SECURITIES PURCHASE AGREEMENT

THIS PURCHASE AGREEMENT (“Agreement”) is made as of the 24 day of January, 2011
by and among Pimi Agro Cleantech, Inc., a Delaware corporation (the “Company”),
and the investors set forth in Annex I attached hereto (each an "Investor" and
collectively the “Investors”).

Recitals

A.

The Company and the Investors are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by the
provisions of Regulation D (“Regulation D”), as promulgated by the U.S.
Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933,
as amended; and

B.

The Investors wish to purchase from the Company, and the Company wishes to sell
and issue to the Investors, upon the terms and conditions stated in this
Agreement, (i) up to an aggregate of 625,000 shares (the “Shares”), and (ii)
warrants to purchase up to an aggregate of 625,000 shares of the Company’s
common stock (the “Common Stock “), at an exercise price of $0.80 per share
exercisable until December 31, 2012 in the form attached hereto as Exhibit A
(the “Warrants”); and

In consideration of the mutual promises made herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

1.

Definitions.  In addition to those terms defined above and elsewhere in this
Agreement, for the purposes of this Agreement, the following terms shall have
the meanings set forth below:

“Affiliate” means, with respect to any Person, any other Person which directly
or indirectly through one or more intermediaries Controls, is controlled by, or
is under common control with, such Person.

“Business Day” means a day, other than a Saturday or Sunday, on which banks in
New York City are open for the general transaction of business.

“Company’s Knowledge” means the actual knowledge of the executive officers (as
defined in Rule 405 under the 1933 Act) of the Company, after due inquiry.

“Control” (including the terms “controlling”, “controlled by” or “under common
control with”) means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.

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“Investors Representative” means Mr. Schahar Dvash.

“Material Adverse Effect” means a material adverse effect on (i) the assets,
liabilities, results of operations, condition (financial or otherwise),
business, or prospects of the Company and its Subsidiaries taken as a whole, or
(ii) the ability of the Company to perform its obligations under the Transaction
Documents.

“Person” means an individual, corporation, partnership, Limited Liability
Company, trust, business trust, association, Joint Stock Company, joint venture,
sole proprietorship, unincorporated organization, governmental authority or any
other form of entity not specifically listed herein.

“Purchase Price” means Eighty Cents ($0.80).

“SEC” means the United States Securities and Exchange Commission.

“Securities” means the Shares, the Warrants and the Warrant Shares.

“Subsidiary” of any Person means another Person, an amount of the voting
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity interests of which) is owned directly or indirectly by such first Person.

“Transaction Documents” means this Agreement and the Warrant.

“Warrant Shares” means the shares of Common Stock issuable upon the exercise of
the Warrants.

“1933 Act” means the Securities Act of 1933, as amended, or any successor
statute, and the rules and regulations promulgated thereunder.

“1934 Act” means the Securities Exchange Act of 1934, as amended, or any
successor statute, and the rules and regulations promulgated thereunder.

2.

Purchase and Sale of the Shares and Warrants.  Subject to the terms and
conditions of this Agreement, following the Closing Date, the Company shall sell
and issue to the Investors, up to 625,000 Shares, together with Warrants to
purchase 625,000 Shares for an aggregate purchase price of up to $500,000 (the
“Purchase Price”). The Purchase Price will be paid in US Dollars or in NIS
calculated according to the Representative Rate of the US Dollar published by
the Bank of Israel known at the time of the payment.

2.1

Allocation of Purchase Price. The Purchase Price shall be payable by the
Investors pursuant to the following installments (collectively, the
“Installments” or “Installment Payments”):

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a.

$50,000 shall be payable upon the signing of this Agreement (the “First
Installment”);

b.

$50,000.00 shall be payable on or before February 15, 2011 (the “Second
Installment”);

c.

$50,000 shall be payable on or before March 15, 2011 (the “Third Installment”);

d.

$250,000 shall be payable on or before April 15, 2011 (the “Fourth
Installment”); and

e.

$100,000 shall be payable on or before May 15, 2011 (the “Fifth Installment”),
which  shall be paid by a check dated May 15, 2011, and which will be delivered
to the Company together with, and at the time of, the Fourth Installment.

The Installment Payments and the Shares and Warrants to be issued pursuant to
such Installment Payments shall be allocated among the Investors according to
their respective percentages set forth in Annex I attached hereto.

Each Investor's obligation, to make any investment under this Agreement shall be
several and not joint, except for the obligation to make the First Installment
which shall be joint and several. In the event that any of the Investors shall
elect not to participate, in whole or in part in any of the Installments, the
remaining Investors shall have the right to invest such part of said Installment
in his stead (the "Replacing Investor(s)"), and the relevant part of Shares and
Warrant shall be issued to the Replacing Investor(s) accordingly. For the
avoidance of doubt, the aforementioned reallocation of the Installments among
the Investors shall not affect any of their rights that are subject to the
aggregate Installments made by them.

Each Installment Payment shall be transferred to a trust account held by the
Advocate Eitan Shmueli the Company legal Counsel and shall be released to the
Company against delivery to the Investors of duly executed Share Certificates
and Warrants relating the such Installment Payment.

 

2.2

Limitations on Investment. In the event the Investors fail to make timely
Installment Payments pursuant to Section 2.1 above, (with five business days
grace period) the Investors shall loose their rights to any subsequent
installment investments under this Agreement. By way of example and for purposes
of clarity, in the event the Investors timely complete the First Installment but
fail to make the Second Installment of the Purchase Price on or prior to
February 15, 2011 (with five business days grace period), the Investors shall
loose their rights to any further Installments pursuant to the terms of this
Agreement. By way of additional example, in the event the Investors timely
complete the First Installment and the Second Installment, but fail to make the
Third Installment on or prior to March 15, 2011 (with five business days grace
period), the Investors shall loose their rights to any further investments in
the Company pursuant to the terms of this Agreement.

