F-4/A










Exhibit 10.17  



SERIES
BB-4 PREFERRED SHARE PURCHASE AGREEMENT


This Preferred Share Purchase
Agreement (this “Agreement”) is
entered into as of the 26 day of
September, 2006 by and between Negevtech
Ltd., a private company organized under the laws of the State of
Israel, with registered office at 12 Hamada Street, Rehovot, 76703 Israel, and corporate registration number 51-163426-3
(hereinafter the “Company”), Amadeus III, a private company
organized under the laws of England, with registered office at Mount Pleasant
House, 2 Mount Pleasant, Cambridge England, and Amadeus III Affiliates Fund LP, a limited partnership
organized under the laws of the state of Delaware, with registered office at 2711 Centerville Road, Suite 400,
Wilmington, New Castle County, Delaware 19808 (both entities shall collectively be referred to as “Amadeus”) and the
Joining Investors identified
in Schedule A attached
hereto (hereinafter each a “Joining Investor”
and collectively the “Joining
Investors”) (Amadeus and the Joining Investors shall collectively be referred to as the
“Investors”).


WITNESSETH


WHEREAS the
Company is engaged in the research and development, manufacturing and marketing of a certain innovative system (the
“System”); and


               WHEREAS
the Investors desire to purchase Series BB-4 Preferred Shares
in the Company and the Company desires to
sell and issue Series BB-4 Preferred Shares in the Company, with such
rights, preferences and privileges as set forth in the Amended Articles (as such term is defined below) (“Series BB-4
Preferred Shares”) pursuant to
the terms and conditions set forth in this Agreement; and


               WHEREAS
Amadeus has entered into
a Share Transfer Agreement of even date hereof with Mr. Gadi Neumann and Mr.
David Alumot (the “Founders”) for
the purchase of 2,436,340 Ordinary Shares of the Company (resulting from the
conversion immediately prior to such
purchase of 1,569,004 Ordinary-Preferred Shares of the Company held by the Founders into Ordinary Shares) (the
“Founders’ Shares”), subject to the conversion of the Founders’ Shares into 2,436,340 Series BB-4
Preferred Shares (the “Amadeus-Founders Agreement”);
and


               WHEREAS
the Company desires to
convert the Founders’ Shares purchased by Amadeus pursuant to the
Amadeus-Founders Agreement, into Series BB-4 Preferred Shares, in consideration for the payment by Amadeus to the
Company of the Conversion Consideration (as defined below), pursuant to
the term and conditions set forth in this Agreement.


               NOW
THEREFORE, in consideration of the covenants and promises set
forth herein, the parties hereto agree as
follows:


	
 

	
 

	
 

	
 


	
1.

	
Purchase and
  Sale of Shares


	
 

	
 

	
 


	
1.1

	
Sale and Issuance of Shares by
  the Company; Conversion of Shares by the Company


	
 

	
 

	
 


	
 

	
(a)

	
Subject to the terms and conditions of this
  Agreement, at the Closing (as defined
  below) the Investors shall purchase, severally and not jointly, and the
  Company shall sell and issue to the Investors, severally and not
  jointly, an aggregate amount of 1,901,756 (One Million Nine Hundred and One
  Thousand Seven Hundred and Fifty Six)
  Series BB-4 Preferred Shares of the Company, par value NIS 0.01 each (“Issued BB-4
  Preferred Shares”),
  at US$2.4354 per share (the “Price Per Share”) for an aggregate investment of US$$4,631,537
  (Four Million Six Hundred and Thirty One Thousand Five Hundred and
  Thirty Seven US Dollars) (the “BB-4 Purchase Price”) convertible into Ordinary Shares of the
  Company, par value NIS 0.01 (“Ordinary Shares”), to be allocated among the Investors as
  set forth in Schedule
  A.












	
 

	
 

	
 

	
 

	
 


	
 

	
(b)

	
Subject
  to the terms and conditions of this Agreement, at the Closing (as defined below), the Company shall convert the 2,436,340
  Founders’ Shares held by Amadeus
  into 2,436,340 Series BB-4 Preferred Shares of the Company, par value NIS 0.01 each (the “Converted Founders’
Shares”) held by Amadeus at the
  Closing, in consideration for the payment by Amadeus to the Company of an additional
  aggregate amount of $US 1,412,784 (the “Conversion
  Consideration”).


	
 

	
 

	
 


	
 

	
 

	
The Issued BB-4
  Preferred Shares and the Converted Founders’ Shares shall be collectively referred to as the “Issued Shares”
and shall have equal
  rights and rank pari
  passu in all respects. The BB-4
  Purchase Price and the Conversion Consideration
  shall be collectively referred to as the “Purchase
  Price”. Under the Amended
  Articles, all of the Issued Shares shall be deemed to have an Original Issue Price of US$2.4354 per share. Ordinary
  Shares issuable upon the conversion of
  the Issued Shares shall be referred to herein as the “Conversion Shares”.


	
 

	
 

	
 


	
 

	
(c)

	
The
  Price Per Share is based on a pre-money Company valuation of US$104,215,086 on a fully diluted basis,
  including: (i) all outstanding shares (including also Ordinary Shares issuable upon conversion of
  Ordinary-Preferred Shares),  (ii) all shares, on an as-converted basis,
  resulting from any anti-dilution protection
  afforded to any of the existing shareholders of the Company triggered by the investment hereunder, (iii) 5,791,503
  Ordinary Shares of the Company reserved under all of the Company’s incentive share option plans (the “Share Option Plans”) for issuance of options to employees and
  consultants (such number not including
  238,000 Ordinary Shares issued upon exercise of options granted to employees of the Company), (iv) 120,560 Ordinary
  Shares reserved for issuance to service
  providers of the Company, and (v) all other warrants, options and convertible rights, including convertible notes
  and loans. Immediately after Closing, Amadeus shall hold at least seven and a half percent (7.50%) of the
  Company’s issued and outstanding
  share capital on a fully diluted basis.


	
 

	
 

	
 


	
1.2

	
The
  rights, preferences and privileges of the Issued Shares are as set forth in
  the Amended Articles of Association
  of the Company attached hereto as Exhibit
  A (hereinafter
  referred to as the “Amended Articles”)
  and in the Shareholders Rights Agreement as amended upon the Closing,
  pursuant to the Amendment attached hereto as
  Exhibit B (hereinafter
  referred to as the “Shareholders Rights
  Agreement”).


	
 

	
 

	
 


	
1.3

	
Closing.


	
 

	
 

	
 


	
 

	
The
  closing of the purchase and sale of the Issued Shares to the Investors (the “Closing”) shall take place on
September
  27, 2006 or at such other time and place as may be agreed upon orally or in
  writing by the Company, Amadeus and the Investors (other than Amadeus) investing a majority of the Purchase Price
  invested by all Investors other
  than Amadeus (together, the “Majority
  Investors”). At the
  Closing, the following transactions
  shall occur simultaneously (no transaction shall be deemed to have been completed or any document delivered
  until all such transactions have been completed and all required documents delivered):


	
 

	
 

	
 


	
 

	
(a)

	
the Company shall deliver to the
  Investors (unless waived by the Majority Investors):


	
 

	
 

	
 

	
 


	
 

	
 

	
(i)

	
copies
  of resolutions of the Company’s shareholders, in the form attached hereto as Schedule
  1.3(a)(i), by
  which, inter alia: (i) the Articles of Association of the Company were replaced by the Amended Articles; (ii)
  the authorized share capital of
  the Company was increased; (iii) converting 2,436,340 Ordinary Shares of the Company (i.e., the Founders’ Shares)
  into the same number of Series BB-4
  Preferred Shares; and (iv) to the extent required, this Agreement and all ancillary documents thereto were
  approved, together with a duly
  completed notices of such changes to the Israeli Registrar of Companies;





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(ii)

	
validly executed share
  certificates covering the Issued Shares issued in the name of each Investor, in the form attached hereto as Schedule
1.3(a)(ii);


	
 

	
 

	
 

	
 


	
 

	
 

	
(iii)

	
a
  copy of a resolution of the Company’s Board of Directors, inter alia: (i) approving
  the execution, delivery and performance of this Agreement and the ancillary documents thereto, (ii) issuing
  and allotting the Issued Shares, and (iii) converting 2,436,340
  Ordinary Shares of the Company (i.e., the Founders’
  Shares) into the same number of Series BB-4 Preferred Shares; all in
  the form attached hereto as Schedule
  1.3(a)(iii);


	
 

	
 

	
 

	
 


	
 

	
 

	
(iv)

	
a
  copy of the Company’s share register registering the Issued Shares in the Investors’ names in the form attached
hereto as Schedule 1.3(a)(iv);


	
 

	
 

	
 

	
 


	
 

	
 

	
(v)

	
a
  copy of the notice to be provided to the Israeli Registrar of Companies immediately
  after the Closing (provided that all Investors who are not (i) Israeli residents
  or (ii) registered as of the Closing with the Registrar of Companies as shareholders of the Company, have
  provided the Company with such documents and information as are
  reasonably necessary to file and register
  such issuance of shares), in the form attached hereto as Schedule 1.4(a)(v).


	
 

	
 

	
 

	
 


	
 

	
 

	
(vi)

	
a
  copy of the approvals of the transactions contemplated hereby from: (i) the
  Office of the Chief Scientist of the Ministry of Industry and Trade of the State of Israel (‘OCS’); and
  (ii) the Investment Center.


	
 

	
 

	
 

	
 


	
 

	
(b)

	
The
  Company shall notify the Israeli Registrar of Companies of the issuance of
  the Issued Shares promptly after the Closing and shall deliver a copy of such
  notice to the Investors’ counsel.


	
 

	
 

	
 

	
 


	
 

	
(d)

	
Payments
  shall be made by the Investors to the Company in U.S. dollars of the Purchase Price by way of a bank transfer to the
  Company’s account (Bank Leumi Le’Israel
  BM, Rehovot Business Branch (978), account No. 222200/29), or by such other form of payment as is mutually agreed by
  the Company and each Investor.


	
 

	
 

	
 

	
 


	
 

	
(e)

	
The
  non-Israeli Investors shall deliver to the Company a duly executed
  undertaking to the OCS in the form
  substantially attached hereto as Schedule
  1.3(d), to the extent required by the OCS and if they have not
  already delivered such undertaking in
  the past.





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2.

	
Representations
  and Warranties of the Company


	
 

	
 

	
 

	
 


	
The Company hereby
  represents and warrant to the Investors that, except as set forth in this Agreement, the Exhibits and Schedules hereto and
  the Schedule of Exceptions
  attached hereto, which exceptions
  shall be deemed to be representations and warranties as if made hereunder,
  the following representations are true and correct on the date of this
  Agreement and shall be true and
  correct on the date of Closing as if made on such date:


	
 

	
 

	
 

	
 


	
2.1

	
Organization, Good Standing and
  Qualification.


	
 

	
 

	
 

	
 


	
The
  Company is a private company duly organized and validly existing under the
  laws of the State of Israel and
  incorporated on December 22, 1991. The Company has all requisite corporate
  power and authority to carry on its business as now conducted and as proposed
  to be conducted in: (i) the Work Plan
  attached hereto as Schedule 2.1;
  (ii) the Marketing Penetration Plan (as defined below); and (iii) the
  2006 Annual Budget (subsections (i), (ii) and
  (iii) are collectively referred to herein as the “Updated Work Plan”). The Company is duly qualified to transact
business in each
  jurisdiction in which the failure so to qualify is reasonably likely to have a material adverse effect
  on its assets, financial condition, operating results, prospects or
  business of the Company as presently conducted and as proposed to be conducted in the Updated Work Plan (“Material Adverse
Effect”). The
  Memorandum of Association and
  Articles of Association of the Company, all as currently in effect, are attached hereto as Schedule 2.1(a).


	
 

	
 

	
 

	
 


	
2.2

	
Capitalization and Voting
  Rights.


	
 

	
 

	
 

	
 


	
Immediately prior to
  Closing (and prior to the creation of the Series BB-4 Preferred Shares and the conversion of the Ordinary-Preferred
  Shares held by the Founders into Ordinary Shares) the authorized capital of the Company consists of 85,570,000
  divided into (i) 47,000,996 Ordinary Shares, of which 469,449 Ordinary
  Shares are issued and outstanding and of
  which 5,791,503 are reserved for issuance to employees, consultants,
  officers, or directors of the
  Company and/or subsidiary thereof pursuant to the Share Option Plans (such number
  not including 238,000 Ordinary Shares issued upon exercise of options granted
  to employees of the Company), of which
  4,996,976 have been allocated and the remaining 794,527 are available for future issuance, (ii)
  1,569,004 Ordinary-Preferred Shares of which all are issued and
  outstanding, (iii) 15,000,000 Preferred AA Shares, par value NIS 0.01, of which 13,144,070 are issued and outstanding,
  (iv) 12,137,708 Preferred BB-1 Shares, par value NIS 0.01, 8,152,256 of which are issued and outstanding (v)
  4,000,000 Preferred BB-2 Shares,
  par value NIS 0.01, 3,597,106 of which are issued and outstanding, (vi)
  5,862,292 Preferred BB-3 Shares,
  par value NIS 0.01 of which 5,859,274 are issued and outstanding.





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Upon the Closing, the authorized capital of the
  Company will consist of 95,000,100 divided into:


	
 

	
 

	
 

	
 


	
(i)
  53,000,060 Ordinary Shares, par value NIS 0.01 each, of which 469,449
  Ordinary Shares are issued and outstanding and 5,791,503 of which are
  reserved for issuance to employees, consultants,
  officers, or directors of the Company and/or subsidiary thereof pursuant to
  the Share Option Plans (such number
  not including 238,000 Ordinary Shares issued upon exercise of options granted to employees of the
  Company), of which 4,996,976 have been allocated and the
  remaining are available for future issuance, (ii) 15,000,000 Preferred AA Shares, par value NIS 0.01 each, of which
  13,144,070 are issued and outstanding, (iii) 12,137,708 Preferred BB-1
  Shares, par value NIS 0.01 each, of which 8,152,256 are issued and outstanding and (iv) 4,000,000 Preferred
  BB-2 Shares, par value NIS 0.01 each, of which 3,597,106 are issued
  and outstanding, (v) 5,862,292 Preferred BB-3 Shares, par value NIS 0.01 each, of which 5,859,274 are issued and
  outstanding, and (vi) 5,000,040 Preferred BB-4 Shares, par value NIS 0.01 each, of which 4,338,096 are issued and
  outstanding.


	
 

	
 

	
 

	
 


	
The
  outstanding Ordinary Shares, Series AA Preferred Shares, Series BB-1
  Preferred Shares, Series BB-2
  Preferred Shares, Series BB-3 Preferred Shares and Series BB-4 Preferred Shares,
  are all duly and validly authorized and issued, fully paid and nonassessable,
  were issued free of any Hen, pledge,
  claim, charge, restriction, encumbrance or third party rights of any kind (“Security
  Interest”), and were issued in compliance with all applicable
  laws, including the relevant
  securities laws of the State of Israel.


	
 

	
 

	
 

	
 


	
A
  complete and correct list of the security holders of the Company (including,
  all warrants and options of the Company’s capital stock) immediately
  prior to the Closing is set forth in Schedule 2.2 attached hereto. The individuals and entities identified in
Schedule 2.2 as the shareholders of the Company immediately prior
  to the Closing are the registered owners, and to the Company’s best
  knowledge, the lawful owners, beneficially and of record, of all of the
  issued and outstanding share capital of the Company, free and clear of any
  Security Interest, restrictions,
  rights, options to purchase, proxies, voting trust and other voting
  agreements, calls or commitments of every kind, and none of the said
  individuals owns any other shares, options
  or other rights to subscribe for, purchase or acquire any capital stock of
  the Company.


	
 

	
 

	
 

	
 


	
Immediately
  following the Closing the correct list of the shareholdings (including all
  warrants and options) of the Company’s share capital will be as set forth in Schedule 2.2(a).


	
 

	
 

	
 

	
 


	
Except
  for (i) the options, warrants and rights detailed in Schedule 2.2, (ii) the Issued Shares to
  be issued under this Agreement and the conversion privileges of such Issued
  Shares, (iii) the rights provided in Sections
  2, 3 & 4 of the Shareholders Rights Agreement, and (iv) rights pursuant to the Company’s Articles of
  Association, there are no outstanding or authorized subscriptions,
  options, warrants, calls, rights (including conversion or preemptive rights),
  commitments, anti-dilution rights,
  exchange rights, or other rights or securities, of any nature whatsoever, or any other agreements,
  undertakings, promises or commitments of any character for the purchase of or acquisition from the Company of any
  shares of its capital stock or any
  security convertible into, or exchangeable for, or evidencing the right to subscribe for, any shares.


	
 

	
 

	
 

	
 


	
The
  Company is not a party or subject to any agreement or understanding, and, to
  the best of the Company’s knowledge,
  there is no agreement or understanding between any persons and/or entities, which affects or relates to the
  voting or giving of written consents with respect to any security or by a
  director of the Company.


	
 

	
 

	
 

	
 


	
2.3

	
Officers and Directors.


	
 

	
 

	
 

	
 


	
 

	
(a)

	
The
  Company and the Subsidiary’s current officers and directors are the individuals appearing in Schedule 2.3 hereto.
Except as set
  forth in the Company’s Articles of Association and the Shareholders
  Rights Agreement, the Company has no
  agreement, obligation or commitment with respect to the election of any individual or individuals to the
  Company’s Board of Directors. To the
  Company’s best knowledge, there is no voting agreement or other arrangement among the
  Company’s shareholders, and there is no agreement or understanding between
  any persons and/or entities, which affects or relates to the voting or giving written
  consents with respect to any security or by a director and/or officer of the
  Company.





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(b)

	
There
  are no agreements, commitments and understandings, whether written or oral, with respect to
  any compensation to be provided by the Company or the Subsidiary to any of
  their directors or officers except as set forth in the Schedule of
  Exceptions copies of which have been provided to Amadeus.


	
 

	
 

	
 


	
2.4

	
Subsidiaries.





The
Company owns, beneficially and of record, all of the issued and outstanding
share capital of its subsidiaries in Delaware USA, Singapore, Japan and Germany
(jointly, the “Subsidiary”) and all the rights thereto, free and clear of liens,
claims, charges, encumbrances,
restrictions, rights, options to purchase, proxies, voting trust or other voting
agreements. Except for the Subsidiary, the Company does not own any of the
issued and outstanding share capital of any
other company, and is not a participant in any partnership, joint venture or other business association. There
are no other share capital, preemptive rights, convertible securities,
outstanding warrants, options or other rights to subscribe for, purchase or acquire from any Subsidiary or from
the Company, any share capital of such Subsidiary
and there are no contracts or binding commitments providing for the issuance
of, or the granting of rights to
acquire, any share capital of any Subsidiary. All issued and outstanding
share capital of the Subsidiary was duly authorized, and is validly issued and outstanding and fully paid and nonassessable. The
Subsidiary is duly organized, validly existing and in good standing under the
laws under which it is incorporated and has full corporate power and authority to own, lease and operate its properties
and assets and to conduct its
business as now being conducted and as proposed to be conducted. Neither the nature of any Subsidiary’s business as now
conducted or as presently proposed to be conducted nor its ownership or leasing of property require that such
Subsidiary be qualified to do
business or be in good standing in any jurisdiction other than the jurisdiction
in which such Subsidiary is
organized.


	
 

	
 

	
 


	
2.5

	
Authorization
  and Approvals.


	
 

	
 

	
 


	
 

	
(a)

	
The
  Company has all requisite corporate power and authority to execute and deliver this Agreement and any other
  agreements contemplated hereby or which are
  ancillary hereto and to consummate the transactions contemplated hereby and thereby. All corporate action on the part of the
  Company and its officers, directors and
  shareholders necessary for the authorization, execution and delivery of this Agreement and any other agreements contemplated
  hereby or which are ancillary hereto,
  the performance of all obligations of the Company hereunder and the authorization,
  issuance and delivery of the Issued Shares, has been taken or will be taken prior to the Closing, and this
  Agreement, any other agreements contemplated
  hereby or which are ancillary hereto and any obligations contemplated herein constitute valid and legally
  binding obligations of the Company,
  enforceable in accordance with its terms subject only to laws affecting the rights and remedies of creditors.






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(b)

	
Except
  for OCS approval, the Investment Center approval, and the notice to be provided
  to the Israeli Registrar of Companies with respect to the adoption of the Amended Articles, the
  amendment of the Company’s Memorandum of Association, the increase and change in the
  composition of its share capital and the allocation of the Issued Shares in
  accordance with this Agreement, no approvals, permits or consents of, or filing with any state or local
  governmental body, official authority, or
  any other third party is required under any applicable law or instrument in connection with the
  execution and delivery of this Agreement or the consummation of the
  transactions contemplated hereby.


	
 

	
 

	
 


	
2.6

	
Valid
  Issuance of Issued Shares.





The
Issued Shares to be issued to each Investor pursuant to this Agreement shall,
when issued as provided
for herein, be duly authorized, validly issued, and issued in compliance with
all applicable laws, including Israeli
securities laws and free of any pre-emptive rights or similar rights (“Participation Rights”) and any
restrictions on transfer, will have the rights, preferences, privileges,
and restrictions set forth in the Shareholders Rights Agreement and the Amended Articles (as shall be in force from
time to time), and will be free and clear of any taxes, liens, claims, encumbrances or third party rights of any kind
(except as specified in this Agreement, the Amended Articles, the
Shareholders Rights Agreement and applicable law)
and duly registered in the Investor’s name in the Company’s share register and,
once the applicable Purchase Price
therefor is fully paid for by such Investor as provided for herein (that is,
the BB-4 Purchase Price in respect of the Issued BB-4 Preferred Shares and the Conversion
Consideration in respect of the Converted Founders’ Shares), shall be fully
paid and non-assessable. The Conversion
Shares have been duly authorized and reserved for issuance by all
necessary corporate action and, when issued and allotted in accordance with the terms of this Agreement and the Company’s
Articles of Association, will be duly and validly issued, will have the
rights, preferences, privileges and restrictions set forth in the Company’s Articles of Association (as shall be in
force from time to time) and will be free and clear of any liens, encumbrances,
claims, or third party rights of any kind (except as specified in this Agreement, the Amended Articles,
the Shareholders Rights Agreement, and applicable
law) and duly registered in the Investor’s name in the Company’s share register
and, once fully paid for by such Investor as provided for herein, shall
be fully paid and non assessable.


	
 

	
 


	
2.7

	
Litigation.





There
is no claim, action, suit, proceeding or, to the best knowledge, information or
belief of the Company, investigation pending or currently threatened against the
Company, the Subsidiary,
and/or any of the Founders in their capacity as shareholders or directors of
the Company,
and there is no claim, action, suit, proceeding or, to the best knowledge, information or belief of the Company,
investigation which questions the validity of this Agreement, the Shareholders Rights Agreement, or the right of any of
them to enter into it, or to
consummate the transactions contemplated hereby, or which is reasonably likely
to result, either individually or in the aggregate, in any Material
Adverse Effect or any change in the current
equity ownership of the Company, nor, to the best knowledge, information or
belief of the Company, is there any
basis for such claim, action, suit, proceeding or investigation. The foregoing
includes, without limitation: (i) actions pending or threatened involving the
prior employment of any of the Company’s or
the Subsidiary’s employees, including without limitation, the previous
employment of the Founders with Orbot Instruments Ltd. (“Orbot”) and
the previous employment of David Alumot with Opal Technologies Ltd. (“Opal”) and/or with Applied Materials Israel Ltd. (“Applied Materials”); (ii) use by
employees of the Company
or the Subsidiary, in connection with the business of the Company, of any information or techniques allegedly
proprietary to any of their former employers, including without limitation, Orbot, Opal and Applied Materials, or their
obligations under any agreements with
any such prior employers, and (iii) any actions pending or threatened by Orbot
and/or Opal and/or Applied Materials. Neither the Company nor the Subsidiary is
a party to, or subject to the
provisions of any order, writ, injunction, judgment or decree of any court
or government agency or instrumentality nor are any of them aware of any
pending or threatened action, suit, proceeding or investigation (or of any
basis for same) against any of them by any government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company, the Subsidiary and/or by the Founders currently pending or that the Company, the Subsidiary and/or the
Founders intends to initiate.

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2.8

	
Proprietary
  Information; Patents and Trademarks.


	
 

	
 

	
 


	
 

	
(a)

	
The
  Company and the Subsidiary own or have the unrestricted right to use pursuant to written
  license, sublicense, agreement, or permission, free and clear of any Security Interest,
  third party rights and royalties, all patents, trademarks, service marks, trade
  names, mask works, and copyrights and all trade secrets, including know-how, invention, 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, mask work, cost data, marketing
  plans, product plans, business strategies, financial information, forecasts, personnel information and customer or
  supplier lists currently used and/or
  necessary for the operation of the businesses of the Company as presently conducted
  and as presently proposed to be conducted in the Updated Work Plan (collectively: “Intellectual
  Property”).


	
 

	
 

	
 


	
 

	
(b)

	
Schedule 2.8 identities each: (a) patent, trade mark,
  domain name or registration which has been issued to the Company or the Subsidiary
  with respect to any of the Intellectual
  Property; (b) pending patent or trade mark application or application for registration which the Company or the
  Subsidiary has made with respect to any of the Intellectual Property; (c)
  each trade name or unregistered trademark used by the Company or the Subsidiary; and (d) license, agreement, or
  other permission which the Company
  or the Subsidiary has received from or granted to any third party with respect to any of the
  Intellectual Property (together with any exceptions). The Company has delivered to Amadeus’ counsel correct and
  complete copies of all such patents,
  copyrights, trade marks, registrations, applications, licenses, agreements, and permissions (as amended to
  date) and has made available to the
  Investors correct and complete copies of all other written documentation evidencing ownership and
  prosecution (if applicable) of each such item. With respect to each item of Intellectual Property required to
  be identified as set forth in this
  Section 2.8: (i) the Company or the Subsidiary possess all right, title, and interest in and to the item, free
  and clear of any Security Interest, license, royalty, commission or similar
  arrangements or other restriction and free and clear of any right of any academic or research
  institution, government, previous employer
  of any of the Founders or any other third party; (ii) the item is not subject
  to any outstanding injunction, judgment, order, decree, ruling, or charge;
  (iii) no action, suit, proceeding, hearing, investigation, charge, complaint,
  claim, or demand is pending or is threatened which challenges in a material
  manner the legality, validity,
  enforceability, use, or ownership of the item; (iv) neither the Company
  nor the Subsidiary has ever agreed to indemnify any person for or against any interference, infringement,
  misappropriation, or other conflict with respect
  to the item; and (v) neither the Company nor the Subsidiary has granted, and there are not outstanding, any options,
  licenses or agreements of any kind relating
  to the Intellectual Property, nor is the Company or the Subsidiary bound by
  or a party to any option, license or agreement of any kind with respect to
  any of the Intellectual Property.






-8-








	
 

	
 

	
 


	
 

	
(c)

	
Each
  item of Intellectual Property owned or used by the Company or the Subsidiary immediately
  prior to the Closing hereunder will be owned or available for use by them on
  substantially the same terms and conditions immediately subsequent to the
  Closing hereunder. Except for readily and commercially available
  off-the-shelf software, no other Intellectual Property of any kind required by the
  Company or the Subsidiary to conduct their business, as currently conducted
  and as presently proposed to be conducted, is owned by a third party or would require the
  payment of any fee or royalty. The Company and the Subsidiary have complied in all material respects with
  the requirements of, and has filed all material
  documentation required in dealing with, any patent or trademark registry agency hi which their patent and/or trademarks
  applications were filed.


	
 

	
 

	
 


	
 

	
(d)

	
To the
  best knowledge of the Company, (i) neither the Company nor the Subsidiary has
  interfered with, infringed upon, misappropriated, or otherwise come into conflict
  with any intellectual property rights of any third party nor will the conducting by them
  of their business, or use of the Intellectual Property, as presently conducted
  and as presently proposed to be conducted interfere, infringe upon, misappropriate or
  otherwise come into conflict with any intellectual property rights of any
  third party; (ii) neither the Company nor the Subsidiary has received any charge,
  complaint, claim, demand, or notice alleging any such interference,
  infringement, misappropriation, or violation (including any claim that the Company or the
  Subsidiary must license or refrain from using any intellectual property
  rights of any third party) and to the Company’s knowledge there is no basis for
  such; and (iii) to the best knowledge of the Company, no third party has
  interfered with, infringed upon, misappropriated, or otherwise come into
  conflict with any Intellectual Property of the Company or the Subsidiary.


	
 

	
 

	
 


	
 

	
(e)

	
Neither
  the Company, Subsidiary nor the Founders are obligated nor is the Company aware that any of the Company’s or
  the Subsidiary’s employees (other than
  Founders) 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 its, his or her best efforts to promote the interests of the
  Company or that would conflict with
  the Company’s or the Subsidiary’s business as now conducted and as presently proposed to be conducted in the updated
  Work Plan. Neither the execution
  nor the delivery of this Agreement, the Shareholders Rights Agreement, the carrying on of the Company’s and the
  Subsidiary’s business by any of their respective employees, nor the conduct of the Company’s and the
  Subsidiary’s business as proposed
  to be conducted, will: either (i) to the best of the Company’s knowledge, information or belief, conflict with
  or result in a breach of the terms, conditions
  or provisions of, or constitute a default under, any contract, covenant or instrument under which any such employee other
  than the Founder is now obligated
  (including without limitation, any agreement with Orbot, Opal or Applied
  Materials), or (ii) conflict with or result in a breach of the terms, conditions or
  provisions of, or constitute a default under, any contract, covenant or instrument under
  which either Founder or the Company or the Subsidiary is now obligated (including
  without limitation, any agreement with Orbot, Opal or Applied Materials). To
  the best of the Company’s knowledge information or belief, for the conduct of its and the
  Subsidiary’s business as now conducted and as
  presently proposed to be conducted in the Updated Work Plan, it will not be necessary to utilize any inventions of the
  Founders or any of their employees (or people it currently intends to hire) owned by any prior employer.






-9-








	
 

	
 

	
 


	
 

	
 

	
All
  Intellectual Property related to the Company, the Subsidiary and their business, developed by
  the Founders prior to the incorporation of the Company (“Founders IP”) was
  duly assigned to the Company by the Founders at the time of, or following, the
  incorporation of the Company, free and clear of any Security Interest, and to the Company’s best
  knowledge, all declarations and documents required
  by the various authorities around the world in order to register such assignments
  have been duly submitted; and neither the Founders nor, to the Company’s best knowledge, any other party has
  any interest in or rights to any of the Founders IP. During the period
  in which the Founders were developing the Founders IP, the Founders to the
  Company’s best knowledge were not employed by
  any third party or involved in any consulting relationship with any third
  party. The Founders to the Company’s
  best knowledge are the sole inventors and developers of the Founders IP (including the inventions, methods and
  devices described and claimed in the patents which are part of such IP)
  without any contribution,
  assistance or participation of any third party.


	
 

	
 

	
 


	
 

	
(f)

	
Each
  Founder, employee, officer and consultant of the Company or Subsidiary has executed a Proprietary
  Information and Inventions Agreement and/or an Employment Agreement and/or any similar
  agreement, containing confidentiality, non compete and assignment of invention
  provisions in the form provided to Amadeus’ counsel, and to the Company’s best
  knowledge none of the Company’s or the Subsidiary’s employees, Founders, officers or
  consultants are in violation thereof, and the Company will use its best efforts to
  prevent any such violation.


	
 

	
 

	
 


	
 

	
(g)

	
The
  Company and the Subsidiary have taken measures to protect the secrecy, confidentiality and
  value of all their intellectual property, which measures are reasonable and
  customary in the industry in which they operate.


	
 

	
 

	
 


	
 

	
(h)

	
There
  are no outstanding options, licenses, or agreements of any land relating to the foregoing, and
  neither the Company nor the Subsidiary is bound by or is a party to any options,
  licenses or agreements of any kind with respect to the patents, trademarks,
  service marks, trade names, copyrights, trade secrets, licenses, information,
  proprietary rights and processes of any other person or entity other than
  licenses arising from the purchase or use of “off-the-shelf or other standard
  products.


	
 

	
 

	
 


	
2.9.

	
Compliance
  with Law and Other Instruments.





Neither the Company nor the Subsidiary is in violation
or default of any provisions of their Memorandum
or Articles of Association or applicable charter documents, or of any instrument, judgment, order, writ, decree or
contract to which it is a party or by which it is bound or, of any provision
of law applicable to it, which violation or default is reasonably likely to have a Material Adverse Effect. The
execution, delivery and performance by the Company of this Agreement,
the Shareholders Rights Agreement and the consummation of the transactions contemplated hereby and thereby
will not result in any such violation or be in conflict with or constitute, with or without the passage of time and/or
giving of notice, either a default
under any such material provision, instrument, judgment, order, writ, decree or
contract or an event which is reasonably likely to result in the
creation of any material lien, charge or
encumbrance upon any assets of the Company or the Subsidiary, suspension, revocation, impairment, forfeiture or non-renewal
of any material permit, license, authorization, or approval applicable
to the Company or the Subsidiary, their business or operations or any of their assets or properties.


-10-








	
 

	
 


	
2.10

	
Agreements;
  Action.








	
 

	
 

	
 


	
 

	
(a)

	
Except
  for the agreements explicitly contemplated hereby and by the Shareholders Rights Agreement there
  are no agreements, understandings or proposed transactions between the
  Company or the Subsidiary and any of their officers, directors or
  shareholders or their affiliates.


	
 

	
 

	
 


	
 

	
(b)

	
There are no Material
  Agreements, judgments, orders, writs or decrees to which the Company or the Subsidiary is a party or by
  which either is bound.


	
 

	
 

	
 


	
 

	
(c)

	
For
  purposes of Section 2.10(a) and (b), “Material
  Agreements” shall mean (i) any agreement or proposed transaction with
  respect to any transaction to which the Company or the Subsidiary is a party and in
  which the amount involved exceeds US$250,000, (ii) any agreement or proposed
  transaction which relates to the Company’s or the Subsidiary’s intellectual property
  and any agreement or proposed transaction which relates to intellectual
  property rights of any third party, (iii) distribution agreements, (iv)
  non-disclosure agreements (other than with employees and distributors of the Company
  or he Subsidiary), (v) any agreement or proposed transaction between the Company
  or the Subsidiary and shareholder of the Company or other Interested Party
  (as such a term is defined under the Israeli Securities Act 1968) of the Company,
  (vi) any written agreement between the shareholders of the Company of which the
  Company has actual knowledge, (vii) any agreement or proposed transaction restricting or
  affecting the development, manufacture or distribution of the Company’s products or
  services, and
  (viii) any agreement or proposed transaction which materially restricts or limits the Company’s
  or the Subsidiary’s right to do business or compete in any area or any field
  with any person, firm or company. All Material Agreements are in full force
  and effect and the Company has no knowledge of the invalidity of or grounds for
  rescission on any of these agreements, or of any intention to terminate any such agreements.
  Neither the Company nor the Subsidiary is a guarantor or indemnitor of any
  indebtedness of any other person, firm or corporation nor is any person, firm
  or corporation a guarantor of any indebtedness of the Company or the
  Subsidiary.


	
 

	
 

	
 


	
 

	
 

	
For
  the purpose of this subsection 2.10(c) all indebtedness, liabilities,
  agreements, understandings,
  instruments, contracts and proposed transactions involving the same person or entity (including persons or
  entities the Company or the Subsidiary has reason to believe are
  affiliated therewith) shall be aggregated for the purpose of meeting the individual minimum dollar amounts of this
  subsection.





-11-








	
 

	
 

	
 


	
 

	
(d)

	
Other
  than as set forth in the Financial Statements, since their incorporation, neither the Company
  nor the Subsidiary has (i) declared or paid any dividends, or authorized or made any distribution upon or
  with respect to any class or series of its capital stock, (ii) incurred any
  indebtedness for money borrowed or any other liabilities, (iii) made any loans or advances to any person, or given
  a guarantee or created any charge,
  lien or other encumbrance on any of its assets and/or its unissued and unpaid share capital for any
  obligation of any person, or (iv) sold, exchanged or otherwise disposed of any of its assets or rights, and in
  respect of (ii), (iii) and (iv)
  other than in the ordinary course of business.


	
 

	
 

	
 


	
 

	
(e)

	
Neither the Company nor
  the Subsidiary are parties to nor are they bound by any contract, agreement or instrument, or subject to
  any restriction under its Memorandum
  or Articles of Association, which is reasonably likely to have a Material Adverse Effect.








	
 

	
 


	
2.11

	
Related-Party
  Transactions.





No employee, officer, or
director of the Company or the Subsidiary or member of his or her immediate family is indebted to the Company or the
Subsidiary, and neither the Company nor the Subsidiary are indebted (or committed
to make loans or extend or guarantee credit) to any of them. To the best of the Company’s knowledge,
none of such persons has any direct or indirect
ownership interest in any firm or corporation with which either the Company or
the Subsidiary are affiliated or with which the Company or the
Subsidiary have a business relationship, or any firm or corporation that
competes with the Company. To the best of the Company’s knowledge, no member of
the immediate family of any officer or director of the Company or the Subsidiary is directly or indirectly interested in any
material contract with the Company.


	
 

	
 


	
2.12

	
Permits.





The
Company and the Subsidiary have all franchises, permits, licenses, and any
similar authority necessary for the conduct of their business as now being
conducted by it, the lack of which is reasonably likely to have a Material Adverse
Effect, and the Company believes that the Company and the Subsidiary can obtain, without undue burden or
expense, any similar authority for the conduct of then respective business as
proposed to be conducted in the Updated Work
Plan. The Company and the Subsidiary are not in default in any material respect under any of such franchises, permits,
licenses, or other similar authority.


	
 

	
 


	
2.13

	
Environmental
  and Safety Laws.





To the best knowledge,
information or belief of the Company, neither the Company nor the Subsidiary is in violation of any applicable
statute, law or regulation relating to the environment or occupational health and safety, and to the best knowledge
information and belief of the Company, no material expenditures are or will be
required in order to comply with any
such existing statute, law or regulation.


	
 

	
 


	
2.14

	
Manufacturing
  and Marketing Rights.





Neither
the Company nor the Subsidiary has granted rights to manufacture, produce, assemble, license,
market, or sell its respective products to any other person and is not bound by any agreement that
affects the Company’s exclusive right to develop, manufacture, assemble, distribute,
market or sell its respective products.


-12-








	
 

	
 


	
2.15

	
Disclosure.





The
Company has fully provided the Investors with all the information that the
Investors have requested
for deciding whether to purchase the Issued Shares and to make the transactions
contemplated in this Agreement and in the
Shareholders Rights Agreement, and all information which the Company
believes is necessary to enable the Investors to make such decisions. Neither this Agreement, the Shareholders
Rights Agreement, nor any other statements
or certificates made or delivered in connection herewith or therewith contains
any untrue statement of a material
fact or omits to state a material fact necessary to make the statements
herein or therein not misleading. There is no material fact or information
relating to the business, prospects, condition (financial or otherwise),
affairs, operations, or assets of the
Company that has not been disclosed to the Investors in writing by the Company.


	
 

	
 


	
2.16

	
Updated
  Work Plan.





The
Updated Work Plan attached hereto as Schedule
2.1 which consists of: (i) the Work Plan dated August 2006, (ii)
the Marketing Penetration Plan dated August 2006, and (iii) the August 2006 Annual
Budget, all previously delivered to the Investors, have been prepared in good
faith by the Company and to the best knowledge, information or belief of the
Company do
not contain any untrue statement of a material fact, nor are there any other
material facts or matters of
which the Company is aware which are reasonably likely to make the statements made therein misleading, except that with respect
to projections and assumptions contained in the Updated Work Plan, the Company represents only that such
projections and assumptions were
prepared and/or made in good faith. The parties agree that such estimates and projections are not purely factual in nature, that
the business of the Company is subject to certain risk factors and no assurance can be or is given that the
assumptions are correct or that any of the forecasts, projections,
expectations or transactions contemplated therein will be attained.


	
 

	
 


	
2.17

	
Registration
  Rights.





Except as provided in the
Shareholders Rights Agreement, the Company has not granted or agreed to grant any registration rights,
including piggyback rights and F-3 registration rights, to any person or
entity.


	
 

	
 


	
2.18

	
Title
  to Property and Assets.





Full and accurate details of
the Company’s and the Subsidiary’s material tangible properties and assets are contained in Schedule 2.18 to this
Agreement. The
Company and the Subsidiary own their
respective property and assets free and clear of all mortgages, liens, loans
and encumbrances. With respect to the property and assets that the Company and
the Subsidiary lease, the Company and the Subsidiary are in compliance
with their respective leases, except for
such non-compliance which is not reasonably likely to have a Material Adverse Effect and the Company and the Subsidiary
hold valid leasehold interests free of any material liens, claims or
encumbrances. No tangible assets owned by the Company are shared by the Company
with any other person.

-13-








	
 

	
 


	
2.19

	
Financial
  Statements





Attached
as Schedule 2.19 is the
Company’s audited consolidated annual financial statements for the
year ended December 31,2005 and reviewed but unaudited financial statements for
the period
ending March 31, 2006 (the “Financial Statements”). The Financial Statements
have been prepared in accordance
with US generally accepted accounting principles applied on a consistent basis throughout the periods indicated
and with each other. The Financial Statements accurately present, in all
material respects, the financial condition and operating results of the Company and the Subsidiary as of
the dates, and for the periods, indicated therein. All proper and necessary books of account and accounting records
have been maintained by the Company, are in its possession and contain accurate
information in accordance with
generally accepted principles consistently applied relating to all transactions
to which the Company has been a
party.


	
 

	
 


	
2.20

	
Financial
  Issues.








	
 

	
 

	
 


	
 

	
(a)

	
The
  Company and the Subsidiary maintain and will continue to maintain a standard system of
  accounting established and administered in accordance with US GAAP with
  reconciliation to Israeli GAAP.


	
 

	
 

	
 


	
 

	
(b)

	
Except
  as stated in the Financial Statements, neither the Company nor the Subsidiary has any liabilities, debts or
  obligations, whether accrued, absolute or contingent,
  incurred, since its Incorporation, except in the ordinary and usual course of business. Since its incorporation, the
  Company has been operating in the
  ordinary and usual course of business.








	
 

	
 


	
2.21

	
Changes.








	
 

	
 

	
 


	
 

	
Since
  March 31, 2006, there has not been:


	
 

	
 


	
 

	
(i)

	
any change in the assets,
  liabilities, financial condition or operating results of the Company or the Subsidiary from that reflected in
  the Financial Statements, except changes in the ordinary course of
  business that have not been, in the aggregate, materially adverse;


	
 

	
 

	
 


	
 

	
(ii)

	
any
  damage, destruction or loss, whether or not covered by insurance, having a Material Adverse
  Effect;


	
 

	
 

	
 


	
 

	
(iii)

	
any
  waiver by the Company or the Subsidiary of a valuable right or of a material debt owed to it;


	
 

	
 

	
 


	
 

	
(iv)

	
any
  satisfaction or discharge of any lien, claim or encumbrance or payment of any
  obligation
  by the Company or the Subsidiary, except in the ordinary course of business
  and that is not material to the assets, properties, financial condition,
  operating results, prospects or business of the Company (as such business is presently conducted and as presently proposed
  to be conducted in the Updated Work Plan).


	
 

	
 

	
 


	
 

	
(v)

	
any
  change or amendment to a material contract or arrangement by which the Company or the
  Subsidiary or any of their respective assets or properties are bound or subject;


	
 

	
 

	
 


	
 

	
(vi)

	
any material change in any
  compensation arrangement or agreement with any employee of the Company;


	
 

	
 

	
 


	
 

	
(vii)

	
any
  sale, assignment or transfer of any patents, trademarks, copyrights, trade secrets or other
  intangible assets of the Company or the Subsidiary;





-14-








	
 

	
 

	
 


	
 

	
(viii)

	
any
  resignation or termination of employment of any key officer of the Company, and to the best knowledge of the Company
  there is no impending resignation or termination
  of employment of any such officer;


	
 

	
 

	
 


	
 

	
(ix)

	
receipt
  of notice that there has been a loss of, or material order cancellation by, any major customer of
  the Company;


	
 

	
 

	
 


	
 

	
(x)

	
any
  mortgage, pledge, transfer of a security interest in, or lien, created by the
  Company
  or the Subsidiary, with respect to any of their respective material properties or assets,
  except liens for taxes not yet due or payable;


	
 

	
 

	
 


	
 

	
(xi)

	
any
  loans or guarantees made by the Company or the Subsidiary to or for the benefit of its
  respective employees, officers or directors, or any members of their immediate families, other than travel
  advances and other advances made in the ordinary
  course of its business;


	
 

	
 

	
 


	
 

	
(xii)

	
any
  declaration, setting aside or payment or other distribution in respect of any
  of the
  Company’s capital stock, or any direct or indirect redemption, purchase or other acquisition of
  any of such stock by the Company;


	
 

	
 

	
 


	
 

	
 (xiii)

	
to the
  best knowledge of the Company, any other event or condition of any character that is
  reasonably likely to have a Material Adverse Effect; or


	
 

	
 

	
 


	
 

	
(xiv)

	
any
  agreement or commitment by the Company or the Subsidiary to do any of the
  things described in this Section 2.21.








	
 

	
 


	
2.22

	
Tax Returns, Payments and
  Elections.





The Company and the Subsidiary have filed all tax returns and reports
(including information returns and reports)
as required by law. These returns and reports are true and correct in all material
respects. The Company hereby represents and warrants that the provision for
taxes of the Company and the Subsidiary as shown in the Financial Statements is
adequate for taxes due or accrued as of the
date thereof. To the best of their knowledge, the Company and the Subsidiary
have not elected pursuant to any applicable tax law any election that would
have a material effect on the Company, its respective financial condition, its
respective business as presently conducted
or presently proposed to be conducted or any of its respective properties and/or
its respective material assets. The Company and the Subsidiary have never had
any tax deficiency proposed or assessed against them and have not executed any
waiver of any statute of limitations on the
assessment or collection of any tax or governmental charge. None of the Company’s or the Subsidiary’s income tax returns
have ever been audited by governmental authorities or, if audited no
material comments or claims by governmental authorities were made with respect to such audits. Since the date
of the Financial Statements, the Company and the Subsidiary have not
incurred any taxes, assessments or governmental charges other than in the ordinary course of business and the
Company and the Subsidiary have made adequate provisions on their
respective books of account for all taxes, assessments and governmental charges with respect to their
respective business, properties and operations for such period. The Company hereby represents and
warrants that the Company and the Subsidiary have withheld or collected
from each payment made to each of their respective employees, the amount of all taxes (including, but not limited to, Israeli
income taxes) required to be withheld or
collected therefrom, and has paid the same to the proper tax receiving officers or authorized depositories.


-15-







	
 

	
 


	
2.23

	
Minute Books.





