & Co`s monthly
      fees in the total amount of US$ 2,000, will be paid as
      follows:

            

    

    
      	
              a.  

            	
              The
      Company shall pay to Sadot & Co. monthly payment of
      US$   1,000.

            

    

    
      	
              b.  

            	
              The
      additional monthly payment of US$ 1,000 will be delayed and shall be
      registered as a shareholder loan by Omdan Consulting. The Company shall
      pay the balance of such shareholder loan to Sadot & Co. in accordance
      with its financial ability after a new investment of not less then US$
      500,000 at a evaluation of not less then US$ 3,000,000 (pre-money) will be
      made by a new investor or in case of another event causing The Company to
      receive an income of more then US$
500,000.

            

    

    
      	
              c.  

            	
              It
      is agreed that in case that no new investor will invest in the Company or
      if the Company shall reach liquidation or terminate its business, Sadot
      & Co. will waive their right to such additional monthly
      payment.

            

    

     

    
      	
              10.  

            	
              Mr.
      Nimrod Ben-Yehuda agrees, that until a new investor will invest in the
      Company, his monthly net salary  from The Company shall be
      reduced by 3,000 NIS, which sum will be considered as a loan by Mr.
      Ben-Yehuda to The Company. In addition, Mr. Ben-Yehuda shall present
      receipts documenting all the out of pocket expenses Mr. Ben-Yehuda made
      for and on behalf of The Company (up to an amount of approx. NIS 50,000)
      which shall be considered as a shareholder loan to The Company. The
      Company undertakes to pay the shareholders loan to Mr. Ben-Yehuda in
      accordance with its financial ability after a new investment of not less
      then US$ 500,000 at a evaluation of not less then US$ 3,000,000
      (pre-money) will be made by a new investor or in case of another event
      causing The Company to receive an income of more then
      US$500,000.

            

    

     

    
      	
              11.  

            	
              All
      current investments and/or loans made by Mr. Ben-Yehuda and/or any company
      on his behalf as well as Omdan Consulting and Instructing Ltd., ("Omdan") shall be
      registered in the books of The Company as a shareholder loan which shall
      be paid back in accordance with the financial ability of The Company as
      shall be determined by the board of directors of The Company provided that
      such board decision has been supported by either Alon or the
      representative of JNS, except for Omdan who shall have the right to notify
      the Company until the 1.2.2007 on his willingness to convert its
      shareholder loans at the amount of 70,000 NIS into Preferred Shares of the
      Company  in accordance with the terms of section 7
      above.

            

    

     

    
      	
              12.  

            	
              Immediately
      after signature of this Addendum eNitiatives loan to the Company for
      services in the amount of US$ 14,000 will be converted
      into  Preferred Shares at the same valuation of US$20000 for
      each 1% of the Company capital. If eNitative will execute his right under
      section 7 above the Company will convert its existing Regular Shares into
      Preferred Shares.

            

    

     

    
      	
              13.  

            	
              All
      other provisions of The Agreement which were not modified under this
      Addendum will stay valid and in full
force.

            

    

     

    
      	
              14.  

            	
              This
      Addendum shall take effect as of the moment when signed by both Parties.
      However, in case that by March 31, 2007: (i) The Company shall meet its
      targets according to the Business Plan (Appendix "A" of  The
      Agreement and under the applicable terms of the Agreement); or (ii) The
      Company shall raise a new investment of not less then US$ 500,000 at an
      evaluation exceeding US$ 3,000,000 (pre-money); or (iii) in case of
      another event causing The Company to receive an income of more then US$
      500,000, this Addendum will be cancelled, and all changes or modification
      made in accordance with this Addendum, shall be null and void save for the
      Shares acquired by Alon and JNS or any other shareholders due to the
      execution of any part of the Additional Investment or under sections 7 and
      11 of this Addendum above. In such case all Preferred Shares so acquired
      shall be converted into Regular
Shares

            

    

     

    
      	
              15.  

            	
              The
      Company shall promptly and timely make all mandatory payments to the
      authorities and shall not obtain any credits and/or loans, whether from
      banks or other lenders without the explicit decision of the board of
      directors of The Company and provided that Alon or the director on behalf
      of JNS have supported such board
decision.

            

    

     

    
      	
              16.  

            	
              The
      Company shall fully reimburse Alon's legal expenses in connection with
      this Addendum.

            

    

     

    
      	
              17.  

            	
              The
      Agreement provisions shall be considered and interpreted in accordance
      with the provisions of this
Addendum.

            

    

     

    
      	
              18.  

            	
              In
      case of any discrepancies between provisions of this Addendum and other
      provisions of The Agreement, the provisions of this Addendum shall
      prevail.

            

    

     

     

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

     

    In
witness Whereof the Parties have signed this Addendum on
the    [Missing Graphic Reference]

     

    
      
        
          
            
              	Pimi Marion Holdings,
      Ltd	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	
                      /s/
      Eitan Shmeuli

                    	 	 	
                       

                    	 
	
                      By:
      Eitan Shmeuli

                    	 	 	
                       

                    	 
	
                      Title:
      Director

                    	 	 	
                       

                    	 

            

          

        

      

    

    

    
      
        
          
            
              	 Omdan Education and Instructing
      Ltd	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	
                      /s/
      Eitan Shmeuli   

                    	 	 	
                       

                    	 
	
                      By:
      Eitan Shmeuli   

                    	 	 	
                       

                    	 
	
                       

                    	 	 	
                       

                    	 

            

          

        

      

    

    
      
        
          
            	Nimrod
    Ben-Yehuda	 	 	 	 
	 	 	 	 	 
	
                    /s/
      Nimrod
Ben-Yehuda

                  	 	 	
                     

                  	 
	
                    Name:
      Nimrod
Ben-Yehuda

                  	 	 	
                     

                  	 
	
                     

                  	 	 	
                     

                  	 

          

        

      

    

    
      
        
          
            
              	 	 	 	 	 
	

                      JNS Capital LLC
      

                    	 	 	 	 
	 	 	 	 	 
	
                      /s/
      Joe Shapira

                    	 	 	
                       

                    	 
	
                      Name:
      Joe Shapira

                    	 	 	
                       

                    	 
	
                      Title: Managing
      Member

                    	 	 	
                       

                    	 

            

          

        

      

    
      
        
          	 	 	 	 	 
	
                  /s/
      Alon Carmel 

                	 	 	
                   

                	 
	
                  Name:
      Alon Carmel 

                	 	 	
                   

                	 
	
                   

                	 	 	
                   

                	 

        

      

    

     

    Agreed to
by:

    
      	
               
      

            	 

    

     

    
      
        
          
            	eNitiatives – New Business
      Architects Ltd.	 	 	 	 
	 	 	 	 	 
	
                    /s/
      Reuven Marko

                  	 	 	
                     

                  	 
	
                    

                      Name:
      Reuven Marko

                    

                  	 	 	
                     

                  	 
	
                    

                      Title: General
      Manager

                    

                  	 	 	
                     

                  	 

          

        

      

     

     

     

    4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00160-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00160-of-00352.parquet"}]]