For the avoidance of doubt, the Investors do not undertake and are not obliged
to make any Installment Payments, except for the First Installment, and any
failure to make such Installment Payments shall not constitute a breach by the
Investors.

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2.3

Right of First Refusal for Additional Investment During 2011.  If at any time
from the Closing Date and until December 31, 2011 (the “Right of First Refusal
Period”), the Company will decide to raise additional funds from third parties
(except from its current shareholders) by selling  its securities, and provided
that the Investors have made all the Installment Payments pursuant to Section
2.1 above, the Company shall send written notice (the “Offer”) to the Investors,
and shall afford the Investors the right to  invest the required additional
funds, or any part thereof, in the Company at the same terms as under this
Securities Purchase Agreement (i.e. a price per share of $0.80 and 100% warrant
coverage at the price of $0.80 until December 31, 2013) (the "Right of First
Refusal"). If the Investors have not responded in writing to the Company within
10 days with respect to a particular Offer, and/or have not signed a definitive
agreement for an additional investment within 20 days from the date of such
Offer, the Company may proceed to raise capital from any third party upon any
terms negotiated with such party.  For purposes of clarity, the Investors' Right
of First Refusal shall apply to each and any fund raising by the Company until
the end of the Right of First Refusal Period, but shall be limited to an
aggregate amount of $500,000 to be invested by the Investors under this Right of
First Refusal from time to time.

 

3.

Closing.  Upon confirmation that the other conditions to closing specified
herein have been satisfied or duly waived by the Investors, the Company shall
deliver to the Investors, the Shares and Warrants, registered in the name of the
Investors, and the Investors shall cause the Purchase Price to be delivered to
the Company as instructed in writing by the Company, in an amount representing
the Purchase Price for the Shares and Warrants so purchased (the “Closing
Date”). The closing of the purchase and sale of the Shares and Warrants shall
take place at the offices of Sadot & Co. at 12 Abba Hillel St. Ramat-Gan or at
such other location and on such other date as the Company and the Investors
shall mutually agree.

Notwithstanding the above, upon the transfer of each Installment Payment the
Company shall take all necessary corporate actions in order to execute Share
Certificates and Warrants relating to such Installment Payment The Share
certificate shall be delivered to the Investors within five (5) business days
from each Closing purchased under the relevant closing.    

4.

Representations and Warranties of the Company.  The Company hereby represents
and warrants to the Investors that, except as set forth in the schedules
delivered herewith (collectively, the “Disclosure Schedules”):

4.1

Organization, Good Standing and Qualification.  The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to carry on its business as now conducted and to own its properties.  

4.2

Authorization.  The Company has full power and authority and, has taken all
requisite action on the part of the Company, its officers, directors and
stockholders necessary for (i) the authorization, execution and delivery of the
Transaction Documents, (ii) authorization of the performance of all obligations
of the Company hereunder or thereunder, and (iii) the authorization, issuance
(or reservation for issuance) and delivery of the Securities.

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4.3

Valid Issuance.  The Shares, and upon the due exercise of the Warrants, the
Warrant Shares, and any additional shares to be issued to the Investors pursuant
to this Agreement, will be validly issued, fully paid and non-assessable free
and clear of all encumbrances and restrictions, except for restrictions on
transfer set forth in the Transaction Documents or imposed by applicable
securities laws and except for those created by the Investors.  The Company has
reserved a sufficient number of shares of Common Stock for issuance upon the
exercise of the Warrants, free and clear of all encumbrances and restrictions,
except for restrictions on transfer set forth in the Transaction Documents or
imposed by applicable securities laws and except for those created by the
Investors.

4.4

Ownership of Shares. A complete and correct list of the security holders of the
Company (including, for the avoidance of doubt, all of the outstanding options,
warrants and other rights to purchase shares of the Company's share capital)
immediately prior to and immediately following the Closing is set forth in
Schedule 4.4 attached hereto. Except as otherwise set forth in Schedule 4.4, the
individuals and entities identified in Schedule 4.4 as the shareholders of the
Company are the holders of record and the beneficial owners, of all of the
issued and outstanding share capital of the Company and of all rights thereto,
options to purchase, proxies, voting trust and other voting agreements, calls or
commitments of every kind, and, except as set forth in Schedule 4.4, none of the
said individuals or entities owns any other stock, options or other rights to
subscribe for, purchase or acquire any share capital of the Company from the
Company.

4.5

Intellectual Property.

(i) General. The Company (directly or through its Subsidiaries) owns or has the
right to use pursuant to written license, sublicense, agreement, or permission,
free and clear of any lien, third party rights and royalties, all patents,
trademarks, service marks, trade names, mask works, and copyrights and all trade
secrets, including know-how, inventions, designs, processes, computer programs,
algorithms, firmware and technical data, concepts, techniques, methods, systems,
drawings, photographs, models, prototypes, research materials, formulas,
development or experimental work, work in progress, cost data, marketing plans,
product plans, financial information, forecasts, personnel information and
customer or supplier lists currently used and/or necessary for the operation of
the businesses of the Company and its Subsidiaries as presently conducted
(collectively: “Intellectual Property”). Each item of Intellectual Property
owned or used by the Company or its Subsidiaries immediately prior to the
Closing hereunder will be owned or available for use by the Company and its
Subsidiaries on substantially the same terms and conditions immediately
subsequent to the Closing hereunder. No other Intellectual Property of any kind
required by the Company or its Subsidiaries to conduct their business, as
currently conducted and as proposed to be conducted, is owned by a third party
or would require the payment of any fee or royalty.