The minute books of the Company
and the Subsidiary provided to the Investor’s counsel contain a complete
summary of all meetings of directors and shareholders since the time of their incorporation and reflect all transactions
referred to in such minutes accurately in all material respects.


	
 

	
 

	
 


	
2.24

	
Labor Agreements and Actions;
  Employee Compensation.


	
 

	
 

	
 


	
 

	
(a)

	
Neither the Company nor the Subsidiary is bound by
  or subject to (and none of its assets or
  properties is bound by or subject to) any written or oral, express or implied,
  contract, commitment or arrangement with any labor union other than those provisions
  of general agreements between the Federation of Labor Unions (the “Histadrut”) and the Coordination Bureau
  of Economic Organizations which may be applicable to certain classes
  of employees by virtue of extension orders, and
  no labor union has requested or has sought to represent any of the employees,
  representatives or agents of the Company or the Subsidiary. There is
  no strike or other labor dispute involving the Company or the Subsidiary
  pending, or to the best knowledge of the
  Company, that is likely to have a Material Adverse Effect, nor is the Company aware of any labor
  organization activity involving the Company
  or the Subsidiary. The Company is not aware that any officer or key employee, or that any group of key employees,
  intends to terminate their employment
  with the Company or the Subsidiary, nor does the Company or the Subsidiary
  have a present intention to terminate the employment of any of the foregoing.
  Schedule 2.24 sets forth
  the names of each of the Company’s and the Subsidiary’s
  employees and consultants. The Company and the Subsidiary are or at the Closing will be a party to an employment
  agreement with each employee of the Company and the Subsidiary, as
  applicable. The employment of each officer and
  employee of the Company or the Subsidiary is terminable at the will of the Company or the Subsidiary, subject to the payment
  of severance and other payments as provided by law and/or pursuant to
  any applicable employment agreements. The
  Company and the Subsidiary have complied in all material respects with all
  applicable laws related to employment. Except as set forth in Schedule
  2.24(a) below, the Company and the Subsidiary are not parties to or bound by any currently effective employment
  deferred compensation agreement, bonus plan, incentive plan, profit
  sharing plan, retirement agreement, or other employee compensation agreement.


	
 

	
 

	
 


	
 

	
 

	
Schedule 2.24(a) contains a list of all written and material oral promises, agreements, arrangements and understandings,
  with officers, directors, employees and consultants (other than
  attorneys and accountants) of the Company and the Subsidiary, which are
  presently in effect, detailing the name, title or position, annual salary/compensation (including bonuses,
  commissions, and deferred compensation),
  pensions (including those required by all applicable laws), retirement benefits, company cars, profit
  sharing, and any interests in any incentive
  compensation plan. A copy of the written (and a summary description of any material oral) agreements described in this
  Section 2.24 was delivered to Arnadeus’s
  counsel prior to the date hereof.





-16-











	
 

	
 

	
 


	
 

	
 

	
The severance pay to the employees of the Company
  and the Subsidiary is fully funded or
  provided for in the Financial Statements in accordance with US generally accepted accounting principals. All
  liabilities of the Company in connection with its employees (excluding
  illness pay and advance notice of termination)
  were adequately accrued in the Financial Statements and the Company is not aware of any circumstance whereby
  any employee might demand any
  claim for compensation on termination of employment beyond the amount of statutory
  or contractual severance pay to which such employee may be entitled. All obligations of the Company and the
  Subsidiary with respect to statutorily required severance payments have been fully satisfied or have been
  funded by contributions to
  appropriate insurance funds.


	
 

	
 

	
 


	
 

	
(b)

	
All grantees under the Share Option Plans have
  provided Mr. Eliahu Lerner and/or Mr.
  Yehuda Zviel with a proxy for the exercise of all rights granted to them with
  respect to their shares and options,
  including voting rights, until the consummation
  of an IPO.


	
 

	
 

	
 


	
2.25

	
Government Sponsored Programs.





Schedule
2.25 attached hereto contains an accurate and complete
list of all grants and other benefits,
including tax benefits, received or applied for by the Company or the
Subsidiary from any governmental
authority. The Company has received certain grants in support of its research
and development through the OCS. The Company is in compliance in all respects with all of the terms and provisions of its grants
from the OCS and any other grants or benefits listed as received in Schedule 2.25 and applicable laws and
regulations in order to continue to qualify
for such grants and in order not to give rise to any obligation to prepay the amount of such grants nor to require the Company
to repay to the OCS any amount in excess of such grants before due.


	
 

	
 


	
2.26

	
Brokers.





Other than as set forth in Schedule 8.3 hereunder, the Company
has no contract, arrangement or understanding with any broker, finder or
similar agent with respect to the transactions contemplated by this Agreement.


	
 

	
 


	
2.27

	
Significant Customers and
  Suppliers.





No customer, sub-contractor or
supplier that is significant to the Company or the Subsidiary, has terminated,
materially reduced or threatened to terminate or materially reduce or limit (i)
its relationship with the Company or the Subsidiary, or (ii) its purchases from
or provision of products or services
to the Company or the Subsidiary, as the case may be.


	
 

	
 


	
2.28

	
Insurance.





The Company and the Subsidiary
have in full force and effect insurance policies of financially sound and reputable insurers, as to their
respective properties and business, in scope and amount customary and reasonable for the businesses in which the Company
and the Subsidiary are engaged or
presently propose to engage, with coverage sufficient in amount to allow them to replace any of their material
properties that might be damaged or destroyed or compensation by or for
the Company and the Subsidiary. The Company and the Subsidiary have not done or suffered anything to be done
that has rendered or might render any policies of insurance void or voidable and the Company and the Subsidiary have
complied in all material respects
with all conditions contained in such policies. Schedule 2.28 sets forth a list of insurance policies currently maintained by the
Company and the Subsidiary and the coverage
thereunder.


-17-











	
 

	
 

	
 


	
2.29

	
Effectiveness; Survival;
  Indemnification


	
 

	
 

	
 


	
 

	
(a)

	
Closing: Each representation and warranty of the Company
  is deemed to be made on the date
  of this Agreement and at the Closing, and shall survive and remain in full force and effect after the Closing for a
  period until the earlier of forty eight (48) months thereafter or the initial
  public offering of the Company’s securities, except for the each of the representations and warranties made in
  Sections 2.2 and 2.6 that shall be
  in effect indefinitely, and the representations and warranties made in Sections 2.7, 2.8 and 2.22 which shall remain
  in full force and effect after the Closing
  for a period of 7 (seven) years or the initial public offering of the Company’s securities, whichever is the earlier,
  In the event of any breach or misrepresentation
  of any covenant, warranty or representation made by the Company under
  this Agreement, the Company shall indemnify the Investors and hold them harmless from any and all loss,
  damage, liability and expense sustained or incurred by the Investors as a result of or in connection with said
  breach or misrepresentation for an
  amount not exceeding the sum of the Purchase Price actually paid by such Investor to the Company
  pursuant to this Agreement.


	
 

	
 

	
 


	
 

	
(b)

	
Notwithstanding the foregoing,
  any limitations set forth in subsection 2.29 shall not apply to any claim for indemnification that
  is based on a willful or intentional breach
  or misrepresentation of any covenant, warranty or representation made by the Company under this Section 2, and the representations
  and warranties made by the Company
  under this Section 2 in respect of any such claim shall be unlimited by time.


	
 

	
 

	
 


	
 

	
(c)

	
Any amount due to any Investor
  as a result of a claim for indemnification shall be determined after deducting or setting off, as the
  case may be, all monetary recovery
  from insurers and other third parties and any savings of taxes or other governmental or administrative levies. For the
  avoidance of doubt, the limitation under this Section 2.29(c), shall not
  restrict any such insurer or other third parties from claiming back from the Company any moneys
  paid to the Investors pursuant to
  this Section 2.29(c) subject, however, to the restrictions and limitations
  set forth in Section 2.29(a) and
  (b) above.


	
 

	
 

	
 


	
2.30

	
Indemnity Procedure.


	
 

	
 

	
 


	
Promptly after receipt by an
  Investor of notice of the commencement of any action, proceeding, or investigation of any third party
  in respect of which indemnity may be sought as provided in subsection 2.29 above, it shall accordingly notify the
  Company (the “Indemnitor”).
  The Company shall promptly
  assume the defense of the Investor with counsel reasonably satisfactory to the Investor, and the fees and
  expenses of such counsel shall be at the sole cost and expense of the
  Company. The Investor will cooperate with the Indemnitor in the defense of any action, proceeding, or investigation
  for which the Company assumes the
  defense. The Indemnitor shall not be liable for the settlement of any action,
  proceeding, or investigation
  effected without its consent, which consent shall not be unreasonably withheld.


	
 

	
 

	
 





-18-







	
 

	
 

	
 


	
3.

	
Representations and Warranties of the Investors






Each Investor hereby represents
and warrants that:


	
 

	
 


	
3.1

	
Authorization: Ownership of
  Shares.





               All
action on the part of the Investor, its officers, directors and shareholders
necessary for the authorization,
execution and delivery of this Agreement and the Shareholders Rights Agreement,
and the performance of all obligations hereunder has been taken or will be
taken prior to the Closing, and this
Agreement and the Shareholders Rights Agreement constitutes a valid and legally binding obligation of the
Investor, enforceable in accordance with its terms, subject only to laws affecting the rights and
remedies of creditors. The Investor is duly organized and properly registered in the jurisdiction of its
organization. The execution, delivery
and performance of this Agreement and the Shareholders Rights Agreement, will
not violate any provision of the
corporate documents of the Investor, or of any instrument, judgment, order, writ, decree or contract to which
it is a party or by which it is bound or, to its best knowledge, of any
provision of law, rule or regulation applicable to the Investor.


	
 

	
 


	
3.2

	
Purchase Entirely for Own Account.





               This
Agreement is made with the Investor in reliance upon the Investor’s representation to the Company, which by the
Investor’s execution of this Agreement the Investor hereby confirms, that the Issued Shares (for the purposes of
this Section 3, collectively, the “Securities”) will be acquired for
investment for the Investor’s own account, not as a nominee or agent, and not
with a view to the resale or distribution of any part thereof, and that
the Investor has no present intention of selling, granting any participation
in, or otherwise distributing the same. By
executing this Agreement, the Investor further represents that it does not have
any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such
person or to any third person, with respect to any of the Securities.


	
 

	
 

	
 


	
3.3

	
Disclosure of Information.


	
 

	
 

	
 


	
               The
  Investor represents that it is a sophisticated investor with the experience
  in making venture capital investments,
  including hi high-tech companies and projects. It was not organized for the
  specific purpose of acquiring the Issued Shares. It is able financially to
  bear the risks involved in such
  investment and it has received all the information it considers necessary
  or appropriate for deciding whether to purchase the Issued Shares. The
  Investor further represents that it has
  had an opportunity to ask questions and receive answers from the Company
  regarding the Company, its business, management, financial affairs and the
  terms and conditions of the offering of
  the Issued Shares. The foregoing, however, does not limit or modify
  the representations and warranties in Section 2 of this Agreement or the
  right of the Investor to rely thereon.


	
 

	
 

	
 


	
3.4

	
Office of the Chief Scientist


	
 

	
 


	
               It
  is aware that the Company has received financing for certain research and development
  projects through the OCS and it is aware, and agrees to the application, of
  the provisions of the Law for the
  Encouragement of Industrial Research and Development, 5744-1984 and of
  Regulations promulgated thereunder, to the Company, including, inter alia:


	
 

	
 

	
 


	
 

	
(a)

	
the Company’s obligation to pay
  royalties to the State of Israel;





-19-











	
 

	
 

	
 


	
 

	
(b)

	
that the manufacture of any
  product developed as a result of any project so funded take place in the State of Israel unless the
  Research Committee of the OCS pursuant
  to the above law otherwise determines, subject to and pursuant to the above law; and


	
 

	
 

	
 


	
 

	
(c)

	
that know-how derived from any project so funded may
  not be transferred to third parties
  without the approval of the Research Committee of the OCS subject to and
  pursuant to the above law.


	
 

	
 

	
 


	
3.5

	
Israeli Securities Law


	
 

	
 

	
 


	
 

	
If listed in Schedule 3.5 A it is a “Venture
  Capital Fund” as defined in the Appendix to the Israeli Securities Law,
  5768-1968 and if listed in Schedule 3.5
  B it confirms that it is not a resident of Israel and
  that no offer to purchase securities of the Company was made to it in Israel.


	
 

	
 

	
 


	
4.

	
Conditions of Investor’s Obligations
  at Closing.


	
 

	
 

	
 


	
               The
  obligations of the Investors under subsections 1.1 and 1.3 of this Agreement
  are subject to the fulfillment on or
  before the Closing, of each of the following conditions (any or all of which may be waived, in whole or in
  part, by the Majority Investors.


	
 

	
 

	
 


	
4.1

	
Representations and
  Warranties.


	
 

	
 

	
 


	
               The
  representations and warranties contained in Section 2 shall be true on and as
  of the Closing as though such representations and warranties had been made on
  and as of the date of the Closing.


	
 

	
 

	
 


	
4.2

	
Performance.


	
 

	
 

	
 


	
               The
  Company shall have performed and complied with all agreements, obligations
  and conditions contained in this
  Agreement that are requited to be performed or complied with by it on or
  before the Closing.


	
 

	
 

	
 


	
4.3

	
Proceedings and Documents.


	
 

	
 

	
 


	
               All
  corporate and other proceedings in connection with the transactions
  contemplated at the Closing, and
  all documents incident thereto shall be reasonably satisfactory in form and substance to the Investors’ counsel, and the
  Investors shall have received all such counterpart original and certified or other copies of such
  documents as they may reasonably request.


	
 

	
 

	
 


	
4.4

	
Consents and Approvals,
  Delivery of Documents


	
 

	
 

	
 


	
               The
  Company shall have received and shall have provided the Investors with
  copies, satisfactory to the Investors’ counsel, of all permits,
  consents, approvals and authorizations which
  shall be necessary or required to consummate this Agreement, the Shareholders
  Rights Agreement and to issue and sell the Issued Shares, including
  without limitation the waivers, consents
  and approvals set forth in Section 1.3 hereof, and OCS and Investments
  Center’s approval for the
  transactions contemplated hereby and for the issuance of the Issued Shares. All
  the actions to be taken as set forth in Section 1.3 above shall have been
  completed to the satisfaction of the
  Investors. Documents to be delivered by the Company, as set forth in Section
  1.3 above, shall be delivered. All such documents shall be satisfactory in
  form and substance to the Investors.





-20-








	
   

  	
   

  
	
  4.5

  	
  Opinion of Company Counsel.

  
	
   

  	
   

  
	
                 On
  or prior to the Closing, the Investors shall have received from Cohen, Cohen,
  Yaron-Eldar & Co. Law Offices, counsel for the Company, an opinion, dated
  as of Closing, in form and substance acceptable to Investors’ counsel
  attached hereto as Schedule 4.5.

  
	
   

  	
   

  
	
  4.6

  	
  Shareholders Rights Agreement

  
	
   

  	
   

  
	
                 On
  or prior to the Closing, the Shareholders Rights Agreement shall have been
  amended as set forth in Exhibit B hereto.

  
	
   

  	
   

  
	
  4.7

  	
  Absence of Adverse Changes

  
	
   

  	
   

  
	
                 From
  the date hereof until the Closing, there will have been no material adverse
  change in the financial or business condition or prospects of the Company, in
  the sole judgment of the Majority Investors.

  
	
   

  	
   

  
	
  4.8

  	
  No Action.

  
	
   

  	
   

  
	
  No action, suit, or proceeding shall be pending or
  threatened before any court or quasi-judicial or administrative agency of any
  state, municipal, or foreign jurisdiction or before any arbitrator wherein an
  unfavorable injunction, judgment, order, decree, ruling, or charge would: (i)
  prevent consummation of any of the transactions contemplated by this
  Agreement; (ii) cause any of the transactions contemplated by this Agreement
  to be rescinded following consummation.

  
	
   

  	
   

  
	
  4.9

  	
  Amended Articles of Association.

  
	
   

  	
   

  
	
                 Prior
  to the Closing, the Amended Articles shall have been adopted by the Company’s
  shareholders.

  
	
   

  	
   

  
	
  4.10

  	
  Officer’s Certificate.

  
	
   

  	
   

  
	
                 On
  or prior to the Closing, a certificate from the chief executive officer of
  the Company, certifying as to the matters set forth in Section 4.1, 4.2, 4.7
  and 4.8 in the form attached hereto as Schedule
  4.10, shall have been delivered to the Investors.

  
	
   

  	
   

  
	
  4.11

  	
  Due Diligence Review

  
	
   

  	
   

  
	
                 The
  Investor’s legal, business and financial due diligence review of the Company
  and the Subsidiary shall have been completed to the sole and complete
  satisfaction of the Investors and their counsel.

  
	
   

  	
   

  
	
  4.12

  	
  Reserved

  
	
   

  	
   

  
	
  4.13

  	
  Directors and Officers’ Insurance

  
	
   

  	
   

  
	
                 Prior
  to the Closing, the Company shall obtain and maintain in full force and
  effect, Directors and Officers insurance policies of financially sound and
  reputable insurers, covering the directors in the Company (including the
  newly designated directors) in the scope and amount acceptable to the
  Majority Investors, and in no event less than US$3,000,000.

  



-21-








	
   

  	
   

  
	
  4.14

  	
  Management Rights Letter

  
	
   

  	
   

  
	
                 The
  Company shall have executed and delivered to Amadeus a Management Rights
  Letter in the form attached hereto as Schedule
  B.

  
	
   

  	
   

  
	
  4.15

  	
  Compliance with Anti Laundering Requirements.

  
	
   

  	
   

  
	
                 The
  Company, its directors and each Joining Investor shall have executed and
  delivered to Amadeus the Compliance with Anti Laundering Requirements Letter
  in the form approved by Amadeus.

  
	
   

  	
   

  
	
  5.

  	
  Conditions
  of the Company’s Obligations at Closing.

  
	
   

  	
   

  
	
                 The
  obligations of the Company to the Investors under this Agreement are subject
  to the fulfillment on or before the Closing of each of the following conditions:

  
	
   

  	
   

  
	
  5.1

  	
  Representations and Warranties.

  
	
   

  	
   

  
	
                 The
  representations and warranties of the Investors contained in Section 3 shall
  be true on and as of the Closing with the same effect as though such
  representations and warranties had been made on and as of the Closing.

  
	
   

  	
   

  
	
  5.2

  	
  Payment of Consideration.

  
	
   

  	
   

  
	
                 The
  Investors shall have delivered the consideration specified in Section 1.1.

  
	
   

  	
   

  
	
  5.3

  	
  Shareholders Rights Agreement

  
	
   

  	
   

  
	
                 On
  or prior to the Closing, the Shareholders Rights Agreement shall have been
  amended as set forth in Exhibit B hereto.

  
	
   

  	
   

  
	
  5.4

  	
  Amended Articles of Association.

  
	
   

  	
   

  
	
                 Prior
  to the Closing, the Amended Articles shall have been adopted by the Company’s
  shareholders.

  
	
   

  	
   

  
	
  5.5

  	
  Consents and Approvals

  
	
   

  	
   

  
	
                 The
  Company shall have received all permits, consents, approvals and
  authorizations which shall be necessary or required to consummate this
  Agreement and to issue and sell the Issued Shares and shall have received the
  Board and shareholders approval for the transfer of the Founders’ Purchased
  Shares.

  
	
   

  	
   

  
	
  5.6

  	
  No Judgment or Order.

  
	
   

  	
   

  
	
                 There
  shall not be on the Closing, any judgment or order of a court of competent
  jurisdiction or any ruling, regulation or order of any agency of the Israeli
  government which would prohibit or have the effect of preventing consummation
  of the sale of the Issued Shares.

  



-22-








	
   

  	
   

  
	
  5A.

  	
  Condition
  of the Company’s and the Investors’ Obligations at Closing; Closing of
  Amadeus-Founders Agreement

  





	
   

  	
   

  
	
   

  	
  Immediately prior to the Closing, the
  Amadeus-Founders Agreement, in the form attached hereto as Schedule C, shall have been closed (being
  understood and agreed that the Closing of the Amadeus-Founders Agreement is
  conditioned upon the Closing hereof), all of the Founders’ Shares shall be
  owned and held by Amadeus, and registered in the Company’s shareholders
  register as such, and the Company undertakes to cooperate in the registration
  of Amadeus as a shareholder in respect thereto.

  
	
   

  	
   

  
	
  5B.

  	
  Pre-Closing Agreements

  
	
   

  	
   

  
	
                 The
  parties agree as follows with respect to the period from the execution of
  this Agreement and until the earlier to occur of: (i) September 30,2006; (ii)
  the Closing:

  
	
   

  	
   

  
	
                 5B.1
  General. Each of the Parties will use its best efforts to take all action and
  to do all things necessary, proper, or advisable in order to consummate and
  make effective the transactions contemplated by this Agreement and the
  ancillary agreements (including satisfaction of the Closing conditions set
  forth in Sections 4 and 5 above).

  
	
   

  	
   

  
	
                 5B.2
  Operation of Business. The Company will not engage in any practice, take any
  action, or enter into any transaction outside the ordinary course of
  business. Without limiting the generality of the foregoing, the Company will
  not (unless otherwise set forth in this Agreement): (i) authorize or effect
  any change in its Articles of Association; (ii) issue any new shares of the
  Company, cause or permit any sale or conveyance of any of the outstanding
  shares of the Company, or sell, assign, transfer or convey any of the assets
  of the Company; or (iii) solicit any offers for, provide detailed information
  in response to any unsolicited offers for, or conduct any negotiations with
  any other person or entity in respect of the sale of shares in the Company,
  or the assets of the Company or any substantial portion of such assets, in
  each such case - other than the grant of options or shares to
  directors/employees/consultants in the ordinary course of business or the
  issuance of snares in connection with an option or warrant exercise
  outstanding at the date hereof and other than any other action the Company is
  required to carry out prior to the Closing as set forth herein.

  
	
   

  	
   

  
	
  6.

  	
  Covenants of the Company.

  
	
   

  	
   

  
	
  6.1

  	
  Use of Proceeds.

  
	
   

  	
   

  
	
                 The
  Company shall utilize the funds received from the Investors under this
  Agreement in accordance with the budget of the Company attached hereto as Schedule 2.1, as updated from time to
  time in by the Board of Directors of the Company.

  
	
   

  	
   

  
	
  6.2

  	
  Amended Articles of Association.

  
	
   

  	
   

  
	
                 Within
  14 days of the Closing, the Company shall file the Amended Articles with the
  Israeli Registrar of Companies.

  
	
   

  	
   

  
	
  7.

  	
  Press Release. No
  party, other than Intel Atlantic Inc. (with respect to which the terms of the
  Side Agreement of even date hereof shall apply) shall issue any public
  statement or release concerning this Agreement and the transactions
  contemplated hereby without the prior written approval of the Company and
  Amadeus.

  


-23-







	
   

  	
   

  
	
  8.

  	
  Miscellaneous.

  
	
   

  	
   

  
	
  8.1

  	
  Survival of Representations; Indemnification.

  




	
   

  	
   

  
	
                 The
  warranties, representations and covenants of the Company and the Investors
  contained in or made pursuant to this Agreement shall survive the execution
  and delivery of this Agreement and the Closing and shall in no way be
  affected by any investigation of the subject matter thereof made by or on
  behalf of the Investors or the Company.

  
	
   

  	
   

  
	
  8.2

  	
  Successors and Assigns.

  
	
   

  	
   

  
	
                 Except
  as otherwise provided herein, the terms and conditions of this Agreement
  shall inure to the benefit of and be binding upon the respective successors
  and assigns of the parties (including Permitted Transferees, as such term is
  defined in the Company’s Amended Articles, of any Issued Shares and
  Conversion Shares). 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, obligations, or liabilities
  under or by reason of this Agreement, except as expressly provided in this
  Agreement.

  
	
   

  	
   

  
	
  8.3

  	
  Finders Fee

  
	
   

  	
   

  
	
                 Each
  of the Company and the Investors represent as to themselves, that, other than
  as stated in Schedule 8.3, no person or entity shall be entitled to any broker’s or finder’s fees or any
  other commission or similar fee in connection with this Agreement. The
  Company agrees to indemnify and to hold harmless the Investors and the
  Investors agree to indemnify and hold harmless the Company and the Founders
  from any liability for any commission or compensation in the nature of a
  finders’ fee (and the costs and expenses of defending against such liability
  or asserted liability) for which the Investors or the Company, or any of
  their respective officers, partners, employees, or representatives are
  respectively responsible.

  
	
   

  	
   

  
	
  8.4

  	
  Governing Law.

  
	
   

  	
   

  
	
                 The
  Company and the Investors agree that this Agreement shall be governed by and
  construed under the laws of the State of Israel and that the exclusive place
  of jurisdiction in any matter arising out of or in connection with this
  Agreement shall be the applicable Tel Aviv Court.

  
	
   

  	
   

  
	
  8.5

  	
  Counterparts.

  
	
   

  	
   

  
	
                 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.

  
	
   

  	
   

  
	
  8.6

  	
  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.

  
	
   

  	
   

  
	
  8.7

  	
  Notices.

  
	
   

  	
   

  
	
                 Unless
  otherwise provided, any notice required or permitted under this Agreement
  shall be given in writing, shall be effective when given, and shall in any
  event be deemed to be given upon receipt or, if earlier, (a) five (5) days
  after the day of deposit with a National Post Office, if delivered by first
  class mail, postage prepaid, if addressed to a parry in the same country or
  fourteen (14) after deposit with a National Post Office, if delivered by
  first class mail, postage prepaid, if addressed to a party in a different
  country, (b) upon delivery, if delivered by hand (c) five (5) days after the
  day of deposit with recognized overnight courier service freight prepaid or (d) one (1)
  business days after the business day of facsimile transmission, if delivered
  by facsimile transmission with a copy by first class mail, postage prepaid,
  and each notice shall be addressed to the party to be notified at the address
  set forth in this section as follows:

  



-24-








	
   

  	
   

  	
   

  
	
  For the
  Company.

  	
   

  
	
  Negevtech Ltd.

  	
   

  
	
  attn:

  	
  CEO

  	
   

  
	
  address:

  	
  Beit Tamar

  12 Hamada St.

  Rehovot 76122

  	
   

  
	
   

  	
   

  	
   

  
	
  tel:

  	
  08-9366050

  	
   

  
	
  fax:

  	
  08-9366051

  	
   

  






	
   

  	
   

  
	
  For the
  Investors:

  
	
   

  	
   

  
	
  As set out on Schedule A.

  
	
   

  	
   

  
	
  or at such other address
  as such party may designate by fourteen (14) days’ advance written notice to
  the other parties.

  
	
   

  	
   

  
	
  8.8

  	
  Expenses.

  
	
   

  	
   

  
	
                 Upon
  Closing, the Company will pay from the proceeds of the Investment the due
  diligence, legal and other professional fees and expenses actually incurred
  by Amadeus in connection with this transaction (“Expenses”), up to a total of
  $20,000 (plus VAT, if
  applicable). In the event that prior to the Closing, the Company decides not
  to consummate the transaction contemplated hereunder, then the Company shall
  pay all of Amadeus’ Expenses up to the point in time the transaction
  contemplated hereunder was abandoned, but in no event more than US$20,000.

  
	
   

  	
   

  
	
  8.9

  	
  Entire Agreement;
  Amendments and Waivers.

  
	
   

  	
   

  
	
                 This
  Agreement (together with the schedules and exhibits attached hereto) contains
  the entire understanding of the parties with respect to its subject matter
  and all prior negotiations, discussions, commitments, and understandings
  heretofore between them with respect thereto are merged herein. Any term of
  this Agreement may be amended, directly or indirectly, 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 Majority Investors, excluding, however, the
  number of shares issued to each Investor and the Price Per Share, that may
  not be changed with respect to such Investor unless such Investor has
  consented thereto in writing.

  
	
   

  	
   

  
	
  8.10

  	
  Severability.

  
	
   

  	
   

  
	
                 If
  one or more provisions of this Agreement are held to be unenforceable under
  applicable law, such provision shall be excluded from this Agreement and the
  balance of the Agreement shall be interpreted as if such provision were so
  excluded and shall be enforceable in accordance with its terms.

  



-25-








[Remainder of Page
Intentionally Left Blank]


-26-








IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date first above written.


	
 

	
 

	
 

	
 

	
 


	
Amadeus III Affiliates Fund LP

	
 

	
 

	
Amadeus III


	
 

	
 

	
 

	
 

	
 


	
By:

	
 

	
 

	
By:

	
 


	
 

	


	
 

	
 

	



	
 

	
 

	
 

	
 

	
 


	
Name:

	
 

	
 

	
Name:

	
 


	
 

	


	
 

	
 

	



	
 

	
 

	
 

	
 

	
 


	
Title:

	
 

	
 

	
Title:

	
 


	
 

	


	
 

	
 

	



	
 

	
 

	
 

	
 

	
 


	
Date:

	
 

	
 

	
Date:

	
 


	
 

	


	
 

	
 

	



	
 

	
 

	
 

	
 

	
 


	
Negevtech Ltd.

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
By:

	


	
 

	
 

	
 


	
 

	


	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	Name:

	
  Rafi Yizhar

	
 

	
 

	
 


	 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	Title:

	
Director

	
 

	
 

	
 


	 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
Date:

	
26/9/06

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 





-27-








IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date first above written.


	
 

	
 

	
 

	
 

	
 


	
Amadeus III Affiliates Fund LP

	
 

	
 

	
Amadeus III


	
 

	
 

	
 

	
 

	
 


	
By:

	
 

	
 

	
By:

	
 


	
 

	


	
 

	
 

	



	
 

	
 

	
 

	
 

	
 


	
Name:

	
 

	
 

	
Name:

	
 


	
 

	


	
 

	
 

	



	
 

	
 

	
 

	
 

	
 


	
Title:

	
 

	
 

	
Title:

	
 


	
 

	


	
 

	
 

	



	
 

	
 

	
 

	
 

	
 


	
Date:

	
 

	
 

	
Date:

	
 


	
 

	


	
 

	
 

	



	
 

	
 

	
 

	
 

	
 


	
Negevtech Ltd.

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
By:

	


	
 

	
 

	
 


	
 

	


	
 

	
 

	
 


	 

	
 

	
 

	
 

	
 


	Name:

	
Eddy Shalev

	
 

	
 

	
 


	 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	Title:

	
Director

	
 

	
 

	
 


	 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
Date:

	
27th September, 2006

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 





-27-








IN WITNESS WHEREOF, the parties
have executed this Agreement as of the date first above written.


	
 

	
 

	
 

	
 

	
 


	
Amadeus III Affiliates Fund LP

	
 

	
 

	
Amadeus III


	
 

	
 

	
 

	
 

	
 


	
By:

	


	
 

	
By:

	



	
 

	


	
 

	
 

	



	
 

	
 

	
 

	
 

	
 


	
Name:

	
 

	
 

	
Name:

	
 


	
 

	


	
 

	
 

	



	
 

	
 

	
 

	
 

	
 


	
Title:

	
 

	
 

	
Title:

	
 


	
 

	


	
 

	
 

	



	
 

	
 

	
 

	
 

	
 


	
Date:

	
 

	
 

	
Date:

	
 


	
 

	


	
 

	
 

	



	
 

	
 

	
 

	
 

	
 


	
Negevtech Ltd.

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
By:

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	Name:

	
 

	
 

	
 

	
 


	 

	


	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	Title:

	
 

	
 

	
 

	
 


	 

	


	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
Date:

	
 

	
 

	
 

	
 


	
 

	


	
 

	
 

	
 





-27-








[2nd
signature page to Series BB-4 Preferred Share Purchase Agreement in Negevtech
Ltd. dated September 26, 2006]


IN
WITNESS WHEREOF, we affix our
signatures hereto as of the date set forth above.


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	
SVE Star Ventures Enterprises Gmbh & Co. No. IX KG.


	
Wellington Partners Ventures III Technology Fund,
  L.P.

	
 

	
Intel Atlantic, Inc.

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
By:

	
 

	
 

	
By:

	
  Dr. Meir Barel 


	
 

	
 

	
 

	
 

	


	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
Title:

	
 

	
 

	
Title:

	
  Managing Director


	
 

	
 

	
 

	
 

	


	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
By:

	
  Ernst Mannheimer

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Title:

	
  Authorized Signatory

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	



	
Star Management of Investments No. II (2000) L.P.

  By: Dr. Meir Barel
Title: Managing Director

	
 

	
Star Growth Enterprise, a German Civil Law
  Partnership (with limitation of liability)
By: SVM Star Ventures Managementgesellschaft
  mbH Nr. 3

	
 

	
Genesis Partners II, L.D.C.


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
By:

	
Dr. Meir Barel 

	
 

	
By:

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	



	
 

	
 

	
 

	
Title:

	
Managing Director

	
 

	
Title:

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	



	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	



	
Genesis Partners II (Israel) L.P.

	
 

	
Poalim Ventures Ltd.

	
 

	
Poalim Ventures I Ltd.


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
By:

	
 

	
 

	
By:

	
 

	
 

	
By:

	
 


	
 

	


	
 

	
 

	


	
 

	
 

	



	
Title:

	
 

	
 

	
Title:

	
 

	
 

	
Title:

	
 


	
 

	


	
 

	
 

	


	
 

	
 

	



	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	


	
 

	
 

	
 

	
 

	
 

	
 


	
Poalim Ventures II L.P.

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
By:

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	


	
 

	
 

	
 

	
 

	
 

	
 


	
Title:

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	


	
 

	
 

	
 

	
 

	
 

	
 





-28-








IN
WITNESS WHEREOF, we affix our
signatures hereto as of the date set forth above.


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	

	
 

	
 

	
 


	


	
 

	


	
 

	
SVE Star Ventures Enterprises Gmbh & Co. No. IX KG.


	
Wellington Partners Ventures III Technology Fund,
  L.P.

	
 

	
Intel Atlantic, Inc.

	
 


	
 

	
 

	
 

	
By:

	
GARY KERSHAW

	
 

	
By:

	
Dr. Meir Barel 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
Print Name:

	
 

	
 

	
Title:

	
Managing Director


	
 

	
 

	
 

	
 

	


	
 

	
 

	
 


	
 

	
 

	
 

	
Title:

	
Assistant Treasurer

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
By:

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Title:

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	



	
Star Management of Investments No. II (2000) L.P.

  By: Dr. Meir Barel
Title: Managing Director

	
 

	
Star Growth Enterprise, a German Civil Law
  Partnership (with limitation of liability)
By: SVM Star Ventures
  Managementgesellschaft mbH Nr. 3

	
 

	
Genesis Partners II, L.D.C.


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
By:

	
Dr. Meir Barel 

	
 

	
By:

	
 


	
 

	
 

	
 

	
 

	
 

	



	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
Title:

	
Managing Director

	
 

	
Title:

	
 


	
 

	
 

	
 

	
 

	
 

	



	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	



	
Genesis Partners II (Israel) L.P.

	
 

	
Poalim Ventures Ltd.

	
 

	
Poalim Ventures I Ltd.


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
By:

	
 

	
 

	
By:

	
 

	
 

	
By:

	
 


	
 

	


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	


	
 

	
 

	



	
Title:

	
 

	
 

	
Title:

	
 

	
 

	
Tile:

	
 


	
 

	


	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	


	
 

	
 

	



	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	


	
 

	
 

	
 

	
 

	
 

	
 


	
Poalim Ventures II L.P.

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
By:

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	


	
 

	
 

	
 

	
 

	
 

	
 


	
Title:

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	


	
 

	
 

	
 

	
 

	
 

	
 





[2nd
signature page to Series BB-4 Preferred Share Purchase Agreement in Negevtech
Ltd. dated September 26, 2006]


-28-









[2nd
signature page to Series BB-4 Preferred Share Purchase Agreement in Negevtech
Ltd. dated September 26, 2006]


IN
WITNESS WHEREOF, we affix our
signatures hereto as of the date set forth above.


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	
SVE Star Ventures Enterprises Gmbh & Co. No. IX KG.


	
Wellington Partners Ventures III Technology Fund,
  L.P.

	
 

	
Intel Atlantic, Inc.

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
By:

	
 

	
 

	
By:

	
 

	
 

	
By:

	
Dr. Meir Barel 


	
 

	


	
 

	
 

	


	
 

	
 

	
 


	
Title:

	
 

	
 

	
Title:

	
 

	
 

	
Title:

	
Managing Director


	
 

	


	
 

	
 

	


	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	


	


	
 

	


	
 

	



	
Star Management of Investments No. II (2000) L.P.

  By: Dr. Meir Barel
Title: Managing Director

	
 

	
Star Growth Enterprise, a German Civil Law
  Partnership (with limitation of liability)
By: SVM Star Ventures Managementgesellschaft
  mbH Nr. 3

	
 

	
Genesis Partners II, L.D.C.


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
By:

	
Dr. Meir Barel 

	


	
By:

	
Eddy Shalev


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
Title:

	
  Managing Director

	
 

	
Title:

	
Founder & Managing Partner


	

	
 

	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	



	
Genesis Partners II (Israel) L.P.

	
 

	
Poalim Ventures Ltd.

	
 

	
Poalim Ventures I Ltd.


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
By:

	
Eddy Shalev

	
 

	
By:

	
 

	
 

	
By:

	
 


	
 

	
 

	
 

	
 

	


	
 

	
 

	



	
Title:

	
Founder & Managing Partner

	
 

	
Title:

	
 

	
 

	
Tile:

	
 


	
 

	
 

	
 

	
 

	


	
 

	
 

	



	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	


	
 

	
 

	
 

	
 

	
 

	
 


	
Poalim Ventures II L.P.

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
By:

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	


	
 

	
 

	
 

	
 

	
 

	
 


	
Title:

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	


	
 

	
 

	
 

	
 

	
 

	
 





-28-








[2nd
signature page to Series BB-4 Preferred Share Purchase Agreement in Negevtech
Ltd. dated September 26, 2006]


IN
WITNESS WHEREOF, we affix our
signatures hereto as of the date set forth above.


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	
SVE Star Ventures Enterprises Gmbh & Co. No. IX KG.


	
Wellington Partners Ventures III Technology Fund,
  L.P.

	
 

	
Intel Atlantic, Inc.

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
By:

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
By:

	
 

	
 

	
By:

	
Dr. Meir Barel 


	


	
 

	
 

	


	
 

	
 

	
 


	
Title:

	
 

	
 

	
Title:

	
 

	
 

	
Title:

	
Managing Director


	


	
 

	
 

	


	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	



	
Star Management of Investments No. II (2000) L.P.

  By: Dr. Meir Barel
Title: Managing Director

	
 

	
Star Growth Enterprise, a German Civil Law
  Partnership (with limitation of liability)
By: SVM Star Ventures
  Managementgesellschaft mbH Nr. 3

	
 

	
Genesis Partners II, L.D.C.


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
By:

	
Dr. Meir Barel 

	
 

	
By:

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	



	
 

	
 

	
 

	
Title:

	
  Managing Director

	
 

	
Title:

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	



	
 

	
 

	
 

	
 

	

	
 

	
 

	


	


	
 

	


	
 

	



	
Genesis Partners II (Israel) L.P.

	
 

	
Poalim Ventures Ltd.

	
 

	
Poalim Ventures I Ltd.


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
By:

	
 

	
 

	
By:

	
 

	
 

	
By:

	
 


	


	
 

	
 

	


	
 

	
 

	



	
Title:

	
 

	
 

	
Title:

	
 

	
 

	
Tile:

	
 


	


	
 

	
 

	


	
 

	
 

	



	

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	


	
 

	
 

	
 

	
 

	
 

	
 


	
Poalim Ventures II L.P.

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
By:

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	


	
 

	
 

	
 

	
 

	
 

	
 


	
Title:

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	


	
 

	
 

	
 

	
 

	
 

	
 





-28-








	
 

	
 


	
[2nd signature page to
  Series BB-4 Preferred Share Purchase Agreement in Negevtech Ltd. dated
  September 26, 2006]


	
 

	
 


	
IN WITNESS
  WHEREOF, we affix our
  signatures hereto as of the date set forth above.


	
 

	
 


	
SVE Star Ventures Enterprises
  GmbH & Co. No. IX KG


	
 

	
 


	
By:

	
SVM Star Ventures Management
  GmbH No. 3


	
 

	
 


	
BY:

	


	
 

	



	
 

	
Dr.
  Meir Barel - Managing Director


	
 

	
 


	
Star Mangement of Investments
  No. II (2000) L.P.


	
 

	
 


	
By:

	


	
 

	



	
 

	
Dr.
  Meir Barel - Director


	
 


	
Star Growth Enterprise,
  & German Civil Law Partnership (with limitation of libility)


	
 

	
 


	
By:

	
SVM Star Ventures Management GmbH No. 3


	
 

	
 


	
By:

	


	
 

	



	
 

	
Dr.
  Meir Barel - Managing Director


	
 


	
SVM Star Ventures
  Managementgesellschaft mbH Nr. 3


	
 

	
 


	
By:

	


	
 

	



	
 

	
Dr.
  Meir Barel - Managing Director





-27-








Schedule A  


List of Investors


	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Investor 

	
 

	
Purchase

Price $ 

	
 

	
Purchased
 Shares# 

	
 

	
Address 


	


	
 

	


	
 

	


	
 

	



	
Preferred BB-4 Shares


	
 


	
SVE Star Ventures Enterprises GmbH & Co.
  No. IX KG.

	
 

	
295,012

	
 

	
121,135

	
 

	
Star Ventures Management

  Attn. Michael Sailer

  Possartstrasse 9

  D-81679 Munich 

  Germany


	
 

	
 

	
 

	
 

	
 

	
 


	
Star Management of Investments No. II (2000)
  L.P.

	
 

	
38,759

	
 

	
15,915

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
Star Growth Enterprise, a German Civil Law
  Partnership (with limitation of Liability)

	
 

	
296,227

	
 

	
121,634

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Poalim Ventures Ltd.

	
 

	
47,015

	
 

	
19,305

	
 

	
Alrov Tower, 46 Rothschild Blvd, Tel Aviv 66883,
  Israel 

  Number for notices being delivered by facsimile: 03-5675760


	
 

	
 

	
 

	
 

	
 

	
 


	
Poalim Ventures I Ltd.

	
 

	
72,331

	
 

	
29,700

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
Poalim Ventures II L.P.

	
 

	
146,652

	
 

	
60,217

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Genesis Partners II, L.D.C.

	
 

	
409,556

	
 

	
168,168

	
 

	
Ackerstein Towers B 

  11 HaMenofim St 

  Herzliya, 46733 

  Israel


	
 

	
 

	
 

	
 

	
 

	
 


	
Genesis Partners II (Israel) L.P.

	
 

	
60,444

	
 

	
24,819

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Intel Atlantic, Inc.

	
 

	
147,999

	
 

	
60,770

	
 

	
c/o Intel Corporation 

  2200 Mission College Boulevard 

  M/S SC4-203 

  Santa Clara, CA 95052 

  USA


	 

	
Wellington Partners Venture III Technology
  Fund L.P.

	
 

	
886,000

	
 

	
363,801

	
 

	
Theresienstrasse 6, 80333 Muenchen, Germany


	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Amadeus III*

	
 

	
2,186,906

	
 

	
897,966

	
 

	
Mount Pleasant House 

  2 Mount Pleasant 

  Cambridge 

  CB3 0RN


	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Amadeus III Affiliates Fund LP**

	
 

	
44,631

	
 

	
18,326

	
 

	
2711 Centerville Road 

  Suite 400, Wilmington, 

  New Castle County, 

  Delaware 19808





* In
addition, Aamdeus III shall pay the Company its portion of the Conversion
Consideration ($1,384,528) in consideration for the conversion of 2,387,613
Founders’ Shares.


** In addition, Aamdeus III Affiliates Fund LP
shall pay the Company its portion of the Conversion Consideration ($28,256) in
consideration for the conversion of 48,727 Founders’ Shares.











Schedule B  





Date: September
26, 2006 


	
 

	
 


	
To:


	
1.

	
Amadeus III


	
 

	
Mount Pleasant House


	
 

	
2 Mount Pleasant


	
 

	
Cambridge


	
 

	
CB3 0RN


	
 

	
 


	
2.

	
Amadeus III Affiliates Fund LP


	
 

	
2711 Centerville Road,


	
 

	
Suite 400, Wilmington,


	
 

	
New Castle County,


	
 

	
Delaware 19808


	
 

	
 


	
(the “Investors”)





Re: Management Rights


Dear Ms./ Sirs,


This letter will confirm our
agreement that pursuant to and effective as. of the purchase of an aggregate of 3,352,632 shares of Series BB-4
Preferred Shares of Negevtech, Ltd. (hereinafter the “Company”), pursuant to that certain Series BB-4 Preferred
Share Purchase Agreement, dated September
26, 2006 (the “Share Purchase Agreement”) by
and between the Investors, the Company
and the other entities set forth therein, the Investors, for as long as they
hold shares of the Company, will be
entitled to the following contractual management rights, in addition to rights
to non-public financial information, inspection rights, and other rights
specifically provided to all investors in the
Share Purchase Agreement and its ancillary documents (including without limitation, the Investors Rights Agreement (as
defined in the Share Purchase Agreement):


	
 

	
 

	
 


	
 

	
(1)

	
The Investors shall be entitled to consult with and
  advise management of the Company on significant business issues, including
  management’s proposed annual operating plans, and management will meet with Investors regularly during each year at the
  Company’s facilities at mutually
  agreeable times for such consultation and advice and to review progress in achieving said plans.


	
 

	
 

	
 


	
 

	
(2)

	
The Investors may examine the
  books and records of the Company and inspect its facilities and may request information at reasonable times
  and intervals concerning the general status of the Company’s financial conditions and operations, provided that
  access to highly confidential
  proprietary information and facilities need not be provided to the Investors.















	
 

	
 

	
 


	
 

	
(3)

	
If and for so long as the
  Investors are not represented on the Company’s Board of Directors (whether through a director or an observer),
  the Company shall give a representative of the Investors (as will be designated in writing by the Investors) (the
  “Representative”) copies of all notices, minutes, consents, and other
  material that the Company provides to its directors; provided, however, that the Company reserves
  the right to exclude the Representative from access to any material the
  Company believes upon advice of counsel that such exclusion is reasonably necessary to preserve the
  attorney-client privilege, to protect highly confidential proprietary information or for other similar
  reasons.  Upon reasonable notice and
  at a scheduled meeting of the Board or such other time, if any, as the
  Board may determine in its sole
  discretion, such Representative may address the Board of Directors with
  respect to the Investor’s concerns regarding significant business issues
  facing the Company.


