CURRENT SHAREHOLDERS AGREEMENT

And between:

And between:

And between:

a.

Microdel is involved in mobilizing funds for the Babies’ Breath Co. Ltd., Private Co. 51-307694-3 (hereinafter: “ the Company ”) particularly by way of setting up a new company in the U.S. (hereinafter: “ the Offered Company ”) which shall hold all the share capital of the Company and the shares whereof shall be registered for “over the counter” trading on the Nasdaq Stock Exchange in the United States. The source of the decisive majority of the funds of the offering is institutional bodies in the U.S., which will invest sums of money in the offered company that will serve to continue to finance the ongoing activity of the Company (hereinafter: “the Offering”).

b.

For the purpose of the Offering, the Articles of Incorporation of the Company must be changed so that all Company shares shall be shares of equal rights and the right of first refusal in the Articles of Incorporation of the Company must be updated so that it applies and obligates solely shareholders who hold at least 5% of the allocated capital of the Company.

c.

Within the context of the Offering procedure, all Company shareholders are to transfer all their shares in the Company to the Offered Company. And shares of equal rights are to be allotted to several private investors who are to invest in the Company together the sum of $150,000 (hereinafter: “ the Private Investors ”) in order to meet the threshold demands of the Offering.

d.

The current Articles of Incorporation of the Company (hereinafter: “ the Current Articles ”) comprise three types of shares, all as specified in the current Articles of Incorporation.

e.

The parties agree to amend the Current Articles and at the shareholders’ General Meeting to pass a special resolution to amend the Articles so that all rights attached to Company shares shall be identical and to amend the section concerning the right of first refusal so that it applies and obligates solely shareholders who hold at least 5% of the allocated capital of the Company, all as specified herein in this agreement.

f.

At the same time as the signature of this agreement, “A Pre-Offering Agreement” between Microdel and the Company has been signed (hereinafter: “the Pre-Offering Agreement”).

g.

The parties would like to preserve, to the extent possible and in the event that the offering fails to succeed, the rights between them concerning all that is connected to the rights to receive dividends in future from the Company, in the event of the failure of the Offering, so that they may remain as close as possible to the rights thereof pursuant to the current Articles in the event the Offering fails to succeed, all as specified herein in this agreement and in accordance with the conditions and arrangements specified therein.

h.

The shares owing to Amado in the Company prior to the signature of this agreement are 564 ordinary C shares which have yet to be allocated to Amado in practice.

1.

Preamble and Interpretations

1.1

The preamble to this agreement constitutes an integral part thereof.

1.2

The section titles are solely for the sake of convenience and shall not be relied on in the interpretation or clarification of this agreement.

1.3

A definition given in this agreement in the plural shall have the same meaning also in the event that it appears in the singular and vice versa.

1.4

Unless otherwise stated explicitly, the terms in this agreement shall have the same meaning as the terms in the Pre-Offering Agreement.

2.1

In this agreement, the following terms shall have the meaning specified alongside thereof insofar as this meaning fails to contradict the contents of matters or context thereof.

2.1.1

“Dollar, $” – A United States dollar. If the reference is to payment in dollars – the payment shall be performed in shekels according to the representative rate of the dollar publicized by the Bank of Israel and known on the date of actual payment.

2.12

“ Future Dividends ” – Dividends to be distributed by the Company in future if the Offering should fail.

2.1.3

“ Attributed Future Dividends ” – The total amount of dividends that the Company is to distribute from time to time to all current shareholders and/or the alternates thereof. (For example: If the Company decides to distribute dividends in any given year in the amount of $200,000 and the percentage of holdings of current shareholders in the Company is 60%, then the sum of the attributed dividends with respect to the same distribution shall be $120,000.)

2.2

In the event of a conflict between the provisions of this agreement and one of the appendices thereof, the provisions of this agreement shall prevail.

2.3

The appendices attached hereto to this agreement shall constitute an integral part of the agreement.

3.1

At the time of signing this agreement the holdings of the shareholders in the Company are as follows:

3.2

According to the current Articles, the rights attached to the various shares are:

3.2.1

The rights attendant on Ordinary A Shares and Ordinary B Shares shall grant the holders thereof the following rights:

With respect to the distribution of dividends :

3.2.1.1

To receive dividends and participate in the distribution of Company revenues at a proportion of 60% for holders of Ordinary A Shares and 40% for holders of Ordinary B Shares, until all the holders of A shares receive the sum of $500,000.

3.2.1.2

Following the distribution of dividends of $500,000 to all holders of Ordinary A Shares, holders of Ordinary A Shares will not be entitled to receive any dividends until the holders of Ordinary B Shares receive dividends in the amount of the difference between the sum of the investment in cash and the sum of the dividend paid them by virtue of section 3.2.1.1 above, and they will be paid the sum of suppliers’ credit and the holders of Ordinary B Shares will be paid any other owners’ loan that they placed in favor of the Company. For the avoidance of doubt, it is clarified that the sum of dividends the holders of Ordinary B Shares will receive by virtue of combining the sums subject of sections 3.2.1.1 and 3.2.1.2 above together with the sum of suppliers’ credit that is refunded shall be equal to the sum of the comprehensive investment.

3.2.1.3

Following payment of the sums as aforesaid in section 3.2.1.2 above, all holders of Ordinary A shares shall be entitled to receive 60% “of the differential in Company profits” to be distributed during a period of 4 (four) years commencing on the date of payment of the final sum, according to section 3.2.1.2 above. In the event that during the aforesaid 4-year period, no profit that may be distributed according to standard accounting rules, which accrued during the aforesaid 4-year period, are distributed (hereinafter: “ the Undistributed Sum of Profits ”), then the sum of the undistributed profits shall be distributed on the first date of dividend distribution at the Company in a division of 60% “of the differential of Company profits” to holders of Ordinary A Shares and 40% to holders of Ordinary B Shares until the entire amount of undistributed profits is distributed, even if the distribution, as aforesaid, shall be subsequent to the 4-year period, as aforesaid.

“ Company Profits Differential ” signifies: all Company profits that are distributed as dividends with the deduction of the sums that are distributed as dividends to holders of Ordinary C Shares.

3.2.1.4

Following the occurrence of the aforesaid condition in subsection 3.2.1.3 above (including subsequent to the distribution of the sum of undistributed profits), the rights of the holders of Ordinary A Shares and the holders of Ordinary B Shares and the holders of Ordinary C Shares in relation to the right to receive dividends, shall be identical.

With respect to the remaining rights

3.2.1.5

Save with respect to the right to receive dividends as aforesaid, the rights attendant on the Ordinary A and B Shares shall be identical and shall grant the holders the