(ii) No Infringement. Neither the Company or its Subsidiaries have interfered
with, infringed upon, misappropriated, or otherwise come into conflict with any
intellectual property rights of any third party nor will the conducting by it of
its business, or use of the Intellectual Property, as presently conducted and as
proposed to be conducted interfere, infringe upon, misappropriate or otherwise
come into conflict with any intellectual property

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rights of any third party;  (ii) neither the Company or its Subsidiaries have
ever received any charge, complaint, claim, demand, or notice, alleging any such
interference, infringement, misappropriation, or violation (including any claim
that the Company or its Subsidiaries must license or refrain from using any
intellectual property rights of any third party) and there is no basis for such;
and (iii) to the best of the Company’s knowledge, no third party has interfered
with, infringed upon, misappropriated, or otherwise come into conflict with any
Intellectual Property of the Company or its Subsidiaries.

(iii) Ownership of Intellectual Property. All of the Intellectual Property
embodied in the Company's technology (or of its Subsidiaries), developed by or
for the Company or its Subsidiaries and/or currently being developed by or for
the Company or its Subsidiaries - is owned, or permitted to be used
indefinitely, solely and exclusively by the Company or its Subsidiaries. Without
derogating from the aforegoing the Company's Intellectual Property (or of its
Subsidiaries) includes, inter alia, patents related to eco-friendly solutions
for pre and post harvest treatments of all food commodities. Each of the
employees of the Company and its Subsidiaries and other persons who, either
alone or in concert with others, developed, invented, discovered, derived,
programmed or designed the Intellectual Property, have entered into written
agreements with the Company or its Subsidiaries assigning to the Company or its
Subsidiaries all rights in any and all Intellectual Property relating to the
business of the Company or its Subsidiaries as developed in the course of their
employment by or provision of services to the Company or its Subsidiaries.

(iv) Protection of IP Rights and Trade Secrets. The Company or its Subsidiaries
take such action to maintain and protect each item of Intellectual Property that
it owns or uses which actions are reasonable and customary in the industry in
which the Company and its Subsidiaries operate. All the confidential information
is being (and has been) continuously maintained in confidence by the Company and
its Subsidiaries by taking reasonable precautions to protect and prevent its
disclosure to unauthorized parties. The Company and its Subsidiaries have
complied in all material respects with the requirements of, and has filed all
material documentation required in dealing with, all Patent and Trademark
Offices and any other patent registry agency in which its patent applications
were filed, all patents (if any) and patent applications are in effect, and
there is no claim which renders the inventions of the Company and its
Subsidiaries referred to in the patents, patent applications and related
documentation (if any) invalid in any manner.

4.6

Consents.  The execution, delivery and performance by the Company of the
Transaction Documents, and the offer, issuance and sale of the Securities
require no consent of, action by or in respect of, or filing with, any Person,
governmental body, agency, or official other than filings that have been made
pursuant to applicable state securities laws, and post-sale filings pursuant to
applicable state and federal securities laws which the Company undertakes to
file within the applicable time periods. Subject to the accuracy of the
representations and warranties of the Investors set forth in Section 5 hereof,
the Company has taken all action necessary to exempt the allocation to the
Investors from U.S. registration requirements (i) the issuance and sale of the
Securities, and (ii) the issuance of the Warrant Shares upon due exercise of the
Warrants.

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4.7

Use of Proceeds.  The net proceeds of the sale of the Shares and the Warrants
hereunder shall be used by the Company for working capital and general corporate
purposes.

4.8

Financial Statements. The financial statements contained in the most recent SEC
Filings (the "Financial Statements"): (i) have been prepared in accordance with
US generally accepted accounting principles (“US GAAP”) applied on a consistent
basis, (ii) are in accordance with the books and records of the Company and its
Subsidiaries, and (iii) are true and correct in all material respects and
present fairly the financial condition of the Company and its Subsidiaries at
the date or dates therein indicated and the results of its operations and cash
flows for the periods therein specified. All proper and necessary books of
account and accounting records have been maintained by the Company and its
Subsidiaries and are in their possession. Except as set forth in the Financial
Statements, the Company and its Subsidiaries have no known or unknown
liabilities, contingent or otherwise, other than: (i) liabilities incurred in
the ordinary course of business subsequent to the period ended on the date of
the Financial Statements, and (ii) obligations under contracts and commitments
incurred in the ordinary course of business and not required under US GAAP to be
reflected in the Financial Statements, which, in both cases, individually or in
the aggregate, are not material to the financial condition or operating results
of the Company or its Subsidiaries. The Company and its Subsidiaries maintain a
standard system of accounting established and administered in accordance with US
GAAP.