	
 

	
 

	
 


	
 

	
(4)

	
The Investors hereby agree on
  their behalf and on behalf of the Representative to hold in strict
  confidence and not to use or otherwise disclose any. confidential information
  provided to the Investors and/or to the
  Representative, or learned by any of them as a consequence of exercising the rights and privileges afforded to
  them under the terms of this letter agreement.
  The provisions of this paragraph 4 shall remain in effect notwithstanding any
  termination of this letter
  agreement.


	
 

	
 

	
 


	
 

	
(5)

	
The rights described herein
  shall terminate and be of no further force or effect upon the date of the closing of the sale of the Company’s
  securities pursuant to a registration statement filed by the Company under the Securities Act of
  1933, as amended, in connection with the firm commitment underwritten offering of its securities to the
  general public, or equivalent law
  of another jurisdiction





Very truly yours,


	


	
 


	


	
 


	
Oz Desheh

	
 


	
Chief Financial Officer

	
 


	
Negevtech, Ltd.

	
 
















Schedule C  


SHARE
TRANSFER AGREEMENT


This Share Transfer
Agreement (this “Agreement”) dated
as of September 26, 2006, by and between (i) Gadi Neumann of 3 HaYarden St.,
Rehovot and David Alumot of 5 Shoshanat HaAmakim, Rehovot (each a “Founder” and together, the “Founders”), and (ii) Amadeus III, a private
company organized under the laws of England, with registered office at Mount
Pleasant House, 2 Mount Pleasant, Cambridge England, and Amadeus III Affiliates
Fund LP, a limited partnership organized under the laws of the state of
Delaware, with registered office at 2711 Centerville Road, Suite 400,
Wilmington, New Castle County, Delaware 19808 (both entities shall collectively
be referred to as the “Purchaser”),
(each of the Founders and the Purchaser a “Party” and collectively the “Parties”).  


	
 

	
 


	
WHEREAS,

	
          the
Purchaser wishes to consummate an investment in Negevtech Ltd. (the “Company”)
in consideration for which, the Company shall issue the Purchaser Series BB-4
Preferred Shares of the Company, in accordance with that certain Series BB-4
Preferred Share Purchase Agreement between the Company and among others the
Purchaser of even date hereof (the “Investment Transaction”), and  


	
 

	
 


	
WHEREAS,

	
          the
  Founders wish to sell to the Purchaser the entire shares of the Company held
  by them, and


	
 

	
 


	
WHEREAS

	
          subject
  to the consummation of the Investment Transaction, the Purchaser wishes to
  purchase from the Founders such shares of the Company, on the terms and
  conditions set forth herein; and


	
 

	
 


	
WHEREAS

	
          it
  is a condition to the transfer of the Transfer Shares (as defined below) from
  the Founders to Amadeus, that the Transfer Shares be converted into series
  BB-4 Preferred Shares of the Company under such terms and conditions as shall
  be determined by the Company and the Purchaser; and


	
 

	
 


	
WHEREAS,

	
          the
  Company agrees to facilitate such transaction provided that the Founders
  agree to extend their non competition undertakings and reaffirm their
  undertaking to cooperate with the Company as set forth below.





NOW, THEREFORE, the Parties agree as follows: 


1.  Sale and Purchase
of Shares


          1.1.     Subject
to the terms of this Agreement, at the Closing (as defined below), the
following transactions shall occur simultaneously (no transaction shall be
deemed to have been completed or any document delivered until all such
transactions have been completed and all required documents delivered).


          1.2.     784,502
Ordinary-Preferred Shares of the Company nominal value NIS 0.01 each (the “Ordinary Preferred Shares”) held by each of
the Founders shall be converted into the same number (i.e., on a one for one
basis) of fully paid and non-assessable Ordinary Shares of the Company, NIS
0.01 par value each (the “Ordinary Shares”)
and the Company shall issue to each Founder for par value (an amount from the
share premium account equal to the nominal value of such additional Ordinary
Shares being attributed as payment on account of the nominal value of such
additional Ordinary Shares) an additional number of 433,668 fully paid and
non-assessable Ordinary Shares (the Ordinary Shares resulting from such
conversion and the additional Ordinary Shares being issued collectively, the “Transfer Shares”);








          1.3.     Each
of the Founders shall sell, assign, transfer and deliver to the Purchaser and
the Purchaser shall purchase from each of the Founders all right, title and
interest in and to the Transfer Shares, in consideration for the payment to
each of the Founders of the aggregate amount of US$2,260,339 (the “Consideration”) as further set forth in Exhibit
1.1; and 


          1.4.     Upon
the Closing of the Investment Transaction, the Transfer Shares shall be
converted into the same number (i.e., on a one for one basis) of fully paid and
non-assessable Series BB-4 Preferred Shares of the Company, par value NIS 0.01
each of the same type that will be issued to the Purchaser pursuant to the
Investment Transaction (the “Conversion”
and the “Conversion Shares”,
respectively) and shall be registered as such in the Company’s Shareholders’
Register.


2.  Closing


          2.1.     The
transactions contemplated hereby shall take place at a closing to be held on
September 30, 2006, provided that all closing conditions set forth below have
been satisfied or waived, or such other date as is mutually agreed (the “Closing”). At the Closing, all transactions
shall be deemed to have occurred simultaneously and no action shall be
effective until all actions have been completed or waived.


          2.2.     As
of the Closing, the Founders shall deliver to the Purchaser the following
documents:


                     2.2.1.     a
waiver of the shareholders of the Company of their right of first refusal and
co-sale rights in connection with the sale and purchase of the Transfer Shares
contemplated hereunder (by way of written consent or evidence that such rights
have lapsed).


                     2.2.2.     the
consent of the Investment Center and/or Office of Chief Scientist of the
Ministry of Industry and Trade of the State of Israel (“OCS”) for the
transactions contemplated hereunder. 


          2.3.     As
a condition to and at the Closing, the Company and the Purchaser have closed
the Investment Transaction.


          2.4.     As
a condition to and at the Closing, each representation and warranty set forth
in Section 3 shall be accurate and complete in all material respects and the
Founders shall deliver to the Purchaser share transfer deeds, executed by the
Founders, substantially in the form attached as Exhibit 2.4(a) hereto, effecting the transfer of the
respective Transfer Shares from the Founders to the Purchaser (the “Share Transfer Deeds”). In addition, prior
to the Closing, the Founders shall deliver to the Company (i) a letter of
resignation from the Board of Directors of the Company and any affiliate
thereof, effective as of and subject to the Closing, in the form attached
hereto as Exhibit 2.4(b); (ii) an undertaking with respect to cooperation and non competition with the
Company, in the form attached as Exhibit
2.4(c) hereto; and (c) surrender for cancellation the
share certificates issued in their names. 


- 2 -








          2.5.     As
a condition to and at the Closing, there will have been no material adverse
change in the financial or business condition or prospects of the Company, all
in the sole judgment of the Purchaser.


          2.6.     As
a condition to and at the Closing, the investment committee (or any other
entity of the same nature) of the Purchaser shall have approved the final
Agreement in accordance with the terms and conditions of this Agreement,


          2.7.     As
a condition to and at the Closing, each representation and warranty set forth
in Section 5 shall be accurate and complete in all material respects and the
Purchaser shall:


                     2.7.1.     pay
to each of the Founders the Consideration in US Dollars, by a bank transfer to
the respective Founder’s accounts, pursuant to wiring instructions as set forth
in Exhibit 1.1, or by a certified check, or by such other form of
payment as is mutually agreed by each of the Founders and the Purchaser; and 


                     2.7.2.     execute
the Share Transfer Deeds. 


3.  Representations and Warranties of Founders


          Each
of the Founders hereby represents, warrants and undertakes with respect to
himself only, to Purchaser, and acknowledges that the Purchaser is entering
into this Agreement in reliance thereon, that:


          3.1.     He has the full power
and authority to execute and perform this Agreement and
this Agreement constitutes his valid and binding obligation, enforceable
against him in accordance with its terms.


          3.2.     He
is the lawful owner of the Transfer Shares to be sold hereunder and upon sale
and delivery of, and payment for, the Transfer Shares, as provided herein, he
shall convey to the Purchaser good and marketable title to the Transfer Shares,
free and clear of any and all liens, encumbrances, equities, claims,
restrictions (except as set forth in the Company’s Articles of Association),
options, proxies or other agreements of any kind whatsoever (“Lien”).


          3.3.     The execution
and performance by Founder of this Agreement do not conflict
with, or result in a breach or violation of, any agreement, judgment, order,
laws or regulations applying to Founder, and do not require the consent or
approval of any person, which consent or approval has not been obtained prior
to the Closing hereof.


          3.4.     To the best of the
Founder’s knowledge, no material claim has been brought
against him, or is intended to be brought against him in any court of law or
otherwise that would affect the sale of the Transfer Shares, or the
transactions contemplated hereunder. The Founder has not initiated bankruptcy
proceedings, nor does the Founder intend to initiate bankruptcy proceedings,
nor is the Founder aware of any cause for any third party to initiate
bankruptcy proceedings against the Founder.


          3.5.     Founder
has had the opportunity to consult with an independent tax, financial and/or
legal advisor with respect to the sale of the Transfer Shares prior to
executing this Agreement, and Founder represents that the Consideration (as may
be adjusted) for the Transfer Shares being transferred hereunder have been
mutually agreed to by the Founders and the Purchaser.


- 3 -








4.  Representations and Warranties of the
Purchaser


          The
Purchaser, hereby represents and warrants to each of the Founders, and
acknowledges that the Founders are entering into this Agreement in reliance
thereon, that:


          4.1.     Such
Purchaser has the full power and authority to execute and perform this
Agreement. This Agreement constitutes the valid and binding obligation of
Purchaser, enforceable against it in accordance with its terms. The execution
and performance by Purchaser of this Agreement do not conflict with, or result
in a breach or violation of, any agreement, judgment, order, laws or
regulations applying to Purchaser, and do not require the consent or approval
of any person, which consent or approval has not been obtained prior to the
date hereof


          4.2.     Such
Purchaser is familiar with the Company’s business and with the rights and
obligations attached to the Transfer Shares as set forth in the Company’s
Articles of Association. The Purchaser represents that the Consideration for
the Transfer Shares being transferred hereunder have been mutually agreed to by
the Founders and the Purchaser.


          4.3.     Such
Purchaser is experienced in investing in securities of hi-tech companies and
can bear the economic risk of such investment, and is capable of evaluating the
merits and risks of the investment in shares of the Company. The Purchaser is
acquiring the Transfer Shares for investment for its own account, not as a
nominee or agent, and not with the view to, or for resale in connection with,
any distribution thereof.


          4.4.     Such
Purchaser is aware that the Company has received financing for certain research
and development projects through the OCS and it is aware, and agrees to the
application, of the provisions of the Law for the Encouragement of Industrial
Research and Development, 5744-1984 and of Regulations promulgated thereunder
and their applicability to the Company, including, inter alia:


	
 

	
 

	
 


	
 

	
(a)

	
the Company’s obligation to pay royalties to the
  State of Israel;


	
 

	
 

	
 


	
 

	
(b)

	
that the manufacture of any product developed as a
  result of any project so funded take place in the State of Israel unless the
  Research Committee of the OCS pursuant to the above law otherwise determines,
  subject to and pursuant to the above law; and


	
 

	
 

	
 


	
 

	
(c)

	
that know-how derived from any project so funded may
  not be transferred to third parties without the approval of the Research
  Committee of the OCS subject to and pursuant to the above law.





          4.5.     Such Purchaser
is a “Venture Capital Fund” as defined in the Appendix to the
Israeli Securities Law, 5768-1968.


5.  Covenants


          5.1.     Until
the Closing, the Founders shall not (i) sell, assign, transfer, deliver or
otherwise dispose of any of the Transfer Shares, or (ii) create or permit to
exist any Lien on any of the Transfer Shares except for such Liens existing as
of the date hereof pursuant to the Articles of Association. In addition, Founders (with the assistance of
the Company) shall take all actions to promptly issue any notices which are
required to be issued in connection with the first refusal and co-sale rights
which are applicable to the transactions contemplated by this Agreement, as
promptly and efficiently as possible, to comply with all procedures and
covenants which are relevant for such rights, in order to secure the full
waiver of all such rights as quickly as possible. Founders and Purchaser
acknowledge that, if any such rights are exercised, in whole or in part, or not
duly waived prior to the Closing, the Purchaser, in its absolute discretion,
shall be free not to complete this transaction and terminate this Agreement by
written notice to the Founders.


- 4 -








          5.2.     Each
of the Parties further undertakes to take all steps necessary and to perform
all such actions as shall be required in order to effectuate the transactions
contemplated hereby and the sale and purchase of the Transfer Shares in
accordance with this Agreement.


          5.3.     Notwithstanding,
in the event that the closing conditions set forth above have not been
satisfied or waived prior to or on September 30, 2006, as may be extended from
time to time by the Parties, then this Agreement shall terminate and be of no
further force and effect.


6.  Miscellaneous.


          6.1.     This
Agreement, the preamble and all exhibits and schedules hereto constitute the
full and entire understanding and agreement between the parties with regard to
the sale and purchase of the Transfer Shares and supersede, nullify and
terminate all prior agreements between the parties with regard to such subject
matter. By executing this Agreement the parties waive all prior rights they may
have with regard to the subject matters hereof and thereof.


          6.2.     Any
notice required or permitted hereunder shall be in writing and shall be sent by
registered mail, personal delivery or confirmed facsimile to the relevant parties
hereto at the respective addresses set forth below (as may be changed by each
of the parties from time to time). Any notice shall operate and be deemed to
have been served, if personally delivered or sent by fax on the next following
business day, and if by registered mail, within three business days of
dispatch.


Each
Founder’s address for the purposes of this Section 6.2 shall be as set forth in
the preamble.


With
a copy to:


Baratz, Horn & Co. 

Attorneys at Law and Notaries 

Fax:      972-3-6960986 

Attn:     Yuval Horn, Adv.


The
Purchaser’s address for the purposes of this Section 6.2 shall be:


Amadeus Capital Partners
Ltd.

16 St James’s Street

London

Fax:

Atten:      Barak Maoz


- 5 -








With a copy to:


Meitar Liquornik Geva & Leshem Brandwein, Law
Offices. 

Fax:       972-3-6103102 

Attn:      David Chertok, Adv.


The Company’s address for
the purposes of this Section 6.2 shall be:


Beit Tamar

12 Hamada St.

Rehovot 76122

Fax:       08-9366051

Attn:      Chief Financial Officer


With a copy to:


Cohen, Cohen, Yaron-Eldar & Co., Law Offices 

Fax:       972-3-753001 

Attn:      David Cohen, Adv.


          6.3.     Each
Party shall bear all costs and expenses related to this Agreement and the
performance of its obligations hereunder, including all tax consequences.
Without limiting the generality of the aforesaid, each Founder undertakes to
fully pay any and all taxes chargeable to him under any applicable law and to
make any tax report or filing required under such law when due.


          6.4.     This
Agreement shall be governed by and interpreted in accordance with the laws of
the State of Israel, without giving effect to the rules respecting conflict of
law, and the competent courts of Tel Aviv - Jaffa shall have sole and exclusive
jurisdiction over any dispute between the Parties.


          6.5.     This
Agreement may not be amended except by a written and signed document executed
by all Parties hereto.


          6.6.     If
any provisions of this Agreement is held invalid or unenforceable, such
invalidity or unenforceability shall not affect the other provisions of this
Agreement, and, to that extent, the provisions of this Agreement are intended
to be and shall be deemed severable.


          6.7.     All
information furnished by any Party to the other Party in connection with this
Agreement and the transactions contemplated hereby, as well as the terms,
conditions and provisions of this Agreement, shall be kept confidential and
shall be used only in connection with this Agreement and the transactions
contemplated hereby, except to the extent that such information is required by
law to be disclosed, whether in any document to be filed with any governmental
department, or agency, domestic or foreign or otherwise and except as is
required in order to comply with the first refusal and co-sale procedures to
which the Founders are subject.


[Signature page follows]


- 6 -








IN WITNESS WHEREOF, this Agreement has been executed by the Parties hereto as of the day
and year first hereinabove written.


	
 

	
 

	
 


	
Gadi Neumann

	
 

	
David Alumot


	
 

	
 

	
 


	
Signature:

	
 

	
Signature:


	


	
 

	



	
 

	
 

	
 


	
Amadeus
  III

	
 

	
Amadeus
  III Affiliates Fund LP


	
 

	
 

	
 


	
By:

	
 

	
By:


	
 

	
 

	
 


	
Title:

	
 

	
Title:


	
 

	
 

	
 


	
Signature:

	
Signature: 

	
Signature:


	


	
 

	






[Signature Page to Share Transfer
Agreement Dated September 26, 2006]


- 7 -








IN WITNESS WHEREOF, this Agreement has been executed by the Parties hereto as of the day
and year first hereinabove written.


	
 

	
 

	
 


	
Gadi
  Neumann

	
 

	
David
  Alumot


	
 

	
 

	
 


	
Signature: 

	
 

	
Signature: 


	


	
 

	



	
 

	
 

	
 


	
Amadeus
  III

	
 

	
Amadeus
  III Affiliates Fund LP


	
 

	
 

	
 


	
By:

	
 

	
By:


	
Title:

	
 

	
Title:


	
Signature:

	
Signature:

	
Signature:


	


	
 

	






[Signature Page to Share Transfer
Agreement Dated September 26, 2006]

- 7 -







Exhibit
1.1


Shares sold by Gad
Neumann


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Name
  of Purchaser

	
 

	
Address

	
 

	
No. of
  Transfer Shares

	
 

	
Consideration
  (in USD)

	
 

	
Wiring
  Instructions


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
1,218,170 Ordinary Shares

	
 

	
2,260,339

	
 

	
Account number: 96253,


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
at Israel Discount Bank Ltd. (bank number 11), 190
  Hertzel Street (branch number 045), Rehovot, Israel.


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
IBAN: IL1104596253 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Swift Code: 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
IDBLILIT 





Shares sold by
David Alumot  


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Name
  of Purchaser

	
 

	
Address

	
 

	
No. of
  Transfer Shares

	
 

	
Consideration
(in USD)

	
 

	
Wiring
  Instructions


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
1,218,170 Ordinary Shares

	
 

	
2,260,339

	
 

	
Account number: 171209/93, 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Bank Leurni (bank number 10), “Asakim” branch 10
  Plaut Street (branch number 978), Rehovot, Israel. 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
IBAN:


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
IL1097817120993


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Swift Code:


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
LUMIILITXXX 





- 8 -








Deed of Transfer of Shares


I,
David Alumot, of 5 Shoshanat HaAmakim, kehovot, in consideration of the sum of
US$90,414 paid to me by Amadeus III Affiliates Fund LP, of 2711 Centervilie
Road, Suite 400, Wilmington, New Castle County, Delaware (the “Transferee”) do
hereby transfer to the Transferee, as of September 28, 2006, 48,727 Ordinary
Shares having par value of NIS 0.01 each of Negevtech Ltd., registered in my
name, to hold unto the Transferee, its executors, administrators, and assigns;
and I, the Transferee, do hereby agree to accept the said shares. 


As
witness we have hereunder set our hands the 28 day of September 2006.


	
 

	
 


	


	
 


	


	
 


	
David Alumot

	
 


	
 

	
 


	


	
 


	
5 Shoshanat HaAmakun,
  Rehovot

	
 


	
 

	
 


	
By:

	
 


	
Title:

	
 


	
 

	
 


	


	
 





- 2 -








Deed of Transfer of Shares


I,
Gad Neumann, of 3 HaYardcn St., Rehovot, in consideration of the sum of
US$2,260,339 paid to me by Amadeus III, of 2 Mount Pleasant, Cambridge England
(the “Transferee”) do hereby transfer to the Transferee, as of September 28,
2006, 1,218,170 Ordinary Shares having par value of NIS 0.01 each of Negevtech
Ltd., registered in my name, to hold unto the Transferee, its executors,
administrators, and assigns; and I, the Transferee, do hereby agree to accept
the said shares. 


As
witness we have hereunder set our hands the 28 day of September 2006.


	
 

	
 


	


	
 


	


	
 


	
Gad Neumann

	
 


	
 

	
 


	


	
 


	
3 HaYarden St., Rehovot

	
 


	
 

	
 


	
By:

	
 


	
Title:

	
 


	
 

	
 


	


	
 





- 9 -








Deed of Transfer of Shares


I,
David Alumot, of 5 Shoshanai HaAmakim, Rehovot, in consideration of the sum of
US$2,169,925 paid to me by
Amadeus III, of 2 Mount Pleasant, Cambridge England (the “Transferee”) do
hereby transfer to the Transferee, as of September 28, 2006, 1,169,443 Ordinary Shares having par value of NIS 0.01
each, of Negevtcch Ltd., registered in my name, to hold unto the Transferee,
its executors, administrators, and assigns; and I, the Transferee, do hereby
agree to accept the said shares. 


As
witness we have hereunder set onr hands the 28 day of September 2006,


	
 

	
 


	


	
 


	


	
 


	
David Alumot

	
 


	
 

	
 


	


	
 


	
5 Shoshanat HaAmakim,
  Rehovot

	
 


	
 

	
 


	
By:

	
 


	
Title:

	
 


	
 

	
 


	


	
 







- 2 -









Exhibit 2.4 (c)


Date:


To

Negevtech Ltd.

***

12 Hamada St.

Rehovot, 76122 


Dear Sirs,


For sale of shares by the founders –
cooperative and Non Cooperative Undertakings


Each of the
undersigned hereby:


	
 

	
 

	
 


	
 

	
(i.)

	
Reaffirms
  his undertakings to cooperate with the Company in accordance with the terms
  of Section 5 of the Agreement dated December 26, 2004 between the undersigned
  and the Company (the agreement concerning his departure from the Company) and
  that accept for the provisions of Sections 1.5, 3 and 9 thereof, that shall
  remain in *** such Agreement (as amended in March 2005  and on September 13, 2005) is terminated
  and shall have no further *** or ***; and


	
 

	
 

	
 


	
 

	
(ii.)

	
Agrees and
  undertakes that subject to the closing of the Share Transfer Agreement dated
  ____ (to which this letter is attached), the non competition undertaking set
  forth in Section 6.2(i) of his respective Services Agreement dated December
  25, 2004 (the “Services Agreement”) shall be extended until second anniversary of the
  closing of such Share Transfer Agreement and confirms that other than such
  extension, no other changes are made to the Services Agreement and that
  Section 6.3, 6.4, 6.5, 10.1, 10.4, 10.9, 10.10 and 10.13 of the Services
  Agreement shall apply to the undersigned extended non competition undertaking
  herein.





Sincerely,


	
 

	
 

	
 


	
Gad Neumann

	
 

	
David Alumot


	
 

	
 

	
 


	
Signature: 

	
 

	
Signature: 


	


	
 

	



	
 

	
 

	
 





- 11 -









Schedule 1.3(a)(i)  


ACTION
BY UNANIMOUS WRITTEN CONSENT 

OF THE SHAREHOLDERS 

OF NEGEVTECH LTD.
 (IN LIEU OF A GENERAL
MEETING AND ANY ADJOURNMENT 

THEREOF) 

DATED SEPTEMBER 17, 2006





In lieu
of a General Meeting of the shareholders of Negevtech Ltd. (the “Company”), the undersigned,
constituting all of the shareholders of the Company, hereby waive any requirement of prior notice and separate
class meetings and adopt the following resolutions
as resolutions in writing:


	
 

	
 


	
1.

	
Changes in
  Share Capital





          In
connection with the closing of the Company’s proposed Series BB-4 Preferred Shares financing (the first of such
closings, if there will be more than one, the “Closing” and the “Financing”,
respectively) it is necessary to make certain changes
to the Company’s registered (authorized) and unissued and registered
(authorized) and issued share capital. Accordingly, the following resolutions
are hereby unanimously adopted:  


	
 

	
 

	
 


	
 

	
1.1.

	
Increase in
  Registered (Authorized) Share Capital and Creation of New Class of Shares; Amendment of Memorandum of
  Association and Articles of Association


	
 

	
 

	
 


	
 

	
 

	
Resolved,
unanimously all subject to and effective immediately prior to the Closing, to
increase the registered (authorized) share capital of the Company by NIS 94,301 divided into
2,563,700 newly created Series BB-4
Preferred Shares nominal value NIS 0.01 each (“Series BB-4 Preferred Shares”) and 6,866,400 Ordinary
Shares nominal value NIS 0.01 each
(“Ordinary Shares”) and to amend the Memorandum of Association and Articles of Association of the
Company accordingly.  


	
 

	
 

	
 


	
 

	
 

	
The powers, preferences,
  rights and restrictions of the Series BB-4 Preferred
  Shares and other matters relating thereto shall be as set forth from time to time in the Articles of
  Association of the Company.


	
 

	
 

	
 


	
 

	
1. 2

	
Sale and
  Conversion of Shares Held by Founders


	
 

	
 

	
 


	
 

	
 

	
Dr. Gadi Neumann and Mr. David Alumot (jointly the
“Founders”) have conveyed
their interest in selling all their shares in the Company in connection with
the Financing. In connection with such sale by the Founders, all 1,569,004 Ordinary-Preferred Shares nominal value NIS 0.01 each (“Ordinary-Preferred Shares”) held by
the Founders will be converted into
the same number (i.e, on an one for one basis) of Ordinary Shares, and upon such conversion arid
pursuant to Article 10 of the
Company’s current Articles of Association (the “Current Articles”), the Company shall issue to the
Founders an additional 867,336 fully paid and non-assessable Ordinary Shares
(an amount from the share premium
account equal to the nominal value of such additional Ordinary Shares
being attributed as payment on account of the
nominal value of such additional Ordinary Shares). Accordingly, the total number of Ordinary Shares resulting from
the conversion of all Ordinary-Preferred Shares will be 2,436,340 Ordinary
Shares. All of these Ordinary Shares will be sold by the Founders to Amadeus
III and Amadeus III Affiliates Fund LP (collectively, “Amadeus”), the
lead investor in the Financing.
Immediately upon the consummation of the transfer of the Ordinary Shares as aforesaid, the Company has agreed
to convert such Ordinary Shares
into the same number of Series BB-4 Preferred Shares with equal rights to the
Series BB-4 Preferred Shares being issued to the investors in the
Financing, in consideration for the payment
to the Company of US$0.5799 per share (the “Conversion Consideration”). As an inducement to the
Company’s agreement to such
conversion, the Founders agreed to extend their non competition undertakings
and reaffirm their undertaking to cooperate with the Company.  


	
 

	
 

	
 













	
 

	
 

	
 


	
 

	
 

	
It
  was therefore RESOLVED, unanimously, to approve, to the extent required, all subject
  and effective immediately prior to or at the Closing, as applicable:








	
 

	
 

	
 

	
 


	
 

	
 

	
(i)

	
To
convert the 1,569,004 Ordinary-Preferred Shares held by the Founders into
1,569,004 (i.e, on an one for one basis) fully paid and non-assessable Ordinary Shares and upon such conversion, and pursuant to Article 10 of the
Current Articles, to issue to the
Founders an additional 867,336 fully paid and non-assessable Ordinary Shares (433,668 Ordinary Shares each) (an amount from the share premium account
equal to the nominal value of such
additional Ordinary Shares to be attributed
as payment on account of the nominal value of such additional Ordinary Shares), so that the total
number of Ordinary Shares resulting from the conversion of all the Ordinary-Preferred Shares will be 2,436,340
Ordinary Shares. The Ordinary
Shares resulting from such conversion including the additional Ordinary Shares so issued shall
collectively be referred to as the
“‘Transfer Shares”; 


	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
To
  approve the transfer at the Closing of the Transfer Shares to Amadeus
  notwithstanding any restrictions on transferability of shares by the
  Founders as set forth in the Current Articles or otherwise;


	
 

	
 

	
 

	
 


	
 

	
 

	
(iii)

	
Upon the transfer of the
  Transfer Shares from the Founders to Amadeus
  as aforesaid and receipt of payment from Amadeus of the Conversion
  Consideration, the Transfer Shares shall be automatically
  converted into the same number of Series BB-4 Preferred Shares and shall be registered as such in the Company’s Shareholders’ Register and such Series
  BB-4 Preferred Shares shall have
  equal rights and rank pari passu in
  all respects with the Series BB-4 Preferred Shares being issued to the investors in the Financing. Such Series
  BB-4 Preferred Shares and the
  Ordinary Shares into which they may be converted,
  when issued and paid for (or deemed paid for) in accordance with the aforesaid and the
  Company’s Articles of Association, as
  shall be in effect from time to time, will be duly authorized, validly issued, fully paid and
  non-assessable.





- 2 -











	
 

	
 

	
 


	
 

	
 

	
The undersigned
  acknowledge that they are aware of the interests of Gad Neumann, a director of the Company, in this resolution due to his
  interests in the transactions
  contemplated thereby.


	
 

	
 

	
 


	
 

	
1.3

	
Summary;
  Authorization to sign and deliver notices; General


	
 

	
 

	
 


	
 

	
 

	
Accordingly, effective
  immediately following the increase of share capital
  provided for in item 1.1 above, the conversion of the Ordinary-Preferred Shares held by the Founders provided
  for in item 1.2 above and the transfer of the resulting Ordinary
  Shares to Amadeus and the conversion
  thereof into the same number of Series BB-4 Preferred Shares, as
  described in item 1.2 above, immediately following the Closing, the registered (authorized) share
  capital of the Company will be NIS
  950,001 divided into:


	
 

	
 

	
 


	
 

	
 

	
(a)  53,000,060
  Ordinary Shares of which 469,449 will be issued and outstanding;


	
 

	
 

	
 


	
 

	
 

	
(b)  15,000,000
  Series AA Preferred Shares of which 13,144,070 will be issued and
  outstanding;


	
 

	
 

	
 


	
 

	
 

	
(c)  12,137,708 Series
  BB-1 Preferred Shares of which 8,152,256 will be issued and
  outstanding;


	
 

	
 

	
 


	
 

	
 

	
(d)  4,000,000 Series BB-2
  Preferred Shares of which 3,597,106 will be issued and outstanding;


	
 

	
 

	
 


	
 

	
 

	
(e)  5,862,292 Series BB-3 Preferred Shares of which 5,859,274 will be issued and
  outstanding; and


	
 

	
 

	
 


	
 

	
 

	
(f)  5,000,040 Series BB-4 Preferred Shares, the number of which that will be issued and
  outstanding will be determined as of the Closing.


	
 

	
 

	
 


	
 

	
 

	
The powers, preferences,
  rights and restrictions of which and other matters
  relating thereto shall be as set forth from time to time in the Articles of Association of the Company.


	
 

	
 

	
 


	
 

	
 

	
Resolved, unanimously, to
  authorize each of the Company’s directors to
  sigh and deliver any notices required with respect to the above to the Registrar of Companies in the name of the
  Company and on its behalf.





- 3 -









	
 

	
 


	
2. 

	
Adoption
of New Articles of Association 


	
 

	
 


	
 

	
Resolved,
unanimously, to approve and adopt, subject to and effective immediately prior to the Closing, the New
Articles of Association attached hereto
as Exhibit A (the “New Articles”), as the Articles of Association of
the Company, such New Articles to
be filed by the Company with the Companies Registrar, in place of the Current
Articles.  


	
 

	
 


	
 

	
It
  was further resolved, unanimously, to authorize each of the Company’s directors to sign and
  deliver any notices required with respect to the above to the Registrar of
  Companies in the name of the Company and on its behalf.


	
 

	
 


	
 

	
The
  undersigned acknowledge that they are aware of the interests of certain of the directors of the
  Company in the New Articles, either as grantees of special rights pursuant
  thereto or due to their interests in grantees of special rights pursuant thereto.


	
 

	
 


	
3.

	
Approval of Share Purchase Agreement and Amendment to
  Shareholders Rights Agreement; Authorization of Sale and Issuance of Shares;
  General Authorization and Approval


	
 

	
 


	
 

	
RESOLVED,
  unanimously, to authorize and approve, all subject to and effective immediately
  prior to the Closing, the following:








	
 

	
 

	
 


	
 

	
3.1.

	
That certain Series BB-4
Preferred Share Purchase Agreement, between the Company and the Investors, as
defined therein, with respect to the Financing, substantially in the form
attached hereto as Exhibit B, for the
sale of Series BB-4 Preferred Shares to certain Investors (the “Share Purchase Agreement”) including, the execution,
delivery and performance of the
Share Purchase Agreement, the consummation of the transactions provided for therein and the performance by the Company of its obligations thereunder,
including, inter alia, the issuance and
sale of Series BB-4 Preferred Shares, the conversion of certain Ordinary Shares into Series BB-4 Preferred
Shares provided for in item 1.2
above, and the issuance of any shares issuable upon the conversion thereof,
all of the above without need for any further act, approval or authority of the Company’s Board of Directors or
of the Shareholders of the
Company, and all ancillary transactions, documents, schedules and exhibits
contemplated by and/or associated with the Share Purchase Agreement (whether or not approved separately
herein) and to authorize any two of
the directors of the Company to execute and deliver the Share Purchase
Agreement in the name of the Company and on its behalf, with such changes therein or additions
thereto as such directors executing the Share Purchase Agreement shall
approve, with the understanding
that substantive changes to the Share Purchase Agreement shall be submitted to the Company’s Board of Directors and only
the Board of Directors, for its approval (such approval deemed to be granted by the shareholders). Such Series
BB-4 Preferred Shares, the Ordinary
Shares into which such shares may be converted and any additional Ordinary
Shares issued in connection with such conversion, when issued and paid for
  (or deemed paid for) in accordance with the provisions
  of the Share Purchase Agreement and the New Articles will be duly authorized, validly issued, fully paid
  and non-assessable. 





- 4 -









	
 

	
 

	
 


	
 

	
3.2.

	
That
certain Second Amendment to Shareholders Rights Agreement, between the Company and
the parties thereto, as defined therein, substantially in the form attached hereto as Exhibit C (the “Second Amendment to Shareholders Rights Agreement”), including, inter alia, the execution,
delivery and performance of the Second Amendment to Shareholders Rights
Agreement and to authorize any two of the directors of the Company to execute and deliver the
Second Amendment
to Shareholders Rights Agreement in the name of the Company and on its
behalf, with such changes therein or additions thereto as such directors executing the Second
Amendment to Shareholders Rights Agreement shall approve with the understanding that substantive
changes to the Second Amendment to Shareholders Rights Agreement shall
be submitted to the Company’s Board of Directors and only the Board of Directors, for
its approval (such approval deemed to be granted by the shareholders).  


	
 

	
 

	
 


	
 

	
3.3.

	
Any
  other matter described or set forth in the Share Purchase Agreement and/or the
  Second Amendment to Shareholders Rights Agreement which requires the authorization or
  approval of the Board of Directors
  or of the Shareholders of the Company and to authorize any two of the directors of the Company to take such
  acts and to execute such documents in the name of the Company and on
  its behalf as may be required to implement
  the Share Purchase Agreement and/or the Second Amendment to Shareholders Rights Agreement and the transactions contemplated therein.


	
 

	
 

	
 


	
 

	
3.4.

	
That
  the execution, delivery and performance of the Share Purchase Agreement and the
  Second Amendment to Shareholders Rights Agreement and the consummation of the
  transactions provided for therein do not prejudice the best interests of the
  Company.








	
 

	
 


	
 

	
The
  undersigned acknowledge that they are aware of the interests of certain of
  the directors of the Company in the Financing, the Share Purchase Agreement and the Second
  Amendment to Shareholders Rights Agreement, either as direct parties thereto
  or due to their interests in parties thereto.


	
 

	
 


	
4.

	
Omnibus
  Resolutions


	
 

	
 


	
 

	
RESOLVED,
  unanimously, that the undersigned deem the actions sanctioned by the foregoing resolutions to be
  advisable and in the best interests of the Company
  and its shareholders.


	
 

	
 


	
 

	
RESOLVED,
  unanimously, that any of the appropriate officers of the Company be, and each of them hereby is, authorized
  to prepare, execute, deliver and perform, as the case may be, such agreements,
  amendments, applications, approvals,
  certificates, communications, consents, demands, directions, documents, further assurances, instruments,
  notices, orders, requests resolutions,
  supplements or undertakings, as each such officer, in his discretion,
  shall deem necessary or advisable to carry out the intent and purposes of the foregoing resolutions; and
  that the preparation, execution, delivery
  and performance of any such agreements, amendments, applications, approvals, certificates, communications,
  consents, demands, directions, documents,
  further assurances, instruments, notices, orders, requests, resolutions, supplements or undertakings shall
  be conclusive evidence of the approval of the Company’s Board of Directors
  thereof and all matters relating thereto.





- 5 -









	
 

	
 


	
 

	
RESOLVED, unanimously,
  that any and all actions heretofore taken by the officers of the Company in the name and on behalf of the Company in furtherance
  of the preceding resolutions, are hereby ratified, approved and adopted.





In addition to each of the
undersigned’s consent to the foregoing resolutions, each of the undersigned hereby confirms that none of the
issued and outstanding shares of the Company
have been issued in violation of any pre-emptive rights, rights of first
refusal or other similar rights it
may have, whether pursuant to the Articles of Association of the Company or to
any agreement to which it may be a party or otherwise, and hereby waives
any pre-emptive rights, rights of first refusal, co-sale rights or other similar
rights it may have pursuant to the Articles
of Association (old and new) of the Company
or to any agreement or otherwise with respect to (A) any of the Series BB-4 Preferred
Shares which will be issued pursuant to the Share Purchase Agreement, except to the extent of its participation as
provided under the Share Purchase Agreement,
and (B) any other shares issuable to the holders of the Series BB-4 Preferred Shares upon conversion or otherwise
pursuant to the New Articles and/or the Share Purchase Agreement to protect them against dilution.


Each person or entity signed
below further acknowledges, confirms and agrees that its signature below also constitutes a separate written consent of
each person or entity who is a holder
of shares of the Company for all purposes for which the consent of such shareholder or all shareholders
is required in connection with the above
matters, whether as holders of a separate class of shares, including Ordinary Shares, Ordinary-Preferred Shares, Series
AA Preferred Shares, Series BB-1
Preferred Shares, Series BB-2 Preferred Shares, Series BB-3 Preferred Shares,
or otherwise, pursuant to the Articles of Association of the Company, to any agreement to which the undersigned or the
Company is a party or otherwise. 


Each
of the undersigned represents that he, she or it is the registered owner of and
has the right and legal power to execute this written consent with respect to
the number of issued and outstanding shares of the capital of the Company held by him,
her or it and that each person
signing his or her name below in a representative capacity has the requisite authority so to act. This resolution may
be signed in any number of counterparts,
each of which shall be deemed an original and all of which shall constitute one instrument.


[THE REMINDER OF THIS PAGE IS INTETIONALLY LEFT BLANK]


-  6 -








[Signature
Page September 2006 General Meeting]


IN WITNESS WHEREOF, we
affix our signatures hereto as of the date set forth above.


	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	



	
Gad
  Neumann

	
 

	
David
  Alumot

	
 

	
Pitango
  Venture Capital Fund III (Israeli Sub) L.P. 


	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	



	
Pitango
  Venture Capital Fund III (Israeli Sub.) Non-Q L.P.

	
 

	
Pitango
  Venture Capital Fund III (Israeli Investors) L.P.

	
 

	
Pitango
  JP Morgan Fund III
  (Israel), L.P. 


	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	



	
Pitango
  Principles Fund III (Israel) L.P.

	
 

	
Pitango
  Venture Capital Fund III Trusts 2000 L.P.

	
 

	
Canada
  Israel Opportunity Fund III, L.P. 


	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	



	
Shrem,
  Fudim, Kelner Founders Group II L.P.

	
 

	
Shrem
  Fudim Kelner & Co. Ltd.

	
 

	
Qualitau
  Ltd. 


	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	



	
SVE
  Star Ventures Enterprises Gmbh & Co. No. IX KG.

	
 

	
Star
  Management of Investments No. II (2000) L.P.

	
 

	
Star
  Growth Enterprise, a German Civil Law Partnership (with limitation of liability)
  


	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	



	
SVM
  Star Ventures Managementgesellschaft mbH Nr. 3

	
 

	
Lehman
  Brothers Holdings plc (on behalf of pre-tax plan)

	
 

	
Lehman
  Brothers Partnership Account 2000/2001, L.P. 


	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	



	
Lehman
  Brothers European Venture Capital L.P.

	
 

	
Lehman
  Brothers Offshore Partnership Account 2000/2001, L.P.

	
 

	
Orbotech
  Technology Ventures L.P. 


	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	



	
Intel
  Atlantic, Inc.

	
 

	
Genesis
  Partners II, L.D.C.

	
 

	
Genesis
  Partners II (Israel), L.P. 


	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	



	
Poalim
  Ventures Ltd.

	
 

	
Poalim
  Ventures I Ltd.

	
 

	
Poalim
  Ventures II L.P. 


	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	



	
Wellington
  Partners Venture III Technology Fund L.P.

	
 

	
Shrem
  Fudim Kelner Founders Group II Annex Fund L.P.

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	



	
FINANCIERE SESO S.A.

	
 

	
Inter
  Hightech (1982) Ltd. (Previously TICI)

	
 

	
Eliyahu
  Lerner, CPA (as trustee) 





- 7 -









Schedule 1.3(a)(ii)  








			
			
			
	SHARES XXX	 	NUMBER O1-XXX
	 	 	 
		NEGEVTECH LTD. 	
	 	 	 
	Share Certificate  	 
	 	 	 
	
This is to certify that

       [Shareholder]





Is the Registered Holder of                   XXX



Series BB-4 Preferred      Shares of  par value NIS 0.01 each,



Numbered                                         XXX - XXX



Inclusive, fully paid up in the above named Company, subject to



The Memorandum and Articles of Association of the Company.  	 
	 	 Given under the Company's Stamp



This __th day of ___, 2006 	 
	 	 	 
	——————————————

DIRECTOR	COMPANY STAMP	——————————————

 DIRECTOR
	 	 	 


















Schedule 1.3(a)(iii)  


Written
Resolution of the Board of Directors of

Negevtech Ltd. (the “Company”)

Adopted by Unanimous Written Consent

Effective as of August 31, 2006


The undersigned, constituting all of the members of
the Board of Directors of the Company (the “Board”), hereby adopt the following
resolutions by way of unanimous written consent in lieu of holding a formal
meeting on the above date and hereby waive any notice whatsoever in connection
therewith: 


	
   

  	
   

  	
   

  
	
  1.

  	
  Changes in Share Capital

  
	
   

  	
   

  	
   

  
	
            In
connection with the closing of the Company’s proposed Series BB-4 Preferred
Shares financing (the first of such closings, if there will be more than one,
the “Closing” and the “Financing”, respectively) it is necessary to make
certain changes to the Company’s registered (authorized) and unissued and
registered (authorized) and issued share capital. Accordingly, the Board
hereby resolves, to approve, and to recommend to the Company’s shareholders
to approve the following resolutions:  

  
	
   

  	
   

  	
   

  
	
   

  	
  1.1.

  	
  Increase
  in Registered (Authorized) Share Capital and Creation of New Class of Shares;
  Amendment of Memorandum of Association and Articles of Association

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Resolved, to approve, and to recommend to the
  Company’s shareholders to approve, all subject to and effective immediately prior
  to the Closing, an increase of the registered (authorized) share capital of
  the Company by NIS 94,301 divided into 2,563,700 newly created Series BB-4
  Preferred Shares nominal value NIS 0.01 each (“Series BB-4 Preferred Shares”) and 6,866,400 Ordinary Shares
  nominal value NIS 0.01 each (“Ordinary
  Shares”) and to amend the Memorandum of Association and Articles
  of Association of the Company accordingly.

  
	
   

  	
   

  	
   

  
	
   

  	
  1.2.

  	
  Sale and
  Conversion of Shares Held by Founders

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Dr. Gadi Neumann and Mr. David Alumot (jointly the “Founders”) have conveyed their interest
  in selling all their shares in the Company in connection with the Financing.
  In connection with such sale by the Founders, all 1,569,004
  Ordinary-Preferred Shares nominal value NIS 0.01 each (“Ordinary-Preferred Shares”) held by the
  Founders will be converted into the same number (i.e, on an one for one
  basis) of Ordinary Shares, and upon such conversion and pursuant to Article
  10 of the Company’s current Articles of Association (the “Current Articles”), the Company shall
  issue to the Founders an additional 867,336 fully paid and non-assessable
  Ordinary Shares (an amount from the share premium account equal to the
  nominal value of such additional Ordinary Shares being attributed as payment
  on account of the nominal value of such additional Ordinary Shares).
  Accordingly, the total number of Ordinary Shares resulting from the
  conversion of all Ordinary-Preferred Shares will be 2,436,340 Ordinary
  Shares. All of theses Ordinary Shares will be sold by the Founders to Amadeus
  III and Amadeus III Affiliates Fund LP (collectively, “Amadeus”), the lead investor in the
  Financing, Immediately upon the consummation of the transfer of the Ordinary
  Shares to Amadeus as aforesaid, the Company has agreed to convert such
  Ordinary Shares into the same number of Series BB-4 Preferred Shares with
  equal rights to the Series BB-4 Preferred Shares being issued to the
  investors in the Financing, in consideration for the payment to the Company
  of US$0.5799 per share (the “Conversion
  Consideration”). As an inducement to the Company’s agreement to
  such conversion, the Founders agreed to extend their non competition
  undertakings and reaffirm their undertaking to cooperate with the Company.

  










	
   

  	
   

  	
   

  
	
   

  	
  It was therefore RESOLVED, unanimously, to approve,
  and to recommend to the Company’s shareholders to authorize and approve, to
  the extent required, all subject and effective immediately prior to or at the
  Closing, as applicable:

  
	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  To convert the 1,569,004 Ordinary-Preferred Shares
  held by the Founders into 1,569,004 (i.e, on an one for one basis) fully paid
  and non-assessable Ordinary Shares and upon such conversion, and pursuant to
  Article 10 of the Current Articles, to issue to the Founders an additional
  867,336 fully paid and non-assessable Ordinary Shares (433,668 Ordinary
  Shares each) (an amount from the share premium account equal to the nominal
  value of such additional Ordinary Shares to be attributed as payment on
  account of the nominal value of such additional Ordinary Shares), so that the
  total number of Ordinary Shares resulting from the conversion of all the
  Ordinary-Preferred Shares will be 2,436,340 Ordinary Shares. The Ordinary
  Shares resulting from such conversion including the additional Ordinary
  Shares so issued shall collectively be referred to as the “Transfer Shares”;

  
	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  To approve the transfer at the Closing of the
  Transfer Shares to Amadeus notwithstanding any restrictions on
  transferability of shares by the Founders as set forth in the Current Articles
  or otherwise;

  
	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
  Upon the transfer of the Transfer Shares from the
  Founders to Amadeus as aforesaid and receipt of payment from Amadeus of the
  Conversion Consideration, the Transfer Shares shall be automatically
  converted into the same number of Series BB-4 Preferred Shares and shall be
  registered as such in the Company’s Shareholders* Register and such Series
  BB-4. Preferred Shares shall have equal rights and rank pari passu in all respects with the
  Series BB-4 Preferred Shares being issued to the investors in the Financing,
  Such Series BB-4 Preferred Shares and the Ordinary Shares into which they may
  be converted, when issued and paid for (or deemed paid for) in accordance
  with the aforesaid and the Company’s Articles of Association, as shall be in
  effect from time to time, will be duly authorized, validly issued, fully paid
  and non-assessable.