4.9

No Material Adverse Change.  Since the date of the Financial Statements, and
except as identified and described in the SEC Filings, there has not been:

(i)

any change in the consolidated assets, liabilities, financial condition or
operating results of the Company from that reflected in the financial statements
included in the Company’s most recent quarterly Report on Form 10-Q, except for
changes in the ordinary course of business which have not and could not
reasonably be expected to have a Material Adverse Effect, individually or in the
aggregate;

(ii)

any declaration or payment of any dividend, or any authorization or payment of
any distribution, on any of the capital stock of the Company, or any redemption
or repurchase of any securities of the Company;

(iii)

any material damage, destruction or loss, whether or not covered by insurance to
any assets or properties of the Company or its Subsidiaries;

(iv)

any waiver, not in the ordinary course of business, by the Company or any
Subsidiary of a material right or of a material debt owed to them;

(v)

any satisfaction or discharge of any lien, claim or encumbrance or payment of
any obligation by the Company or a Subsidiary, except in the ordinary course of
business and which is not material to the assets, properties, financial
condition, operating results or business of the Company and its Subsidiaries
taken as a whole (as such business is presently conducted and as it is proposed
to be conducted);

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(vi)

any change or amendment to the Company's Certificate of Incorporation or
by-laws, or material change to any material contract or arrangement by which the
Company or any Subsidiary is bound or to which any of their respective assets or
properties is subject;

(vii)

any material labor difficulties or labor union organizing activities with
respect to employees of the Company or any Subsidiary;

(viii)

any material transaction entered into by the Company or a Subsidiary other than
in the ordinary course of business;

(ix)

the loss of the services of any key employee, or material change in the
composition or duties of the senior management of the Company or any Subsidiary;
or

(x)

any other event or condition of any character that has had or could reasonably
be expected to have a Material Adverse Effect.

4.10

SEC Filings. At the time of filing thereof, the SEC Filings complied as to form
in all material respects with the requirements of the 1934 Act and did not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.

4.11

No Conflict, Breach, Violation or Default.  The execution, delivery and
performance of the Transaction Documents by the Company and the issuance and
sale of the Securities will not conflict with or result in a breach or violation
of any of the terms and provisions of, or constitute a default under (i) the
Company’s Certificate of Incorporation or the Company’s Bylaws, both as in
effect on the date hereof (true and complete copies of which have been made
available to the Investors through the EDGAR system), or (ii)(a) any statute,
rule, regulation or order of any governmental agency or body or any court,
domestic or foreign, having jurisdiction over the Company, any Subsidiary or any
of their respective assets or properties, or (b) any agreement or instrument to
which the Company or any Subsidiary is a party or by which the Company or a
Subsidiary is bound or to which any of their respective assets or properties is
subject.

4.12

Litigation. Neither the Company or its Subsidiaries are: (i) subject to any
outstanding injunction, judgment, order, decree, writ, stipulation, ruling, or
charge of any court or any governmental agency or any arbitrator; or (ii) a
party or is threatened to be made a party to any action, suit, proceeding,
hearing, complaint, charge or investigation of, in, or before any court or
quasi-judicial or administrative agency of any state, municipal, or foreign
jurisdiction or before any arbitrator or other method of settling disputes or
disagreements. The Company and its Subsidiaries do not know, anticipate, or have
any basis to believe that any such action, suit, proceeding, hearing, complaint,
charge or investigation may be brought or threatened against the Company or its
Subsidiaries and the Company and its Subsidiaries do not intend to initiate any
such action, suit, proceeding, hearing, complaint, charge or investigation.
Without derogating from any of the foregoing, there is no action, suit,
proceeding, or investigation pending or

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currently threatened involving the prior employment of any of the employees of
the Company or its Subsidiaries, their use in connection with the business of
the Company and its Subsidiaries of any information or techniques allegedly
proprietary to any of their former employers, or their obligations under any
agreement with prior employers.

4.13

Compliance with the Law and Other Instruments. To the best of their knowledge,
the Company and its Subsidiaries have conducted their business in all material
respects in accordance with all applicable laws of the countries in which they
have conducted their business and there is no violation or default with respect
to any law or judgment of any court or any governmental agency which could have
a material adverse effect upon the assets or business of the Company and its
Subsidiaries.  To the best of the knowledge of the Company and its Subsidiaries,
there is no existing law, rule, regulation or order which would prohibit or
restrict the Company or its Subsidiaries from, or otherwise materially adversely
affect the Company or its Subsidiaries in conducting their business in any
jurisdiction in which it is now conducting business or, in which they currently
propose to conduct business.

4.14

Permits. The Company and its Subsidiaries have all franchises, permits,
licenses, and any similar authority necessary for the conduct of their business
as now being conducted and as proposed to be conducted, the lack of which could
adversely affect the business, properties, prospects or financial condition of
the Company and its Subsidiaries. The Company and its Subsidiaries are not in
material default under any of such franchises, permits, licenses, or other
similar authority.

4.15

Related-Party Transactions. Except as set forth in Schedule 4.15, none of the
Company’s shareholders (owning in excess of ten (10%) percent of the Company’s
currently outstanding common stock), officers or directors (i) own, directly or
indirectly, any debt, equity or other interest or investment in any corporation,
association or other entity which is a competitor, lessor, lessee, customer,
supplier or advertiser of the Company or its Subsidiaries; (ii) has been
involved in any business arrangement or relationship with the Company or its
Subsidiaries, which is material to the Company, the Subsidiaries or their
business; (iii) owes any amount to, or is owed any amount by the Company or its
Subsidiaries;(iv) has any interest in or owns any property or right, including
Intellectual Property, material to the Company or its Subsidiaries in the
conduct of their business as presently conducted and as proposed to be
conducted; (v) has lent or advanced any money to, or borrowed any money from, or
guaranteed or otherwise become liable for any indebtedness or other obligations
of the Company or its Subsidiaries; (vi) is a party to any contract, lease,
agreement, arrangement or commitment, material to the Company or its
Subsidiaries in their business as presently conducted and as proposed to be
conducted; or (vii) received from or furnished to the Company or its
Subsidiaries any goods or services (with or without consideration), material to
the Company or its Subsidiaries in the conduct of its  business, since its
 incorporation.

4.16

Employees. The Company and its Subsidiaries have complied in all material
respects with all legal requirements relating to employment, wages, hours,
benefits, pensions, the payment of social security and similar taxes. The
Company and its Subsidiaries are not liable for the payment of any damages,
taxes, fines, penalties, or other amounts, however designated, for failure to
comply with any of the foregoing legal requirements. No officer or key

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employee, nor any group of key employees, intends to terminate their employment
with the Company or its Subsidiaries, nor does the Company or its Subsidiaries
have a present intention to terminate the employment of any of the foregoing.
The severance pay to the employees of the Company and its Subsidiaries is fully
funded or provided for in the Financial Statements. All liabilities of the
Company and its Subsidiaries in connection with its employees (excluding illness
pay) were adequately accrued in the Financial Statements. None of the employees
of the Subsidiaries or its Subsidiaries is obligated under any contract
(including licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative
agency, that would interfere with the use of such employee's best efforts to
promote the interests of the Company and its Subsidiaries, or that would
conflict with the business of the Company or its Subsidiaries.

4.17

Tax Matters. (a) Other than as disclosed in the Financial Statements, as of
September 30, 2010, the Company and its Subsidiaries have no liability of any
nature, accrued or contingent for taxes or any penalties, interest, and
additions to taxes, other than liabilities for which full provision has been
made in the Financial Statements for September 30, 2010. The Financial
Statements for September 30, 2010 make full provisions for all taxation for
which the Company and its Subsidiaries were then or thereafter became or may
hereafter become liable or accountable in respect of or by reference to any
income, profit, receipt, gain, transaction, agreement, distribution or event
which was earned, accrued, received, or realized, entered into, paid, made or
accrued on or before the date of the Financial Statements. The Company and its
Subsidiaries have paid or fully provided in their books of account for all
taxation for which it has or may hereafter become liable or accountable in the
period from the date of its incorporation; (b) the Company and its Subsidiaries
have at all times and within the requisite time limits, fully and accurately
observed, performed and complied with all obligations and conditions imposed on
them, or to which any claim deduction, allowance or relief made, claimed by or
afforded to it was made subject under any legislation relating to taxation; (c)
the Company and its Subsidiaries are not aware of any circumstances which will
or may, whether by lapse of time or the issue of any notice of assessment or
otherwise, give rise to any dispute with any relevant taxation authority in
relation to its liability or accountability for taxation, any claim made by
them, any relief, deduction, or allowance afforded to them, or in relation to
the status or character of the Company or its Subsidiaries under or for the
purpose of any provision of any legislation relating to taxation; (d) the
Company and its Subsidiaries have never had any tax deficiency proposed or
assessed against it and has not executed any waiver of any statute of
limitations on the assessment or collection of any tax or governmental charge;
(e) none of the income tax returns of the Company or its Subsidiaries have ever
been audited by governmental authorities. Since the date of the Financial
Statements, the Company and its Subsidiaries have not incurred any taxes,
assessments or governmental charges other than in the ordinary course of
business; (f) the Company and its Subsidiaries have withheld or collected from
each payment made to each of its employees, the amount of all taxes required to
be withheld or collected therefrom, and has paid the same to the proper tax
receiving officers or authorized depositories.

4.18

No Directed Selling Efforts or General Solicitation.  Neither the Company nor
any Person acting on its behalf has conducted any general solicitation or
general advertising (as those terms are used in Regulation D) in connection with
the offer or sale of any of the Securities.

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4.19

No Integrated Offering.  Neither the Company nor any of its Affiliates, nor any
Person acting on its or their behalf has, directly or indirectly, made any
offers or sales of any Company security or solicited any offers to buy any
security, under circumstances that would adversely affect reliance by the
Company on Section 4(2) for the exemption from registration for the transactions
contemplated hereby or would require registration of the Securities under the
1933 Act.

4.20

Private Placement.  The offer and sale of the Securities to the Investors as
contemplated hereby is exempt from the registration requirements of the 1933
Act.

5.

Representations and Warranties of the Investors.  Each Investor hereby,
severally and not jointly, represents and warrants to the Company that:

5.1

Requisite Power.  The Investor has all requisite power and authority to invest
in the Securities pursuant to this Agreement.

5.2

Authorization.  The execution, delivery and performance by the Investor of the
Transaction Documents to which the Investor is a party have been duly authorized
and will each constitute the valid and legally binding obligation of the
Investor, enforceable against the Investor in accordance with their respective
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability, relating to or affecting
creditors’ rights generally.

5.3

Purchase Entirely for Own Account.  The Securities to be received by the
Investor hereunder will be acquired for the Investor’s own account, not as
nominee or agent, and not with a view to the resale or distribution of any part
thereof in violation of the 1933 Act, and the Investor has no present intention
of selling, granting any participation in, or otherwise distributing the same in
violation of the 1933 Act without prejudice, however, to the Investor's right at
all times to sell or otherwise dispose of all or any part of such Securities in
compliance with applicable federal and state securities laws. Nothing contained
herein shall be deemed a representation or warranty by the Investor to hold the
Securities for any period of time. The Investor is not a broker-dealer
registered with the SEC under the 1934 Act or an entity engaged in a business
that would require it to be so registered.

5.4

Investment Experience.  The Investor acknowledges that it can bear the economic
risk and complete loss of his investment in the Securities and has such
knowledge and experience in financial or business matters that he is capable of
evaluating the merits and risks of the investment contemplated hereby.