  



- 2 -








	
   

  	
   

  	
   

  
	
   

  	
  The undersigned acknowledge that they are aware of
  the interests of Gad Neumann in this resolution due to his interests in the
  transactions contemplated thereby and therefore, that his signature hereunder
  is for the purpose of adopting a resolution in writing.

  
	
   

  	
   

  	
   

  
	
   

  	
  1.3

  	
  Summary; Authorization to sign and
  deliver notices; General

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Accordingly, effective immediately following the increase
  of share capital provided for in item 1.1 above, the conversion of the
  Ordinary-Preferred Shares held by the Founders provided for in item 1.2 above
  and the transfer of the resulting Ordinary Shares to Amadeus and the
  conversion thereof into the same number of Series BB-4 Preferred Shares, as
  described in item 1.2 above, immediately following the Closing, the
  registered (authorized) share capital of the Company will be NIS 950,001
  divided into:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a) 53,000,060 Ordinary Shares of which 469,449 will
  be issued and outstanding;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b) 15,000,000 Series AA Preferred Shares of which
  13,144,070 will be issued and outstanding;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c) 12,137,708 Series BB-1 Preferred Shares of which
  8,152,256 will be issued and
  outstanding;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (d) 4,000,000 Series BB-2 Preferred Shares of which
  3,597,106 will be issued and outstanding;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (e) 5,862,292 Series BB-3 Preferred Shares of which
  5,859,274 will be issued and outstanding; and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (f) 5,000,040 Series BB-4 Preferred Shares, the
  number of which that will be issued and outstanding will be determined as of
  the Closing.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The powers, preferences, rights and restrictions of
  which and other matters relating thereto shall be as set forth from time to
  time in the Articles of Association of the Company.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Resolved, unanimously, to authorize each of the
  Company’s directors to sign and deliver any notices required with respect to
  the above to the Registrar of Companies in the name of the Company and on its
  behalf.

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Adoption of New Articles of
  Association

  
	
   

  	
   

  	
   

  
	
   

  	
  Resolved, to approve and adopt, and to recommend to
  the Company’s shareholders to approve and adopt, subject to and effective
  immediately prior to the Closing, the New Articles of Association attached
  hereto as Exhibit A (the
  “New Articles”), as the Articles
  of Association of the Company, such New Articles to be filed by the Company
  with the Companies Registrar, in place of the Current Articles.

  
	
   

  	
   

  	
   

  
	
   

  	
  It was further resolved, unanimously, to authorize
  each of the Company’s directors to sign and deliver any notices required with
  respect to the above to the Registrar of Companies in the name of the Company
  and on its behalf.

  
	
   

  	
   

  	
   

  
	
   

  	
  The undersigned acknowledge that they are aware of
  the interests of certain of the directors of the Company in the New Articles,
  either as grantees of special rights pursuant thereto or due to their interests in grantees of
  special rights pursuant thereto.

  



- 3 -








	
   

  	
   

  	
   

  
	
  3.

  	
  Approval
  of Share Purchase Agreement and Amendment to Shareholders Rights Agreement;
  Authorization of Sale and Issuance of Shares; General Authorization and
  Approval

  
	
   

  	
   

  	
   

  
	
   

  	
  Resolved, to approve, and
  to recommend to the Company’s shareholders to approve, the following:

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1.

  	
  That certain Series BB-4
  Preferred Share Purchase Agreement, between the Company and the Investors, as
  defined therein, with respect to the Financing, substantially in the form
  attached hereto as Exhibit B,
  for the sale of Series BB-4 Preferred Shares to certain Investors (the “Share Purchase Agreement”) including, the
  execution, delivery and performance of the Share Purchase Agreement, the
  consummation of the transactions provided for therein and the performance by
  the Company of its obligations thereunder, including, inter alia, the
  issuance and sale of Series BB-4 Preferred Shares, the conversion of certain
  Ordinary Shares into Series BB-4 Preferred Shares provided for in item 1.2
  above, and the issuance of any shares issuable upon the conversion thereof,
  all of the above without need for any further act, approval or authority of
  the Company’s Board of Directors, of the Shareholders or of the Company, and
  all ancillary transactions, documents, schedules and exhibits contemplated by
  and/or associated with the Share Purchase Agreement (whether or not approved
  separately herein) and to authorize any two of the directors of the Company
  to execute and deliver the Share Purchase Agreement in the name of the
  Company and on its behalf, with such changes therein or additions thereto as
  such directors executing the Share Purchase Agreement shall approve, with the
  understanding that substantive changes to the Share Purchase Agreement shall
  be submitted to the Company’s Board of Directors for its approval. Such
  Series BB-4 Preferred Shares, the Ordinary Shares into which such shares may be
  converted and any  additional Ordinary
  Shares issued in connection with such conversion, when issued and paid for
  (or deemed paid for) in accordance with the provisions of the Share Purchase
  Agreement and the New Articles will be duly authorized, validly issued, fully
  paid and non-assessable.

  
	
   

  	
   

  	
   

  
	
   

  	
  3.2.

  	
  That certain Second
  Amendment to Shareholders Rights Agreement,
  between the Company and the parties thereto, as defined therein,
  substantially in the form attached hereto as Exhibit C (the “Second
  Amendment to Shareholders Rights Agreement”), including, inter
  alia, the execution, delivery and performance of the Second Amendment to
  Shareholders Rights Agreement and to authorize any two of the directors of
  the Company to execute and deliver the Second Amendment to Shareholders
  Rights Agreement in the name of the Company and on its behalf, with such
  changes therein or additions thereto as such directors executing the Second
  Amendment to Shareholders Rights Agreement shall approve with the
  understanding that substantive changes to the Second Amendment to
  Shareholders Rights Agreement shall be submitted to the Company’s
  Board of Directors for its approval.

  



- 4 -








	
   

  	
   

  	
   

  
	
   

  	
  3.3.

  	
  Any other matter described or set forth in the Share
  Purchase Agreement and/or the Second Amendment to Shareholders Rights
  Agreement which requires the authorization or approval of the Board of
  Directors or of the Shareholders of the Company and to authorize any two of
  the directors of the Company to take such acts and to execute such documents
  in the name of the Company and on its behalf as may be required to implement
  the Share Purchase Agreement and/or the Second Amendment to Shareholders
  Rights Agreement and the transactions contemplated therein.

  
	
   

  	
   

  	
   

  
	
   

  	
  3.4.

  	
  That the execution, delivery and performance of the
  Share Purchase Agreement and the Second Amendment to Shareholders Rights
  Agreement and the consummation of the transactions provided for therein do
  not prejudice the best interests of the Company.

  
	
   

  	
   

  	
   

  
	
   

  	
  The undersigned acknowledge that they are aware of
  the interests of certain of the directors of the Company in the Financing,
  the Share Purchase Agreement and the Second Amendment to Shareholders Rights
  Agreement, either as direct parties thereto or due to their interests in
  parties thereto.

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Convening
  of General Meeting

  
	
   

  	
   

  	
   

  
	
   

  	
  Resolved, unanimously, that general meetings of the
  shareholders of the Company be convened, for the purpose of obtaining the
  approval of the Company’s shareholders to the matters approved above and any
  other matters that may lawfully be brought for shareholder approval at such
  meeting.

  
	
   

  	
   

  	
   

  
	
   

  	
  It is further resolved, unanimously, that any
  director of the Company be authorized to determine the time and place of the
  above meeting and to send notices thereof to the shareholders, it being
  agreed that if all shareholders agree in writing to the above, the meeting
  may not be held.

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Extension of Exercise Period of
  Options Granted to Noam Dotan

  
	
   

  	
   

  	
   

  
	
   

  	
  Noam Dotan (“Dotan”)
  was employed by the Company until August 31, 2005. In an Amendment to Dotan’s
  Employment Agreement, executed on March 1, 2005, the Company agreed that upon
  termination of Dotan’s employment, his unvested options scheduled to vest
  within a year of such termination shall accelerate and become immediately
  vested upon such termination and that any vested options (including due to
  acceleration) shall remain exercisable for a period of one year following
  termination. Since such one year period shall terminate on August 31, 2006
  and due to that fact that Dotan is currently providing services to the
  Company, the Company wishes to extend the exercise period of Dotan’s vested
  options by one additional year, until August 31, 2007.

  
	
   

  	
   

  	
   

  
	
   

  	
  Resolved, to approve and ratify the Amendment to
  Dotan’s Employment Agreement as provided for above and to extend the exercise
  period of the vested options held by Dotan by one year, so that
  notwithstanding any provision to the contrary in the Company’s ESOP and/or in
  the Option Agreement between Dotan and the Company, all vested options, as
  described above, hold by Dotan, shall be exercisable until August 31, 2007.

  



- 5 -








	
   

  	
   

  	
   

  
	
  6.

  	
  Omnibus Resolutions

  
	
   

  	
   

  	
   

  
	
   

  	
  Resolved, to approve, and to recommend to the
  Company’s shareholders to approve, that any of the appropriate officers of
  the Company be, and each of them hereby is and will be, authorized to
  prepare, execute, deliver and perform, as the case may be, such agreements,
  amendments, applications, approvals, certificates, communications, consents,
  demands, directions, documents, further assurances, instruments, notices,
  orders, requests resolutions, supplements or undertakings, as each such
  officer, in his discretion, shall deem necessary or advisable to carry out
  the intent and purposes of the foregoing resolutions; and that the preparation,
  execution, delivery and performance of any such agreements, amendments,
  applications, approvals, certificates, communications, consents, demands,
  directions, documents, further assurances, instruments, notices, orders,
  requests, resolutions, supplements or undertakings shall be conclusive
  evidence of the approval of the Company’s Board of Directors thereof and all
  matters relating thereto.

  
	
   

  	
   

  	
   

  
	
   

  	
  It was further resolved, unanimously, that any and
  all actions heretofore taken by the officers of the Company in the name and
  on behalf of the Company in furtherance of the preceding resolutions, are
  hereby ratified, approved and adopted.

  



This resolution may be signed in any number of
counterparts, each of which shall be deemed an original and all of which shall
constitute one instrument.


IN WITNESS WHEREOF, we affix our signatures hereto as
of the date set forth above.


	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  


  	
   

  	
  


  	
   

  	
  


  	
   

  
	
  Gad Neumann

  	
   

  	
  Eran Gersht

  	
   

  	
  Aaron Mankovsky

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  


  	
   

  	
  


  	
   

  	
  


  	
   

  
	
  Rafi Yizhar

  	
   

  	
  Amichai Steinberg

  	
   

  	
  Yaffa Krindel

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  


  	
   

  	
  


  	
   

  	
  


  	
   

  
	
  Eyal Kishon

  	
   

  	
  Arnon Gat

  	
   

  	
  Bart Markus

  	
   

  
	
  (substitute director of Eddy Shalev)

  	
   

  	
   

  	
   

  	
   

  	
   

  



[Signature Page August 2006 Board]


- 6 -










Schedule 1.3(a)(iv)  




	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Share Register (as of 28 September, 2006)


	



	
Ordinary Shares


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Cert

	
 

	
Shareholder

	
 

	
Series

	
 

	
# of Shares

	
 

	
From

	
 

	
To

	
 

	
Notes


	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	



	
 


	
01

	
 

	
Financiere
  Seso S.A

	
 

	
Ordinary

	
 

	
159,620

	
 

	
1

	
 

	
159,620

	
 

	
 


	
02

	
 

	
Inter
  Hightech(1982) Ltd. (Previously TICI)

	
 

	
Ordinary

	
 

	
71,829

	
 

	
159,621

	
 

	
231,449

	
 

	
 


	
03

	
 

	
Eli
  Lemer, CPA (Trastee)

	
 

	
Ordinary

	
 

	
34,500

	
 

	
231,450

	
 

	
265,949

	
 

	
 


	
04

	
 

	
Eli
  Lerner, CPA (Trustee)

	
 

	
Ordinary

	
 

	
203,500

	
 

	
265,950

	
 

	
469,449

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Total 

	
 

	
 

	
 

	
 

	
 

	
469,449 

	
 

	
 

	
 

	
 

	
 

	
 







	
 

	
 

	
 


	
 

	
1

	
Schedule 1.3(a)(iv) - Share Register














	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Share Register (as
  of September 28,2006)


	



	
Ordinary - Preferred
  Shares


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Cert

	
 

	
Shareholder

	
 

	
Series

	
 

	
# of Shares 

	
 

	
From

	
 

	
To

	
 

	
Notes


	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	



	
 


	
OP-1

	
 

	
Gadi
  Neumann

	
 

	
Ordinary
  -Preferred

	
 

	
784,502

	
 

	
1

	
 

	
784,502

	
 

	
Cancelled-
  Transferred and converted to BB-4 


	
OP-2

	
 

	
David
  Alumot

	
 

	
Ordinary
  -Preferred

	
 

	
784,502

	
 

	
784,503

	
 

	
1,569,004

	
 

	
Cancelled-
  Transferred and converted to BB-4 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Total 

	
 

	
 

	
 

	
 

	
 

	
0 

	
 

	
 

	
 

	
 

	
 

	
 






	
 

	
 

	
 


	
 

	
2

	
Schedule 1.3(a)(iv) - Share Register














	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Share Register (as
  of September 28, 2006)


	



	
Preferred AA Shares


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Cert

	
 

	
Shareholder

	
 

	
Series

	
 

	
# of Shares

	
 

	
From

	
 

	
To

	
 

	
Notes


	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	



	
 


	
PAA-1

	
 

	
Pitango
  Venture Capital Fund III (Israeli Sub) L.P.

	
 

	
Preferred
  AA

	
 

	
2,902,420

	
 

	
1

	
 

	
2,902,420

	
 

	
 


	
PAA-2

	
 

	
Pitango
  Venture Capital Fund III (Israeli Sub.) Non-Q L.P.

	
 

	
Preferred
  AA

	
 

	
268,316

	
 

	
2,902,421

	
 

	
3,170,736

	
 

	
 


	
PAA-3

	
 

	
Pitango
  Venture Capital Fund III (Israeli Investors) L.P.

	
 

	
Preferred
  AA

	
 

	
784,811

	
 

	
3,170,737

	
 

	
3,955,547

	
 

	
 


	
PAA-4

	
 

	
Pitango
  JP Morgan Fund III (Israel), L.P.

	
 

	
Preferred
  AA

	
 

	
447,636

	
 

	
3,955,548

	
 

	
4,403,183

	
 

	
 


	
PAA-5

	
 

	
Pitango
  Principles Fund III (Israel) L.P.

	
 

	
Preferred
  AA

	
 

	
102,165

	
 

	
4,403,184

	
 

	
4,505,348

	
 

	
 


	
PAA-6

	
 

	
Pitango
  Venture Capital Fund II Trusts 2000 L.P.

	
 

	
Preferred
  AA

	
 

	
204,330

	
 

	
4,505,349

	
 

	
4,709,678

	
 

	
 


	
PAA-7

	
 

	
Canada
  Israel Opportunity Fund III, L.P.

	
 

	
Preferred
  AA

	
 

	
45,308

	
 

	
4,709,679

	
 

	
4,754,986

	
 

	
 


	
PAA-8

	
 

	
Shrern,
  Fudim, Kelner Founders Group II L.P.

	
 

	
Preferred
  AA

	
 

	
45,308

	
 

	
4,754,987

	
 

	
4,800,294

	
 

	
 


	
PAA-9

	
 

	
Shrem
  Fudim Kelner & Co. Ltd.

	
 

	
Preferred
  AA

	
 

	
30,187

	
 

	
4,800,295

	
 

	
4,830,481

	
 

	
 


	
PA
  A- 10

	
 

	
Qualitau
  Ltd.

	
 

	
Preferred
  AA

	
 

	
355,522

	
 

	
4,830,482

	
 

	
5,186,003

	
 

	
 


	
PAA-11

	
 

	
SVE
  Star Ventures Enterprises Gmbh & Co. No. IX KG.

	
 

	
Preferred
  AA

	
 

	
2,224,297

	
 

	
5,186,004

	
 

	
7,410,300

	
 

	
 


	
PAA-12

	
 

	
Star
  Management of Investments No. II (2000) L.P.

	
 

	
Preferred
  AA

	
 

	
321,275

	
 

	
7,410,301

	
 

	
7,731,575

	
 

	
 


	
PAA-13

	
 

	
Genesis
  Partners II, L.D.C.

	
 

	
Preferred
  AA

	
 

	
1,773,948

	
 

	
7,731,576

	
 

	
9,505,523

	
 

	
 


	
PAA-14

	
 

	
Genesis
  Partners 11 (Israel) L.P.

	
 

	
Preferred
  AA

	
 

	
262,512

	
 

	
9,505,524

	
 

	
9,768,035

	
 

	
 


	
PAA-
  15

	
 

	
Lehman
  Brothers European Venture Capital L.P.

	
 

	
Preferred
  AA

	
 

	
222,108

	
 

	
9,768,036

	
 

	
9,990,143

	
 

	
 


	
PAA-
  16

	
 

	
Lehman
  Brothers Holdings plc (on behalf of pre-tax plan)

	
 

	
Preferred
  AA

	
 

	
425,109

	
 

	
9,990,144

	
 

	
10,415,252

	
 

	
 


	
PAA-17

	
 

	
Lehman
  Brothers Partnership Account 2000/2001, L.P.

	
 

	
Preferred
  AA

	
 

	
191,536

	
 

	
10,415,253

	
 

	
10,606,788

	
 

	
 


	
PAA-
  18

	
 

	
Lehman
  Brothers Offshore Partnership Account 2000/2001, L.P.

	
 

	
Preferred
  AA

	
 

	
49,677

	
 

	
10,606,789

	
 

	
10,656,465

	
 

	
 


	
PAA-19

	
 

	
Orbotech
  Technology Ventures L.P.

	
 

	
Preferred
  AA

	
 

	
1,776,860

	
 

	
10,656,466

	
 

	
12,433,325

	
 

	
 


	
PAA-20

	
 

	
Intel
  Atlantic, Inc.

	
 

	
Preferred
  AA

	
 

	
710,745

	
 

	
12,433,326

	
 

	
13,144,070

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Total

	
 

	
 

	
 

	
 

	
 

	
13,144,070

	
 

	
 

	
 

	
 

	
 

	
 







	
 

	
 

	
 


	
 

	
3

	
Schedule 1.3(a)(iv) - Share Register














	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Share Register (as
  of September 28, 2006)


	



	
Preferred BB-1
  Shares


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Cert

	
 

	
Shareholder

	
 

	
Series

	
 

	
# of Shares

	
 

	
From

	
 

	
To

	
 

	
Note


	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	



	
 


	
PBB1-1

	
 

	
Poalim
  Ventures Ltd

	
 

	
Preferred
  BB-1

	
 

	
381,027

	
 

	
1

	
 

	
381,027

	
 

	
 


	
PBB1-2

	
 

	
Poalim
  Ventures I Ltd

	
 

	
Preferred
  BB-1

	
 

	
586,194

	
 

	
381,028

	
 

	
967,221

	
 

	
 


	
PBB1-3

	
 

	
Poalim
  Ventures II L.P.

	
 

	
Preferred
  BB-1

	
 

	
1,188,509

	
 

	
967,222

	
 

	
2,155,730

	
 

	
 


	
PBB1-4

	
 

	
SVE
  Star Ventures Enterprises Gmbh & Co. No. IX KG.

	
 

	
Preferred
  BB-1

	
 

	
521,206

	
 

	
2,155,731

	
 

	
2,676,936

	
 

	
 


	
PBBl-5

	
 

	
Star
  Management of Investments No. II (2000) L.P.

	
 

	
Preferred
  BB-1

	
 

	
56,238

	
 

	
2,676,937

	
 

	
2,733,174

	
 

	
 


	
PBB1-6

	
 

	
Star
  Growth Enterprise, a German Civil Law Partnership (with limitation of
  Liability)

	
 

	
Preferred
  BB-1

	
 

	
2,247,164

	
 

	
2,733,175

	
 

	
4,980,338

	
 

	
 


	
PBB1-7

	
 

	
SVM
  Star Ventures Managmenttgesellschaft mbH Nr. 3

	
 

	
Preferred
  BB-1

	
 

	
334,236

	
 

	
4,980,339

	
 

	
5,314,574

	
 

	
 


	
PBB1-8

	
 

	
Genesis
  Partners II, L.D.C.

	
 

	
Preferred
  BB-1

	
 

	
693,952

	
 

	
5,314,575

	
 

	
6,008,526

	
 

	
 


	
PBB1-9

	
 

	
Genesis
  Partners II (Israel) L.P.

	
 

	
Preferred
  BB-1

	
 

	
102,414

	
 

	
6,008,527

	
 

	
6,110,940

	
 

	
 


	
PBB1-10

	
 

	
Pitango
  Venture Capital Fund III (Israeli Sub) L.P.

	
 

	
Preferred
  BB-1

	
 

	
1,377,123

	
 

	
6,110,941

	
 

	
7,488,063

	
 

	
 


	
PBB1-11

	
 

	
Pitango
  Venture Capital Fund III (Israeli Sub.) Non-Q L.P.

	
 

	
Preferred
  BB-1

	
 

	
127,309

	
 

	
7,488,064

	
 

	
7,615,372

	
 

	
 


	
PBB1-12

	
 

	
Pitango
  Venture Capital Fund III (Israeli Investors) L.P.

	
 

	
Preferred
  BB-1

	
 

	
372,373

	
 

	
7,615,373

	
 

	
7,987,745

	
 

	
 


	
PBB1-13

	
 

	
Pitango
  Principles Fund III (Israel) L.P.

	
 

	
Preferred
  BB-1

	
 

	
48,474

	
 

	
7,987,746

	
 

	
8,036,219

	
 

	
 


	
PBB1-14

	
 

	
Pitango
  Venture Capital Fund II Trusts 2000 L.P.

	
 

	
Preferred
  BB-1

	
 

	
96,949

	
 

	
8,036,220

	
 

	
8,133,168

	
 

	
 


	
PBB1-15

	
 

	
Canada
  Israel Opportunity Fund III, L.P.

	
 

	
Preferred
  BB-l

	
 

	
9,544

	
 

	
8,133,169

	
 

	
8,142,712

	
 

	
 


	
PBB1-16

	
 

	
Shrem,
  Fudim, Kelner Founders Group II L.P.

	
 

	
Preferred
  BB-l

	
 

	
9,544

	
 

	
8,142,713

	
 

	
8,152,256

	
 

	
Cancelled
  - Replaced by PBB1-19 


	
PBB1-17

	
 

	
Genesis
  Partners II, L.D.C.

	
 

	
Preferred
  BB-1

	
 

	
751,400

	
 

	
8,152,257

	
 

	
8,903,656

	
 

	
Cancelled
  - Conversion to BB-3 


	
PBB1-18

	
 

	
Genesis
  Partners II (Israel) L.P.

	
 

	
Preferred
  BB-1

	
 

	
110,892

	
 

	
8,903,657

	
 

	
9,014,548

	
 

	
Cancelled
  - Conversion to BB-3 


	
PBB1-19

	
 

	
Shrem,
  Fudim, Kelner Founders Group II Annex Fund L.P.

	
 

	
Preferred
  BB-1

	
 

	
9,544

	
 

	
8,142,713

	
 

	
8,152,256

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Total

	
 

	
 

	
 

	
 

	
 

	
8,152,256

	
 

	
 

	
 

	
 

	
 

	
 






	
 

	
 

	
 


	
 

	
4

	
Schedule 1.3(a)(iv) - Share Register















	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Share Register (as
  of September 28, 2006)


	



	
Preferred BB-2
  Shares


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Cert

	
 

	
Shareholder

	
 

	
Series

	
 

	
# of Shares

	
 

	
From

	
 

	
To

	
 

	
Notes


	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	



	
 


	
PBB2-1

	
 

	
Pitango
  Venture Capital Fund III (Israeli Sub) L.P.

	
 

	
Preferred
  BB-2

	
 

	
861,590

	
 

	
1

	
 

	
861,590

	
 

	
 


	
PBB2-2

	
 

	
Pi
  tango Venture Capital Fund III (Israeli Sub.) Non-Q L.P.

	
 

	
Preferred
  BB-2

	
 

	
79,650

	
 

	
861,591

	
 

	
941,240

	
 

	
 


	
PBB2-3

	
 

	
Pitango
  Venture Capital Fund III (Israeli Investors) L.P.

	
 

	
Preferred
  BB-2

	
 

	
233,002

	
 

	
941,241

	
 

	
1,174,242

	
 

	
 


	
PBB2-4

	
 

	
Pitango
  Principles Fund III (Israel) L.P.

	
 

	
Preferred
  BB-2

	
 

	
30,332

	
 

	
1,174,243

	
 

	
1,204,574

	
 

	
 


	
PBB2-5

	
 

	
Pitango
  Venture Capital Fund II Trusts 2000 L.P.

	
 

	
Preferred
  BB-2

	
 

	
60,660

	
 

	
1,204,575

	
 

	
1,265,234

	
 

	
 


	
PBB2-6

	
 

	
Canada
  Israel Opportunity Fund III, L.P.

	
 

	
Preferred
  BB-2

	
 

	
7,308

	
 

	
1,265,235

	
 

	
1,272,542

	
 

	
 


	
PBB2-7

	
 

	
Shrem,
  Fudim, Kelner Founders Group II L.P.

	
 

	
Preferred
  BB-2

	
 

	
7,209

	
 

	
1,272,543

	
 

	
1,279,751

	
 

	
Cancelled
  - Replaced by PBB2-14 


	
PBB2-8

	
 

	
Shrem
  Fudim Kelner & Co. Ltd.

	
 

	
Preferred
  BB-2

	
 

	
4,932

	
 

	
1,279,752

	
 

	
1,284,683

	
 

	
 


	
PBB2-9

	
 

	
SVE
  Star Ventures Enterprises Gmbh & Co. No. IX KG.

	
 

	
Preferred
  BB-2

	
 

	
635,475

	
 

	
1,284,684

	
 

	
1,920,158

	
 

	
 


	
P8B2-10

	
 

	
Star
  Management of Investments No. II (2000) L.P.

	
 

	
Preferred
  BB-2

	
 

	
68,535

	
 

	
1,920,159

	
 

	
1,988,693

	
 

	
 


	
PBB2-11

	
 

	
Star
  Growth Enterprise, a German Civil Law Partnership (with limitation of
  Liability)

	
 

	
Preferred
  BB-2

	
 

	
1,045,227

	
 

	
1,988,694

	
 

	
3,033,920

	
 

	
 


	
PBB2-12

	
 

	
Genesis
  Partners II, L.D.C.

	
 

	
Preferred
  BB-2

	
 

	
490,760

	
 

	
3,033,921

	
 

	
3,524,680

	
 

	
 


	
PBB2-13

	
 

	
Genesis
  Partners II (Israel) L.P.

	
 

	
Preferred
  BB-2

	
 

	
72,426

	
 

	
3,524,681

	
 

	
3,597,106

	
 

	
 


	
PBB2-14

	
 

	
Shrem,
  Fudim, Kelner Founders Group II Annex Fund L.P.

	
 

	
Preferred
  BB-2

	
 

	
7,209

	
 

	
1,272,543

	
 

	
1,279,751

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Total

	
 

	
 

	
 

	
 

	
 

	
3,597,106

	
 

	
 

	
 

	
 

	
 

	
 






	
 

	
 

	
 


	
 

	
5

	
Schedule 1.3(a)(iv) - Share Register














	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Share Register (as
  of September 28, 2006)


	



	
Preferred BB-3
  Shares


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Cert

	
 

	
Shareholder

	
 

	
Series

	
 

	
# of Shares

	
 

	
From

	
 

	
To

	
 

	
Notes


	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	



	
 


	
PBB3-1

	
 

	
WE
  Star Ventures Enterprises GmbH & Co. No. IX KG.

	
 

	
Preferred
  BB-3

	
 

	
79,061

	
 

	
1

	
 

	
79,061

	
 

	
 


	
PBB3-2

	
 

	
Star
  Management of Investment No. II (2000) L.P.

	
 

	
Preferred
  BB-3

	
 

	
8,530

	
 

	
79,062

	
 

	
87,591

	
 

	
 


	
PBB3-3

	
 

	
Star
  Growth Enterprise, a German Civil Law Partnership (with limitation of
  Liability)

	
 

	
Preferred
  BB-3

	
 

	
181,876

	
 

	
87,592

	
 

	
269,467

	
 

	
 


	
PBB3-4

	
 

	
Poalim
  Ventures Ltd.

	
 

	
Preferred
  BB-3

	
 

	
47,628

	
 

	
269,468

	
 

	
317,095

	
 

	
 


	
PBB3-5

	
 

	
Poalim
  Ventures I Ltd.

	
 

	
Preferred
  BB-3

	
 

	
73,274

	
 

	
317,096

	
 

	
390,369

	
 

	
 


	
PBB3-6

	
 

	
Poalim
  Ventures II L.P.

	
 

	
Preferred
  BB-3

	
 

	
148,564

	
 

	
390,370

	
 

	
538,933

	
 

	
 


	
PBB3-7

	
 

	
Genesis
  Partners II, L.D.C.

	
 

	
Preferred
  BB-3

	
 

	
234,812

	
 

	
538,934

	
 

	
773,745

	
 

	
 


	
PBB3-8

	
 

	
Genesis
  Partners II (Israel) L.P.

	
 

	
Preferred
  BB-3

	
 

	
34,654

	
 

	
773,746

	
 

	
808,399

	
 

	
 


	
PBB3-9

	
 

	
Pitango Venture Capital Fund III (Israeli Sub) L.P.

	
 

	
Preferred
  BB-3

	
 

	
183,505

	
 

	
808,400

	
 

	
991,904

	
 

	
 


	
PBB3-10

	
 

	
Pitango
  Venture Capital Fund III (Israeli Sub) Non-Q L.P.

	
 

	
Preferred
  BB-3

	
 

	
16,964

	
 

	
991,905

	
 

	
1,008,868

	
 

	
 


	
PBB3-11

	
 

	
Pitango
  Venture Capital Fund III (Israeli Investors) L.P.

	
 

	
Preferred
  BB-3

	
 

	
49,619

	
 

	
1,008,869

	
 

	
1,058,487

	
 

	
 


	
PBB3-12

	
 

	
Pitango
  Principles Fund HI (Israel) L.P.

	
 

	
Preferred
  BB-3

	
 

	
6,460

	
 

	
1,058,488

	
 

	
1,064,947

	
 

	
 


	
PBB3-13

	
 

	
Pitango
  Venture Capital Fund II Trusts 2000 L.P.

	
 

	
Preferred
  BB-3

	
 

	
12,918

	
 

	
1,064,948

	
 

	
1,077,865

	
 

	
 


	
PBB3-14

	
 

	
Intel
  Atlantic, Inc.

	
 

	
Preferred
  BB-3

	
 

	
474,261

	
 

	
1,077,866

	
 

	
1,552,126

	
 

	
 


	
PBB3-15

	
 

	
Wellington
  Partners Venture III Technology Fund L.P.

	
 

	
Preferred
  BB-3

	
 

	
3,190,480

	
 

	
1,552,127

	
 

	
4,742,606

	
 

	
 


	
PBB3-16

	
 

	
Genesis
  Partners II, L.D.C.

	
 

	
Preferred
  BB-3

	
 

	
751,400

	
 

	
4,742,607

	
 

	
5,494,006

	
 

	
 


	
PBB3-17

	
 

	
Genesis
  Partners II (Israel) L.P.

	
 

	
Preferred
  BB-3

	
 

	
110,892

	
 

	
5,494,007

	
 

	
5,604,898

	
 

	
 


	
PBB3-18

	
 

	
Intel
  Atlantic, Inc.

	
 

	
Preferred
  BB-3

	
 

	
9,298

	
 

	
5,604,899

	
 

	
5,614,196

	
 

	
 


	
PBB3-19

	
 

	
Wellington
  Partners Venture III Tech

	
 

	
Preferred
  BB-3

	
 

	
245,078

	
 

	
5,614,197

	
 

	
5,859,274

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Total

	
 

	
 

	
 

	
 

	
 

	
5,859,274

	
 

	
 

	
 

	
 

	
 

	
 








	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Share Register (as
  of September 28, 2006)


	



	
Prefered BB-4 Shares


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Cert

	
 

	
Shareholder

	
 

	
Series

	
 

	
# of Shares

	
 

	
From

	
 

	
To

	
 

	
Notes


	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	



	
 


	
PBB4-I

	
 

	
SVE
  Star Ventures Enterprises GmbH & Co. No. IX KG.

	
 

	
Preferred
  BB-4

	
 

	
121,135

	
 

	
1

	
 

	
121,135

	
 

	
 


	
PBB4-2

	
 

	
Star
  Management of Investment No. II (2000) L.P.

	
 

	
Preferred
  BB-4

	
 

	
15,915

	
 

	
121,136

	
 

	
137,050

	
 

	
 


	
PBB4-3

	
 

	
Star
  Growth Enterprise, a German Civil Law Partnership (with limitation of
  Liability)

	
 

	
Preferred
  BB-4

	
 

	
121,634

	
 

	
137,051

	
 

	
258,684

	
 

	
 


	
PBB4-4

	
 

	
Genesis
  Partners II, L.D.C.

	
 

	
Preferred
  BB-4

	
 

	
168,168

	
 

	
258,685

	
 

	
426,852

	
 

	
 


	
PBB4-5

	
 

	
Genesis
  Partners II (Israel) L.P.

	
 

	
Preferred
  BB-4

	
 

	
24,819

	
 

	
426,853

	
 

	
451,671

	
 

	
 


	
PBB4-6

	
 

	
Intel
  Atlantic, Inc.

	
 

	
Preferred
  BB-4

	
 

	
60,770

	
 

	
451,672

	
 

	
512,441

	
 

	
 


	
PBB4-7

	
 

	
Wellington
  Partners Venture III Tech

	
 

	
Preferred
  BB-4

	
 

	
363,801

	
 

	
512,442

	
 

	
876,242

	
 

	
 


	
PBB4-8

	
 

	
Poalim
  Ventures Ltd.

	
 

	
Preferred
  BB-4

	
 

	
19,305

	
 

	
876,243

	
 

	
895,547

	
 

	
 


	
PBB4-9

	
 

	
Poalim
  Ventures I Ltd.

	
 

	
Preferred
  BB-4

	
 

	
29,700

	
 

	
895,548

	
 

	
925,247

	
 

	
 


	
PBB4-10

	
 

	
Poalim
  Ventures II L.P.

	
 

	
Preferred
  BB-4

	
 

	
60,217

	
 

	
925,248

	
 

	
985,464

	
 

	
 


	
PBB4-11

	
 

	
Amadeus
  III

	
 

	
Preferred
  BB-4

	
 

	
3,285,579

	
 

	
985,465

	
 

	
4,271,043

	
 

	
 


	
PBB4-I2

	
 

	
Amadeus
  III Affiliates Fund LP

	
 

	
Preferred
  BB-4

	
 

	
67,053

	
 

	
4,271,044

	
 

	
4,338,096

	
 

	
 


	
Total

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Total

	
 

	
 

	
 

	
 

	
 

	
4,338,096

	
 

	
 

	
 

	
 

	
 

	
 







	
 

	
 

	
 


	
 

	
6

	
Schedule 1.3(a)(iv) - Share Register














Schedule 1.3(a)(v)  


Adoption
of New Articles of Association


to approve and adopt the New
Articles of Association attached hereto as Exhibit
A (the “New Articles”), as the Articles of Association of the Company, such New Articles to be filed
by the Company with the
Companies Registrar, in place of the Current
Articles.








THE COMPANIES LAW


A COMPANY LIMITED BY SHARES


AMENDED AND RESTATED ARTICLES OF ASSOCIATION OF 


NEGEVTECH LTD.




PRELIMINARY


	
 

	
 


	
1.

	
Reserved.


	
 

	
 


	
2.

	
In these Articles, unless the context otherwise
  requires:


	
 

	
 


	
 

	
These “Articles”
  - shall mean the Articles of Association of the Company as shall be in force from time to
  time.


	
 

	
 


	
 

	
“Amadeus” – shall mean Amadeus
  III and Amadeus III Affiliates Fund LP and their Permitted Transferees
  to which they transfer shares.


	
 

	
 


	
 

	
The “Amadeus
  Agreement” shall mean the Series BB-4 Preferred Share Purchase Agreement dated September 26, 2006 between
  the Company and certain investors.


	
 

	
 


	
 

	
“as converted basis” - shall mean assuming
  the theoretical conversion of all outstanding Preferred Shares into Ordinary Shares, at the then applicable
  conversion ratio.


	
 

	
 


	
 

	
“Board” or “Board of Directors” – shall mean the Board of Directors of the
  Company.


	
 

	
 


	
 

	
“Business Day” – shall mean a day on
  which commercial banks in Israel are open for business (including, for the avoidance of doubt,
  Fridays).


	
 

	
 


	
 

	
The
  “Company” - shall mean NEGEVTECH
  LTD.


	
 

	
 


	
 

	
The “Companies Law”
  - shall mean the Companies Law, 5759-1999 as shall be in effect from time to time and
  any other law that shall be in effect from time to time with respect to companies and that shall apply to the
  Company.


	
 

	
 


	
 

	
“Genesis” – shall mean Genesis
  Partners II, L.D.C., Genesis Partners II (Israel) L.P. and their Permitted
  Transferees to which they transfer shares.


	
 

	
 


	
 

	
“Intel” shall mean Intel Atlantic,
  Inc., a corporation established and existing under the laws of the State of
  Delaware, USA.


	
 

	
 


	
 

	
The
  “Office” - shall mean the
  registered office of the Company as it shall be from time to time.


	
 

	
 


	
 

	
The term “Major
  Holder” shall mean a holder of at least 2.5% of the issued and outstanding shares of the
  Company, on an as converted basis and with respect solely to Article 14 - a holder of at least 2% of the issued and
outstanding shares
  of the Company, on an as converted basis.














	
 

	
 


	
 

	
the
  ordinary manner in any mail list of the company or any copy of any fax in the
  Company’s possession shall be prima
  facie proof of the delivery.


	
 

	
 


	
107.

	
(a)
       In any case where it is necessary to give prior
  notice of a certain number of days or a notice valid for a certain period, the date of delivery shall be taken
  into account in the number of days
  or period.


	
 

	
 


	
 

	
(b)
       In addition to the furnishing of a notice
  pursuant to the above article, the Company may furnish a notice to the shareholders entitled to receive notice,
  or to part of them, by publication
  of a notice in a newspaper distributed in the area wherein the Office is
  located, or any other place, in
  Israel or abroad, as the Board shall determine from time to time.


	
 

	
 


	
108.

	
RESERVED


	
 

	
 


	
109.

	
INDEMNITY


	
 

	
 


	
(a)

	
The
  Company shall, subject and pursuant to the provisions of the Companies Law, indemnify
  an “Office Holder” of the Company (as such term is defined in the Companies Law) for all liabilities and expenses incurred
  by him arising from or as a result of any act (or omission) carried out by him as an Office Holder
  of the Company and which is indemnifiable pursuant to the Companies
  Law, to the maximum extent permitted by law. The Company may indemnify an Office Holder post-factum and may also
  undertake to indemnify an Office
  Holder in advance, provided that, to the extent required under applicable law, such undertaking is limited to
  types of occurrences which, in the opinion of the Board of Directors are, at the time of the undertaking,
  foreseeable and to an amount of the
  Board of Directors has determined is reasonable in the circumstances.


	
 

	
 


	
(b)

	
The
  Company shall, subject and pursuant to the provisions of the Companies Law,
  enter into contracts to insure the
  liability of Office Holders of the Company for any liabilities incurred by
  him arising from or as a result of any act (or omission) carried out by him
  as an Office Holder of the Company and for
  which the Company may insure Office Holders pursuant to the Companies Law, to the maximum extent permitted
  by law.


	
 

	
 


	
(c)

	
The
  Company may, subject to the provisions of the Companies Law, procure
  insurance for or indemnify any
  person who is not an Office Holder including, without limitation, any employee, agent, consultant or contractor of
  the Company who is not an Office Holder.


	
 

	
 


	
(d)

	
The
  Company may, to the maximum extent permitted by law, exempt and release an
  Office Holder, including in
  advance, from all or part of his or her liability for monetary or other damages due to, arising or resulting from, a breach
  of his or her duty of care to the Company.
  The Directors of the Company are released and exempt from all liability as aforesaid
  to the maximum extent permitted by law with respect to any such breach, which
  has been or may be committed.





-45-







Conversion of Ordinary-Preferred
Shares into Ordinary Shares


to convert the 1,569,004 Ordinary-Preferred Shares
held by Gad Neuman and David Alumot into 1,569,004 (i.e, on an one for one
basis) fully paid and non-assessable Ordinary Shares.








Conversion of Ordinary Shares into BB-4 Preferred
Shares


to convert 2,436,340 Ordinary Shares held by Amadeus III and Amadeus
III Affiliates Fund LP into the same number of series BB-4 Preferred Shares.








Change of Share Capital


	
 

	
 

	
 


	
 

	
To
  increase the registered (authorized) share capital of the Company by NIS 94,301 divided into 2,563,700 newly created
Series BB-4 Preferred
  Shares nominal value NIS 0.01 each and 6,866,400
  Ordinary Shares nominal value NIS 0.01 each.

	
 















Schedule 1.3(d)  





Date: September 26, 2006 



	To:  	The
Research Committee

The Office of the Chief Scientist

PO Box 2197

Jerusalem, 91021 









Relating to projects that have been
financed by or are currently being financed by the Office of the Chief Scientist of the
Ministry of Industry, Trade and Labor (the “OCS”) and to projects of the
Company (as this term is defined below) that may be financed by the OCS in the future (the
“Projects”).  



UNDERTAKING  



The undersigned, Amadeus III a
partnership incorporated, organized and existing under the laws of England and whose
registered offices is at Mount pleasant House, 2 Mount Pleasant, Cambridge England,
having, by an agreement dated September 26, 2006, committed to invest in Negevtech Ltd.,
an Israeli company (the “Company”), in exchange for 3,285,579 Preferred
BB-4 Shares par value NIS 0.01 each of the Company; 



Recognizing that the Company’s
research and development Projects are currently, have been or will be financially
supported by the Government of the State of Israel through the OCS under and subject to
the provisions of The Encouragement of Research and Development in Industry Law 5744-1984
(the “R&D Law”) and the regulations, rules and procedures promulgated
thereunder; and 



Recognizing that the R&D Law
places strict constraints on the transfer of know-how and/or production rights, making all
such transfers subject to the absolute discretion of the OCS’ research committee (the
“Research Committee”), acting in accordance with the aims of the R&D
Law and requiring that any such transfer receive the prior written approval of the
Research Committee; 



HEREBY UNDERTAKE, 



To observe strictly all the
requirements of the R&D Law and the regulations, rules and procedures promulgated
thereunder, as applied to the Company and as directed by the Research Committee, in
particular those requirements stipulated under Section 19, 19A and 19B of the R&D Law
relating to the prohibitions on the transfer of know-how and/or production rights. 



As a shareholder of the Company, to
make all reasonable efforts that the Company shall not be in breach of the requirements of
the R&D Law and the regulations, rules and procedures promulgated thereunder, as
applied to the Company and as directed by the Research Committee, in particular those
requirements stipulated under Sections 19, 19A and 19B of the R&D Law relating to the
prohibitions on the transfer of know-how and/or production rights. 



Nothing herein shall be deemed as an
assumption by the undersigned of any of the obligations of the Company. 


		
		
		
		
		
	By:	______________________
	 
	Name:	______________________
	 
	Title:	______________________


















Schedule 2.1(a)  


THE COMPANIES LAW


A COMPANY LIMITED BY SHARES


AMENDED AND RESTATED ARTICLES OF ASSOCIATION
OF


NEGEVTECH LTD.


PRELIMINARY


	
 

	
 


	
1.

	
Reserved.


	
 

	
 


	
2.

	
In these
  Articles, unless the context otherwise requires:


	
 

	
 


	
 

	
These
“Articles” - shall mean the Articles of Association of the Company as shall
be in force from time to time. 


	
 

	
 


	
 

	
“as
converted basis” - shall mean assuming the theoretical conversion of all
outstanding Preferred Shares and Ordinary-Preferred Shares into Ordinary
Shares, at the then applicable conversion ratio. 


	
 

	
 


	
 

	
“Board” or
“Board of Directors” – shall mean the Board of Directors of the Company. 


	
 

	
 


	
 

	
“Business
Day” – shall mean a day on which commercial banks in Israel are open for
business (including, for the avoidance of doubt, Fridays). 


	
 

	
 


	
 

	
The
“Company” - shall mean NEGEVTECH LTD.  


	
 

	
 


	
 

	
The
“Companies Law” - shall mean the Companies Law, 5759-1999 as shall be in
effect from time to time and any other law that shall be in effect from time
to time with respect to companies and that shall apply to the Company. 


	
 

	
 


	
 

	
The
“Founders” - shall mean Dr. Gad Neumann and Mr. David Alumot. 


	
 

	
 


	
 

	
“Genesis” –
shall mean Genesis Partners II, L.D.C., Genesis Partners II (Israel) L.P. and
their Permitted Transferees to which they transfer shares. 


	
 

	
 


	
 

	
“Intel” shall
mean Intel Atlantic, Inc., a corporation established and existing under the
laws of the State of Delaware, USA. 


	
 

	
 


	
 

	
The “Office”
- shall mean the registered office of the Company as it shall be from time to
time. 


	
 

	
 


	
 

	
The term
“Major Holder” shall mean a holder of at least 2.5% of the issued and
outstanding shares of the Company, on an as converted basis and with respect
solely to Article 14 - a holder of at least 2% of the issued and outstanding
shares of the Company, on an as converted basis. 


	
 

	
 


	
 

	
“Majority
Preferred Shareholders” – shall mean the holders of the majority of the
issued and outstanding Preferred Shares (calculated on an as converted basis). 












	
 

	
 


	
 

	
“Ordinary Shares” – shall mean Ordinary
  Shares of the Company, par value NIS 0.01 each.


	
 

	
 


	
 

	
“Ordinary-Preferred Shares” – shall mean
  Ordinary-Preferred Shares of the Company, par value NIS 0.01 each.