5.5

Disclosure of Information.  The Investor has had an opportunity to receive all
information related to the Company requested by him and to ask questions of and
receive answers from the Company regarding the Company, its business and the
terms and conditions of the offering of the Securities.  The Investor
acknowledges receipt of copies of the SEC Filings.  Neither such inquiries nor
any other due diligence investigation conducted by the Investor shall

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modify, amend or affect such Investor’s right to rely on the Company’s
representations and warranties contained in this Agreement.

5.6

Restricted Securities.  The Investor understands that the Securities are
characterized as “restricted securities” under the U.S. federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the 1933 Act only in
certain limited circumstances.

5.7

Legends.  It is understood that, except as provided below, certificates
evidencing the Securities may bear the following or any similar legend:

(a)

“The securities represented hereby may not be transferred unless (i) such
securities have been registered for sale pursuant to the Securities Act of 1933,
as amended, (ii) such securities may be sold pursuant to Rule 144(k), or (iii)
the Company has received an opinion of counsel reasonably satisfactory to it
that such transfer may lawfully be made without registration under the
Securities Act of 1933 or qualification under applicable state securities laws.”

(b)

If required by the authorities of any state in connection with the issuance of
sale of the Securities, the legend required by such state authority.

5.8

Accredited Investors.  Each Investor is an accredited Investor as defined in
Rule 501(a) of Regulation D, as amended, under the 1933 Act.

5.9

No General Solicitation.  The Investor did not learn of the investment in the
Securities as a result of any public advertising or general solicitation.

6.  Conditions to Closing.

6.1

Conditions to the Investors’ Obligations. The obligation of the Investors to
purchase the Shares and Warrants at Closing is subject to the fulfillment to the
Investors’ satisfaction, on or prior to the Closing Date, of the following
conditions, any of which may be waived by the Investors:

(a)

The representations and warranties made by the Company in Section 4 hereof
qualified as to materiality shall be true and correct at all times prior to and
on the Closing Date, except to the extent any such representation or warranty
expressly speaks as of an earlier date, in which case such representation or
warranty shall be true and correct as of such earlier date, and, the
representations and warranties made by the Company in Section 4 hereof not
qualified as to materiality shall be true and correct in all material respects
at all times prior to and on the Closing Date, except to the extent any such
representation or warranty expressly speaks as of an earlier date, in which case
such representation or warranty shall be true and correct in all material
respects as of such earlier date.  The Company shall have performed in all

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material respects all obligations and conditions herein required to be performed
or observed by it on or prior to the Closing Date.

(b)

The Company shall have obtained any and all consents, permits, approvals,
registrations and waivers necessary or appropriate for consummation of the
purchase and sale of the Securities, and the consummation of the other
transactions contemplated by the Transaction Documents, all of which shall be in
full force and effect.

(c)

No judgment, writ, order, injunction, award or decree of or by any court, or
judge, justice or magistrate, including any bankruptcy court or judge, or any
order of or by any governmental authority, shall have been issued, and no action
or proceeding shall have been instituted by any governmental authority,
enjoining or preventing the consummation of the transactions contemplated hereby
or in the other Transaction Documents.

(d)

The Company shall have delivered to the Investors a legal opinion of its U.S.
legal counsel, in a form satisfactory to the Investors, confirming the validity
of the transaction contemplated under this Agreement, including, inter alia,
with respect to the gradual issuance of shares according to the Installment
Payments made by the Investors.

6.2

Conditions to Obligations of the Company . The Company's obligation to sell and
issue the Shares and the Warrants at the Closing Date is subject to the
fulfillment to the satisfaction of the Company, on or prior to the Closing Date,
of the following conditions, any of which may be waived by the Company:

(a)

The representations and warranties made by the Investors in Section 5 hereof
(the “Investment Representations”), shall be true and correct in all material
respects when made, and shall be true and correct in all material respects on
the Closing Date with the same force and effect as if they had been made on and
as of said date.  The Investors shall have performed in all material respects
all obligations and conditions herein required to be performed or observed by
them on or prior to the Closing Date.

(c)

The Investors shall have delivered the First Installment of the Purchase Price
to the Company in the form of a bank check or money order of good and lawful
money.

7.

Covenants and Agreements of the Company .

7.1

No Conflicting Agreements.  The Company will not take any action, enter into any
agreement or make any commitment that would conflict or interfere in any
material respect with the Company’s obligations to the Investors under the
Transaction Documents.

7.2

Compliance with Laws.  The Company will comply in all material respects with all
applicable laws, rules, regulations, orders and decrees of all governmental
authorities.

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7.3

Removal of Legends.  Upon Rule 144 becoming available the Company shall, upon an
Investors’ written request, promptly cause certificates evidencing the
Investors’ Securities to be replaced with certificates which do not bear such
restrictive legends, and Warrant Shares subsequently issued upon due exercise of
the Warrants shall not bear such restrictive legends provided the provisions of
above are satisfied with respect to such Warrant Shares.   

8.

Other Company Limitations. Following payment of the First Installment the
Company shall not pay, directly or indirectly, any management fee and/or
consulting fee (“Affiliate Shareholder Fees”) (except for fees in connection
with actual employment by the Company or consulting to the Company) to any of
its shareholders and/or their family members, associates or assigns. The
aforesaid restriction shall remain in force so long as the Investors duly make
the Installment Payments, and upon completion of the Installment Payments the
restriction shall remain in force for so long the Investors hold collectively
(for this purpose together with any Affiliates of the Investors) at least Five
Percent (5%) of the then outstanding common stock of the Company. For purposes
of clarity, the above restriction shall not apply to payment of reasonable
remuneration and/or salaries or consulting fee to the Company's directors,
officers and/or shareholders who are actually employed by the Company or give
services to the Company or consulting to the company.

9.