	
 

	
 


	
 

	
“Original Issue Price” – shall mean: (i)
  with respect to the Series AA Preferred Shares, $2.81 per share, provided,
  that with respect to any Series AA Preferred Share issued following the
  closing of the Poalim Agreement, the Original Issue Price shall be the price
  per share actually paid to the Company for such Series AA Preferred Share;
  (ii) with respect to the Series BB-1 Preferred Shares and the Series BB-3
  Preferred Shares, $2.3194 per share; and (iii) with respect to the Series
  BB-2 Preferred Shares, $1.97149 per share, as such  prices may be adjusted, for certain purposes set forth in these
  Articles, upon the occurrence of a Recapitalization Event. 


	
 

	
 


	
 

	
“Orbotech” - shall mean Orbotech Technology
  Ventures L.P. and its Permitted Transferees to which it transfers shares.


	
 

	
 


	
 

	
“Permitted Transferee” - shall mean: (i) a
  person or entity that controls or is controlled by or is under common control
  with the respective shareholder; (ii) spouse, brothers, sisters, parents and
  children of the transferor or a trust for the benefit of the transferor
  and/or any of the foregoing, in the event the shares are held by individuals;
  (iii) in the case of any shareholder which is a limited or general
  partnership or a trust, to its partners (including retired partners) or
  beneficiaries and to affiliated partnerships managed by the same management
  company or managing (general) partner or by an entity which directly or
  indirectly controls, is controlled by, or is under common control with, such
  management company or managing or general partner; (iv) a trustee of the
  Company’s incentive plans may transfer to a beneficiary and vice versa; (v) in
  the case of Plenus Technologies Ltd., Plenus II, L.P., Plenus II (D.C.M.),
  Limited Partnership, Golden Gate Bridge Fund, L.P., Bank Leumi Le-Israel B.M.
  and the Participants (listed in Schedule 1 of the Loan Agreement between the
  Company, Plenus II, L.P. and Plenus II (D.C.M.), Limited Partnership dated
  October 11, 2005), each shall be considered a Permitted Transferee of each
  other, as long as such Permitted Transferee is not a competitor of the
  Company.


	
 

	
 


	
 

	
The term
  “control” shall have the same meaning as designated to it under the Companies
  Law and shall also mean the possession, directly or indirectly, of more than
  50% of the voting power or the right to appoint more than 50% of the members
  of the Board of Directors or the right to receive more than 50% of the
  distributed profit.


	
 

	
 


	
 

	
“Pitango” – shall mean Pitango Venture
  Capital Fund III (Israeli Sub) L.P., Pitango Venture Capital Fund III
  (Israeli Sub.) Non-Q L.P., Pitango Venture Capital Fund III (Israeli
  Investors) L.P., Pitango JP Morgan Fund III (Israel), L.P., Pitango
  Principles Fund III (Israel) L.P., Pitango Venture Capital Fund III Trusts
  2000 L.P. and their Permitted Transferees to which they transfer shares


	
 

	
 


	
 

	
The “Poalim Agreement” shall mean the Series
  BB Preferred Share Purchase Agreement dated September 13, 2005 between the
  Company and certain investors.





- 2 -








	
 

	
 


	
 

	
“Poalim Ventures” means Poalim Ventures
  Ltd., Poalim Ventures I Ltd. and Poalim Ventures II L.P., who shall be deemed
  Permitted Transferees of each other, and their Permitted Transferees to which
  they transfer shares.


	
 

	
 


	
 

	
“Preferred Shares” – shall mean Series AA
  Preferred Shares and Series BB Preferred Shares.


	
 

	
 


	
 

	
“Qualified IPO” or “QIPO” – shall mean the
consummation of a firm commitment underwritten public offering of the Company’s
shares, netting to the Company at least US$30,000,000 (Thirty Million), as an
offering price per share in excess of 3 (three) times the Original Issue
Price of the Series BB-1 Preferred Shares. 


	
 

	
 


	
 

	
“Recapitalization Event” – shall mean any
  event of share combination or subdivision, distribution of bonus shares or
  any other similar reclassification, reorganization or recapitalization of the
  Company’s share where the shareholders retain their proportionate holdings in
  the Company.


	
 

	
 


	
 

	
The “Share Transfer Agreement” – shall mean
  that certain Share Transfer Agreement effective as of the closing of the
  Poalim Agreement between the Company, the Founders and certain Purchasers (as
  defined therein).


	
 

	
 


	
 

	
“Series AA Preferred Shares” - shall mean
  Series AA Preferred Shares of the Company, par value NIS 0.01 each.


	
 

	
 


	
 

	
“Series BB Preferred Shares” - shall mean
  Series BB-1 Preferred Shares, Series BB-2 Preferred Shares and Series BB-3
  Preferred Shares.


	
 

	
 


	
 

	
“Series BB-1 Preferred Shares” - shall mean
  Series BB-1 Preferred Shares of the Company, par value NIS 0.01 each.


	
 

	
 


	
 

	
“Series BB-2 Preferred Shares” - shall mean
  Series BB-2 Preferred Shares of the Company, par value NIS 0.01 each.


	
 

	
 


	
 

	
“Series BB-3 Preferred Shares” – shall mean
  Series BB-3 Preferred Shares of the Company, par value NIS 0.01 each.


	
 

	
 


	
 

	
“Star” – shall mean SVE Star Ventures
  Enterprises Gmbh & Co. No. IX KG., Star Management of Investments No. II
  (2000) L.P., SVM Star Ventures Managementgesellschaft mbH No. 3, Star Growth
  Enterprise, a German Civil Law Partnership (with limitation of liability) and
  their Permitted Transferees to which they transfer shares.


	
 

	
 


	
 

	
The “Star Agreement” - shall mean the
  Preferred Share Purchase Agreement dated May 2002 between the Company and
  certain investors.


	
 

	
 


	
 

	
“Transition Agreement” shall mean the
  Agreement dated as of December 26, 2004 between the Company and the Founders,
  as amended. 


	
 

	
 


	
 

	
“Wellington” - shall mean Wellington
  Partners Ventures III Technology Fund L.P. and its Permitted Transferees to
  which it transfers shares.





- 3 -








	
 

	
 

	
 


	
 

	
The “Wellington Agreement” - shall mean the
  Series BB Preferred Share Purchase Agreement dated March 22, 2006.


	
 

	
 

	
 


	
 

	
In these
  Articles, subject to this Article 2 and unless the context otherwise
  requires, expressions defined in the Companies Law, or any modification
  thereof in force at the date at which these Articles become binding on the
  Company, shall have the meanings so defined; and words importing the singular
  shall include the plural, and vice versa, and words importing the masculine
  gender shall include the female, and words importing persons shall include
  bodies corporate. The titles of the articles are not part of the articles.


	
 

	
 

	
 


	
 

	
For purposes
  of determining the availability of any right or the applicability of any
  limitation under these Articles, all Ordinary Shares and Preferred Shares
  entitled to such right or the application of such limitation held or
  acquired by affiliated entities or persons constituting Permitted Transferees
  of each other, shall be aggregated and such entities or persons shall be
  viewed as a single Shareholder.


	
 

	
 

	
 


	
 

	
In the event
  that an article that has been added to these Articles contradicts an original
  article found in these Articles - the article added shall take precedence.


	
 

	
 

	
 


	
3.

	
PRIVATE
  COMPANY


	
 

	
 

	
 


	
 

	
(a)

	
The Company
  is a private Company.


	
 

	
 

	
 


	
 

	
(b)

	
The right to
  transfer the shares of the Company shall be restricted in the manner
  hereinafter appearing;


	
 

	
 

	
 


	
 

	
(c)

	
The number
  of the shareholders of the Company (not including persons who are in the
  employment of the Company, and persons who, having been formerly in the
  employment of the Company were while in that employment and have continued
  after the termination of that employment to be shareholders of the Company)
  shall be limited to fifty, provided that, for the purposes of this provision,
  where two or more persons hold one or more shares in the Company jointly they
  shall be treated as a single shareholder; and


	
 

	
 

	
 


	
 

	
(d)

	
No
  invitation shall be issued to the public to subscribe for any shares or
  debentures or debenture stocks of the Company.


	
 

	
 

	
 


	
3A

	
CHARITABLE
  CONTRIBUTIONS


	
 

	
 

	
 


	
 

	
The Company
  may donate reasonable sums of money and/or issue securities of the Company
  representing up to tenth of one percent (0.1%) of its issued and outstanding
  share capital, to any worthy purpose or entity approved by the Board of
  Directors of the Company even if such donation is not made for business
  consideration.


	
 

	
 

	
 


	
4.

	
OFFICE


	
 

	
 

	
 


	
 

	
The Office
  of the Company shall be at such place as the Board shall from time to time
  designate.





- 4 -








	
 

	
 

	
 


	
5.

	
THE CAPITAL


	
 

	
 

	
 


	
 

	
The
  authorized capital of the Company is comprised of NIS 855,700 divided into:
  47,000,996 Ordinary Shares, par value 0.01 NIS per share; 1,569,004
  Ordinary-Preferred Shares, par value 0.01 NIS per share, 15,000,000 Series AA
  Preferred Shares, par value 0.01 NIS per share, 12,137,708 Series BB-1
  Preferred Shares, par value 0.01 NIS per share, 4,000,000 Series BB-2
  Preferred Shares, par value 0.01 NIS per share and 5,862,292 Series BB-3
  Preferred Shares, par value 0.01 NIS per share.


	
 

	
 

	
 


	
6.

	
RIGHTS,
  PREFERENCES AND RESTRICTIONS OF PREFERRED SHARES AND ORDINARY-PREFERRED
  SHARES


	
 

	
 

	
 


	
 

	
The rights,
  preferences, privileges, and restrictions granted to and imposed on the
  Preferred Shares and on the Ordinary-Preferred Shares, are as set forth in
  these Articles.


	
 

	
 

	
 


	
 

	
The
  Ordinary-Preferred Shares shall have the same rights, preferences, privileges
  and restrictions granted to and imposed on the Ordinary Shares, except for
  the rights, preferences and privileges specifically granted to the
  Ordinary-Preferred Shares in these Articles.


	
 

	
 

	
 


	
7.

	
DIVIDEND
  PROVISIONS


	
 

	
 

	
 


	
 

	
Subject to
  Article 8 below, any dividends declared by the Company shall be distributed,
  subject to Article 30 below, between all holders of shares of the Company,
  pari passu, based upon the number of Ordinary Shares (on an as converted
  basis) held by any such holder.


	
 

	
 

	
 


	
8.

	
DIVIDEND AND
  LIQUIDATION PREFERENCE


	
 

	
 

	
 


	
 

	
(a)

	
Upon the
  happening of any of the following events:








	
 

	
 

	
 

	
 


	
 

	
 

	
(1)

	
any
  liquidation, dissolution or winding up of the Company, either voluntary or
  involuntary; or


	
 

	
 

	
 

	
 


	
 

	
 

	
(2)

	
any
consolidation, or merger of the Company with or into another corporation
following which the shareholders of the Company prior to such transaction do
not hold following such transaction more than 50% of the outstanding shares
and the voting power of the surviving corporation by virtue of their holdings
in the Company prior to such transaction (“Merger”); or 


	
 

	
 

	
 

	
 


	
 

	
 

	
(3)

	
any sale or
transfer to another corporation of all or substantially all of the assets of
the Company, or all or substantially all of the shares in the Company (other
than to a wholly owned subsidiary of the Company or to a corporation in which
the shareholders of the Company prior to the transaction hold more than 50%
of the outstanding voting rights) (“Acquisition”); or 


	
 

	
 

	
 

	
 


	
 

	
 

	
(4)

	
any
  distribution of dividends;


	
 

	
 

	
 

	
 


	
 

	
 

	
(any of the
  events described in sections (1) to (4) above shall be hereinafter referred
  to as a “Liquidation Event”)





- 5 -








	
 

	
 

	
 


	
 

	
 

	
then the
amount of declared dividends or any assets of the Company available for
distribution in connection with, or the consideration received in, such
Liquidation Event (hereinafter referred to as “Distribution Assets”) shall be
distributed pursuant to the following order of preference: 


	
 

	
 

	
 


	
 

	
(b)

	
The holders
of the Series BB-3 Preferred Shares shall be entitled to receive, prior and
in preference to any distribution of any of the assets of the Company to the
holders of all other equity securities of the Company by reason of their
ownership thereof, an amount per Series BB-3 Preferred Share equal to: (i)
the applicable Original Issue Price for each Series BB-3 Preferred Share,
plus (ii) an amount equal to declared but unpaid dividends on each such Series
BB-3 Preferred Share, plus (iii) an amount equal to 8% return per annum,
compounded annually, on the applicable Original Issue Price, for each BB-3
Preferred Share to be calculated from the date of payment to the Company on
account of such Series BB-3 Preferred Share until such distribution, less
(iv) any amount of dividend preference paid on account of such Series BB-3
Preferred Share until such distribution (the “BB-3 Preference Amount”). In
the event that the Distribution Assets are not sufficient for distribution to
the holders of the Series BB-3 Preferred Shares pursuant to this subarticle
(b), such Distribution Assets as are available for distribution, shall be
distributed among the holders of the Series BB-3 Preferred Shares pro-rata in
proportion to the preferential amount each such holder is otherwise entitled
to receive. 


	
 

	
 

	
 


	
 

	
(c)

	
Following
the payment in full of the BB-3 Preference Amount, the holders of the Series
BB-1 Preferred Shares and the holders of the Series BB-2 Preferred Shares
shall be entitled to receive, prior and in preference to any distribution of
any of the assets of the Company to the holders of all other equity
securities of the Company by reason of their ownership thereof, an amount per
each Series BB-1 Preferred Share and per each Series BB-2 Preferred Share
equal to: (i) the applicable Original Issue Price for each such share, plus
(ii) an amount equal to declared but unpaid dividends on each such share,
plus (iii) an amount equal to 8% return per annum, compounded annually, on
the applicable Original Issue Price, for each such share to be calculated
from the date of payment to the Company on account of such share until such
distribution, less (iv) any amount of dividend preference paid on account of
such share until such distribution (the “BB Preference Amount”). In the event
that the Distribution Assets are not sufficient for distribution to the
holders of the Series BB-1 Preferred Shares and the holders of the Series
BB-2 Preferred Shares pursuant to this subarticle (c), such Distribution
Assets as are available for distribution, shall be distributed among the
holders of the Series BB-1 Preferred Shares and the holders of the Series
BB-2 Preferred Shares pro-rata in proportion to the preferential amount each
such holder is otherwise entitled to receive. 





- 6 -








	
 

	
 

	
 


	
 

	
(d)

	
Following
the payment in full of the BB-3 Preference Amount and the BB Preference
Amount, the holders of the Series AA Preferred Shares and the holders of
Ordinary-Preferred Shares shall be entitled to receive prior and in
preference to any distribution of any of the assets of the Company to the
holders of all other equity securities of the Company by reason of their
ownership thereof, an aggregate amount equal to the sum of: (i) the Original
Issue Price for each Series AA Preferred Share, plus (ii) an amount equal to
declared but unpaid dividends on each such Series AA Preferred Share, plus
(iii) an amount equal to 8% return per annum, compounded annually, on the
Original Issue Price for each outstanding Series AA Preferred Share to be
calculated from the later of the date of payment to the Company on account of
such Series AA Preferred Share or May 23, 2002 and until such distribution,
less (iv) any amount of dividend preference paid on account of such Series AA
Preferred Share and each Ordinary-Preferred Share until such distribution
(the “Secondary Preference Amount”), such aggregate amount to be distributed
among the holders of Series AA Preferred Shares and the holders of
Ordinary-Preferred Shares such that: (x) holders of Series AA Preferred
Shares shall receive out of the Secondary Preference Amount an amount equal to
the Secondary Preference Amount multiplied by a fraction (the “Multiplier”)
the numerator of which is the total number of the then outstanding Series AA
Preferred Shares (for the avoidance of doubt, not on an as converted basis)
and the denominator of which is such total number of then outstanding Series
AA Preferred Shares plus 1.2764 times the total number of the then
outstanding Ordinary-Preferred Shares (for the avoidance of doubt, not on an
as converted basis) (“AA Secondary Preference Amount”), to be allocated among
the holders of Series AA Preferred Shares pro rata, such that for each Series
AA Preferred Share held by a holder of Series AA Preferred Shares such holder
shall be entitled to an amount equal to the product of the Multiplier
multiplied by the sum of: (i) the Original Issue Price for such Series AA
Preferred Share, plus (ii) an amount equal to declared but unpaid dividends
on such Series AA Preferred Share, plus (iii) an amount equal to 8% return
per annum, compounded annually, on the Original Issue Price for such Series
AA Preferred Share to be calculated from the later of the date of payment to
the Company on account of such Series AA Preferred Share or May 23, 2002 and
until such distribution, less (iv) any amount of dividend preference paid on
account of such Series AA Preferred Share until such distribution, and (y)
the holders of Ordinary Preferred Shares shall receive out of the Secondary
Preference Amount an amount equal to the Secondary Preference Amount minus
the AA Secondary Preference Amount, to be allocated among the holders of
Ordinary Preferred Shares pro-rata based on the number of Ordinary-Preferred
Shares held by them.  


	
 

	
 

	
 


	
 

	
 

	
In the event
  that, following the payment in full of the BB-3 Preference Amount and the BB
  Preference Amount, the remaining Distribution Assets are not sufficient for a
  full payment of the Secondary Preference Amount pursuant to this subarticle (d),
  then such remaining Distribution Assets shall be distributed among the
  holders of Series AA Preferred Shares and the holders of Ordinary-Preferred
  Shares in proportion to the amount they would have been entitled to receive
  had the Secondary Preference Amount been paid in full.


	
 

	
 

	
 


	
 

	
(e)

	
Thereafter,
  the holders of the Preferred Shares, the holders of the Ordinary-Preferred
  Shares and the holders of the Ordinary Shares shall be entitled to receive
  any remaining Distribution Assets available for distribution pro rata based
  on the number of Ordinary Shares (on an as converted basis) held by any such
  holder.


	
 

	
 

	
 


	
 

	
(f)

	
Notwithstanding
  the foregoing, if distribution of the Distribution Assets among all
  shareholders of the Company, pro-rata to the number of shares they hold on an
  as converted basis, will result in the holders of Series BB-3 Preferred
  Shares receiving in respect of each Series BB-3 Preferred Share they hold an
  amount of at least three (3) times the Original Issue Price of the Series
  BB-3 Preferred Shares, then the provisions of subarticles (b)-(e) above shall
  not apply and the Distribution Assets shall be distributed among all
  shareholders of the Company, pro-rata to the number of share they hold, on an
  as converted basis.





- 7 -








	
 

	
 

	
 

	
 


	
 

	
(g)

	
In the event
  of a Merger or an Acquisition in which the shareholders (and not the Company)
  are the intended recipients of the proceeds resulting therefrom (such as with
  a sale of shares transaction), no transfer of securities in accordance
  thereto will be considered valid, unless the provisions of the distribution
  preferences under this Article 8 shall apply.


	
 

	
 

	
 


	
 

	
(h)

	
Whenever the
  Distribution Assets are in securities or property other than cash, the value
  of such assets shall be the fair market value of such securities or other
  property as shall be determined by the Board, or by the liquidator in case of
  winding up. Such proceeds shall be made payable in US dollars unless any
  holder of fully paid share elects to receive such distributions in NIS. The
  NIS equivalent of the dollar value of any distribution shall be determined in
  accordance with the Representative Rate last published by the Bank of Israel
  prior to the date of the making of the distribution.


	
 

	
 

	
 


	
9.

	
CONVERSION
  OF PREFERRED SHARES


	
 

	
 


	
 

	
The holders
  of the Preferred Shares shall have conversion rights as follows (the “Conversion Rights”):


	
 

	
 

	
 


	
 

	
(a)

	
Right to
  Convert.


	
 

	
 

	
 

	
 


	
 

	
 

	
(1)

	
Subject to
  Article 9(c), each fully paid Preferred Share shall be convertible, at the
  option of the holder thereof, at any time after the date of issuance of such
  Preferred Share at the Office or any transfer agent for the Preferred Shares,
  into one fully paid and non-assessable Ordinary Share nominal value NIS 0.01
  and the Company shall, at such time, issue to the holders thereof, for no
  additional charge (a portion of the premium paid for such Preferred Shares
  being attributed as payment on account of the nominal value of such
  additional Ordinary Shares – in the event that the then applicable law
  requires that shares are issued for no less than their nominal value and to
  the extent no other source available pursuant to the provisions of the then
  applicable law may be used for such purpose), such number of fully-paid and
  non-assessable Ordinary Shares as required so that the total number of
  Ordinary Shares so issued (i.e. including the Ordinary Share into which the
  Preferred Share was converted) will be equal to the number determined by
  dividing the Original Issue Price applicable to such Preferred Share by the
  Conversion Price (as defined below) at the time in effect for such share. In
  the event that the then applicable law requires that shares are issued for
  not less than their nominal value, and the aggregate nominal value of all
  such Ordinary Shares shall exceed the consideration paid to the Company with
  respect to such Preferred Share, the holder thereof shall pay the Company
  such excess nominal value to the extent no other source available pursuant
  to the provisions of the then applicable law (such as premiums paid for other
  shares of the Company) may be used for such purpose. The initial Conversion
  Price per share for the Series BB-3 Preferred Shares, the Series BB-1
  Preferred Shares and the Series AA Preferred Shares shall be the Original
  Issue Price of the Series BB-1 Preferred Shares and the initial Conversion
  Price for the Series BB-2 Preferred Shares shall be the Original Issue Price
  of the Series BB-2 Preferred Shares, provided, however, that the Conversion
  Price for the Preferred Shares shall be subject to adjustment as set forth in
  subarticles 9(c), 9(d) and 9(e).





- 8 -








	
 

	
 

	
 

	
 


	
 

	
 

	
(2)

	
Each
  Preferred Share shall automatically be converted into Ordinary Shares at the
  Conversion Price at the time in effect for such Preferred Share upon the
  earlier of: (A) a Qualified IPO, or (B) the written consent of the Majority
  Preferred Shareholders, provided however that if such conversion is not part
  of, or conditioned upon the closing of, a Qualified Transaction (as defined
  in Article (12)(g) below), such conversion shall be subject to the Special BB
  Consent as set forth in Article 12(g) below. The Series AA Preferred Shares
  shall also automatically be converted into Ordinary Shares as aforesaid upon
  the consent of the holders of at least sixty six percent (66%) of the issued
  and then outstanding Series AA Preferred Shares.


	
 

	
 

	
 


	
 

	
(b)

	
Mechanics of
  Conversion.


	
 

	
 

	
 

	
 


	
 

	
 

	
(1)

	
Before any
  holder of Preferred Shares shall be entitled to convert the same into
  Ordinary Shares such holder shall surrender the certificate or certificates
  therefor at the Office and shall give written notice to the Company of the
  election to convert the same (or any part thereof) and shall state therein
  the name or names of any nominee for such holder in which the certificate or
  certificates for shares of Ordinary Shares are to be issued. The Company
  shall, as soon as practicable thereafter unless such notice states that
  conversion is to be effective on any later date or when *** conditions
  specified in the notice have been fulfilled in which case conversion shall take
  effect on such other date or when such conditions have been fulfilled, issue
  and deliver at such office to such holder of Preferred Shares, or subject to
  the transfer restrictions contained in these Articles to the nominee or
  nominees of such holder, a certificate or certificates for the number of
  shares of Ordinary Shares to which such holder shall be entitled as
  aforesaid. Such conversion shall be deemed to have been made immediately
  prior to the close of business on the date of such surrender of the shares of
  Preferred Shares to be converted, or on any later date or when any conditions
  specified in the notice have been fulfilled and the person or persons
  entitled to receive the Ordinary Shares issuable upon such conversion shall
  be treated for all purposes as the record holder or holders of such Ordinary
  Shares as of such date. If the conversion is in connection with a QIPO, the
  conversion may, at the option of any holder tendering Preferred Shares for
  conversion, be conditioned upon the closing with the underwriter of the sale
  of securities pursuant to such offering, in which event the person(s)
  entitled to receive the Ordinary Shares issuable upon such conversion of the
  Preferred Shares shall not be deemed to have converted such Preferred Shares
  until immediately prior to the closing of such sale of securities. In the
  event that the certificate(s) representing the Preferred Shares to be
  converted as aforesaid are not delivered to the Company, then the Company
  shall not be obligated to issue any certificate(s) representing the Ordinary
  Shares issued upon such conversion, unless the holder of such Preferred
  Shares notifies the Company in writing that such certificate(s) have been
  lost, stolen or destroyed and executes an agreement satisfactory to the Company
  to indemnify the Company from any loss incurred by it in connection with such
  certificates.





- 9 -








	
 

	
 

	
 

	
 


	
 

	
 

	
(2)

	
A conversion
  of Preferred Shares pursuant to one of the events described in Article
  9(a)(2) shall be deemed to have taken place automatically regardless of
  whether the certificates representing such shares have been tendered to the
  Company but from and after such conversion any such certificates not tendered
  to the Company shall be deemed to evidence solely the Ordinary Shares
  received upon such conversion and the right to receive a certificate for such
  Ordinary Shares.


	
 

	
 

	
 


	
 

	
(c)

	
Conversion
  Price Adjustments of Preferred Shares


	
 

	
 

	
 


	
 

	
 

	
Until the
  QIPO, the applicable Conversion Price of the Preferred Shares shall be
  subject to adjustment from time to time as follows:


	
 

	
 

	
 


	
 

	
 

	
(1)

	
During the
period commencing on the closing of the Poalim Agreement, and ending on the
earlier of (x) the QIPO or (y) 24 months following such date (the “Initial
Period”), upon each issuance by the Company of any “Additional Securities”
(as defined below) without consideration or for a price per share less than
the applicable Conversion Price for any issued and outstanding Series BB
Preferred Shares in effect immediately prior to the issuance of such
Additional Securities, the applicable Conversion Price for any such issued
and outstanding Series BB Preferred Share in effect immediately prior to each
such issuance shall be adjusted to the price per share paid at such issuance. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(2)

	
With respect
  to the Series BB Preferred Shares during the period after the Initial Period
  and until the QIPO and with respect to the Series AA Preferred Shares during
  the Initial Period and thereafter until the QIPO, upon each issuance by the
  Company of any “Additional Securities” (as defined below), without
  consideration or for a price per share less than the applicable Conversion
  Price for any issued and outstanding applicable series of Preferred Shares in
  effect immediately prior to the issuance of such Additional Securities, the
  applicable Conversion Price for any such issued and outstanding series of
  Preferred Shares in effect immediately prior to each such issuance shall be
  adjusted to a price (calculated to the nearest ten thousandth of a US Dollar
  ($0.0001)) determined by dividing (1) the sum of (A) the total number of
  Ordinary Shares issued and outstanding prior to the issuance of such
  Additional Securities multiplied by the applicable Conversion Price of such
  series, as the case may be, in effect prior to the issuance of such Additional
  Securities, plus (B) the total amount of the consideration received by the
  Company for such Additional Securities by (2) the sum of the total number of
  Ordinary Shares issued and outstanding immediately prior to the issuance of
  such Additional Securities plus the number of such Additional Securities
  issued. For the purpose of the above calculation, the number of shares of
  Ordinary Shares issued and outstanding immediately prior to such issue shall
  be calculated on an as converted and fully diluted basis, as if all
  outstanding warrants, options or other rights for the purchase of shares or
  convertible securities had been fully exercised (and the resulting securities
  fully converted into Ordinary Shares, if so convertible) as of such date.





- 10 -








	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
(3)

	
In the event
  that the full application of the anti dilution protection in subarticles
  9(c)(l) and 9(c)(2) cannot be implemented mathematically, then the Series BB
  Preferred Shares shall have absolute priority over the Series AA Preferred
  Shares in implementation of the above such that only the Series BB Preferred
  Shares shall be provided with the anti-dilution protection.


	
 

	
 

	
 

	
 


	
 

	
 

	
(4)

	
(A)

	
No
  adjustments of any applicable Conversion Price shall be made in an amount
  less than ten thousandth of a US Dollar ($0.0001). No adjustment of any
  applicable Conversion Price pursuant to subarticles 9(c)(l) and (2) shall be
  made if it has the effect of increasing the applicable Conversion Price above
  the applicable Conversion Price in effect immediately prior to such adjustment.


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(B)

	
In the case
  of the issuance of Additional Securities (as defined below) for cash, the
  consideration, for the purpose of subarticles 9(c)(l) and (2), shall be deemed
  to be the amount of cash received therefore before any payment of commissions,
  expenses and the like.


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(C)

	
In the case
  of the issuance of Additional Securities (defined below) for a consideration,
  in whole or in part other than cash, the consideration other than cash shall,
  for the purpose of subarticles 9(c)(l) and (2), be deemed to be the fair
  value thereof as determined, in good faith, by the Board of Directors.


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(D)

	
In the case
  of the issuance of options to purchase or rights to subscribe for Ordinary
  Shares, or securities by their terms convertible into or exchangeable for
  Ordinary Shares or options to purchase or rights to subscribe for such
  convertible or exchangeable securities, the aggregate maximum number of
  Ordinary Shares deliverable upon exercise (assuming the satisfaction of any
  conditions to exercise, including without limitation, the passing of time,
  but without taking into account potential antidilution adjustments) of such
  options to purchase or rights to subscribe for Ordinary Shares or upon
  conversion or an exchange of such convertible or exchangeable security shall
  be deemed to have been issued at the time of the issuance of such options,
  rights, or securities at a consideration equal to the consideration
  (determined in the manner provided in subarticle 9(c)(4)(B) and (c)(4)(C)),
  if any, received by the Company upon the issuance of such options or rights
  or securities plus any additional consideration payable to the Company
  pursuant to the term of such options or rights or securities (without taking
  into account potential antidilution adjustments) for the Ordinary Shares
  covered thereby, and the applicable Conversion Price shall be adjusted
  accordingly. Upon the expiration of any such options or rights, the
  termination of any such rights to convert or exchange or the expiration of
  any options or rights related to such convertible or exchangeable securities,
  the Conversion Price for such series of Preferred Shares to the extent in any
  way affected by or computed using such options, rights or securities or
  options or rights related to such securities (unless such options or rights
  were merely to be included in the numerator and denominator for purposes of
  determining the number of Ordinary Shares outstanding for purposes of Article
  9(c)(2)) shall be recomputed to reflect the issuance of only the number
  Ordinary Shares (and convertible or exchangeable securities that remain in
  effect) actually issued upon the exercise of such options or rights, or upon
  the conversion or exchange of such securities or upon the exercise of the
  options or rights related to such securities. The number of Ordinary Shares
  deemed issued and the consideration deemed paid therefor shall be
  appropriately adjusted to reflect any change, termination or expiration of
  the type described in this Article 9(c)(4)(D).





- 11 -








	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(E)

	
For purpose
  of subarticles 9(c)(l) and (2) hereof, the consideration for any Additional
  Securities shall be taken into account at the U.S. dollar equivalent thereof,
  on the day such Additional Securities are issued or deemed to be issued pursuant
  to subarticle 9(c)(4)(D).


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
(5)

	
“Additional
  Securities” shall mean any Ordinary Shares, options to purchase or rights to
  subscribe for Ordinary Shares, or securities which by their terms are
  convertible into or exchangeable for Ordinary Shares, or any securities
  convertible into or exercisable for any securities of the foregoing.
  Notwithstanding the foregoing, “Additional Securities” does not include:


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(A)

	
Securities
  issued pursuant to a transaction described in subarticle 9(c)(6) hereof;


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(B)

	
The
  issuance, pursuant to the approval of the Board, of Ordinary Shares or
  Options to purchase Ordinary Shares to employees, directors and bona-fide
  consultants; and


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(C)

	
Securities
  issued pursuant to options, warrants or other rights outstanding on the
  losing of the Poalim Agreement or on the closing of the Wellington Agreement,
  provided that such options, warrants or other rights are reflected in the
  Capitalization Table attached as Schedule 2.2 to the Poalim Agreement or in Schedule
  2.2 to the Wellington Agreement; and


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(D)

	
Ordinary
  Shares issued upon conversion of Preferred Shares or Ordinary-Preferred
  Shares; and


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(E)

	
Issuance of
  bonus shares, providing such bonus shares are issued to all the then existing
  shareholders, or shares issued pursuant to a rights offering in which all
  such shares are offered exclusively to existing shareholders; and





- 12 -








	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(F)

	
Shares
  issued in the acquisition of another company provided that the issuance of
  such shares is approved by the Board of Directors; and


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(G)

	
Shares
  issued in connection with equipment leases, bank loans or secured debt
  financings approved by the Board of Directors provided the number of such
  shares issued shall not exceed 1% of the then issued *** outstanding share
  capital of the Company on a fully diluted, as converted basis; and


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(H)

	
Securities
  issued or issuable following written approval of Majority Preferred
  Shareholders in which they agree to waive their anti-dilution or pre-emptive
  rights (as the case may be) with respect to such specific issuance.


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(I)

	
Securities
  issued as a charitable donation pursuant to Article 3A.


	
 

	
 

	
 

	
 


	
 

	
 

	
(6)

	
If the
  Company shall subdivide or combine its Ordinary Shares, the applicable
  Conversion Price shall be proportionately reduced, in case of subdivision of
  shares, as at the effective date of such subdivision, or if the Company shall
  fix a record date for the purpose of so subdividing, as at such record date,
  whichever is earlier, or shall be proportionately increased, in the case of
  combination of shares, as at the effective date of such combination, or, if
  the Company shall fix a record date for the purpose of so combining, as at
  such record date, whichever is earlier.


	
 

	
 

	
 

	
 


	
 

	
 

	
(7)

	
Subject to
  the liquidation preference of the Preferred Shares as set forth in Article 8
  above, if the Company at any time shall make a distribution of its assets to
  the holders of its Ordinary Shares as a dividend in liquidation or partial
  liquidation or by way of return of capital or other than as a dividend
  payable out of earnings or surplus legally available for dividends, each
  holder of Preferred Shares shall be entitled to receive without payment of
  any additional consideration, a sum equal to the amount of such assets as
  would have been payable to such holder as owner of that number of Ordinary
  Shares receivable by exercise of the conversion rights had such holder been
  the holder of record of such Ordinary Shares on the record date for such
  distribution; and an appropriate provision therefor shall be made a part of
  any such distribution.


	
 

	
 

	
 

	
 


	
 

	
(d)

	
Other
  Distributions


	
 

	
 

	
 

	
 


	
 

	
 

	
Subject to
  the liquidation preference of the Preferred Shares as set forth in Article 8
  above, in the event the Company shall declare a distribution payable in
  securities of other persons, evidences of indebtedness issued by the Company
  or other persons, assets (excluding cash dividends) or options or rights not
  referred to in subarticle 9(c)(5) or if the Company at any time shall pay a dividend
  payable in additional Ordinary Shares or other securities or rights
  convertible into, or entitling the holder thereof to receive directly or
  indirectly, additional Ordinary Shares then, in each such case for the
  purpose of this subarticle 9(d), the holders of the Preferred Shares shall be
  entitled to receive such distribution, in respect of their holdings on an as-converted
  basis as of the record date for such distribution.





- 13 -








	
 

	
 

	
 

	
 


	
 

	
(e)

	
Recapitalizations


	
 

	
 

	
 

	
 


	
 

	
 

	
If at any
  time or from time to time there shall be a Recapitalization Event (other than
  a subdivision, combination or merger or sale of assets transaction provided
  for elsewhere in this Article 9 or Article 8) provisions shall be made so
  that the holders of the Preferred Shares shall thereafter be entitled to
  receive upon conversion of the Preferred Shares the number of Ordinary Shares
  or other securities or property of the Company or otherwise, to which a
  holder of Ordinary Shares deliverable upon conversion would have been
  entitled immediately prior to such Recapitalization Event. In any such case,
  appropriate adjustment shall be made in the application of the provisions of
  this Article 9 with respect to the rights of the holders of the Preferred
  Shares after such Recapitalization Event to the end that the provisions of
  this Article (including adjustment of the Conversion Price then in effect and
  the number of shares issuable upon conversion of the Preferred Shares) shall
  be applicable after that event in a manner as nearly equivalent as may be
  practicable.


	
 

	
 

	
 

	
 


	
 

	
(f)

	
No
  Impairment


	
 

	
 

	
 

	
 


	
 

	
 

	
The Company
  will not, by amendment of these Articles or through any reorganization,
  recapitalization, transfer of assets, consideration, merger, dissolution,
  issue or sale of securities or any other voluntary action, avoid or seek to
  avoid the observance or performance of the Conversion Rights of the holders
  of Preferred Shares, but will at all times in good faith assist in the
  carrying out of all the provisions of this Article 9 and in the taking of all
  such action as may be necessary or appropriate in order to protect the
  Conversion Rights of the holders of the Preferred Shares against impairment.


	
 

	
 

	
 

	
 


	
 

	
(g)

	
No
  Fractional Shares and Certificate as to Adjustments


	
 

	
 

	
 

	
 


	
 

	
 

	
(1)

	
No
  fractional shares shall be issued upon conversion of the Preferred Shares,
  and the number of Ordinary Shares to be issued shall be rounded to the
  nearest whole share. Whether or not fractional shares are issuable upon such
  conversion shall be determined on the basis of the total number of Preferred
  Shares held by the holder and the number of Ordinary Shares issuable upon
  such aggregate conversion.


	
 

	
 

	
 

	
 


	
 

	
 

	
(2)

	
Upon the
  occurrence of each adjustment or readjustment of any applicable Conversion
  Price pursuant to this Article 9, the Company, at its expense, shall promptly
  compute such adjustment or readjustment in accordance with the terms hereof
  and prepare and furnish to each holder of Preferred Shares a certificate
  setting forth each adjustment or readjustment and showing in detail the facts
  upon which such adjustment or readjustment is based. The Company shall
  furnish or cause to be furnished to such holder a like certificate setting
  forth (A) such adjustment and readjustment, (B) the applicable Conversion
  Price at the time in effect, and (C) the number of Ordinary Shares and the
  amount, if any, of other property which at the time would be received upon
  the conversion of a Preferred Share.





- 14 -








	
 

	
 

	
 


	
 

	
(h)

	
Notices of
  Record Date


	
 

	
 

	
 


	
 

	
 

	
In the event
  of any taking by the Company of a record of the holders of any class of
  securities for the purpose of determining the holders thereof who are
  entitled to receive any dividend (including a cash dividend) or other
  distribution, any right to subscribe for, purchase or otherwise acquire any shares
  of any class or any other securities or property, or to receive any other
  right, the Company, shall provide to each holder of Preferred Shares, at
  least 20 days prior to the date specified therein, a notice specifying the
  date on which any such record is to be taken for the purpose of such
  dividend, distribution or right, and the amount and character of such
  dividend, distribution or right.


	
 

	
 

	
 


	
 

	
(i)

	
Reservation
  of Shares Issuable Upon Conversion


	
 

	
 

	
 


	
 

	
 

	
The Company
  shall at all times reserve and keep available out of its authorized but
  unissued shares of Ordinary Shares solely for the purpose of effecting the
  conversion of the Preferred Shares such number of its Ordinary Shares as
  shall from time to time be sufficient to effect the conversion of all outstanding
  Preferred Shares; and if at any time the number of authorized but unissued
  Ordinary Shares shall not be sufficient to effect the conversion of all then
  outstanding Preferred Shares, in addition to such other remedies as shall be
  available to the holder of such Preferred Shares, the Company will take such
  corporate action as may, in the opinion of its counsel, be necessary to
  increase its authorized but unissued Ordinary Shares to such number of shares
  as shall be sufficient for such purposes.








	
 

	
 

	
 


	
10.

	
CONVERSION
  OF ORDINARY-PREFERRED SHARES


	
 

	
 


	
 

	
(a)

	
Immediately
following the closing of the Poalim Agreement, each Ordinary-Preferred Share
shall be convertible, at the option of the holder thereof, into one fully
paid and non-assessable Ordinary Share nominal value NIS 0.01 (the “Converted
Ordinary-Preferred Share”) and upon such conversion the Company shall issue
to the holders thereof, for no additional charge (in the event that the then
applicable law requires that shares are issued for not less than their
nominal value, and the aggregate nominal value of all such Ordinary Shares
shall exceed the consideration paid to the Company with respect to such
Ordinary - Preferred Share, the holder thereof shall pay the Company such
excess nominal value to the extent no other source available pursuant to the
provisions of the then applicable law (such as premiums paid for other shares
of the Company) may be used for such purpose) such number of additional
fully-paid and non-assessable Ordinary Shares as required so that the total
number of Ordinary Shares so issued (i.e. including the Ordinary Share into
which the Ordinary - Preferred Share was converted) will be equal to the
number determined by multiplying the Converted Ordinary-Preferred Share by
1.552794 (subject, however, to Article 9 (g)(i) above). Accordingly, the
total number of Ordinary Shares into which the Ordinary-Preferred Shares may
be converted (immediately following the closing of the Poalim Agreement and
the sale of the Founders’ shares pursuant to the Share Transfer Agreement)
shall be 2,436,340. 





- 15 -








	
 

	
 

	
 


	
 

	
(b)

	
The
  Ordinary-Preferred Shares shall be automatically converted into Ordinary
  Shares as aforesaid in the event of an automatic conversion of the Series AA
  Preferred Shares of the Company pursuant to Article 9(a)(2) above. The
  conversion of the Ordinary-Preferred Shares into Ordinary Shares upon the
  automatic conversion of the Series AA Preferred Shares shall not require the
  consent of the holders of Ordinary-Preferred Shares. The Ordinary-Preferred
  Shares shall also automatically be converted into Ordinary Shares as
  aforesaid upon the consent of the holders of at least sixty six percent (66%)
  of the issued and then outstanding Ordinary-Preferred Shares. 


	
 

	
 

	
 


	
 

	
(c)

	
The
  applicable provisions of Article 9 (b) shall apply, mutatis mutandis, to
  conversions pursuant to sub-paragraphs (a) – (b) of this Article 10.


	
 

	
 

	
 


	
 

	
(d)

	
The
  provisions of subparagraphs (c)(6) and (7), (d) to (i) of Article 9 above
  shall apply with respect to the Ordinary-Preferred Shares, mutatis mutandis.








	
 

	
 

	
 

	
 


	
11.

	
VOTING
  RIGHTS


	
 

	
 


	
 

	
Subject to
  Article 58 below, each holder of Ordinary Shares, Ordinary-Preferred Shares
  and Preferred Shares shall be entitled to one (1) vote per Ordinary Share or
  Ordinary Share into which such Preferred Share or Ordinary-Preferred Share is
  convertible at the, time of voting, whether in a vote by show of hands,
  secret ballot or written consent. Each holder of Preferred Shares and
  Ordinary-Preferred Shares shall vote together with the Ordinary Shares as a
  single class (except as otherwise expressly provided in these Articles or as
  required by law) and shall be entitled to notice of any general meeting of
  shareholders in accordance with these Articles. Fractional votes shall not be
  permitted and any fractional vote resulting from the conversion mechanism,
  described above in these Articles shall be rounded up or down to the nearest
  whole number (with one-half (1/2) being rounded upward).


	
 

	
 

	
 

	
 


	
12.

	
PROTECTIVE
  PROVISIONS


	
 

	
 

	
 

	
 


	
 

	
(a)

	
Until the
  QIPO, the Company shall not take any of the following actions without
  approval of the Majority Preferred Shareholders (which may be obtained by way
  of a written consent and shall not require the convening of a shareholders
  meeting for such purpose, unless required by applicable law):


	
 

	
 

	
 

	
 


	
 

	
 

	
(1)

	
any
  amendment to or modification of these Articles and/or the Memorandum of
  Association of the Company or any other action which would amend, change or
  modify the rights, preferences or privileges of the Preferred Shares.


	
 

	
 

	
 

	
 


	
 

	
 

	
(2)

	
declaration
  of any dividend;


	
 

	
 

	
 

	
 


	
 

	
 

	
(3)

	
the
  authorization of any share capital, or other rights or securities convertible
  into or exchangeable for share capital, or the conversion of any existing
  shares into shares, in each case with rights equal to or superior *** the rights
  of the Preferred Shares;





- 16 -








	
 

	
 

	
 

	
 


	
 

	
 

	
(4)

	
any action
  or transaction which is outside the business of the Company as contemplated
  in the Updated Work Plan of the Company (as defined in the Poalim Agreement);


	
 

	
 

	
 

	
 


	
 

	
 

	
(5)

	
any transaction
  of the Company or of any subsidiary thereof, with either or both of the
  Founders, or with any entity affiliated with the Founder(s) in any way;


	
 

	
 

	
 

	
 


	
 

	
 

	
(6)

	
any action
  which effects a merger, reorganization, liquidation, disposition, acquisition
  or *** of the Company or of any subsidiary thereof, or any transfer of a
  material asset of the Company or of any subsidiary thereof, or the creation
  of or purchase of or into any entity;


	
 

	
 

	
 

	
 


	
 

	
 

	
(7)

	
any action
  which may alter or change the capital structure of the Company or of any
  subsidiary thereof, any action which effects a reclassification or
  recapitalization of the outstanding capital shares of the Company, and any
  increase in the registered share capital of the Company or of any subsidiary
  thereof;


	
 

	
 

	
 

	
 


	
 

	
 

	
(8)

	
the creation
  of any guarantee, mortgage, pledge or security interest in a material asset,
  or in all or substantially all of the assets of the Company or a subsidiary;


	
 

	
 

	
 

	
 


	
 

	
 

	
(9)

	
the
  replacement of the independent auditors to the Company, which in any event
  shall be one of the “big four”; and


	
 

	
 

	
 

	
 


	
 

	
 

	
(10)

	
the
  incurrence by the Company or by any subsidiary thereof of any indebtedness
  that shall exceed the sum of $250,000 (Two Hundred Fifty Thousand US
  Dollars), calculated on a cumulative basis in respect of any one transaction
  or in respect of a series of connected transactions;


	
 

	
 

	
 

	
 


	
 

	
(b)

	
Until the
  QIPO, the Company shall not issue any securities of any kind or options to
  purchase securities of any kind without the approval of the majority of the
  directors appointed by the holders of the Preferred Shares, provided however
  that shares issued upon the exercise of warrants, options, or other rights
  outstanding as of the closing of the Poalim Agreement or the closing of the
  Wellington Agreement or the grant of options (and shares issued upon exercise
  of such options) under the Company’s incentive plans are not subject to such
  approval.


	
 

	
 

	
 

	
 


	
 

	
(c)

	
Any
  amendment or modification of the rights and obligations of the Founders set
  forth in Article 14 (Preemptive Rights), Article 29B(b) (Bring Along),
  Article 29C (No Sale) and Article 65(a)(l) (participation of the Founders in
  the Board) shall require the consent of at least one of the Founders.


	
 

	
 

	
 

	
 


	
 

	
(d)

	
Any
  amendment or modification of the rights and obligations of Intel set forth in
  Article 29(e) (Right of First Refusal), Article 29A (Co-Sale) and, Article
  29(B)(c) (Bring Along) and 65(c) (Directors) shall require the consent of
  Intel.


	
 

	
 

	
 

	
 


	
 

	
(e)

	
Any
  amendment to or modification of these Articles which would adversely amend,
  change or modify the rights, preferences or privileges of the
  Ordinary-Preferred Shares shall require the consent of the holders of at
  least 66% of the Ordinary-Preferred Shares.





- 17 -








	
 

	
 

	
 

	
 


	
 

	
 

	
Furthermore,
  the authorization of any additional shares of Ordinary-Preferred Shares or
  any rights or securities convertible into or exchangeable for
  Ordinary-Preferred Shares, or the conversion of any other class of shares
  into Ordinary-Preferred Shares or the unification of the Ordinary-Preferred
  Shares with another class of shares shall require the consent of the holders
  of at least 66% of the Ordinary-Preferred Shares.


	
 

	
 

	
 


	
 

	
 

	
Notwithstanding
  the aforesaid, any amendment, modification, termination or waiver of the
  provisions of these Articles that applies to the rights of the holders of
  Ordinary-Preferred Shares in the same proportional manner and without
  treating them proportionally different from the Series AA Preferred Shares,
  shall not require the consent of the holders of the Ordinary-Preferred
  Shares. For illustration purposes, any change, including cancellation, of the
  Secondary Preference Amount, but not the manner of allocation of the
  Secondary Preference Amount between the holders of the Series AA Preferred
  Shares and the holders of the Ordinary-Preferred Shares as set forth in
  Article 8(d), shall not require the consent of the holders of the Ordinary-Preferred
  Shares.


	
 

	
 

	
 


	
 

	
(f)

	
Until the
  QIPO, the Company shall not take, without the consent of the holders of at
  least a majority of the issued and outstanding Preferred Shares of the
  affected class, an action that amends or modifies the rights attached to such
  class of Preferred Shares, provided however that (a) the authorization or
  issuance of a new class of shares with preferential rights, or (b) a change,
  waiver of other modification that applies to the rights of the Preferred
  Shares in the same proportional manner and without treating a certain series
  proportionally different from the other series, in each case – that was approved
  by holders of a majority of the issued and outstanding Preferred Shares,
  shall not be deemed a change hereunder.


	
 

	
 

	
 


	
 

	
(g)

	
Until the
QIPO, the Company shall not take, without the consent of the holders of at
least a majority of the issued and outstanding Series BB Preferred Shares
(which must include also the affirmative consent of the holders of at least
70% of the Series BB-1 Preferred Shares and Series BB-3 Preferred Shares
(voting together as one group) that were issued at the closing of the Poalim
Agreement and at the closing of the Wellington Agreement to investors who
were not shareholders of the Company immediately prior to the closing of the
Poalim Agreement or affiliates or Permitted Transferees of such shareholders
(the “Special BB Consent”)) an action that effects (i) any change or waiver
of rights of the Series BB Preferred Shares that does not apply to the rights
of all Preferred Shares in the same proportional manner and that treats a
certain series proportionally differently from the other series; (ii) any
waiver of liquidation preferences, anti-dilution, board representation or
information rights of the Series BB Preferred Shares, (iii) an IPO, merger or
the sale of all or substantially all of the Company’s shares or assets,
unless, in each such case, the applicable IPO or transaction reflects a price
per share of more than two times the Original Issue Price of the Series BB-I
Preferred Shares (a “Qualified Transaction”), or (iv) conversion of the
Series BB Preferred Shares, other than as part of, and conditioned upon the
closing of, a Qualified Transaction.  





- 18 -








	
 

	
 

	
 

	
 


	
 

	
(h)

	
The required
  consents as set forth in Articles 12(a) – (g) above shall also apply to any
  action taken by any wholly owned subsidiary of the Company.


	
 

	
 

	
 

	
 


	
13.

	
ALLOTMENT OF
  SHARES


	
 

	
 

	
 

	
 


	
 

	
Subject to
  the provisions of Articles 12 and 14, the authorized but unissued shares
  shall be under the control of the Board of Directors, who shall have the
  power to allot shares or otherwise dispose of them to such persons, on such terms
  and conditions (including, inter-alia, terms relating to calls as set forth in
  Article 31 hereof), and either at par or at a premium, or, subject to the
  provisions of the Companies Law, at a discount, and at such times, as the
  Board of Directors may think fit, and the power to give any person the option
  to acquire from the Company any shares, either at par or at premium, or
  subject as aforesaid, at a discount, during such time and for such
  consideration as the Board of Directors may think fit.


	
 

	
 

	
 

	
 


	
14.

	
PREEMPTIVE
  RIGHTS


	
 

	
 

	
 

	
 


	
 

	
(i)

	
Until the
  QIPO, the provisions of this Article 14 shall apply:


	
 

	
 

	
 

	
 


	
 

	
 

	
(1)

	
Any
Additional Securities (as defined in Article 9 above) to be issued by the
Company (the “Offered Securities”) shall first be offered by the Board of
Directors by written notice to each Major Holder and Founder, for as long as
such Founder holds shares in the Company (for purposes of this Article 14,
the “Offerees”). The number of Offered Securities offered to each Offeree
shall be the result of the multiplication of the Offered Securities by a
fraction: (i) the numerator of which shall be the total number of outstanding
Ordinary Shares of the Company (on an as-converted basis) held by such
Offeree as determined prior to the offer made pursuant to this Article ***,
and (ii) the denominator of which is the total number of outstanding Ordinary
Shares of the Company (on an as-converted basis), as determined prior to the
offer made pursuant to this Article 14.  


	
 

	
 

	
 

	
 


	
 

	
 

	
(2)

	
The Company
shall provide each Offeree with a Notice (the “Notice of Offer”) specifying
the number of Offered Securities he is entitled to purchase and which shall
state the terms of the proposed issuance, and any such Offeree may accept
such offer, as to all or any part of the Offered Securities so offered to
him, by giving the Company written notice of acceptance within twenty (20)
days after being served with such Notice of Offer; provided, however, that
the Founders may only exercise such right for their own benefit through their
available funds, provided that if the purchase by such Offeree is being
effected prior to, or concurrently with such issuance of Offered Securities
(rather than subsequent thereto) then such Offeree shall be obligated to
consummate the purchase of such Offered Securities only if the Company
consummates the sale of the balance of the Offered Securities pursuant to the
terms described in such Notice of Offer  


	
 

	
 

	
 

	
 


	
 

	
 

	
(3)

	
Any and all
  preemption rights set forth in this Article 14, may be exercised by a
  Permitted Transferee of a Major Holder instead of by such Major Holder if
  such Major Holder so notifies the Company in writing.





- 19 -








	
 

	
 

	
 


	
 

	
(j)

	
Any Offered
  Securities not subscribed for by the Offered as aforesaid, shall be under the
  control of the Board of Directors and may be issued without regard to this
  Article 14, except to the extent that said Offered Securities may not be
  allotted on terms more favorable to the purchaser than those offered pursuant
  to this Article 14. In the event the Offered Securities are not acquired by
  the expiration of 120 days from the date of expiration of the twenty (20) day
  period referred to in Article 14(a)(2), they may not be issued except by
  compliance with the provisions of Article 14.


	
 

	
 

	
 


	
15.

	
REGISTERED
  HOLDER 


	
 

	
 

	
 


	
 

	
(a)

	
If two or more
  persons are registered as joint holders of a share they shall be jointly and
  severally liable for any calls or any other liability with respect to such
  share. However, with respect to voting, power of attorney and furnishing
  notices, the one registered first in the register of shareholders, insofar as
  all the registered joint holders shall not notify the Company in writing to
  relate to another one of them as the sole owner of the share, as aforesaid,
  shall be deemed to be the sole owner of the Share.


	
 

	
 

	
 


	
 

	
(b)

	
In the case
  that two or more persons arc registered together as holders of a share, each
  one of them shall be permitted to give receipts binding all the joint holders
  for dividends or other monies in connection with the share and the Company
  shall be permitted to pay all the dividends or other monies due with respect
  to the share to one or more of the joint holders, as it shall choose.


	
 

	
 

	
 


	
 

	
(c)

	
Except as
  otherwise provided in these Articles, the Company shall be entitled to treat
  the registered holder of any share as the absolute owner thereof, and,
  accordingly, shall not, except as ordered by a court of competent
  jurisdiction, or as required by statute, be bound to recognize any equitable
  or other claim to, or interest in, such share, on the part of any other
  person. 


	
 

	
 

	
 


	
16.

	
SHARE
  CERTIFICATE 


	
 

	
 

	
 


	
 

	
(a)

	
A
  shareholder shall be entitled to receive from the Company without payment,
  one certificate that shall contain that number of shares registered in the
  name of such shareholder, their class and serial numbering. However, in the
  event of joint holders holding a share, the Company shall not be obligated to
  issue more than one certificate to all of the joint holders, and the delivery
  of such a certificate to one of the joint holders shall be deemed to be a
  delivery to all of the joint holders.


	
 

	
 

	
 


	
 

	
(b)

	
Each
  certificate shall carry the signature or signatures of a director or such
  other persons appointed by the Board of Directors for this purpose and the
  rubber stamp or  the seal of the
  Company.


	
 

	
 

	
 


	
 

	
(c)

	
If a share
  certificate is defaced, lost or destroyed, it may be replaced upon payment of
  such fee, if any, and on such terms, if any, as to evidence and indemnity as
  the Board of Directors may think fit.





- 20 -








	
 

	
 


	
17.

	
MODIFICATIONS
  OF SHARE RIGHTS


	
 

	
 


	
 

	
If at any
  time the share capital is divided into different classes of shares (unless
  otherwise provided for by the terms of issue of the shares of that class) it
  shall be permitted, subject to the provisions of Article 12 above, to change,
  convert, broaden, add or vary in any other manner the rights, advantages,
  restrictions and provisions attached at that time to one or more of the
  classes by a resolution of the general meeting of the shareholders of the
  Company, without the need for any separate class vote or class meeting.


	
 

	
 


	
 

	
It is hereby
  clarified that any resolution required to be adopted pursuant to these
  Articles by the consent of a separate class of shares, whether by way of a
  separate general meeting of such class or by way of written consent, shall be
  given by the holders of shares of such class entitled to vote or give consent
  thereon and no holder of shares of a certain class shall be banned from
  voting or consenting by virtue of being a holder of more than one class of
  shares of the Company, irrespective of any conflicting interests that may
  exist between such different classes of shares. A shareholder shall not be
  required to refrain from participating in the discussion, voting and/or
  consenting on any resolution concerning an amendment to any class of shares
  held by such shareholder, due to the fact that such shareholder may benefit
  in one way or another from the outcome of such resolution. 


	
 

	
 


	
 

	
Without
  derogating from the need to receive any consents or approvals required
  pursuant to Article 12, it is hereby clarified and agreed that the
  enlargement of an existing class of shares, or the issuance or allotment of
  additional shares thereof, or the creation of additional shares of that class
  as a result of conversion of shares from another class or. unification with
  another class, shall not be deemed, for purposes of these Articles, to amend,
  change, vary, modify or abrogate the rights attached to the previously issued
  shares of such class or of any other class.


	
 

	
 


	
PLEDGE


	
 

	
 


	
18.

	
The Company
  shall have a lien and first pledge on all the shares, not fully paid,
  registered in the name of any shareholder (whether registered in his name
  only or together with another or others) and on the proceeds from the sale
  thereof, for any amount still outstanding with respect to that share, whether
  presently payable or not. Such a pledge shall exist whether the dates of
  payment or fulfillment or execution of the obligations, debts or commitments
  have become due or not, and shall apply to all dividends that shall be
  decided upon from time to time in connection with these shares. No benefit
  shall be created with respect to this share based upon the rules of equity
  which shall frustrate this pledge, however the Board may declare at any time
  with respect to any share, that it is released, wholly or in part,
  temporarily or permanently, from the provisions of this article.


	
 

	
 


	
19.

	
The Company
  may sell, in such manner and at such time as the Board thinks fit, any of the
  pledged shares, but no sale shall be made unless the date of payment of the
  monies or a part thereof has arrived, or the date of fulfillment and
  performance of the obligations and commitments in consideration of which the
  pledge exists has arrived, and after a written request has been furnished to
  the shareholder or person who has acquired a right in the shares, which sets
  out the amount or obligation or commitment due from him and which demands
  their payment, fulfillment or execution, and which informs the person of the
  Board’s desire to sell the shares in the event of non-fulfillment of the
  notice, and the person has not fulfilled his obligation pursuant to the
  notice within seven days after the notice has been sent to him.





- 21 -








	
 

	
 


	
20.

	
The net
  proceeds of such sale after payment of the costs thereof; shall be applied in
  payment of such sum due to the Company or to the fulfillment of the
  obligation or commitment (including debts, liabilities and engagements which
  have not yet fallen due for payment or satisfaction), and the remainder (if
  there shall be any) shall be paid to the shareholder or to the person who has
  acquired a right in the share sold pursuant to the above.


	
 

	
 


	
21.

	
After
  execution of a sale as aforesaid, the Board shall be permitted to sign or to
  appoint someone to sign a deed of transfer of the sold shares and to register
  the buyer’s name in the register of shareholders as the owner of the sold
  shares and it shall not be the obligation of the buyer to supervise the
  application of monies nor will his right in the shares be affected by a
  defect or illegality in the sale proceedings after his name has been
  registered in the register of shareholders with respect to those shares. The
  sole remedy of any person aggrieved by the sale shall be in damages only and
  against the Company exclusively.


	
 

	
 


	
TRANSFER OF
  SHARES AND THE MANAGEMENT THEREOF


	
 

	
 


	
22.

	
Each
  transfer of shares shall be made in writing in the form appearing herein
  below, or in a similar form, or in any form as to be determined upon by the
  Board from time to time, such form shall be delivered to the Office together
  with the transferred share certificates and any other proof the Board shall
  require, if it shall so require, in order to prove the title of the
  transferor. The instruments and documents notifying the Company with respect
  to the transfer are a prerequisite to the effectuation of such transfer.
  Notwithstanding the above, any transfer of shares to any person or entity
  that is not at the time of transfer a shareholder of the Company and that
  competes with the Company, directly or indirectly, in the field of optical
  inspection or metrology for semiconductors or the transfer of shares which
  have not been fully paid up will require the consent and approval of the
  Board of Directors, except if such transfer is to a Permitted Transferee.








	
 

	
 


	
Deed of Transfer of Shares


	
 

	
 


	
I,
  ____________of _____________in consideration of the sum of NIS ___________
  (New Israeli Shekels) paid to me by __________, of ____________ (hereinafter
  called “the said transferee”) do hereby transfer to the said transferee
  ___________ share (or shares) having par value of NIS________each one
  numbered____until____inclusive in Negevtech Ltd., to hold unto the said
  transferee, his executors, administrators, and assigns, subject to the
  conditions on which I held the same at the time of the execution hereof; and
  I, the said transferee, do hereby agree to accept the said share (or shares)
  subject to the conditions aforesaid. As witness we have hereunder set out
  hands the______day of _________20__. 








	
 

	
 

	
 

	
 

	
 


	
 

	


	
 

	


	
 


	
 

	
Transferee

	
 

	
Transferor

	
 


	
 

	
 

	
 

	
 

	
 


	
 

	


	
 

	


	
 


	
 

	
Address

	
 

	
Address

	
 








	
 

	
 


	
23.

	
The deed of
  share transfer shall be executed both by the transferor and transferee, and
  the transferor shall be deemed to remain a holder of the share until the name
  of the transferee is entered into the register of shareholders in respect
  thereof.





- 22 -








 


	
 

	
 


	
24.

	
The Company
  shall be permitted to demand a fee for registration of transfer, in a
  reasonable rate as to be determined by the Board from time to time, with the
  exception of transfers to Permitted Transferees.


	
 

	
 


	
25.

	
The Register
  shall be closed for a period of seven (7) days before every ordinary general
  meeting of the Company.


	
 

	
 


	
26.

	
Upon the
  death of a shareholder, the remaining holders (in the event that the deceased
  was a joint holder in a share) or the administrators or executors or heirs of
  the deceased (in the event the deceased was the sole holder of the share or
  was the only one of the joint holders of the share to remain alive) shall be
  recognized by the Company as the sole holders of any title to the shares of
  the deceased. However, nothing aforesaid shall release the estate of a joint
  holder of a share from any obligation with respect to the share that he held
  jointly with any other holder.


	
 

	
 


	
27.

	
Any person
  becoming entitled to a share in consequence of the death or bankruptcy or
  liquidation of a shareholder shall, upon such evidence being produced as may
  from time to time be required by the Board, have the right, either to be
  registered as a shareholder in respect of the share upon the consent of the
  Board or, instead of being registered himself, to transfer such share to
  another person, subject to the provisions contained in these Articles with
  respect to transfers.


	
 

	
 


	
28.

	
A person
  becoming entitled to a share because of the death of a shareholder shall be
  entitled to receive, and to give receipts for, dividends or other payments
  paid with respect to the share, but he shall not be entitled to receive
  notices with respect to Company meetings or to participate or vote therein
  with respect to that share, or aside from the aforesaid, to use any right of
  a shareholder, until he has been accepted as a shareholder with respect to
  that share.








	
 

	
 

	
 


	
29.

	
RIGHT OF
  FIRST REFUSAL


	
 

	
 

	
 


	
 

	
(a)

	
Until the
  QIPO, a shareholder in the Company shall not be permitted to make any
  Transfer (as hereinafter defined) of his shares in the Company, other than to
  a Permitted Transferee, except pursuant to the following provisions set forth
  below.


	
 

	
 

	
 


	
 

	
 

	
For the
purposes of this Agreement, the term “Transfer” shall mean any sale,
assignment, transfer, hypothecation or other encumbrance or disposition of in
any way. 


	
 

	
 

	
 


	
 

	
(b)

	
A
shareholder, desirous of making any Transfer of the shares held by him to
others, in whole or in part (hereinafter the “Transferor”) shall be obligated
to offer them first to the Offerees (as defined in Article 14 above), by
giving notice in writing to such Offerees (hereinafter “Sale Notice”).  


	
 

	
 

	
 


	
 

	
(c)

	
In the Sale
Notice the Transferor shall mention the number of shares he wishes to
Transfer (hereinafter the “Offered Shares”), the price forming the
consideration for the Offered Shares, the name of the transferee (the
“Transferee”) and the other conditions of the sales.  


	
 

	
 

	
 


	
 

	
(d)

	
The Sale
  Notice shall be irrevocable unless all of the Offerees agree otherwise.





- 23 -








	
 

	
 

	
 


	
 

	
(e)

	
Each of the
Offerees may inform the Transferor in writing within 21 Business Days from
the date of receipt of the Sale Notice as to his/her intention to purchase
that number of Offered Shares, in whole or in part, which is the result of
the multiplication of the Offered Shares by a fraction: (i) the numerator of
which is the number of Ordinary Shares (on an as-converted basis) of the
Company held by such Offeree and (ii) the denominator of which is the total
number of outstanding Ordinary Shares (on an as-converted basis) held by all
Offerees (hereinafter the “Offerees’ Offered Shares”), the purchase of which
shall be at the purchase price and in accordance with the payment conditions
as provided for in the Sale Notice (hereinafter the “Purchase Notice”). An
Offeree who has submitted a Purchase Notice shall be referred to hereinafter
as “Buyer”. Notwithstanding the foregoing, Intel (to the extent it is a Major
Holder) shall be required to provide the Transferor with a Purchase Notice
within 10 days of receipt of the Sale Notice and, in the event Intel is the
Transferor, the Offerees will be required to provide Intel with a Purchase
Notice within 10 days of receipt of the Sale Notice.  


	
 

	
 

	
 


	
 

	
(f)

	
Thereafter,
the Transferor shall give each Buyer who has fully exercised his rights
pursuant to Article 29(e) a written notice (the “Excess Notice”) stating the
amount of Offered Shares with respect to which no Purchase Notice was
submitted (hereinafter referred to as “Excess Offered Shares”) and each such
Buyer shall be entitled, subject to Article 29(j) below, provided he so
notifies the Transferor in writing (the “Excess Reply Notice”), such Excess
Reply Notice to be received by the Transferor within 7 Business Days following
the delivery by the Transferor to such Buyer of the Excess Notice, to
purchase any or all of such Excess Offered Shares.  


	
 

	
 

	
 


	
 

	
(g)

	
If by the
  end of the time referred to in Articles 29(e) and 29(f) above no Purchase
  Notices have been received by the Transferor or the Transferor has received
  Purchase Notices with respect to a total number of shares that is less than
  the number of Offered Shares, the Transferor may, within 30 days from the
  expiration of the time for submission of the Purchase Notices or, in the
  event that Article 29(f) applies, the Excess Reply Notice, sell all (but not
  less than all) of the Offered Shares to the Transferee and/or to any Buyer
  that submitted a Purchase Notice and, if applicable, an Excess Notice, up to
  the number of shares requested to be purchased by such Buyer (though he shall
  be under no obligation to do so) at a price not less than the price mentioned
  in the Sale Notice (as linked to the representative rate of the U.S. dollar
  from the day of the furnishing of the notice to the date of sale in fact) and
  upon all other conditions not less favorable to the Transferor than those
  provided for in the Sales Notice.


	
 

	
 

	
 


	
 

	
(h)

	
If the
  Transferor shall not transfer the Offered Shares as aforesaid, within the
  period of time specified in Articles 29(e), (f) and (g) above, he shall be
  obligated, before selling the Offered Shares to another, to offer them again
  to the Offeree in accordance with the aforementioned procedure, and such
  procedure shall apply to any further offer.


	
 

	
 

	
 


	
 

	
(i)

	
If there
  have been received Purchase Notices and, if applicable, Excess Reply Notices,
  for a total number of shares equal to the number of Offered Shares, then
  every Buyer shall buy the number of shares as mentioned in the Purchase
  Notice and, if applicable, the Excess Reply Notices, he has submitted.





- 24 -








	
 

	
 

	
 


	
 

	
(j)

	
If Purchase
  Notices and Excess Reply Notices shall have been received for a total number
  of shares greater than the number of Offered Shares, the Buyers may acquire
  shares in a manner proportionate to the share capital of the Company held by
  them at that time, as determined in accordance with Article 29(e) above.
  However, no Buyer shall be required to buy a greater number of shares than
  the number provided for in the Purchase Notice and, if applicable, the Excess
  Reply Notice, submitted by him and upon the allocation to him of the full
  number of Offered Shares so requested by him in the Purchase Notice, such
  Buyer shall be disregarded for the purpose of any further allocation of the
  remaining Excess Offered Shares.


	
 

	
 

	
 


	
 

	
(k)

	
In every one
of the events referred to in Articles 29(e), 29(f), 29(g), 29(h), 29(j) and
29(i) the Transferor shall send within five (5) days after the last date for
the submission of each of the Purchase Notices and the Excess Reply Notices
to each of the Buyers, a notice accompanied by the copies of all Purchase
Notices received by the Transferor of either non-acceptance of the offer
pursuant to the Sale Notice or the acceptance thereof (hereinafter the
“Acquisition Notice”). 


	
 

	
 

	
 


	
 

	
(l)

	
After
  receipt of the Acquisition Notice notifying acceptance, each Buyer shall
  purchase from the Transferor, and the Transferor shall sell and transfer to
  such Buyer the number of shares referred to in such notice according to the
  terms of the Sale Notice (other than in circumstances set forth in Article
  29(g) above in which case the provisions of said Article 29(g) will apply).
  Upon the transfer to Buyer such shares must be free and clear of any liens or
  encumbrances unless otherwise specified in the Sale Notice. The Transferor
  and such Buyer shall each have all remedies for breach of contract available
  under applicable laws in connection with the transactions set forth in this
  Article 29.


	
 

	
 

	
 


	
 

	
(m)

	
Any Transfer
  of shares by any Offeree pursuant to the exercise of its co-sale rights under
  Article 29A shall not give the other Offerees additional rights of first
  refusal and shall be deemed to have been part of the Offered Shares and
  included in the Sale Notice to the extent that the number of the shares being
  Transferred has not changed as a result of the exercise of co-sale rights. To
  the extent such number has changed, the provisions hereof shall apply to the
  transaction again, ab initio, and the Transferor shall give a new Sale Notice
  hereunder.








	
 

	
 

	
 


	
29A

	
CO SALE


	
 

	
 

	
 


	
 

	
(a)

	
Should any
holder of Preferred Shares (other than Intel) or holder of Ordinary-Preferred
Shares (“Selling Shareholder”) wish to make a Transfer, other than to a
Permitted Transferee, then each of the holders of Preferred Shares and
Ordinary-Preferred Shares other than Intel (the “Entitled Shareholders”)
shall have the right to participate in the Selling Shareholder’s Transfer of
such Offered Shares, in accordance with this Article 29A, pursuant to the
specified terms and conditions’ stated in the Sales Notice, provided that an
Entitled Shareholder who is also an Offeree for purposes of Article 29 above
shall be entitled to effect whether to exercise its rights under either
Article 29 or Article 29A and shall not be entitled to contingently exercise
its rights under both such articles. Each of the Entitled Shareholders shall
be entitled upon written notice to the Selling Shareholder within twenty-one
(21) Business Days after receipt of the Sales Notice (“Participating Preferred
Shareholders”), to sell to the Transferee up to that number of the Shares in
the Company owned by such Participating Preferred Shareholder (the “Equity
Shares”) determined by multiplying the total number of Offered Shares times a
fraction the numerator of which is the number of Ordinary Shares owned by
such Participating Preferred Shareholders (on an as-converted basis) and the
denominator of which is the total number of Ordinary Shares owned by all
Participating Preferred Shareholders (on an as-converted basis) and the
Selling Shareholder. Such written notice shall indicate, subject to the terms
of this Article 29A, the number of Shares that the Participating Preferred
Shareholder intends to transfer to the Transferee. At the closing of the sale
of the Offered Shares to the Transferee, the Selling Shareholder shall
transfer his shares to the Transferee only if the Transferee concurrently
therewith purchases, on the same terms and conditions specified in the
Article 29A Notice, all of the Shares as to which participation notices have
been delivered.  





- 25 -








	
 

	
 

	
 


	
 

	
(b)

	
Notwithstanding
  the provisions of Article 29A(a), no Transfer in one transaction or in a
  series of related transactions, of shares representing more than 50% of the
  issued and outstanding shares of the Company (on an as converted basis) may
  be made, other than to a Permitted Transferee, unless the proposed Transferee
  of such shares offers to purchase the remaining issued and outstanding shares
  of the Company upon the same terms and conditions. In such event, the
  consideration payable by the Transferee shall be distributed among all
  selling shareholders participating in such Transfer in accordance with the
  terms of Article 8.


	
 

	
 

	
 


	
29B

	
BRING ALONG


	
 

	
 

	
 


	
 

	
(a)

	
At any time
  prior to the Company’s QIPO, in the event that:


	
 

	
 

	
 


	
 

	
 

	
Shareholders
holding 60% (sixty percent) or more (the “Threshold Percent”) of the
Company’s issued and Outstanding shares, on an as converted basis (the
“Proposing Shareholders”) accept an offer to affect a Merger or Acquisition (the
“Offer”); and  


	
 

	
 

	
 


	
 

	
 

	
Such Merger
or Acquisition is conditioned upon the consent and/or sale of all of the
remaining issued shares of the Company; then all remaining shareholders
(the “Non Proposing Shareholders”) will be required, if so demanded by the
Proposing Shareholders, to vote in favor of, execute the relevant documents,
and otherwise take all necessary and reasonable actions relating to such
Offer, including to sell their shares upon the same terms and conditions as
in the Offer made to the Proposing Shareholders and the proceeds shall be
allocated in accordance with the provisions of Article 8, provided however,
that absent the written consent of the holders of the majority of the
outstanding Series BB Preferred Shares (which must include also the Special
BB Consent), the holders of the Preferred Shares shall not be forced to take
any actions or sell their shares as aforesaid, if the Merger or the
Acquisition does not reflect a Company price per share of more than two times
the Original Issue Price of the Series BB-1 Preferred Shares. In the event
that the Threshold Percent is met, any safe, assignment, transfer, pledge,
hypothecation, mortgage, disposal or encumbrance of the Shares by the Non
Proposing Shareholders other than in connection with the Offer, shall be
absolutely prohibited. 





- 26 -








	
 

	
 

	
 

	
 


	
 

	
(b)

	
Any sale,
transfer or exchange of the shares or all or substantially all of the assets
of the Company pursuant to Article 29B(a) above which gives rise to a tax
liability of either of the Founders (any such transaction, a “Taxable
Transaction”) will be dealt with in one (1) of the following two (2) ways: 


	
 

	
 

	
 


	
 

	
 

	
(1)

	
if the
Taxable Transaction is a bona fide transaction with a third party unrelated
to the Company or any of its directors or shareholders, the Taxable
Transaction shall be contingent, unless otherwise agreed by the Founders,
upon the Taxable Transaction’s including the receipt by each of the Founders
of (A) cash or liquid assets reasonably acceptable to the Founders, in either
case not subject to transfer prohibition and in an amount sufficient to pay
each Founder’s tax liability, if any, in connection with the Taxable
Transaction or (B) a loan as described in Article 29B(b)(2) below; or  


	
 

	
 

	
 

	
 


	
 

	
 

	
(2)

	
in any other
  event, such transaction shall be contingent, unless otherwise agreed by the
  Founders, upon the Taxable Transaction’s providing for a loan to each of the
  Founders in an amount sufficient to pay his tax liability, if any, in
  connection with the Taxable Transaction, such loan to be linked to the U.S.
  Dollar but without interest and repayable upon the sale of each Founder of
  the shares or other non-cash consideration received by him in the Taxable
  Transaction, and to be non-recourse other than in respect of such shares or
  other non-cash consideration received by the Founders in the Taxable
  Transaction.


	
 

	
 

	
 

	
 


	
 

	
(c)

	
Notwithstanding
  the foregoing, the obligation of Intel to sell its shares (the “Transaction”) pursuant to this Article
  29B shall be subject to the satisfaction of each of the following conditions:


	
 

	
 

	
 

	
 


	
 

	
 

	
(i)

	
Form of
  Consideration. Intel shall not be required to accept
  any consideration for its shares other than cash or freely tradeable equity
  securities (subject to a lock-up period of no more than 90 days following the
  issuance of such securities to Intel) which have been admitted to or listed
  upon (i) the Official List of the UK Listing Authority or (ii) the New York
  or American Stock Exchange or the NASDAQ National Market in the United States
  of America or (iii) the Neuer Markt or (iv) Euronext Paris S.A. or (v) such
  other stock exchange as Intel may agree.


	
 

	
 

	
 

	
 


	
 

	
 

	
(ii)

	
Equal
  Consideration. Subject to section (iii) below, upon
  the consummation of the Transaction, all of the holders of Preferred Shares
  will receive the same form and amount of consideration per Preferred Share,
  respectively, taking into account any liquidation preference to which the
  holders of Preferred Shares are entitled, and if any holders of Preferred
  Shares arc; given an option as to the form and amount of consideration to be
  received, all holders will be given the same option.


	
 

	
 

	
 

	
 


	
 

	
 

	
(iii)

	
Costs/Expenses.
  Intel shall not be required to incur any costs or expenses (without
  limitation whether by way of out of pocket expenses or by way of set off) in
  connection with the Transaction except its pro rata share of any costs
  incurred for the benefit of all of the Company’s shareholders and for which
  Intel has agreed in writing to be responsible in advance of such costs being
  incurred. For the avoidance of doubt Intel shall be solely responsible for
  any costs that it decides to incur including the costs of its own counsel.





- 27 -








	
 

	
 

	
 

	
 


	
 

	
 

	
(iv)

	
Representations,
Warranties and Indemnities. The only
representations, warranties or indemnities that Intel shall be required to
make in connection with the Transaction are representations, warranties and
indemnities concerning (i) legal ownership of the Company’s securities to be
sold by Intel (the “Intel Securities”), and (ii) the corporate authority of
Intel to convey title to the Intel Securities, and the ability to do so free
and clear of liens, encumbrances or adverse claims (the “Intel Required
Obligations”). The Intel Required Obligations shall be in the same form as
these to be given by each of the other shareholders of the Company and shall
be given by Intel on a several (but not joint) basis only.  


	
 

	
 

	
 

	
 


	
 

	
 

	
(v)

	
Liability.
  Intel shall not accept, assume or be deemed to have assumed any joint, or
  joint and several, liability with any other shareholder(s), the Company or any
  other party, with respect to any representation, warranty, indemnity,
  covenant or combination thereof made by such other shareholder(s), the
  Company or other party in connection with the Transaction. Intel’s liability
  shall in any event be limited to the amount of consideration actually
  received by Intel in cleared funds.


	
 

	
 

	
 

	
 


	
 

	
 

	
(vi)

	
Escrow and
Liability upon Escrow. In the event that
consideration for any of the shares in the Company is to be placed in escrow
(the “Escrow Amount”), such Escrow Amount will not exceed 15% of the total
consideration payable to all shareholders of the Company and that the Escrow
Amount, to the extent that no claim has been made against it and for such
amount as might remain following such claim, will be released to the shareholders
at the latest three (3) months following the end of the acquiring company’s
first accounting period after the consummation of the transfer of Intel’s
shares or eighteen (18) months after the consummation of such transfer (the
later of the two). Intel’s liability shall be limited to its pro rata share
of the Escrow Amount (Intel’s pro rata share to be calculated on the basis of
the consideration due to Intel as a proportion of the aggregate consideration
due to all shareholders in the Company). For the avoidance of doubt, the
Escrow Amount may be used to satisfy claims arising out of breaches by the
Company of representations and warranties given by the Company in connection
with a Transaction, all subject to the foregoing terms and conditions. 


	
 

	
 

	
 

	
 


	
 

	
 

	
(vii)

	
US
Securities. If the consideration proposed for Intel’s shares is in the form
of securities of an issuer incorporated in the United States, Intel shall not
be obligated to participate in the Transaction unless it is provided an
opinion of counsel to the effect, that the sale in connection with such
Transaction is not in violation of the registration or qualification
requirements of federal or applicable state securities laws in the United
States, or, if Intel is not provided with such an opinion, the Company shall
indemnify Intel for any violation. 





- 28 -








	
 

	
 

	
 

	
 


	
 

	
 

	
(vii)

	
Other
Agreements. Intel shall not be required to amend, extend or terminate any
contractual or other relationship with the Company, the acquirer or their
respective affiliates. 


	
 


	
 

	
 

	
(viii)

	
Covenant Not
to Compete. Intel shall not be required to agree to any covenants including
without limitation any covenant not to compete or any covenant not to
solicit any of the customers, employees or suppliers of any party to the
Transaction. 


	
 

	
 

	
 

	
 


	
 

	
 

	
Furthermore,
notwithstanding the foregoing, the obligation of Orbotech to sell its shares
(the “Orbotech Transaction”) pursuant to this Article 29B shall be subject to
the condition that the only representations, warranties or indemnities that
Orbotech shall be required to make in connection with the Orbotech
Transaction are representations, warranties and indemnities concerning (i)
legal ownership of the Company’s securities to be sold by Orbotech (the
“Orbotech Securities”), and (ii) the corporate authority of Orbotech to
convey title to the Orbotech Securities, and the ability to do so free and
clear of liens, encumbrances or adverse claims (the “Orbotech Required
Obligations”). The Orbotech Required Obligations shall be in the same form as
those to be given by each of the other shareholders of the Company and shall
be given by Orbotech on a several (but not joint) basis only.  








	
 

	
 

	
 


	
29C.

	
NO SALE


	
 


	
 

	
(a)

	
Until the
close of business on December 31, 2005, subject to Articles 29C(b) and (c)
below and Article 29D below, neither Founder shall make any transfer,
assignment, pledge, or other disposal (a “Disposition”) of the issued and
outstanding share capital of the Company held by him upon execution of the
Star Agreement, and any shares of the Company hereafter acquired by any such
Founder as a result of this holding of such shares (collectively referred to
as the: “Limited Shares”), either directly or indirectly.  


	
 


	
 

	
(b)

	
Notwithstanding
the above, in the event that the Company’s IPO has not occurred prior to the
expiration of eighteen months following the execution of the Star Agreement,
(the “Initial Period”) then during each year commencing upon the expiration
of the Initial Period, each Founder shall be entitled to make a Disposition
of Limited Shares representing up to an aggregate of ten percent (10%) of the
Limited Shares held by such Founder (the “10% Allowance”), provided however
that prior to the IPO, the aggregate of such Dispositions shall be not more
than twenty five percent (25%) of the Limited Shares in the aggregate. Any
10% Allowance not sold by a Founder during any one year may be accumulated by
such Founder in respect of the following year or years.  


	
 


	
 

	
(c)

	
The
  restrictions set forth in this Article 29C shall expire upon and in
  connection with the IPO or on the close of business on December 31, 2005, the
  earlier of the two. Nothing in this Article shall have any effect upon the
  requirement to offer any shares sold as part of the 10% Allowance to the
  Offerees as set forth in Article 29 or to receive the consent of the Board of
  Directors to the transfer of any shares to a competitor of the Company (which
  may be obtained prior to or after offering the shares to the other
  shareholders) or upon its authority to refuse to consent to the share
  transfer.





- 29 -








	
 

	
 


	
29D.

	
SALE OF
  SHARES BY THE FOUNDERS


	
 

	
 


	
 

	
Anything to
  the contrary herein notwithstanding, the sale of shares by the Founders
  pursuant to the Share Transfer Agreement shall not be subject to the
  restrictions on transfer set forth in Articles 29 (“Right of First Refusal”),
  29A (“Co Sale”) or 29C (“No Sale”).


	
 

	
 


	
29E.

	
STAND STILL


	
 

	
 


	
 

	
Notwithstanding
  anything to the contrary in these Articles, any issuance of securities by the
  Company, and any sale, transfer, pledge, encumbrance or other disposal of any
  of the securities of the Company (by the Company or any shareholder), or any
  other action (including repurchase of any shares of the Company by the
  Company or by any subsidiary thereof), other than any action in which the
  provisions of Article 29B (Bring Along) shall apply, which results in a
  Strategic Investor (as defined below) whether or not a shareholder of the
  Company, holding (together with affiliates, Permitted Transferees, or other
  parties acting in concert with it) more than 20% of the voting rights in the
  Company, is prohibited unless approved in writing in advance by the Majority
  Preferred Shareholders (excluding, for the purposes of such majority, any
  Strategic Investors and their affiliates and Permitted Transferees or other
  parties acting in concert with them) and on terms and conditions approved by
  them. Any of the transactions set forth in the forgoing sentence not so
  approved shall be null and void and shall not be registered in the Company’s
  Shareholders Register. For purpose hereof a “Strategic Investor” shall mean a
  corporation or other business entity whose business is related to the
  Company’s business and, who is likely to have a business or technologic
  interest in the Company’s business, as distinguished from an interest for the
  sole purpose of financial investment.


	
 

	
 


	
CALLS


	
 


	
30.

	
A
  shareholder shall not be entitled to receive dividends nor to use any right a
  shareholder has, or receive any benefit or entitlement stated in these
  Articles (including without limitation, the rights set forth in Articles 7,
  8, 11, 12, 14, 29, 29A, 65 and 86 hereof), unless he has paid all the calls
  that shall be made from time to time prior to or on the date appointed for
  payment thereof, with respect of money unpaid on all of his shares, whether
  he is the sole holder or holds the shares together with another person, in
  addition to interest and expenses if there shall be any.


	
 

	
 


	
31.

	
The Board
  may, subject to the provisions of these Articles, make calls upon the
  shareholders from time to time in respect of any moneys unpaid on their
  shares, as they shall determine proper, upon the condition that there shall
  be given prior notice of fourteen (14) days on every call and each
  shareholder shall be obligated to pay the total amount requested from him, or
  the installment on account of the call (if there shall so be) at the times
  and places to be determined by the Board.


	
 

	
 


	
32.

	
The calls
  for payment shall be deemed to have been requested from the date the Board
  shall have decided upon the calls for payment.





- 30 -










	
 

	
 


	
33.

	
The joint holders of a share shall be jointly and
  severally liable to pay the calls for payment in full and the installment on account, in connection with such
  calls.


	
 

	
 


	
34.

	
If a sum called in respect of a
  share is not paid the holders of the share or the person to whom it has been issued shall be liable to pay
  interest and linkage differentials upon the amount of the call or the payments on account, as determined by the
  Board of Directors commencing from the day appointed for the payment
  thereof to the time of actual payment, but
  the Board shall be at liberty to waiver payment of that interest, wholly or
  in part.


	
 

	
 


	
35.

	
Any amount that according to
  the condition of issuance of a share must be paid at the time of issuance
  or at a fixed date, whether on account of the sum of the share or premium,
  shall be deemed for the purposes of these
  Articles to be a call of payment that was made duly and the date of payment
  shall be the date appointed for payment. In the event of non-payment of this amount all of the Articles herein dealing with
  payment of interest, expenses, forfeiture, pledge and the like and all
  the other Articles connected therewith, shall apply, as if this sum had been duly requested and notice had been
  given, as aforesaid.


	
 

	
 


	
36.

	
The Board may make arrangements at the time of issue
  of shares for a difference between the holders with respect to the amount of
  calls to be paid and the times of payment, and the rate of interest.


	
 

	
 


	
37.

	
The Board may, if it thinks
  fit, receive from any shareholder willing to pay in advance all of the monies or a part thereof that shall be due on
  account of his shares, in addition to any amounts of a part thereof that shall be due on account of his shares,
  in addition to any amounts that the payment in fact has been requested
  and they shall be permitted to pay him interest
  at the rate the Board and shareholders shall agree upon, for the amounts paid
  in advance as aforesaid, or upon the
  part thereof which is in excess of the amounts whose payment was at the time requested on account of
  his shares in connection with which the payments have been made in
  advance, in addition to paying dividends that will be paid for that part of the share which has been paid in
  advance. The Board of Directors may at any time repay any amount so advanced without premium or penalty by giving
  such shareholder seven days’ prior
  notice in writing. Nothing in this Article 37 shall derogate from the right
  of the Board of Directors to make any call before or after receipt by the
  Company of any such advance.


	
 

	
 


	
FORFEITURE OF SHARES


	
 

	
 


	
38.

	
If a shareholder fails to pay
  any call or installment of a call on the day appointed for payment thereof, the Board may, at any time thereafter
  during such time as any part of such call or installment remains unpaid, serve a notice on him requiring payment of
  so much of the call or installment
  as is unpaid, together with any interest which may have accrued and any expenses that were incurred as a result of such
  non-payment.


	
 

	
 


	
39.

	
The notice shall name a further day, not earlier than the
  expiration of seven days from the date of the notice, on or before
  which the amount of the call or installment or a part thereof is to be made together with interest and any
  expenses incurred as a result of such nonpayment. The notice shall also state the place the payment is to be
  made and that in the event of
  non-payment, at or before the time appointed, the shares in respect of which
  the call was made will be liable to be forfeited.





- 31 -








	
 

	
 

	
 


	
40.

	
If the requirements of any such
  notice as aforesaid are not complied with, any share in respect of
  which the notice has been given may at any time thereafter, before the
  payment required by the notice has been
  made, be forfeited by a resolution of the Board to that effect. In such event, the provisions of Section 181 of
  the Companies Law shall apply, and the shares so forfeited shall be “dormant shares” as provided for therein.
  The forfeiture shall include those
  dividends that were declared but not yet distributed, with respect to the forfeited shares.


	
 

	
 

	
 


	
41.

	
A share so forfeited-shall be deemed to be the
  property of the Company and can be sold or otherwise disposed of, on such
  terms and in such manner as the Board thinks fit, subject to applicable law. Such shares shall not be deemed,
  for the purposes of the Articles, to comprise
  part of the issued and outstanding share capital of the Company, and shall be
  disregarded for the purposes of
  calculations based thereon. At any time before a sale or disposition the forfeiture may be canceled on
  such terms as the Board thinks fit.


	
 

	
 

	
 


	
42.

	
A person whose shares have been forfeited shall
  cease to be a shareholder in respect of the forfeited shares, but shall
  notwithstanding remain liable to pay to the Company all monies which, at the date of forfeiture, were
  presently payable by him to the Company in respect of the shares, but
  his liability shall cease if and when the Company receives payment in full of
  all moneys that, at the date of forfeiture, were presently payable by him to
  the Company in respect of the shares
  (including interest and expenses).


	
 

	
 

	
 


	
43.

	
Without derogating from Article
  30 above, the forfeiture of a share shall cause, at the time of forfeiture,
  the cancellation of all rights in the Company or any claim or demand against
  it with respect to that share and the other rights and obligations between
  the share owner and the Company
  accompanying the share, except for those rights and obligations not included
  in such a cancellation according to
  these Articles or that the Companies Law imposes upon former shareholders. 


	
 

	
 

	
 


	
44.

	
The provisions of these Articles as to forfeiture
  shall apply in the case of non-payment of any
  sum which, by the terms of issue of a share, becomes payable at a fixed-time,
  whether on account of the nominal
  value amount of the share, or by way of premium, as if the same had been
  payable by virtue of a call duly made and notified.


	
 

	
 

	
 


	
MODIFICATION OF CAPITAL


	
 

	
 

	
 


	
45.

	
Subject to the provisions of Article 12 above and to
  any applicable law, the Company may, from
  lime to time, by resolution duly adopted according to these Articles:


	
 

	
 

	
 


	
 

	
(a)

	
consolidate and divide all or any of its issued or
  unissued share capital into shares of larger
  nominal value than its existing shares;


	
 

	
 

	
 


	
 

	
(b)

	
cancel any shares which have
  not been taken or agreed to be taken by any person;


	
 

	
 

	
 


	
 

	
(c)

	
by subdivision of its existing shares, or any of
  them, divide the whole, or any part, of its share capital into shares of
  smaller amounts than is fixed by the Memorandum of Association in a manner that with respect to the shares created as a
  result of the division it will be
  possible within the resolution of division to grant to one or more shares a preferable right or advantage with
  respect to dividend, capital, voting or otherwise over the remaining share or other similar shares;






- 32 -








	
 

	
 

	
 


	
 

	
(d)

	
reduce its share capital and any fund reserved for
  capital redemption in the manner that it
  shall deem to be correct.







	
 

	
 


	
INCREASE OF SHARE CAPITAL


	
 

	
 


	
46.

	
Subject to the provisions of Article 12 above and to
  any applicable law, the Company shall be
  permitted from time to time, by resolution duly adopted according to these
  Articles, to increase its share capital - whether or not all its shares have
  been issued, or whether the shares
  issued have been paid in full - by creation of new shares. This new capital
  shall be in such an amount, divided into shares in such amounts and
  have such preferable or deferred or other special rights (subject always to
  the special rights conferred upon an existing class of share), subject to any
  condition and restrictions with respect to dividends, return of capital, voting or otherwise, all as shall be directed by
  the general meeting in its resolution sanctioning the increase of the share capital.


	
 

	
 


	
47.