Investors’ Board of Director Rights.

9.1

Board Observer. Following payment of the First Installment, the Investors
Representative shall have the right to nominate an individual who shall be
permitted to attend and observe (the "Observer") meetings of the Company’s Board
of Directors (the “Board”) . The Investors Representative's right to appoint the
Observer shall remain in effect so long as the Investors duly make the
Installment Payments, and upon completion of the Installment Payments the right
to appoint the Observer shall further remain in effect for so long the Investors
hold collectively (for this purpose together with any Affiliates of the
Investors) at least Five Percent (5%) of the then outstanding common stock of
the Company . Except as set forth herein, the Observer shall not have, nor be
afforded, any rights or privileges of a duly elected Board member.
 Notwithstanding the aforementioned, the Observer shall be afforded an
opportunity (i) to receive prior notice of any scheduled Board meetings, (ii) to
receive information disseminated to the Board prior to any Board meetings, and
(iii) to participate in any discussions held at Board meetings (which shall be
duly recorded in the Company’s minutes). The Observer shall be subject to any
rules and regulations of a person holding material, non-public information of
the Company.

9.2

Nomination of a Board Member. Notwithstanding anything to the contrary in this
Agreement, in the event (i) the Investors make an aggregate investment in the
Company exceeding the Purchase Price (i.e. in excess of $500,000) on or prior to
December 31, 2011, and (ii) the Investors beneficially hold (for this purpose
together with any Affiliates of the Investors) at least Ten percent (10%) of the
Company’s outstanding Common Stock on or prior to December 31, 2011, then the
Investors Representative shall have the right to appoint one (1) director to the
Company’s Board of Directors (the “Board Candidate”). The Board shall have the
right to object to the appointment of the proposed Board Candidate solely on the
ground that

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such proposed Board Candidate does not have the required experience to serve as
a member of the Board.

10.

Survival and Indemnification.

10.1  Survival.  The representations, warranties, covenants and agreements
contained in this Agreement shall survive the Closing of the transactions
contemplated by this Agreement.

10.2  Indemnification.  The Company agrees to indemnify and hold harmless the
Investors and their Affiliates and their respective directors, officers,
employees and agents from and against any and all losses, claims, damages,
liabilities and expenses (including without limitation reasonable attorney fees
and disbursements and other expenses incurred in connection with investigating,
preparing or defending any action, claim or proceeding, pending or threatened
and the costs of enforcement thereof) (collectively, “Losses”) to which such
Person may become subject as a result of any breach of representation, warranty,
covenant or agreement made by or to be performed on the part of the Company
under the Transaction Documents, and will reimburse any such Person for all such
amounts as they are incurred by such Person.

10.3  Conduct of Indemnification Proceedings.  Promptly after receipt by any
Person (the “Indemnified Person”) of notice of any demand, claim or
circumstances which would or might give rise to a claim or the commencement of
any action, proceeding or investigation in respect of which indemnity may be
sought pursuant to Section 8.2, such Indemnified Person shall promptly notify
the Company in writing and the Company shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Person, and shall assume the payment of all fees and expenses; provided,
however, that the failure of any Indemnified Person so to notify the Company
shall not relieve the Company of its obligations hereunder except to the extent
that the Company is materially prejudiced by such failure to notify.  In any
such proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless: (i) the Company and the Indemnified Person shall
have mutually agreed to the retention of such counsel; or (ii) in the reasonable
judgment of counsel to such Indemnified Person representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them.  The Company shall not be liable for any settlement of
any proceeding effected without its written consent, which consent shall not be
unreasonably withheld, but if settled with such consent, or if there be a final
judgment for the plaintiff, the Company shall indemnify and hold harmless such
Indemnified Person from and against any loss or liability (to the extent stated
above) by reason of such settlement or judgment.  Without the prior written
consent of the Indemnified Person, which consent shall not be unreasonably
withheld, the Company shall not effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Person from all liability arising out of such proceeding.

11.

Miscellaneous.

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11.1

Successors and Assigns.  This Agreement may not be assigned by a party hereto
without the prior written consent of the Company or the Investors, as
applicable, provided, however, that each Investor may assign its rights and
delegate its duties hereunder in whole or in part to an Affiliate or to a third
party acquiring some or all of its Securities in a private transaction without
the prior written consent of the Company, after notice duly given by such
Investor to the Company.  The provisions of this Agreement shall inure to the
benefit of and be binding upon the respective permitted successors and assigns
of the parties.  Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in this Agreement.

11.2

Counterparts; Faxes.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.  This Agreement may also
be executed via facsimile, which shall be deemed an original.

11.3

Titles and Subtitles.  The titles and subtitles used in this Agreement are used
for convenience only and are not to be considered in construing or interpreting
this Agreement.

11.4

Notices.  Unless otherwise provided, any notice required or permitted under this
Agreement shall be given in writing and shall be deemed effectively given as
hereinafter described (i) if given by personal delivery, then such notice shall
be deemed given upon such delivery, (ii) if given by telex or telecopier, then
such notice shall be deemed given upon receipt of confirmation of complete
transmittal, (iii) if given by mail, then such notice shall be deemed given upon
the earlier of (A) receipt of such notice by the recipient or (B) three days
after such notice is deposited in first class mail, postage prepaid, and (iv) if
given by an internationally recognized overnight air courier, then such notice
shall be deemed given one business day after delivery to such carrier.  All
notices shall be addressed to the party to be notified at the address as
follows, or at such other address as such party may designate by ten days’
advance written notice to the other party:

If to the Company:

Mr. Youval Saly

269 South Beverly Drive suite 1091

Beverly Hills California 90212

With a copy to:

SHIBOLETH LLP

1 Penn Plaza

New York, New York 10119

Attention:  Jonathan R. Shechter, Esq.