	
Subject to any decision to the
  contrary in the resolution sanctioning the increase in share capital,
  pursuant to these Articles, the new share capital shall be deemed to be part
  of the original share capital of
  the Company and shall be subject to the same provisions with reference
  to payment of calls, liens, title, forfeiture, transfer and otherwise as
  apply to the original share capital.


	
 

	
 


	
GENERAL MEETINGS


	
 

	
 


	
48.

	
A general meeting shall be held once in every
  calendar year at such time, being not more than
  fifteen months after the holding of the last preceding general meeting, and
  place as may be prescribed by the Board. The above mentioned general
  meetings shall be called “Annual General Meetings”. All other general
  meetings shall be called “Special General Meetings”.


	
 

	
 


	
49.

	
Subject to the provisions of
  these Articles the function of the Annual General Meeting shall be to receive and to deliberate with respect to
  the profit and loss statement, the balance sheets, the ordinary
  reports and accounts of the Board and auditors; to declare dividends, to appoint auditors and to fix their salaries.
  Every other matter shall be deemed to be special and shall be discussed at a Special General
  Meeting.


	
 

	
 


	
50.

	
The directors or anyone of them
  may, whenever they think fit, and upon a requisition in writing as
  provided for in the Companies Law, convene a Special General Meeting. Every
  such requisition shall include the objects for which a meeting should be
  convened, shall be signed by the
  requisitioners and shall be sent to the registered. Office of the Company. If
  the Board of Directors does not
  convene a meeting within 21 days from the date of the submission of
  the requisition as aforesaid, the requisitioners may convene by themselves a meeting. However, the meeting which was so convened
  shall not be held after three months have passed since the date of the
  submission of the requisition.






- 33 -










NOTICE OF GENERAL MEETINGS


	
 

	
 


	
51.

	
A prior notice of 14 days at least shall be sufficient for any general
  meeting, including any meeting at which it
  is being proposed to amend the Memorandum of Association and/or Articles
  of Association and, accordingly, prior notice of at least 14 days shall be
  given with. respect to the place, date and
  hour of the meeting, and in the event that a special matter shall be
  discussed, a general description of the nature of that matter. The notice
  shall be given, as herein below provided for, to the shareholders
  entitled pursuant to these Articles to vote at the meeting. The notice shall
  be sufficient for any meeting of shareholders including a meeting at which it
  is proposed to amend the Memorandum of Association and/or Articles of
  Association. If, by chance, a notice as aforesaid was not given or not
  received by a shareholder, this shall not
  amount to a disqualification of the resolution passed or disqualification of
  the proceedings held at that meeting. With the consent of all the shareholders who are entitled, at that time, to
  vote, it shall be permitted to convene all meetings and to resolve all
  types of resolutions, upon a shorter advance notice or without any notice and in such manner, generally, as
  such be approved by the shareholders.


	
 

	
 


	
QUORUM


	
 

	
 


	
52.

	
No deliberation shall be
  commenced with respect to any matter at the general or special meeting unless there shall be present a quorum at
  the time when the general meeting proceeds
  to deliberate. In any meeting a quorum shall be formed. when there are
  present personally or by proxy not
  less than two shareholders who hold or represent together the majority
  of the voting rights of the issued share capital of the Company, providing
  that one of such two shareholders present
  shall be a holder of Preferred Share(s) of the Company.


	
 

	
 


	
53.

	
If within half an hour from the time appointed for
  the meeting a quorum is not present, the meeting, if convened by the Board
  upon the demand of shareholders or upon the demand of less than 50% of the directors then in office or directly by such
  shareholders or directors, shall be
  cancelled. Otherwise, if within half an hour from the time appointed for the
  meeting a quorum is not present, the meeting shall stand adjourned to the
  same day in the next week at the same place and time, or any other day
  and/or any other hour and/or any other place as the Board shall notify the shareholders, and, if at the second meeting
  a quorum is not present, within
  half an hour from the time appointed for the meeting any two shareholders
  present personally or by proxy
  shall be a quorum, and shall be entitled to deliberate and to resolve in respect
  of the matters for which the meeting was convened. Shareholders may
  participate by means of conference telephone or similar communications
  equipment by means of which all persons participating in the meeting can hear
  each other, and such participation in a meeting. shall constitute attendance in person at the meeting. The secretary of
  the meeting shall confirm
  attendance by telephone to the Chairman.


	
 

	
 


	
CHAIRMAN


	
 

	
 


	
54.

	
The Chairman of the Board of
  Directors shall preside as chairman at all general meetings. If there
  is no Chairman or he is not present within 15 minutes from the time appointed
  for the meeting or if he shall refuse to
  preside at the meeting, the shareholders present shall elect one of the directors to act as Chairman, and if
  only one director is present he shall act as Chairman, If no directors are present or if they all refuse to preside
  at the meeting the shareholders
  present shall elect one of the shareholders present to preside at the
  meeting. The Chairman shall have no
  special rights or privileges and no second or casting vote.


	
 

	
 


	
POWER TO ADJOURN


	
 

	
 


	
55.

	
The Chairman may, with the
  consent of any meeting at which a quorum is present, and shall if so directed by the meeting, adjourn the
  meeting from time to time and from place to place, as the meeting
  shall decide. At an adjourned meeting no matters shall be discussed except for those permissible to be discussed at that
  meeting which decided upon the adjournment.





- 34 -








	
 

	
 


	
ADOPTION OF RESOLUTIONS


	
 

	
 


	
56.

	
At every meeting a resolution
  put to the vote of the meeting shall be decided upon by a show of hands, unless before or upon the declaration
  of the result of the show of hands a secret ballot in writing be demanded by the Chairman (if he is entitled to
  vote) or by any shareholder present, in person or by proxy, and
  entitled to vote at the meeting. Except if a secret vote is demanded as aforesaid, the declaration of the Chairman
  that the resolution has been carried or carried unanimously or by a
  particular majority, or lost, or not carried by a particular majority, shall be final, and an entry to that effect in
  the minute book of the Company,
  shall be conclusive evidence of the fact without the necessity of proving the
  number or proportion of the votes recorded in favor or against such a
  resolution. Subject to any provision in
  this regard in the Companies Law, or in these Articles, all resolutions of
  the shareholders including without
  limitation with respect to a merger, a change of the Company’s name, modification or alterations of
  the Company’s share capital and the amendment
  of the Company’s Memorandum of Association in accordance with such resolution and the amendment or replacement of
  the Company’s Articles of Association shall be deemed adopted at a General Meeting at which a quorum is
  present if approved by a simple
  majority of the voting rights of the Company represented personally or by
  proxy and voting thereon.


	
 

	
 


	
57.

	
If a secret Ballot is duly
  demanded, it shall be taken in such manner as the Chairman directs, whether immediately or after an adjournment or
  in a postponed manner or otherwise, and the results of the ballot shall be deemed to be a resolution of the meeting
  wherein the secret ballot was
  demanded. Those requesting a secret ballot can withdraw their request at any time before the secret ballot is held. A secret
  ballot demanded on the election of a Chairman, or on a question of
  adjournment shall be taken forthwith. A secret ballot demanded on any
  other question shall be taken at such time as the Chairman of the meeting
  directs. A demand for a secret ballot shall not prevent the continuation of
  the meeting with respect to the
  transaction of any other business, except for the manner with respect to
  which the secret ballot was
  demanded. All demands or notices hereunder may be submitted by facsimile.


	
 

	
 


	
VOTES OF SHAREHOLDERS


	
 

	
 


	
58.

	
Subject to and without
  derogating from the right or preference rights: or restrictions existing at
  that time with respect to a certain class of shares forming of the capital of
  the Company, each shareholder present at a
  meeting, personally or by proxy, shall be entitled, whether at a vote
  by show of hands or by secret ballot, to one vote for each Ordinary Share
  held by him calculated, with respect to
  the Preferred Shares and Ordinary-Preferred Shares, on an as- converted basis, provided that no shareholder
  shall be permitted to vote any shares at a general meeting or appoint a proxy’ to vote therein except if he has
  paid all calls for payment prior to
  or on the day appointed for payment thereof and all monies due: of the
  Company from him prior to or on the
  ‘day appointed for payment thereof with respect to such shares.





- 35 -








	
 

	
 

	
 


	
59.

	
In the case of joint holders
  the vote of the senior who tenders a vote, whether in person or by proxy,
  shall be accepted to the exclusion of the votes of the other joint holders;
  and for the purpose of this article
  seniority shall be determined by the order in which the names stand in the
  register of shareholders. Joint holders of a share of which one of them is
  present at a meeting shall not vote by proxy. The appointment of a proxy to
  vote on behalf of a share held by joint
  holders shall be executed by the signature of the senior of the joint
  holders.


	
 

	
 

	
 


	
60.

	
PROXIES


	
 

	
 

	
 


	
 

	
(a)

	
In every vote a shareholder
  shall be entitled to vote either personally or by proxy. A proxy
  present at a meeting shall also be entitled to request a secret ballot. A
  proxy need not be a shareholder of the
  Company.


	
 

	
 

	
 


	
 

	
(b)

	
A shareholder of the Company
  that is a corporation or partnership shall be entitled by decision of its Board of Directors or by a
  decision of a person or other duly authorized body, to appoint a
  person who it shall deem fit to be its representative at every meeting of the
  Company. The representative, appointed as aforesaid,
  shall be entitled to perform on behalf of the corporation he represents all
  the powers that the corporation itself may
  use just as if it was a person.


	
 

	
 

	
 


	
61.

	
(a)

	
A vote pursuant to an instruction appointing a proxy
  shall be valid notwithstanding the death
  of the appointor or the appointor becoming of unsound mind or the cancellation of the proxy or its expiration in
  accordance with any law, or the transfer of the shares with respect to
  which the proxy was given, unless a notice in writing was given of the death, becoming of unsound mind, cancellation or
  transfer and was received at the Office before the meeting took place.


	
 

	
 

	
 


	
 

	
(b)

	
A shareholder is entitled to
  vote by a separate proxy with respect to each share held by him provided that
  each proxy as aforesaid shall have a separate letter of appointment
  containing, the serial number of the shares with respect to which the proxy
  is entitled to vote. If a specific share is included by the holder in more
  than one letter of appointment, that share shall not entitle any of the
  holders of such instrument to a vote.


	
 

	
 

	
 


	
INSTRUMENT OF APPOINTMENT


	
 

	
 

	
 


	
62.

	
A letter of appointment of a proxy or power of
  attorney or other certificate (if there shall be such) pursuant to which the
  appointee is acting, shall be in writing and such instrument or a copy
  thereof shall be deposited in the Office, or in another place in Israel of
  abroad - as the Board shall direct from
  time to time generally or with respect to a particular case, no later than upon the commencement of the meeting or
  adjourned meeting wherein the person referred to in the instrument is
  appointed to vote, otherwise that person shall not be entitled to vote that
  share. An instrument appointing a proxy and which is not limited in time or
  by the occurrence of an event (such as an IPO) shall not be valid 12 months
  after the date of its execution. If the
  appointment shall be for a limited period or until the occurrence of an event
  (such as an IPO), the instrument shall be valid for the period or until the
  occurrence of the event contained therein.


	
 

	
 

	
 


	
63.

	
An instrument appointing a proxy (whether for a
  specific meeting or otherwise) may be in the
  following form or in any other similar form which the circumstances shall
  permit:





- 36 -








	
 


	
“I, ___________, of ___________, a shareholder holding shares
in ___________ and entitled
  to ___________ votes hereby appoint
  ___________, of ___________, or in his place ___________, of
  ___________, to vote in my name and in my place at the general meeting (annual, special, adjourned - as
  the case maybe) of the Company to be held on the ___________ day
  of ___________, 2 ___________
  and at any adjournment thereof.


	
 


	
In witness whereof, I have
  hereby affixed my signature the ___________
  day of ___________, 2 ___________.








	
 


	




	
 


	
Appointor’s Signature








	
 

	
 

	
 

	
 


	
64.

	
RESERVED


	
 

	
 

	
 

	
 


	
65.

	
DIRECTORS


	
 

	
 

	
 

	
 


	
 

	
(a)

	
The Board of Directors shall
  consist of up to nine (9)
  members who shall be appointed as
  follows:


	
 

	
 

	
 

	
 


	
 

	
 

	
(1)

	
the Founders shall be entitled
  to appoint one (1) director until such time as the Founders, together, cease to hold 7% or more of the issued and outstanding share
capital of the Company on an
  as-converted basis, after which
  they will no longer have the right to appoint a director. However, notwithstanding the previous sentence, during the
  18 month period commencing upon
  the closing of the Poalim Agreement, such right to appoint one director shall continue to apply even if
  their aggregate holdings fall below 7% as aforesaid, until such time
  as the Founders, together, cease to hold 5% or
  more of the issued and outstanding share capital of the Company on an as-converted basis after which they will no longer
  have the right to appoint a director. In the event the Founders will
  no longer be entitled to appoint a director,
  the directorship which is vacated shall thereafter be held by another independent industry expert to be appointed by a
  majority of the other directors
  appointed pursuant to Articles 65(a)(2)-(3) below, such that two directors
  who are independent industry experts may thereafter serve on the Board of Directors;


	
 

	
 

	
 

	
 


	
 

	
 

	
(2)

	
each of Pitango, Star, Genesis and Orbotech shall be
  entitled to appoint one (1) director to the Board of Directors of the Company
  for so long as it holds Preferred Shares
  constituting more than 5% of the issued and outstanding share capital of the Company, on an as converted
  basis, and thereafter the directorship which was vacated shall be held
  by a director appointed by the holders of
  the majority of the Series AA Preferred Shares not otherwise entitled to appoint a director pursuant to this
  Article 65(a)(2);


	
 

	
 

	
 

	
 


	
 

	
 

	
(3)

	
each of Poalim Ventures and Wellington shall be
  entitled to appoint one (1) director for so long as it holds Preferred Shares
  constituting more than 3% of the issued and outstanding share capital of the
  Company, on an as converted basis and
  thereafter the directorship which was vacated shall be held by a director
  appointed by the holders of the majority of the Series BB Preferred Shares;





- 37 -








	
 

	
 

	
 

	
 


	
 

	
 

	
(4)

	
the majority of the other directors appointed
  pursuant to Articles 65(a)(l)-(3) above
  shall be entitled to appoint one (1) director, who shall be an independent industry expert; and


	
 

	
 

	
 

	
 


	
 

	
 

	
(5)

	
the Chief Executive Officer
(“CEO”) of the Company shall be a director if he or she is appointed as a director by a majority
of the directors appointed pursuant
to Articles 65(a)(l)-(3) above; 


	
 

	
 

	
 

	
 


	
 

	
(c)

	
Observers to the Board of
  Directors shall be entitled to attend all Board of Directors meetings and in this capacity, to receive all
  notices of meetings and any documentation the Company provides to the
  Company’s directors before, during or after such meetings, subject to
  restrictions relating to attorney-client privilege, and shall be subject
  (other than an observer appointed by Intel) to the same fiduciary duties that apply to members of the Board of
  Directors.


	
 

	
 

	
 

	
 


	
 

	
(d)

	
The provisions of this Article
  65 shall be in force until the QIPO.


	
 

	
 

	
 

	
 


	
66.

	
(a)

	
The directors and observers shall be appointed as
  set forth in Article 65 and may be removed
  and vacancies filled by those entitled to appoint, as specified in Article
  65. Notice of appointment or removal shall become effective on the
  date fixed in the notice of appointment or
  removal, or upon delivery thereof to the Company, whichever is later. For avoidance of doubt, in
  the event that a seat of the Board of Directors is vacated, and no one is entitled to replace such vacated
  seat, then such vacated seat shall remain vacant and the number of
  directors shall be reduced accordingly.


	
 

	
 

	
 

	
 


	
 

	
(b)

	
If the office of any member of
  the Board of Directors is vacated, the other members of the Board of
  Directors may act in every way and manner so long as their number does not fall below two, at least one of which
  was appointed by the holders of the Preferred Shares. If their number
  falls below two, or if there are only two directors but none of them were appointed by the holder of the Preferred Shares,
  they may act only in an emergency, for convening General Meetings and
  for providing written notice to those shareholders or groups of shareholders
  who are entitled to fill the vacancies, of such vacancies. In the event that
  within 10 days following mailing of such
  written notices the vacancies are not filled, the directors in office,
  whatever their number or by whom
  appointed, may act in every way and manner.


	
 

	
 

	
 

	
 


	
67.

	
Subject to the provisions of
  these Articles or to the provisions of an existing contract, the tenure of office or the director shall
  automatically be terminated:


	
 

	
 

	
 

	
 


	
 

	
(1)

	
if he
  becomes bankrupt;


	
 

	
 

	
 

	
 


	
 

	
(2)

	
if he is declared lunatic or
  becomes of unsound mind;


	
 

	
 

	
 

	
 


	
 

	
(3)

	
if he has resigned by an
  instrument in writing to the Company;


	
 

	
 

	
 

	
 


	
 

	
(4)

	
if he is removed from office
  pursuant to Articles 65 and 66 above;





- 38 -








	
 

	
 

	
 


	
 

	
(5)

	
with his death;


	
 

	
 

	
 


	
 

	
(6)

	
if he is the CEO, upon
  termination of his position as CEO (or earlier, if removed pursuant to Articles 65 and 66 above, as
  aforesaid); or


	
 

	
 

	
 


	
 

	
(7)

	
if a company, with its
  liquidation.


	
 

	
 

	
 


	
68.

	
ALTERNATIVE DIRECTOR


	
 

	
 

	
 


	
 

	
(a)

	
Any person who is qualified to be appointed as a
Director may serve as a substitute director even if he is a member of the
Board of Directors or a substitute Director, (hereinafter “substitute”). 


	
 

	
 

	
 


	
 

	
(b)

	
A substitute shall have one
  vote.


	
 

	
 

	
 


	
 

	
(c)

	
A substitute shall have, subject to the provisions
  of the instrument by which he was appointed, all the powers and authorities
  that the director for which he is serving as director, has.


	
 

	
 

	
 


	
 

	
(d)

	
The provision of this Article
  with respect to the appointment of a director shall apply with respect to an
  appointment of a substitute.


	
 

	
 

	
 


	
 

	
(e)

	
The office of a substitute
  director shall be automatically vacated if his appointment is terminated
  by the director who appointed him in accordance with these regulations, or upon the occurrence of one of the events
  described in Articles (1), (2), (3), (5), (6) or (7) of Article 67 or, if the office of the member of the Board of
  Directors with respect to whom he
  serves as a substitute shall be vacated for any reason whatsoever.


	
 

	
 

	
 


	
 

	
(f)

	
The substitute director has the
  right to receive notice of convening *** a Board of Directors meeting and
  may participate or vote at such meeting only if the director appointing said substitute is absent from said
  meeting.


	
 

	
 

	
 


	
69.

	
REMUNERATION OF DIRECTOR


	
 

	
 

	
 


	
 

	
Members of the Board of
  Directors, not being employees of the Company or professionals providing
  special professional services for consideration to its members - shall not
  receive a salary from funds of the Company unless the general meeting
  has so decided and in the amount that the
  general meeting shall decide upon. The directors, and their substitutes,
  shall be entitled to receive expenses, in an acceptable rate, for travel
  expenses, board and lodging that have been expended for or during the
  performance of their duties as directors, and including travel expenses to the Board meetings and return. If
  pursuant to a decision of the Board, one of the directors shall
  perform services or tasks aside from his regular duties as a director, whether as a result of his particular
  profession or by a trip or stay abroad or otherwise, the Board may decide to
  pay him a preferred wage in addition to his regular salary, and such a
  wage shall be paid by way of salary, commission, participation in profits or otherwise and this wage shall be in addition
  to his regular salary, If there shall be any, or will be in place thereof, as
  shall be decided.





- 39 -








	
 

	
 

	
 


	
70.

	
POWER AND DUTIES


	
 

	
 

	
 


	
 

	
The management of the business
  of the Company shall be vested in the Board of Directors. They shall be entitled
  to exercise all the powers and authorities that the Company has and to perform
  in its name all the acts that it is entitled to do according to its
  memorandum of association and/or Articles and/or the. Companies Law except
  for those which are pursuant to the
  Companies Law or the Articles vested in the general meeting of the Company,
  subject to any provisions in the Companies Law or in these Articles or
  the regulations that the Company shall
  adopt in its general meeting (insofar as they do not contradict the Companies
  Law or these Articles). However any
  article adopted by the Company in its general meeting shall not affect
  the legality of any prior act of the Board that would be legal and valid, if
  not for such an article.


	
 

	
 

	
 


	
71.

	
A director shall not be
  required to hold qualifying shares.


	
 

	
 

	
 


	
CONFLICT OF INTEREST


	
 

	
 

	
 


	
72.

	
A director shall not be
  prohibited from fulfilling his rights and duties under these Articles or from
  entering into contracts with the Company whether as a seller, buyer or
  otherwise, and no such contract or
  arrangement which shall be made on behalf of the Company or in its name wherein the director is or will be an
  interested party, either directly or indirectly, shall be void provided,
  however that:


	
 

	
 

	
 


	
 

	
(a)

	
any transaction between a director and the Company
  must be approved both by the Board of
  Directors and the Audit Committee of the Company, or, if no Audit Committee has been created, by the General
  Meeting;


	
 

	
 

	
 


	
 

	
(b)

	
the interested director may not
  participate or vote at the Board of Directors at which approval is sought unless all other directors
  are interested directors, but shall be counted toward the *** necessary for commencing deliberations at
  such meeting; and


	
 

	
 

	
 


	
 

	
(c)

	
the interested director must, in addition to disclosing
  the substance of his interest in the
  transaction for which approval is sought, also disclose any material facts
  and documents relating thereto. The
  provisions of this article shall apply also to a substitute or alternate director, if it is
  appropriate.


	
 

	
 

	
 


	
73.

	
A director may hold another paid
  position or function in the Company or in any other company that the
  Company is a shareholder of or that it has some other interest in, together with his position as a director (except an
  auditor) upon those conditions with respect to salary and other matters as decided by the Board.


	
 

	
 

	
 


	
74.

	
FUNCTIONS OF THE DIRECTORS


	
 

	
 

	
 


	
 

	
The Board may meet in order to
  transact business, to adjourn its meetings or to organize them
  otherwise as it shall deem fit and to determine the legal quorum necessary to
  conduct business, provided that the quorum
  for a meeting of the Board of Directors shall consist of at least ***
  majority of the directors then in office. A director whose presence *** required
  for purposes of a quorum as aforesaid may
  by written notice to the Company waive the requirement for his presence in order to constitute a quorum. If
  within half an hour from the time
  appointed for the meeting a quorum is not present, the meeting shall stand
  adjourned to the second business day
  following the day originally scheduled, and at such adjourned meeting
  4 directors shall constitute a quorum notwithstanding that a director
  appointed by any specific shareholder or
  class of shareholders is not present.





- 40 -








	
 

	
 

	
 


	
75.

	
CHAIRMAN


	
 

	
 

	
 


	
 

	
The Board may from time to time
  elect, by a simple majority, a Chairman, and decide the period of time he
  shall hold such an office, and he shall preside at the meetings of the Board of Directors. However, if such a Chairman is not
  elected or if he is not present at any meeting, the Board may, by a simple majority, choose one of its
  members to serve as Chairman of
  that meeting.


	
 

	
 

	
 


	
 

	
The Chairman shall have no rights or privileges
  other than those granted to directors and shall
  not have a second of casting vote.


	
 

	
 

	
 


	
MEETINGS


	
 

	
 

	
 


	
76.

	
A member of the Board of
  Directors may at any time call a Board of Directors’ meeting, and the secretary shall be required on the request of
  such member to convene a Board of Directors’ meeting.


	
 

	
 

	
 


	
 

	
(a)

	
Any notice of a Board of Directors’
  meeting can be given, in writing, or by fax or email provided that the
  notice is given seven (7) days before the time appointed for the meeting, unless all the members of the Board
  of Directors having received a shorter
  notice, shall agree to such a shorter notice, provided, however, that a four
  (4) days notice will be sufficient if the majority of the directors
  then in office agree to such shorter
  notice.


	
 

	
 

	
 


	
 

	
(b)

	
Unless otherwise provided by
  these Articles, all acts and determinations of the Board of Directors shall be determined by a simple
  majority of those attending and voting.


	
 

	
 

	
 


	
 

	
(c)

	
Members of the Board of
  Directors, or any committee designated by the Board of Directors, may participate in a meeting of the
  Board of Directors, or any committee, by means of conference telephone or similar communications equipment
  by means of which all persons
  participating in the meeting can hear each other, and such participation in a meeting shall constitute
  attendance in person at the meeting.


	
 

	
 

	
 


	
77.

	
DELEGATION OF POWER


	
 

	
 

	
 


	
 

	
(a)

	
Subject to applicable law, the
  Board of Directors may delegate any of their powers to committees consisting of such member or members
  of their body as they deem fit and may, from time to time, revoke such
  delegation. No committee of the Board of Directors
  shall be established except by unanimous consent of all directors.


	
 

	
 

	
 


	
 

	
(b)

	
In the exercise of any power
  delegated to it by the Board of Directors all committees shall conform
  to any regulations that may be imposed upon them by the Board of Directors, if there shall he any such
  regulation. If no such regulations are adopted by the Board of Directors or
  if there are no complete and encompassing regulations, the committees shall act pursuant to these Articles
  dealing with organization of meetings, meetings and functions of the
  Board of Directors, mutatis mutandis, and insofar
  as no provision of the Board of Directors shall replace it pursuant to this article.





- 41 -








	
 

	
 

	
 

	
 


	
 

	
(c)

	
All actions performed in a
  bona fide fashion by the Board of Directors or by a committee of the
  Board of Directors, or by any person acting as a director or as a substitute
  shall be as valid, even if at a later date a flaw shall be discovered in the appointment of such a director or such a person
  acting as aforesaid, or that all or some of them were unfit as if each
  and every one of those persons shall have been duly appointed and fit to serve as a director or substitute as the
  case may be.


	
 

	
 

	
 

	
 


	
80.

	
GENERAL MANAGER


	
 

	
 

	
 

	
 


	
 

	
(a)

	
The Board may from time to time appoint one or more
  persons, whether or not he is a member of the Board of Directors, as the CEO
  of the Company, either for a fixed period
  of time or without limiting the time that he or they will stay in office, and
  the Board may from time to time (subject to any provision in any
  contract between him or them and the
  Company) release him or them from their office and appoint another or others in his or their place.


	
 

	
 

	
 

	
 


	
 

	
(b)

	
The Board of Directors may from
  time to time grant and bestow upon the general manager, at that time, those powers and authorities that it exercises
  pursuant to these Articles, as it
  shall deem fit, and may grant those powers and authorities for such period, and to be exercised for such objectives
  and purposes and in such time and conditions,
  and on such restrictions, as it shall decide; and it may grant such authorities whether concurrently with the Board
  of Directors’ authorities in that area, or in excess of them, or in
  place thereof or any one of them, and it can from time to time revoke, repeal, or change any one or all of
  those authorities.


	
 

	
 

	
 

	
 


	
 

	
(c)

	
Notwithstanding the aforesaid in Article 69 the
  wages of the general manager shall be
  determined from time to time by the Board of Directors (subject to any
  provision in any contract between him and the Company) and it may be paid by
  way of a fixed salary or commission or dividends, or a percentage of
  profits or the Company profit turnover or
  of any other Company that the Company has an interest in, or by participation in such profits, or in one or more
  of the aforementioned methods.


	
 

	
 

	
 

	
 


	
81.

	
MINUTES


	
 

	
 

	
 

	
 


	
 

	
(a)

	
The Board shall cause minutes to
  be taken of all general meetings of the Company, of the appointments of officials of the
  Company, of Board of Directors’ meetings and of committee meetings that shall include the following items, if
  applicable:


	
 

	
 

	
 

	
 


	
 

	
 

	
(1)

	
the names of the members
  present;


	
 

	
 

	
 

	
 


	
 

	
 

	
(2)

	
the matters discussed at the
  meeting;


	
 

	
 

	
 

	
 


	
 

	
 

	
(3) 

	
the results of the vote;


	
 

	
 

	
 

	
 


	
 

	
 

	
(4)

	
resolutions adopted at the meeting;


	
 

	
 

	
 

	
 


	
 

	
 

	
(5)

	
directives given by the meeting
  to the committees;





- 42 -








	
 

	
 

	
 

	
 


	
 

	
 

	
(6)

	
if requested, any reservation of
  a shareholder or director with regard to a matter discussed or resolution passed.








	
 

	
 

	
 


	
 

	
(b)

	
The minutes of any meeting
  shall serve as prima facie proof as to the facts in the minutes if the
  minutes are reviewed and approved at the next succeeding meeting and are signed by the Chairman of that next
  succeeding meeting.


	
 

	
 

	
 


	
82.

	
RESOLUTION IN WRITING


	
 

	
 

	
 


	
 

	
A resolution in writing signed
  by all shareholders of the Company or by all the members of the Board of Directors, or of a committee, or
  such a resolution that all the shareholders of the Company then entitled to vote at General Meetings, the members of
  the Board of Directors or a
  committee have agreed to in writing or by fax shall be valid for every
  purpose as a resolution adopted at a General Meeting, Board of Directors’ or
  committee meeting, as the case may be, that was duly convened and
  held. In place of a shareholder or director, as the case may be, any such aforesaid resolution may be signed and
  delivered by his substitute.


	
 

	
 

	
 


	
83.

	
SEAL, STAMP AND SIGNATURES


	
 

	
 

	
 


	
 

	
(a)

	
The Board shall cause the seal
  (if the Company shall have a seal) to be kept in safekeeping and it shall be forbidden to use the
  seal unless prior permission of the Board of Directors is given. If
  such permission was given, the seal shall be affixed in the presence of
  whoever has been so appointed by the Board of Directors, and he shall sign any document upon which the seal has
  been affixed.


	
 

	
 

	
 


	
 

	
(b)

	
The Company shall have at least one rubber stamp.
  The Board shall ensure that such a stamp
  is kept in a safe place.


	
 

	
 

	
 


	
 

	
(c)

	
The Board of Directors may designate and authorize
  any person or persons (even if they are
  not members of the Board of Directors) to act and to sign in the name of the Company, and the
  acts and signatures of such a person or persons shall bind the Company, insofar as such persons have acted and
  signed within the limits of then aforesaid authority.


	
 

	
 

	
 


	
 

	
(d)

	
The printing of the name of the
  Company by a typewriter or by hand next to the signatures of the
  authorized signatories of the Company, pursuant to sub-article (c) above, shall be valid as if the rubber stamp of
  the Company was affixed.


	
 

	
 

	
 


	
84.

	
BRANCH REGISTERS


	
 

	
 

	
 


	
 

	
The Company may, subject to the
  provisions of the Companies Law or any other applicable law that may
  substitute such provisions, keep in every other country where those
  provisions shall apply, a register or registers of shareholders living
  in that other country as aforesaid, and
  to exercise any other powers referred to in the laws with respect to such
  branch registers.


	
 

	
 

	
 


	
85.

	
THE SECRETARY, OFFICERS AND
  ATTORNEYS


	
 

	
 

	
 


	
 

	
(a)

	
The Board of Directors may
  appoint a secretary of the Company upon the conditions that it deems fit. The Board may as well, from
  time to, time, appoint an associate secretary
  who shall be deemed to be the secretary for the period of his appointment.





- 43 -








	
 

	
 

	
 


	
 

	
(b)

	
The Board of Directors may,
  from time to time appoint to the Company, officers, workers, agents and functionaries to permanent,
  temporary or special positions, as it shall, from time to time, see fit and
  set compensation for them.


	
 

	
 

	
 


	
 

	
(c)

	
The Board may, at any lime and
  from time to time, authorize any Company, firm, person or group of people, whether this
  authorization is done by the Board directly or indirectly, to be the attorneys in fact of the Company for those
  purposes and with those powers and
  discretion which shall not exceed those conferred upon the Board of
  Directors or that the Board of Directors can exercise pursuant to these
  Articles - and for such a period of time
  and upon such conditions as the Board deems proper, kind every such authorization may contain such
  directives as the Board of Directors deems
  proper for the protection and benefit of the persons dealing with such attorneys.


	
 

	
 

	
 


	
86.

	
DIVIDEND


	
 

	
 

	
 


	
 

	
Subject to the provisions of
  the Companies Law and these Articles, including without limitation the
  provisions of Articles 7, 8 and 12 and subject to any tights or conditions of
  Preferred Shares and Ordinary-Preferred
  Shares and other rights and conditions attached at that time to any share in the capital of the
  Company granting preferential, special or deferred rights or not
  granting any rights with respect to dividends, the profits of the Company
  shall be distributable to the shareholders
  of the Company according to the proportion, of the nominal value paid
  up or credited as paid up on account of the shares held by them at the date
  so appointed by the Company, without regard to the premium-paid in excess of
  the nominal value. A distribution, setting
  aside or declaration of dividend requires a decision of the Board of
  Directors.


	
 

	
 

	
 


	
 

	
The Board of Directors may
  issue any share upon the condition that a dividend shall be paid at a
  certain date or that a portion of the declared dividend for a certain period
  shall be paid, or that the period for which a dividend shall be paid shall
  commence at a certain date, or a similar condition, all as decided by the
  Board of Directors. In every such case - subject to the provision mentioned in the beginning of this article - the dividend
  shall be paid in respect of such a
  share in accordance with such a condition.


	
 

	
 

	
 


	
87.

	
Subject to the provisions of
  the Companies Law, at the time of declaration of a dividend the Board of Directors may decide that such a
  dividend shall be paid in part or in whole, by way of distribution of certain properties,
  especially by way of distribution of fully paid up shares or debentures or
  debenture stock of the Company, or by way of distribution of fully paid up shares or debentures or debenture stock of any
  other Company or in one or more of the aforesaid ways. For purposes of
  any such distribution, the outstanding Preferred Shares and Ordinary-Preferred
  Shares shall be deemed to have been converted into Ordinary Shares as of the time appointed by the Board of Directors
  for the purpose of determining entitlement to participate in such
  distribution.


	
 

	
 

	
 


	
88.

	
Any dividends payable on shares
  which are not fully paid up, will be first a *** to any unpaid amount on such shares even if such
  payments are not yet due pursuant to the terms of issuance or as
  provided in these Articles, and any excess will be distributed to the holder of such shares as set forth herein.





- 44 -








	
 

	
 

	
 


	
89.

	
The Board of Directors may put
  a lien on any dividend on which the Company has a charge, and it may use it to pay any debts, obligations
  or commitments with respect to which the charge exists.


	
 

	
 

	
 


	
90.

	
A transfer of shares shall not transfer the right to
  a dividend which has been declared after the
  transfer but before the registration of the transfer. The person registered
  in the register as a shareholder
  on the date appointed by the company for that purpose shall be the one entitled
  to receive a dividend.


	
 

	
 

	
 


	
91.

	
Reserved.


	
 

	
 

	
 


	
92. 

	
A notice of the declaration of
  a dividend, whether an interim dividend or otherwise, shall be given to the shareholders registered in the
  register, in the manner provided for in these Articles.


	
 

	
 

	
 


	
93.

	
If no other provision is given,
  the dividend may be paid by check or payment order to be mailed to the registered address of a
  shareholder or person entitled thereto in the register or, in the case of registered joint owners, to the
  addresses of one of the joint owners as registered in the register.
  Every such check shall be made out to the person it is sent to. The receipt
  of the person who, on the date of declaration of dividend, is registered as
  the holder of any share or, in the case of
  joint holders, of one of the joint holders, shall serve as a release with respect to payments made in
  connection with that share.


	
 

	
 

	
 


	
94.

	
(a)

	
Subject to Article 12 above, if
  at any time the share capital shall be divided into different classes
  of shares, the distribution of fully paid up shares, from funds pursuant to Article 95 below, shall be made in one of
  the two following manners as to be decided upon by the Board:


	
 

	
 

	
 


	
 

	
 

	
(i) In such a manner so that all the holders of a share entitled
  to fully paid up shares shall
  receive one uniform class of shares; or


	
 

	
 

	
 


	
 

	
 

	
(ii) In such manner so that
  each holder of shares entitled to fully paid up shares as aforesaid shall receive shares of the class of
  shares held by him and entitling him to fully paid up shares, as aforesaid.


	
 

	
 

	
 


	
 

	
(b)

	
In order to give effect to any resolution in
  connection with the distribution of dividends, or distribution of property,
  fully paid-up shares or debentures, the Board of Directors may resolve any difficulty that shall arise with
  distribution as it shall deem necessary, especially to issue certificates for
  fractional shares and to determine the value of certain property for
  purposes of distribution, and to decide that payment in cash shall be made to the shareholder on the basis of the value decided
  for that-purpose, or that fractions the value of which is less than one New Israeli Shekel shall not be taken
  into account for the purpose of coordinating the rights of all the
  parties. The Board of Directors shall be permitted,
  in this regard, to grant cash or property to trustees in escrow for the
  benefit Of persons entitled thereto,
  as the Board shall see beneficial. Wherever required, an agreement
  shall be submitted to the registrar of companies and the Board may appoint a
  person to execute such an agreement in the name of the persons entitled to a
  dividend, property, fully paid up shares or debentures as shares or
  debentures as aforesaid, and such an
  appointment shall be valid.





- 45 -








	
 

	
 

	
 

	
 


	
 

	
(c)

	
The Company shall not be
  obligated to pay interest on a dividend.


	
 

	
 

	
 

	
 


	
 

	
(d)

	
The Board of Directors may,
  with respect to all dividends not collected within one year after their declaration, invest or use them in
  another way for the benefit of the Company, until they shall be demanded. The Company shall not pay interest for
  dividends or interest not
  collected.


	
 

	
 

	
 

	
 


	
95.

	
FUNDS


	
 

	
 

	
 

	
 


	
 

	
The Board may set aside from the profits of the
  Company the sums it deems proper, as a reserve
  fund or reserve funds for extraordinary uses, or for preferred dividends or equalisation
  of dividends or other funds or for the purpose of correcting, bettering or
  retaining any property of the Company and for those other purposes which -
  shall, in the absolute discretion of the
  Board of Directors, be beneficial to the Company and it may invest the, various sums so invested in such
  investments as it finds proper, and from time to time deal with such
  investments, change or transfer them, in part or in whole, for the benefit of
  the Company. The Board of Directors may, as well, divide any reserve
  liability fund to preferred funds as it shall deem proper, transfer moneys
  from funds to fund and use every fund or
  any part thereof in the business of the Company, without being required to
  keep such sums separate from the rest of the Company’s property. The
  Board of Directors may, from time to time,
  also transfer, to the next year, profits out of such sums which are, in its absolute discretion, beneficial to the Company.
  Generally the Board of Directors may create funds as it deems
  necessary, either those resulting from profits of the Company or from
  re-evaluation of property, or from premiums paid for shares or from any other
  source, and to use them in its discretion as it deems fit insofar as that in
  the creation of such funds, the changes or
  uses do not exceed the provisions of the Companies Law or accepted accounting
  principles.


	
 

	
 

	
 

	
 


	
96.

	
All premiums received from ***
  issue of shares shall be capital funds and they shall be treated for
  every purpose as capital and not as profits distributable as dividends. The
  Board of Directors may organize a reserve
  capital liability account and transfer, from time to time, all such
  premiums to the reserve capital liability account or use such premiums and
  monies to cover depreciation or doubtful loss. All losses from sale of
  investments or other property of the Company shall be debited from other
  funds of the Company. The Board of Directors may use any monies credited to the capital reserve liability account
  in any manner that these Articles or the Companies Law permits.


	
 

	
 

	
 

	
 


	
97.

	
Any amounts transferred and
  credited to the account of income and expense fund or general reserve liability account or capital liability
  reserve account, may, until otherwise used in accordance with these Articles, be invested together with such other
  monies of the Company in the day to
  day business of the Company, without having to differentiate between these investments and the investment of the monies of
  the Company.


	
 

	
 

	
 

	
 


	
98.

	
ACCOUNTS AND AUDIT


	
 

	
 

	
 

	
 


	
 

	
The Board shall cause correct accounts
  to be kept:


	
 

	
 

	
 

	
 


	
 

	
 

	
(a) of the assets and liabilities; 





- 46 -








	
 

	
 

	
 


	
 

	
(b) of any amount of money received
  or expended by the Company and the mattes for which such sum of money is expended or received; and


	
 

	
 

	
 


	
 

	
(c) of all purchases and sales
  made by the Company.







	
 

	
 

	
 


	
99.

	
The account books shall be kept in the Office or at
  such other place as the Board deems fit and
  they shall also be open for inspection by the directors.


	
 

	
 

	
 


	
100.

	
The Board of Directors shall
  determine from time to time, in any specific case or type of case, or
  generally, whether and to what extent and at what times and places and under
  what conditions or regulations the accounts and books of the Company, or any
  of them, shall be open for inspection by
  the shareholders, and no shareholder, not being a director, shall have any
  right of inspecting any account book or document of the Company except as
  conferred by law or authorized by the
  Board of Directors or by the Company in a general meeting.


	
 

	
 

	
 


	
101.

	
Not less than once a year, the
  Board shall submit before the Company at the Annual General Meeting a profit and loss account for the period
  after the previous account, and if it is the first account for the period after registration of the Company, it
  shall be prepared as of a date not
  more than nine months before the date of the meeting and in accordance with
  the relevant provisions of the
  Companies Law, and the Board shall submit a balance sheet that is correct
  as of the date of the profit and loss account. To the balance sheet shall be
  attached a report of the auditor and it
  shall be accompanied by a report from the Board with respect to the situation of the Company business and the
  amount they propose as a dividend and the amount (if any) that they propose be set aside for the fund accounts.


	
 

	
 

	
 


	
102.

	
Auditors shall be appointed and
  their function shall be set out in accordance with the Companies Law.


	
 

	
 

	
 


	
NOTICES


	
 

	
 

	
 


	
102.

	
A notice or any other document
  may be served by the Company upon any shareholder either personally or
  by sending it by prepaid letter, fax or e-mail addressed to such shareholder
  at his address, wherever situated, as
  appearing in the register of shareholders, provided, however that a
  shareholder may notify the Company in writing of its objection to the use of
  e-mail as the sole means of notice in which event the Company shall provide
  notice to such shareholder by e-mail and
  one of the other means permitted by this Article 102.


	
 

	
 

	
 


	
103.

	
All notices directed to be
  given to the shareholders shall, with respect to any shares to which persons
  are jointly entitled, be given to one of the joint holders, and any notice so
  given shall be sufficient notice to the holders of such share.


	
 

	
 

	
 


	
104.

	
Prior and timely notice of the
  convening, of a shareholders meeting shall be given to each shareholder, wherever situated, at the last
  address provided by the shareholder. Any shareholder registered in the register who shall, from time to time,
  furnish the Company with an address
  at which notices may be served, shall be entitled to receive all notices he
  is entitled to receive according to
  these Articles at that address.


	
 

	
 

	
 


	
105.

	
A notice may be given by the Company to the persons
  entitled to a share in consequence of the
  death or bankruptcy of a shareholder by sending it through the post in a
  prepaid letter or fax or e-mail
  addressed to them by name, at the address furnished for the purpose by the persons claiming to be so
  entitled or, until such an address has been so furnished, by giving the notice in any manner in which the same
  might have been given if the death or bankruptcy had not occurred.





- 47 -








	
 

	
 


	
106.

	
Any notice or other document,
  (i) if delivered personally, shall be deemed to have been served upon
  delivery, (ii) if sent by post, shall be deemed to have been served five (5)
  days after the time when the letter was delivered to the post, if sent by
  airmail, and two (2) days after the letter
  was delivered to the post, if sent by domestic post, and (iii) if sent by facsimile or electronic mail, shall be confirmed
  by appropriate answer back and shall be effective upon actual receipt if
  received during the recipient’s normal business hours, or beginning the recipient’s next business day
  after receipt if not received during recipient’s normal business
  hours. In proving such service it shall be sufficient to prove that the
  letter, facsimile, or electronic mail containing the notice was properly
  addressed and delivered at the post office or sent by facsimile or electronic
  mail, as the case may be. Any list kept in the
  ordinary manner in any mail list of the company or any copy of any fax in the
  Company’s possession shall be prima
  facie proof of the delivery.


	
 

	
 


	
107.

	
(a) In any case where it is
  necessary to give prior notice of a certain number of days or a notice valid for a certain period, the date of
  delivery shall be taken into account in the number of days or period.


	
 

	
 


	
 

	
(b) In addition to the
  furnishing of a notice pursuant to the above article, the Company may furnish a notice to the shareholders
  entitled to receive notice, or to part of them, by publication of a
  notice in a newspaper distributed in the area wherein the Office is located, or any other place, in Israel or abroad, as the
  Board shall determine from time to time.


	
 

	
 


	
108.

	
RESERVED


	
 

	
 


	
109.

	
INDEMNITY


	
 

	
 


	
(a)

	
The Company shall, subject and
pursuant to the provisions of the Companies Law, indemnify an “Office Holder” of the Company (as
such term is defined in the Companies Law) for all liabilities and expenses incurred by him arising from or
as a result of any act (or omission)
carried out by him as an Office Holder of the Company and which is indemnifiable pursuant to the Companies Law, to
the maximum extent permitted by law. The
Company may indemnify an Office Holder post-factum and may also undertake to indemnify an Office Holder in advance, provided
that, to the extent required under applicable law, such undertaking is
limited to types of occurrences which, in the opinion of the Board of
Directors are, at the time of the undertaking, foreseeable and to an amount
of the Board of Directors has determined
is reasonable in the circumstances. 


	
 

	
 


	
(b)

	
The Company shall, subject and pursuant to the provisions
  of the Companies Law, enter into contracts
  to insure the liability of Office Holders of the Company for any liabilities
  incurred by him arising from or as a result of any act (or omission) carried
  out by him as an Office Holder of the Company and for which the Company may
  insure Office Holders pursuant to the Companies Law, to the maximum extent
  permitted by law.


	
 

	
 


	
(c)

	
The Company may, subject to the provisions of the
  Companies Law, procure insurance for or
  indemnify any person who is not an Office Holder including, without
  limitation, any employee, agent,
  consultant or contractor of the Company who is not an Office Holder.





- 48 -








	
 

	
 


	
(d)

	
The Company may, to the maximum extent permitted by
  law, exempt and release an Office Holder, including in advance, from all or
  part of his or her liability for monetary or other damages due to, arising or resulting from, a breach of his or her duty
  of care to the Company. The Directors of the Company are released and
  exempt from all liability as aforesaid to the maximum extent permitted by law
  with respect to any such breach, which has
  been or may be committed.





- 49 -










Schedule 2.1  



Updated work Plan  



[***]



*** Text omitted and filed separately
with the Securities and Exchange Commission pursuant to 17 CFR § 230.406 and §
200.80(b)(4). 