Fax:  (212) 244-4111

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If to the Investors:

[___________________ ]

Attention:  [__________]

Fax:

[_____________]

Any notices or instructions to be given by or to the Investors with respect to
Investors rights under this Agreement, shall be given by or to (as applicable)
the Investors Representative, including, without limitation, any notice with
respect to the appointment of the Observer and the Board Candidate.

11.5

Expenses.  The parties hereto shall pay their own costs and expenses in
connection herewith.  In the event that legal proceedings are commenced by any
party to this Agreement against another party to this Agreement in connection
with this Agreement or the other Transaction Documents, the party or parties
which do not prevail in such proceedings shall severally, but not jointly, pay
their pro rata share of the reasonable attorneys’ fees and other reasonable
out-of-pocket costs and expenses incurred by the prevailing party in such
proceedings.

Any expenses to be borne by the Investors shall be allocated among them on a
pro-rata basis according to their respective percentages set forth in Annex I.

11.6

Amendments and Waivers.  Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Investors. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each holder of
any Securities purchased under this Agreement at the time outstanding, each
future holder of all such Securities, and the Company.

11.7

Publicity.  Except as set forth below, no public release or announcement
concerning the transactions contemplated hereby shall be issued by the Company
or the Investors without the prior consent of the Company (in the case of a
release or announcement by the Investors) or the Investors (in the case of a
release or announcement by the Company) (which consents shall not be
unreasonably withheld), except as such release or announcement may be required
by law or the applicable rules or regulations of any securities exchange or
securities market, in which case the Company or the Investors, as the case may
be, shall allow the Investors or the Company, as applicable, to the extent
reasonably practicable in the circumstances, reasonable time to comment on such
release or announcement in advance of such issuance.  By 8:30 a.m. (New York
City time) on the trading day immediately following the Closing Date, the
Company shall issue a press release disclosing the consummation of the
transactions contemplated by this Agreement.  No later than the third trading
day following the Closing Date, the Company will file a Current Report on Form
8-K attaching the press release described in the foregoing sentence as well as
copies of the Transaction Documents.  In addition, the Company will make such
other filings and notices in the manner and time required by the SEC.
 Notwithstanding the foregoing, the Company shall not publicly disclose the name
of any Investor, or include the name of any Investor in any filing with the SEC
(other than the

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Registration Statement and any exhibits to filings made in respect of this
transaction in accordance with periodic filing requirements under the 1934 Act)
or any regulatory agency or Nasdaq, without the prior written consent of such
Investor, except to the extent such disclosure is required by law or trading
market regulations, in which case the Company shall provide such Investor with
prior notice of such disclosure.

11.8

Severability.  Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof but shall be interpreted as if it were written so as
to be enforceable to the maximum extent permitted by applicable law, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.  To the extent
permitted by applicable law, the parties hereby waive any provision of law which
renders any provision hereof prohibited or unenforceable in any respect.

11.9

Entire Agreement.  This Agreement, including the Exhibits and the Disclosure
Schedules, and the other Transaction Documents constitute the entire agreement
among the parties hereof with respect to the subject matter hereof and thereof
and supersede all prior agreements and understandings, both oral and written,
between the parties with respect to the subject matter hereof and thereof.

11.10

Further Assurances.  The parties shall execute and deliver all such further
instruments and documents and take all such other actions as may reasonably be
required to carry out the transactions contemplated hereby and to evidence the
fulfillment of the agreements herein contained.

11.11

Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.  This Agreement
shall be governed by, and construed in accordance with, the internal laws of the
State of New York without regard to the choice of law principles thereof.  Each
of the parties hereto irrevocably submits to the exclusive jurisdiction of the
courts of the State of New York and the United States District Courts for the
purpose of any suit, action, proceeding or judgment relating to or arising out
of this Agreement and the transactions contemplated hereby.  Service of process
in connection with any such suit, action or proceeding may be served on each
party hereto anywhere in the world by the same methods as are specified for the
giving of notices under this Agreement.  Each of the parties hereto irrevocably
consents to the jurisdiction of any such court in any such suit, action or
proceeding and to the laying of venue in such court.  Each party hereto
irrevocably waives any objection to the laying of venue of any such suit, action
or proceeding brought in such courts and irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum.  EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A
TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS
THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

[signature page follows]

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IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.

The Company:

 

PIMI AGRO CLEANTECH, INC.

 

By:       __________________

Name:  Youval Saly

Title:     Chief Executive Officer

 

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The Investors:

1.

Shachar Dvash Israeli ID 5623117-8

Of 49 Tagor Neve Avivim Tel-Aviv

By: ______________________

Aggregate Purchase Price:  $150,000

Number of Warrants:  187,500

2.

Shabtai Shabtai Israeli ID 53240990 of 22 Shoham St. Neve Monoson Yehud. (or a
company under the joint control of Mr. Shabtai and Mr. Arama).

By: ______________________

Aggregate Purchase Price:  $175,000

Number of Warrants:  218,750

3.

Moshe Arama Israeli ID 54765037 of 14 Shderot Michael Neeman, Tel-Aviv (or a
company under the joint control of Mr. Shabtai and Mr. Arama).

By: ______________________

Aggregate Purchase Price:  $175,000

Number of Warrants:  218,750

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ANNEX I

NAME

RESPECTIVE PERCENTAGES

Shachar Dvash

30%

Shabtai Shabtai

35%

Moshe Arama

35%

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