Schedule 2.2  


Negevtech Ltd.
Capitalization Table (on a fully diluted
basis) Prior to Closing


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Name

	
 

	
# Ordinary

	
 

	
# Options/Warrants to Purchase Ordinary

	
 

	
# Ordinary-Preferred

	
 

	
# Ordinary (Ordinary-Preferred Shares adjustment upon
  conversation)

	
 

	
# Preferred AA

	
 

	
# Warrants to purchase Preferred AA

	
 

	
# Preferred BB-2 (including 15% discount)

	
 

	
# Preferred BB-1

	
 

	
# Warrants to purchase Preferred BB-1

	
 

	
# Preferred BB-3

	
 

	
# Total Shares on an as converted basis

	
 

	
% Issued & Outstanding on an as converted basis

	
 

	
# Total Fully Diluted on an as converted basis

	
 

	
% Fully Diluted on an as converted basis

	
 


	



	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	


	
 

	


	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Gadi Neumann

	
 

	
 

	
 

	
 

	
 

	
784,502

	
 

	
433,668

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
1,218,170

	
 

	
3.62

	
%

	
 

	
1,218,170

	
 

	
2.85

	
%


	
David Alumot

	
 

	
 

	
 

	
 

	
 

	
784,502

	
 

	
433,668

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
1,218,170

	
 

	
3.62

	
%

	
 

	
1,218,170

	
 

	
2.85

	
%


	
Pitango Venture Capital Fund III (Israeli Sub) L.P.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
2,902,420

	
 

	
201,465

	
 

	
861,590

	
 

	
1,377,123

	
 

	
 

	
 

	
183,505

	
 

	
5,324,638

	
 

	
15.82

	
%

	
 

	
5,526,103

	
 

	
12.91

	
%


	
Pitango Venture Capital Fund III (Israeli Sub.) Non-Q L.P.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
268,316

	
 

	
18,624

	
 

	
79,650

	
 

	
127,309

	
 

	
 

	
 

	
16,964

	
 

	
492,239

	
 

	
1.46

	
%

	
 

	
510,863

	
 

	
1.19

	
%


	
Pitango Venture Capital Fund III (Israeli Investors) L.P.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
784,811

	
 

	
54,475

	
 

	
233,002

	
 

	
372,373

	
 

	
 

	
 

	
49,619

	
 

	
1,439,805

	
 

	
4.28

	
%

	
 

	
1,494,280

	
 

	
3.49

	
%


	
Pitango JP Morgan Fund III (Israel), L.P.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
447,636

	
 

	
36,734

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
447,636

	
 

	
1.33

	
%

	
 

	
484,370

	
 

	
1.13

	
%


	
Pitango Principles Fund III (Israel) L.P.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
102,165

	
 

	
7,092

	
 

	
30,332

	
 

	
48,474

	
 

	
 

	
 

	
6,460

	
 

	
187,431

	
 

	
0.56

	
%

	
 

	
194,523

	
 

	
0.45

	
%


	
Pitango Venture Capital Fund II Trusts 2000 L.P.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
204,330

	
 

	
14,184

	
 

	
60,660

	
 

	
96,949

	
 

	
 

	
 

	
12,918

	
 

	
374,857

	
 

	
1.11

	
%

	
 

	
389,041

	
 

	
0.91

	
%


	
Canada Israel Opportunity Fund III, L.P.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
45,308

	
 

	
2,520

	
 

	
7,308

	
 

	
9,544

	
 

	
 

	
 

	
 

	
 

	
62,160

	
 

	
0.18

	
%

	
 

	
64,680

	
 

	
0.15

	
%


	
Shrem, Fudim, Kelner Founders Group II L.P.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
45,308

	
 

	
2,520

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
45,308

	
 

	
0.13

	
%

	
 

	
47,828

	
 

	
0.11

	
%


	
Shrem Fudim Kelner Founders Group II Annex Fund L.P.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
7,209

	
 

	
9,544

	
 

	
 

	
 

	
 

	
 

	
16,753

	
 

	
0.05

	
%

	
 

	
16,753

	
 

	
0.04

	
%


	
Shrem, Fudim Kelner & Co Ltd.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
30,187

	
 

	
1,679

	
 

	
4,932

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
35,119

	
 

	
0.10

	
%

	
 

	
36,798

	
 

	
0.09

	
%


	
Qualitau Ltd.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
355,522

	
 

	
26,879

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
355,522

	
 

	
1.06

	
%

	
 

	
382,401

	
 

	
0.89

	
%


	
SVE Star Ventures Enterprises Gmbh & Co. No. IX KG.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
2,224,297

	
 

	
318,075

	
 

	
635,475

	
 

	
521,206

	
 

	
 

	
 

	
79,061

	
 

	
3,460,039

	
 

	
10.28

	
%

	
 

	
3,778,114

	
 

	
8.83

	
%


	
Star Management of Investments No. II (2000) L.P.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
321,275

	
 

	
45,943

	
 

	
68,535

	
 

	
56,238

	
 

	
 

	
 

	
8,530

	
 

	
454,578

	
 

	
1.35

	
%

	
 

	
500,521

	
 

	
1.17

	
%


	
Star Growth Enterprise, a German Civil Law Partnership (with
  limitation of Liability)

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
1,045,227

	
 

	
2,247,164

	
 

	
 

	
 

	
181,876

	
 

	
3,474,267

	
 

	
10.32

	
%

	
 

	
3,474,267

	
 

	
8.12

	
%


	
SVM Star Ventures Managmenttgesellschaft mbH Nr. 3

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
334,236

	
 

	
 

	
 

	
 

	
 

	
334,236

	
 

	
0.99

	
%

	
 

	
334,236

	
 

	
0.78

	
%


	
Genesis Partners II, L.D.C.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
1,773,948

	
 

	
253,679

	
 

	
490,760

	
 

	
693,952

	
 

	
 

	
 

	
986,212

	
 

	
3,944,872

	
 

	
11.72

	
%

	
 

	
4,198,551

	
 

	
9.81

	
%


	
Genesis Partners II (Israel) L.P.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
262,512

	
 

	
37,535

	
 

	
72,426

	
 

	
102,414

	
 

	
 

	
 

	
145,546

	
 

	
582,898

	
 

	
1.73

	
%

	
 

	
620,433

	
 

	
1.45

	
%


	
Lehman Brothers European Venture Capital L.P.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
222,108

	
 

	
41,998

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
222,108

	
 

	
0.66

	
%

	
 

	
264,106

	
 

	
0.62

	
%


	
Lehman Brothers Holdings plc (on behalf of pre-tax plan)

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
425,109

	
 

	
80,384

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
425,109

	
 

	
1.26

	
%

	
 

	
505,493

	
 

	
1.18

	
%


	
Lehman Brothers Partnership Account 2000/2001, L.P.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
191,536

	
 

	
36,217

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
191,536

	
 

	
0.57

	
%

	
 

	
227,753

	
 

	
0.53

	
%


	
Lehman Brothers Offshore Partnership Account 2000/2001, L.P.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
49,677

	
 

	
9,393

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
49,677

	
 

	
0.15

	
%

	
 

	
59,070

	
 

	
0.14

	
%


	
Orbotech Technology Ventures L.P.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
1,776,860

	
 

	
335,988

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
1,776,860

	
 

	
5.28

	
%

	
 

	
2,112,848

	
 

	
4.94

	
%


	
Intel Atlantic, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
710,745

	
 

	
134,395

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
483,559

	
 

	
1,194,304

	
 

	
3.55

	
%

	
 

	
1,328,699

	
 

	
3.11

	
%


	
Poalim Ventures Ltd.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
381,027

	
 

	
 

	
 

	
47,628

	
 

	
428,655

	
 

	
1.27

	
%

	
 

	
428,655

	
 

	
1.00

	
%


	
Poalim Ventures I Ltd.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
586,194

	
 

	
 

	
 

	
73,274

	
 

	
659,468

	
 

	
1.96

	
%

	
 

	
659,468

	
 

	
1.54

	
%


	
Poalim Ventures II L.P.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
1,188,509

	
 

	
 

	
 

	
148,564

	
 

	
1,337,073

	
 

	
3.97

	
%

	
 

	
1,337,073

	
 

	
3.12

	
%


	
Wellington Partners Venture III Technology Fund L.P.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
3,435,558

	
 

	
3,435,558

	
 

	
10.21

	
%

	
 

	
3,435,558

	
 

	
8.03

	
%


	
Financiere Seso S.A

	
 

	
159,620

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
159,620

	
 

	
0.47

	
%

	
 

	
159,620

	
 

	
0.37

	
%


	
Inter Hightech (1982) Ltd. (Previously TICI)

	
 

	
71,829

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
71,829

	
 

	
0.21

	
%

	
 

	
71,829

	
 

	
0.17

	
%


	
Service Providers

	
 

	
 

	
 

	
32,769

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
-

	
 

	
0.00

	
%

	
 

	
32,769

	
 

	
0.08

	
%


	
TICI

	
 

	
 

	
 

	
87,791

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
-

	
 

	
0.00

	
%

	
 

	
87,791

	
 

	
0.21

	
%


	
Tmura Fund

	
 

	
 

	
 

	
5,000

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
ESOP IL Plan(1)(2)

	
 

	
238,000

	
 

	
5,186,503

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
238,000

	
 

	
0.71

	
%

	
 

	
5,424,503

	
 

	
12.68

	
%


	
ESOP US Plan

	
 

	
 

	
 

	
605,000

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
-

	
 

	
0.00

	
%

	
 

	
605,000

	
 

	
1.41

	
%


	
Plenus Technologies Ltd

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
1,556,437

	
 

	
 

	
 

	
-

	
 

	
0.00

	
%

	
 

	
1,556,437

	
 

	
3.64

	
%


	
 

	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	


	
 

	


	
 


	
Total

	
 

	
469,449

	
 

	
5,917,063

	
 

	
1,569,004

	
 

	
867,336

	
 

	
13,144,070

	
 

	
1,659,779

	
 

	
3,597,106

	
 

	
8,152,256

	
 

	
1,556,437

	
 

	
5,859,274

	
 

	
33,658,495

	
 

	
100

	
%

	
 

	
42,791,774

	
 

	
100

	
%


	
 

	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	


	
 

	


	
 





(1) The 238,000 Ordinary
Shares are held by Eli Lerner, CPA as trustee under the Company’s ESOP


(2) Includes
1,410,285 options to purchase Ordinary Shares of the Company granted to Arnon
Gat, the Company’s CEO. Such number of Shares includes an Adjustment (as
provided for and defined in Mr. Gat’s employment agreement with the Company) in
connection with an investment of US$25.











Schedule 2.3  



Negevtech –
Officers and Directors  



Negevtech Ltd.
– Directors 


Bart Markus
Eran Gersht

Amichai Stienberg

Arnon Gat

Yaffa Krindel

Aaron Mankovski

Gad Neumann

Eddy Shalev

Rafi Yizhar




Negevtech Ltd. –
Officers 


		
	Arnon Gat	Chief Executive Officer
	Glyn Davies	Corporate VP Marketing
	Oz Desheh	CFO
	Mordechai Gatenio	VP Operations
	Yuval Levin	VP Sales
	Michal Rozenkrantz	VP Human Resources
	Dr. Rivi Sherman	VP Business Development
	Dvir Harmelech	VP R&D
	Shmuel Gov	VP Customer Support









Negevtech Inc. 





	 	
 Directors:








	
Arnon Gat

Oz Desheh 









	 	
  Officers:








	
Glyn Davies - President 








Negevtech PTE. Ltd. (Singapore) 




	 	
 Directors:









	
Oz Desheh

Chen Wen Woam Angela 










	 	
 Officers:








	
Oz Desheh 






Negevtech GmbH Dresden 



	 	
 Directors:








	
 Oz Desheh

Markus Kindler










	 	
 Officers:








	
Markus Kindler 
















Negevtech Japan 




	 	
 Directors:







	
 Arnon Gat

Oz Desheh

Roi Shefts












	 	
  Officers:






	
 Roi Shefts - Business Manager











Negevtech Korea 




	 	
 Directors:







	
Oz Desheh (representative director)

Arnon Gat

Michal Levi (auditor) 






Negevtech Taiwan 




	 	
 Directors:







	
Oz Desheh  






	 	
  Officers:






	
 Yanki Avni-Business manager


















Schedule 2.8  


	
 

	
 

	
 


	
 

	
Negevtech
  FAMILY STATUS 

	
Version: 1 


	
 

	
Status report date:
  15/08/05 

	
 








	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
File #

	
 

	
Title

	
 

	
Negevtech detailed
  comments

	
 

	
Status

	
 

	
Abstract

	
 

	
Independent claims

	
 

	
Country

	
 

	
Application No.

	
 

	
Issued Patent


	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	



	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
44623

	
 

	
METHOD
  AND SYSTEM FOR FAST ONLINE ELECTRO-OPTICAL DETECTION OF WAFER DEFECTS

	
 

	
Gadi’s
  basic concept patent

	
 

	
 

	
 

	
6,693,664 

	
 

	
6,693,664 

	
 

	
USA

	
 

	
 

	
 

	
6,693,664 



	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
46509

	
 

	
METHOD
  AND SYSTEM FOR FAST ONLINE ELECTRO-OPTICAL DETECTION OF WAFER DEFECTS

	
 

	
Gadi’s
  basic concept patent

	
 

	
Pending -
  correspondence with the examiner. Amendment was sent on jul 2006

	
 

	
 

	
 

	
 

	
 

	
Europe

	
 

	
03250255-1

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
46793

	
 

	
METHOD
  AND SYSTEM FOR FAST ONLINE ELECTRO-OPTICAL DETECTION OF WAFER DEFECTS

	
 

	
Gadi’s
  basic concept patent

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Taiwan

	
 

	
092100777

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
47513

	
 

	
METHOD
  AND APPARATUS FOR INSPECTION OF DEFECTS IN A REPETITIVE OBJECT

	
 

	
Gadi’s
  basic concept patent

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Israel

	
 

	
153977

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
47606

	
 

	
METHOD
  AND SYSTEM FOR FAST ONLINE ELECTRO-OPTICAL DETECTION OF WAFER DEFECTS

	
 

	
Gadi’s
  basic concept patent

	
 

	
Pending -
  examintation requested

	
 

	
 

	
 

	
 

	
 

	
Japan

	
 

	
2003-7400

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
[***]

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
47607

	
 

	
METHOD
  AND SYSTEM FOR FAST ONLINE ELECTRO-OPTICAL DETECTION OF WAFER DEFECTS

	
 

	
Gadi’s
  basic concept patent

	
 

	
Pending - A
  request for examination must be filed before January 15, 2008.

	
 

	
 

	
 

	
 

	
 

	
Korea

	
 

	
2003-2671

	
 

	
 







*** Text omitted and filed separately
with the Securities and Exchange Commission pursuant to 17 CFR § 230.406 and §
200.80(b)(4). 








	
 

	
 

	
 


	
 

	
Negevtech
  FAMILY STATUS 

	
Version: 1 



	
 

	
Status
report date: 15/08/05  

	
 








	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
File #

	
 

	
Title

	
 

	
Negevtech detailed
  comments

	
 

	
Status

	
 

	
Abstract

	
 

	
Independent claims

	
 

	
Country

	
 

	
Application No.

	
 

	
Issued Patent


	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	



	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
44420

	
 

	
SYSTEM
  FOR DETECTION OF WAFER DEFECTS

	
 

	
Full
  description & claims on the 302 imaging apparatus - concept claims

	
 

	
Pending
  - correspondence with the examiner. Amendment was sent on Jul 2006

	
 

	
 

	
 

	
 

	
 

	
USA

	
 

	
10/345,097

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
53751

	
 

	
SYSTEM
  FOR DETECTION OF WAFER DEFECTS

	
 

	
Full
  description & claims on the 302 imaging apparatus - Fourier lens claims

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
USA

	
 

	
11/021,393

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
55247

	
 

	
GROUP
  IV (Div. Of 44420)

	
 

	
 

	
 

	
In
  Filing process

	
 

	
 

	
 

	
 

	
 

	
USA

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
55070

	
 

	
GROUP
  VI: DARK FIELD (Div. of 44420)

	
 

	
 

	
 

	
Filed
  on June 2006

	
 

	
 

	
 

	
 

	
 

	
USA

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
55071

	
 

	
GROUP
  VI: LASER ILLUMINATION (Div. of 44420)

	
 

	
 

	
 

	
Filed
  on June 2006

	
 

	
 

	
 

	
 

	
 

	
USA

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
55147

	
 

	
GROUP
  VII (Div. Of 44420)

	
 

	
 

	
 

	
Filed
  on June 2006

	
 

	
 

	
 

	
 

	
 

	
USA

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
55072

	
 

	
GROUP
  VIII: FIELD CURVATURE (Div. of 44420)

	
 

	
 

	
 

	
Filed
  on June 2006

	
 

	
 

	
 

	
 

	
 

	
USA

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
55062

	
 

	
SYSTEM
  FOR DETECTION OF WAFER DEFECTS

	
 

	
Full
  description & claims on the 302 imaging apparatus

	
 

	
Pending
  - published

	
 

	
 

	
 

	
 

	
 

	
Europe

	
 

	
4701321.4

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
50446

	
 

	
SYSTEM
  FOR DETECTION OF WAFER DEFECTS

	
 

	
Full
  description & claims on the 302 imaging apparatus

	
 

	
National
  phase filed

	
 

	
 

	
 

	
 

	
 

	
PCT

	
 

	
PCT/IL04/000023

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
55065

	
 

	
SYSTEM
  FOR DETECTION OF WAFER DEFECTS

	
 

	
Full
  description & claims on the 302 imaging apparatus

	
 

	
Pending
  - examination was not requested

	
 

	
 

	
 

	
 

	
 

	
South
  Korea

	
 

	
2005-7013165

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
[***]

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 







*** Text omitted and filed separately
with the Securities and Exchange Commission pursuant to 17 CFR § 230.406 and §
200.80(b)(4). 








	
 

	
 

	
 


	
 

	
Negevtech
  FAMILY STATUS 

	
Version: 1 


	
 

	
Status report date:
  15/08/05 

	
 








	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
File #

	
 

	
Title

	
 

	
Negevtech detailed
  comments

	
 

	
Status

	
 

	
Abstract

	
 

	
Independent claims

	
 

	
Country

	
 

	
Application No.

	
 

	
Issued Patent


	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	



	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
47667

	
 

	
FIBER
  OPTICAL ILLUMINATION SYSTEM

	
 

	
BF
  & DF illumination system with the coherence breaking technique

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
USA

	
 

	
6,892,013

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
54590

	
 

	
FIBER
  OPTICAL ILLUMINATION SYSTEM

	
 

	
BF
  & DF illumination system with the coherence breaking technique

	
 

	
Pending
  - correspondence with the examiner. Amendment was sent on June 2006

	
 

	
 

	
 

	
 

	
 

	
USA
  (Cont of
47667)

	
 

	
11/096,873

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
55106

	
 

	
FIBER
  OPTICAL ILLUMINATION SYSTEM

	
 

	
BF
  & DF illumination system with the coherence breaking technique

	
 

	
Pending

	
 

	
 

	
 

	
 

	
 

	
Europe

	
 

	
4701327.1

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
50445

	
 

	
FIBER
  OPTICAL ILLUMINATION SYSTEM

	
 

	
BF
  & DF illumination system with the coherence breaking technique

	
 

	
Natinal
  phase filed

	
 

	
 

	
 

	
 

	
 

	
PCT

	
 

	
PCT/IL04/000022

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
55109

	
 

	
FIBER
  OPTICAL ILLUMINATION SYSTEM

	
 

	
BF
  & DF illumination system with the coherence breaking technique

	
 

	
Pending
  - Examination was not requested

	
 

	
 

	
 

	
 

	
 

	
South
  Korea

	
 

	
2005-7013118

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
50532

	
 

	
FIBER
  OPTICAL ILLUMINATION SYSTEM

	
 

	
BF
  & DF illumination system with the coherence breaking technique

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Taiwan

	
 

	
093101034

	
 

	
 












	
 

	
 

	
 


	
 

	
Negevtech
  FAMILY STATUS 

	
Version: 1 


	
 

	
Status report date:
  15/08/05 

	
 








	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
File #

	
 

	
Title

	
 

	
Negevtech detailed
  comments

	
 

	
Status

	
 

	
Abstract

	
 

	
Independent claims

	
 

	
Country

	
 

	
Application No.

	
 

	
Issued Patent


	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	



	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
53885
  

	
 

	
MULTI
  MODE INSPECTION METHOD AND APPARATUS 

	
 

	
FPA
  that allows simple and economical CCD packing+ concept for simultaneous
  BF&DF 

	
 

	
Pending
  - correspondence with the examiner. Amendment was sent on June 2006 

	
 

	
 

	
 

	
 

	
 

	
USA
  

	
 

	
11/176,844
  

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
52169
  

	
 

	
MULTI
  MODE INSPECTION METHOD AND APPARATUS 

	
 

	
FPA
  that allows simple and economical CCD packing+ concept for simultaneous
  BF&DF 

	
 

	
Provisional
  

	
 

	
 

	
 

	
 

	
 

	
USA-
  Provisional
  

	
 

	
60/587,675
  

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
[***]
  

	
 

	
  

	
 

	
 

	
 

	
  

	
 

	
 

	
 

	
 

	
 

	
 
  

	
 

	
  

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
53886
  

	
 

	
MULTI
  MODE INSPECTION METHOD AND APPARATUS 

	
 

	
FPA
  that allows simple and economical CCD packing+ concept for simultaneous
  BF&DF 

	
 

	
National
  phase should be fined untill Jan 2007 

	
 

	
 

	
 

	
 

	
 

	
PCT 

	
 

	
PCT/IL2005/000708

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
53603
  

	
 

	
METHOD
  AND APPARATUS FOR DETECTING DEFECTS IN WAFERS 

	
 

	
Image
  processing of the 302 

	
 

	
Pending
  

	
 

	
 

	
 

	
 

	
 

	
USA 

	
 

	
11/069,712
  

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
57768
  

	
 

	
METHOD
  AND APPARATUS FOR DETECTING DEFECTS IN WAFERS 

	
 

	
Image
  processing of the 302 

	
 

	
Filed
  on Feb 2006 

	
 

	
 

	
 

	
 

	
 

	
Europe
  

	
 

	
6251044.1
  

	
 

	
 







*** Text omitted and filed separately
with the Securities and Exchange Commission pursuant to 17 CFR § 230.406 and §
200.80(b)(4). 








	
 

	
 

	
 


	
 

	
Negevtech
  FAMILY STATUS 

	
Version: 1 


	
 

	
Status report date:
  15/08/05 

	
 








	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
File #

	
 

	
Title

	
 

	
Negevtech detailed
  comments

	
 

	
Status

	
 

	
Abstract

	
 

	
Independent claims

	
 

	
Country

	
 

	
Application No.

	
 

	
Issued Patent


	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	


	
 

	




	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
[***]

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
53604

	
 

	
METHOD
  AND APPARATUS FOR DETECTING DEFECTS IN WAFERS INCLUDING ALIGNMENT OF THE
  WAFER IMAGES SO AS TO INDUCE THE SAME SMEAR IN ALL IMAGES

	
 

	
Image
  processing of the 302

	
 

	
Pending

	
 

	
 

	
 

	
 

	
 

	
USA

	
 

	
11/068,711

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
[***]

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
NRI-I

	
 

	
Printed
  Fourier Filtering In Optical Inspection Tools

	
 

	
Producing
  Fourier image by printing

	
 

	
Filed
  on April 2006

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
11/410,276

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
NRI-2

	
 

	
Wafer
  Inspection Using Short-Pulsed Continuous Broadband Illumination

	
 

	
Description
  of Inspection tool that uses short-pulsed continuous broadband illumination,
  especially by using the supercontinuum effect via PCF (Photonic Crystal
  Fibers).

	
 

	
Provisional
  - filed on May 2006

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
60/808,816

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
NRI-3

	
 

	
Speckle
  Reduction Using A Fiber Bundle And Light Guide

	
 

	
Speckle
  reduction using bundle of fibers and a light guide after it

	
 

	
filed
  on Aug 2006

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
Domain
Name: negevtech.com 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
Unregistered
Trademark: Step&Image 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 







*** Text omitted and filed separately
with the Securities and Exchange Commission pursuant to 17 CFR § 230.406 and §
200.80(b)(4). 











Schedule 2.18  


[***]


*** Text omitted and filed separately
with the Securities and Exchange Commission pursuant to 17 CFR § 230.406 and §
200.80(b)(4). 











Schedule 2.19  




NEGEVTECH LTD.


INTERIM REPORT


AS OF MARCH 31, 2006


(Unaudited)







 TABLE OF CONTENTS 


	
 

	
 

	
 


	
   

	
   

	
 Page 


	
   

	
   

	
   


	
 AUDITORS’
REVIEW REPORT 

	
   

	
 2 


	
 CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS - IN U.S. DOLLARS ($): 

	
   

	
   


	
 Balance sheets 

	
   

	
 3 


	
 Statements of operations 

	
   

	
 4 


	
 Statements of changes in shareholders’ equity 

	
   

	
 5-6 


	
 Statements of cash flows 

	
   

	
 7 


	
 Notes to financial statements 

	
   

	
 8-9 


	
   

	
   

	
   












 September 10,
2006 


 The Board of
Directors of 

Negevtech Ltd. 


 Dear Sirs, 


	
5

	
 


	
 Re: 

	
 Review of
condensed unaudited interim financial Statements for the three month period
ended March 31, 2006 





 At your
request, we have reviewed the condensed consolidated interim balance sheet of
Negevtech Ltd. (hereafter -
the Company) and its subsidiaries as of March 31, 2006 and the condensed
consolidated statements of operations, changes in shareholders’ equity and cash
flows for the three month period ended March 31, 2006. 


 Our review was
performed in accordance with the procedures prescribed by the Institute of
Certified Public Accountants in Israel. Inter alia, these procedures included:
reading of the aforementioned financial statements, reading of minutes of
meetings of shareholders and the board of directors, and making inquiries of
Company officers responsible for financial and accounting matters. 


 Since our
review was limited in scope and did not constitute an audit in accordance with
generally accepted auditing standards, we do not express an opinion on the
abovementioned condensed interim financial statements. 


 During our
review, nothing came to our attention that indicated that significant
adjustments should be made in the said interim condensed financial statements
in order for them to be considered as having been prepared in accordance with
generally accepted accounting principles. 


 Sincerely
yours, 


 Kesselman & Kesselman

Certified Public Accountants (Isr.) 


2








 NEGEVTECH LTD. 


 CONDENSED CONSOLIDATED BALANCE SHEETS 


 AS OF MARCH 31, 2006 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
   

	
   

	
 March 31 

	
   

	
   

	
   


	
   

	
   

	


	
   

	
 December 31, 

	
   


	
   

	
   

	
 2006 

	
   

	
 2005 

	
   

	
 2005 

	
   


	
   

	
   

	


	
   

	


	
   

	


	
   


	
   

	
   

	
 (Unaudited) 

	
   

	
 (Audited) 

	
   


	
   

	
   

	


	
   

	


	
   


	
   

	
   

	
 U.S. dollars in thousands 

	
   


	
   

	
   

	


	
   


	
   

	
   

	
   

	
   


	
 A s s e t
  s 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
   

	
   

	
   

	
   


	
 CURRENT ASSETS: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Cash and cash equivalents 

	
   

	
   

	
 10,400 

	
   

	
   

	
 1,639 

	
   

	
   

	
 1,356 

	
   


	
 Accounts receivable: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Trade 

	
   

	
   

	
 3,794 

	
   

	
   

	
 504 

	
   

	
   

	
 3,219 

	
   


	
 Government of Israel 

	
   

	
   

	
 1,146 

	
   

	
   

	
 1,058 

	
   

	
   

	
 1,671 

	
   


	
 Other 

	
   

	
   

	
 1,919 

	
   

	
   

	
 689 

	
   

	
   

	
 737 

	
   


	
 Inventories 

	
   

	
   

	
 18,140 

	
   

	
   

	
 13,869 

	
   

	
   

	
 17,212 

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
   

	
   

	
   

	
   


	
 T o t a l  current assets 

	
   

	
   

	
 35,399 

	
   

	
   

	
 17,759 

	
   

	
   

	
 24,195 

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
 NON-CURRENT
  ASSETS: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Restricted deposits 

	
   

	
   

	
 1,200 

	
   

	
   

	
 3,504 

	
   

	
   

	
 1,199 

	
   


	
 Long - term prepaid expenses 

	
   

	
   

	
 683 

	
   

	
   

	
   

	
   

	
   

	
 722 

	
   


	
 Severance pay funds 

	
   

	
   

	
 818 

	
   

	
   

	
 417 

	
   

	
   

	
 812 

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
 T o t a l  non-current assets 

	
   

	
   

	
 2,701 

	
   

	
   

	
 3,921 

	
   

	
   

	
 2,733 

	
   


	
   

	
   

	
   

	
   


	
 FIXED ASSETS: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Cost 

	
   

	
   

	
 11,534 

	
   

	
   

	
 5,552 

	
   

	
   

	
 10,061 

	
   


	
 L e s s - accumulated depreciation 

	
   

	
   

	
 4,183 

	
   

	
   

	
 1,701 

	
   

	
   

	
 3,325 

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
   

	
   

	
   

	
   


	
   

	
   

	
   

	
 7,351 

	
   

	
   

	
 3,851 

	
   

	
   

	
 6,736 

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
   

	
   

	
   

	
   


	
   

	
   

	
   

	
 45,451 

	
   

	
   

	
 25,531 

	
   

	
   

	
 33,664 

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
 Liabilities
  and shareholders’ equity 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
   

	
   

	
   

	
   


	
 CURRENT LIABILITIES: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Short term loans and current maturities of long-term bank
loan 

	
   

	
   

	
 833 

	
   

	
   

	
 5,333 

	
   

	
   

	
 833 

	
   


	
 Accounts payable and accruals: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Trade 

	
   

	
   

	
 3,909 

	
   

	
   

	
 2,507 

	
   

	
   

	
 4,730 

	
   


	
 Customer’s advance and Deferred revenue 

	
   

	
   

	
 3,125 

	
   

	
   

	
 2,281 

	
   

	
   

	
 550 

	
   


	
 Other 

	
   

	
   

	
 2,260 

	
   

	
   

	
 1,675 

	
   

	
   

	
 2,497 

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 T o t a l  current liabilities 

	
   

	
   

	
 10,127 

	
   

	
   

	
 11,796 

	
   

	
   

	
 8,610 

	
   


	
   

	
   

	
   

	
   


	
 LONG-TERM LIABILITIES: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Accrued severance pay liability 

	
   

	
   

	
 893 

	
   

	
   

	
 495 

	
   

	
   

	
 877 

	
   


	
 Loans and other liabilities, net of current maturities: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Bank loans 

	
   

	
   

	
 139 

	
   

	
   

	
 972 

	
   

	
   

	
 347 

	
   


	
 Other liabilities 

	
   

	
   

	
 10,000 

	
   

	
   

	
   

	
   

	
   

	
 7,700 

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
   

	
   

	
   

	
   


	
 T o t a l  long - term liabilities 

	
   

	
   

	
 11,032 

	
   

	
   

	
 1,467 

	
   

	
   

	
 8,924 

	
   


	
   

	
   

	
   

	
   


	
 CONVERTIBLE LOANS FROM SHAREHOLDERS 

	
   

	
   

	
   

	
   

	
   

	
 7,121 

	
   

	
   

	
   

	
   


	
   

	
   

	
   

	
   


	
 COMMITMENTS AND CONTINGENT LIABILITIES 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 T o t a l  liabilities 

	
   

	
   

	
 21,159 

	
   

	
   

	
 20,384 

	
   

	
   

	
 17,534 

	
   


	
   

	
   

	
   

	
   


	
 SHAREHOLDERS’ EQUITY 

	
   

	
   

	
 24,292 

	
   

	
   

	
 5,147 

	
   

	
   

	
 16,130 

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
   

	
   

	
   

	
   


	
   

	
   

	
   

	
 45,451 

	
   

	
   

	
 25,531 

	
   

	
   

	
 33,664 

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   








	
 

	
 

	
 

	
 


	
   

	
   

	
    ) 

	
   


	
   

	
   

	
    ) 

	
 DIRECTORS 


	
   

	
   

	
    ) 

	
   





 The accompanying notes are an integral part of these
condensed financial statements. 


3








 NEGEVTECH LTD. 



 CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS 



 FOR THE THREE MONTH PERIOD ENDED MARCH 31,
2006 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
   

	
   

	
 Three months

  ended March 31 

	
   

	
 Year ended

  December 31 

	
   


	
   

	
   

	


	
   

	
   


	
   

	
   

	
 2006 

	
   

	
 2005 

	
   

	
 2005 

	
   


	
   

	
   

	


	
   

	


	
   

	


	
   


	
   

	
   

	
 (Unaudited) 

	
   

	
 (Audited) 

	
   


	
   

	
   

	


	
   

	


	
   


	
   

	
   

	
 U.S. dollars in thousands 

	
   


	
   

	
   

	


	
   


	
   

	
   

	
   

	
   


	
 Revenues 

	
   

	
   

	
 4,501 

	
   

	
   

	
 3,725 

	
   

	
   

	
 15,856 

	
   


	
   

	
   

	
   

	
   


	
 Cost of revenues 

	
   

	
   

	
 2,220 

	
   

	
   

	
 2,144 

	
   

	
   

	
 8,918 

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
   


	
 Gross profit 

	
   

	
   

	
 2,281 

	
   

	
   

	
 1,581 

	
   

	
   

	
 6,938 

	
   


	
   

	
   

	
   

	
   


	
 Research and development costs: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Research and development expenses 

	
   

	
   

	
 2,986 

	
   

	
   

	
 1,848 

	
   

	
   

	
 9,158 

	
   


	
 L e s s - royalty bearing participation from the
Government of Israel 

	
   

	
   

	
 333 

	
   

	
   

	
 390 

	
   

	
   

	
 1,524 

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
 Research and development expenses, net 

	
   

	
   

	
 2,653 

	
   

	
   

	
 1,458 

	
   

	
   

	
 7,634 

	
   


	
   

	
   

	
   

	
   


	
 Marketing, general and administrative Expenses, net 

	
   

	
   

	
 3,613 

	
   

	
   

	
 2,240 

	
   

	
   

	
 12,932 

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
   


	
 Operating loss 

	
   

	
   

	
 3,985 

	
   

	
   

	
 2,117 

	
   

	
   

	
 13,628 

	
   


	
   


	
 Financial expenses, net: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
   


	
 Non-cash expenses in respect of conversion of
  convertible loans from shareholders 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 1,251 

	
   


	
   

	
   

	
   

	
   


	
 Other financial expenses, net 

	
   

	
   

	
 369 

	
   

	
   

	
 306 

	
   

	
   

	
 1,232 

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
   

	
   

	
   

	
   


	
 Net loss for the period 

	
   

	
   

	
 4,354 

	
   

	
   

	
 2,423 

	
   

	
   

	
 16,111 

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   





 The accompanying notes are an integral part of these
condensed financial statements. 


4








 (Continued -1) 


 NEGEVTECH LTD. 


 CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY 


 FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2006 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
   

	
   

	
 Share capital 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
   

	
   

	


	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
   

	
   

	
 Ordinary

  shares 

	
   

	
 Ordinary

  preferred

  shares 

	
   

	
 Preferred

  shares 

	
   

	
 Amount 

	
   

	
 Additional

  Paid-in

  capital 

	
   

	
 Warrants 

	
   

	
 Accumulated

  deficit 

	
   

	
 Total 

	
   


	
   

	
   

	


	
   

	


	
   

	


	
   

	


	
   

	


	
   

	


	
   

	


	
   

	


	
   


	
   

	
   

	
 Number of shares 

	
   

	
 U . S .    d o l l a r s    i n    t h o u s a n d s 

	
   


	
   

	
   

	


	
   

	


	
   


	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 BALANCE AT
  JANUARY 1, 2006
  (audited)  

	
   

	
   

	
 428,949 

	
   

	
   

	
 1,569,004 

	
   

	
   

	
 24,893,433 

	
   

	
   

	
 66 

	
   

	
   

	
 66,447 

	
   

	
   

	
 1,742 

	
   

	
   

	
 (52,125 

	
 ) 

	
   

	
 16,130 

	
   


	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 CHANGES
  DURING THE THREE MONTH PERIOD ENDED MARCH 31, 2006  (unaudited):  

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Exercise of Employee stock options 

	
   

	
   

	
 30,000 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 (a 

	
 ) 

	
   

	
 12 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 12 

	
   


	
 Employee stock based compensation 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 20 

	
   

	
   

	
 20 

	
   


	
 Issuance of preferred
BB3 shares capital (b) 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 4,742,606 

	
   

	
   

	
 12 

	
   

	
   

	
 12,472 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 12,484 

	
   


	
 Loss 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 (4,354 

	
 ) 

	
   

	
 (4,354 

	
 ) 


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 BALANCE AT
  MARCH 31, 2006 (unaudited) 

	
   

	
   

	
 458,949 

	
   

	
   

	
 1,569,004 

	
   

	
   

	
 29,636,039 

	
   

	
   

	
 78 

	
   

	
   

	
 78,931 

	
   

	
   

	
 1,742 

	
   

	
   

	
 (56,459 

	
 ) 

	
   

	
 24,292 

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
 BALANCE AT JANUARY 1,
  2005 (audited) 

	
   

	
   

	
 259,949 

	
   

	
   

	
 2,401,978 

	
   

	
   

	
 12,071,278 

	
   

	
   

	
 37 

	
   

	
   

	
 43,077 

	
   

	
   

	
 178 

	
   

	
   

	
 (36,014 

	
 ) 

	
   

	
 7,278 

	
   


	
   


	
 CHANGES
  DURING THE THREE MONTH PERIOD ENDED MARCH 31, 2005  (unaudited):  

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Warrants issued in connection
with Short - term loan 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 292 

	
   

	
   

	
   

	
   

	
   

	
 292 

	
   


	
 Loss 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 (2,423 

	
 ) 

	
   

	
 (2,423 

	
 ) 


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
 BALANCE AT MARCH 31, 2005 (unaudited) 

	
   

	
   

	
 259,949 

	
   

	
   

	
 2,401,978 

	
   

	
   

	
 12,071,278 

	
   

	
   

	
 37 

	
   

	
   

	
 43,077 

	
   

	
   

	
 470 

	
   

	
   

	
 (38,437 

	
 ) 

	
   

	
 5,147 

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   








	
 

	
 

	
 


	
   

	
 (a) Represents an amount less
  than $ 1. 


	
   

	
 (b) Net
  of Issuance expenses of $ 516 thousands 





5








 NEGEVTECH LTD. 


 CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY 


 FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2006 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
   

	
   

	
 Share capital 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
   

	
   

	


	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
   

	
   

	
 Ordinary

  shares 

	
   

	
 Ordinary

  preferred

  shares 

	
   

	
 Preferred

  shares 

	
   

	
 Amount 

	
   

	
 Additional

  paid-in

  capital 

	
   

	
 warrants 

	
   

	
 Accumulated

  deficit 

	
   

	
 Total 

	
   


	
   

	
   

	


	
   

	


	
   

	


	
   

	


	
   

	


	
   

	


	
   

	


	
   

	


	
   


	
   

	
   

	
 Number of shares 

	
   

	
 U . S .    d o l l a r s    i n    t h o u s a n d s 

	
   


	
   

	
   

	


	
   

	


	
   


	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 BALANCE AT JANUARY 1, 2005  (audited)  

	
   

	
   

	
 259,949 

	
   

	
   

	
 2,401,978 

	
   

	
   

	
 12,071,278 

	
   

	
   

	
 37 

	
   

	
   

	
 43,077 

	
   

	
   

	
 178 

	
   

	
   

	
 (36,014 

	
 ) 

	
   

	
 7,278 

	
   


	
   


	
 CHANGES DURING 2005 (audited): 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Warrants issued to a service providers 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 5 

	
   

	
   

	
   

	
   

	
   

	
 5 

	
   


	
 Warrants issued in connection with loans from Plenus 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 1,559 

	
   

	
   

	
   

	
   

	
   

	
 1,559 

	
   


	
 Exercise of Employee stock options 

	
   

	
   

	
 169,000 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 (a 

	
 ) 

	
   

	
 7 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 7 

	
   


	
 Issuance of preferred AA shares as a result of equity
consolidation 

	
   

	
   

	
   

	
   

	
   

	
 (832,974 

	
 ) 

	
   

	
 1,072,792 

	
   

	
   

	
 3 

	
   

	
   

	
 (3 

	
 ) 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Interest expense in respect of conversion of convertible loans from
  shareholders 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 1,251 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 1,251 

	
   


	
 Issuance of preferred BB1 and BB2 shares capital (b 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 11,749,363 

	
   

	
   

	
 26 

	
   

	
   

	
 22,115 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 22,141 

	
   


	
 Loss 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 (16,111 

	
 ) 

	
   

	
 (16,111 

	
 ) 


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
 BALANCE AT DECEMBER 31, 2005 (audited)  

	
   

	
   

	
 428,949 

	
   

	
   

	
 1,569,004 

	
   

	
   

	
 24,893,433 

	
   

	
   

	
 66 

	
   

	
   

	
 66,447 

	
   

	
   

	
 1,742 

	
   

	
   

	
 (52,125 

	
 ) 

	
   

	
 16,130 

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   








	
 

	
 

	
 


	
   

	
 (c) Represents an amount less
  than $ 1. 


	
   

	
 (b) Net
  of Issuance expenses of $ 859 thousands. 





 The accompanying notes are an integral part of these condensed
financial statements. 


6








 NEGEVTECH LTD. 


 CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS 


 FOR THE THREE MONTH PERIOD ENDED MARCH 31,
2006 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
   

	
   

	
 Three
  months

  Ended March 31 

	
   

	
 Year ended

  December 31, 

	
   


	
   

	
   

	


	
   

	
   


	
   

	
   

	
 2006 

	
   

	
 2005 

	
   

	
 2005 

	
   


	
   

	
   

	


	
   

	


	
   

	


	
   


	
   

	
   

	
 (Unaudited) 

	
   

	
 (Audited) 

	
   


	
   

	
   

	


	
   

	


	
   


	
   

	
   

	
 U.S.
  dollars in thousands 

	
   


	
   

	
   

	


	
   


	
   

	
   

	
   

	
   


	
 CASH FLOWS FROM OPERATING ACTIVITIES: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Loss for the period 

	
   

	
   

	
 (4,354 

	
 ) 

	
   

	
 (2,423 

	
 ) 

	
   

	
 (16,111 

	
 ) 


	
 Adjustments required to reconcile loss to net cash used in operating
  activities: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Depreciation and amortization 

	
   

	
   

	
 858 

	
   

	
   

	
 214 

	
   

	
   

	
 1,838 

	
   


	
 Accrued severance pay 

	
   

	
   

	
 16 

	
   

	
   

	
 10 

	
   

	
   

	
 392 

	
   


	
 Amortization of debt issuance cost 

	
   

	
   

	
 100 

	
   

	
   

	
   

	
   

	
   

	
 430 

	
   


	
 Deferred stock based compensation 

	
   

	
   

	
 20 

	
   

	
   

	
   

	
   

	
   

	
 5 

	
   


	
 Interest expenses related to convertible loan 

	
   

	
   

	
   

	
   

	
   

	
 71 

	
   

	
   

	
 310 

	
   


	
 Interest expense in respect of conversion of convertible loans from
  shareholders 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 1,251 

	
   


	
 Changes in operating asset and liability items: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Decrease (increase) in trade accounts receivable 

	
   

	
   

	
 (575 

	
 ) 

	
   

	
 225 

	
   

	
   

	
 (2,490 

	
 ) 


	
 Decrease (increase) in other accounts receivable 

	
   

	
   

	
 382 

	
   

	
   

	
 149 

	
   

	
   

	
 (104 

	
 ) 


	
 Increase in inventories 

	
   

	
   

	
 (1,819 

	
 ) 

	
   

	
 (2,877 

	
 ) 

	
   

	
 (9,707 

	
 ) 


	
 Increase (decrease) in trade payables 

	
   

	
   

	
 (821 

	
 ) 

	
   

	
 (347 

	
 ) 

	
   

	
 1,876 

	
   


	
 Increase (decrease) in other accounts payable and accruals 

	
   

	
   

	
 (237 

	
 ) 

	
   

	
 2,571 

	
   

	
   

	
 1,112 

	
   


	
 Increase in customer’s advance and deferred revenues 

	
   

	
   

	
 2,575 

	
   

	
   

	
   

	
   

	
   

	
 550 

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
   


	
 Net cash used in operating activities 

	
   

	
   

	
 (3,855 

	
 ) 

	
   

	
 (2,407 

	
 ) 

	
   

	
 (20,648 

	
 ) 


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
 CASH FLOWS FROM INVESTING ACTIVITIES: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Purchase of fixed assets 

	
   

	
   

	
 (582 

	
 ) 

	
   

	
 (281 

	
 ) 

	
   

	
 (1,303 

	
 ) 


	
 Long-term deposit 

	
   

	
   

	
 (1 

	
 ) 

	
   

	
 (2,297 

	
 ) 

	
   

	
 8 

	
   


	
 Short – term bank deposit 

	
   

	
   

	
   

	
   

	
   

	
 32 

	
   

	
   

	
 32 

	
   


	
 Severance pay funds 

	
   

	
   

	
 (6 

	
 ) 

	
   

	
 (3 

	
 ) 

	
   

	
 (398 

	
 ) 


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
   


	
 Net cash used in investing activities 

	
   

	
   

	
 (589 

	
 ) 

	
   

	
 (2,549 

	
 ) 

	
   

	
 (1,661 

	
 ) 


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
 CASH FLOWS FROM FINANCING ACTIVITIES: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Short-term bank credit, net 

	
   

	
   

	
   

	
   

	
   

	
 (243 

	
 ) 

	
   

	
 (243 

	
 ) 


	
 Short-term bank loan 

	
   

	
   

	
   

	
   

	
   

	
 4,500 

	
   

	
   

	
   

	
   


	
 Long term loan from other 

	
   

	
   

	
 2,300 

	
   

	
   

	
   

	
   

	
   

	
 7,700 

	
   


	
 Repayment of long term bank loan 

	
   

	
   

	
 (208 

	
 ) 

	
   

	
 (208 

	
 ) 

	
   

	
 (834 

	
 ) 


	
 Proceeds from convertible loan received 

	
   

	
   

	
   

	
   

	
   

	
 2,000 

	
   

	
   

	
 9,404 

	
   


	
 Exercise of Employee stock options 

	
   

	
   

	
 12 

	
   

	
   

	
   

	
   

	
   

	
 7 

	
   


	
 Issuance of share capital, net of share issuance expenses 

	
   

	
   

	
 11,384 

	
   

	
   

	
   

	
   

	
   

	
 7,377 

	
   


	
 Warrant issued in connection with short-term loan 

	
   

	
   

	
   

	
   

	
   

	
 292 

	
   

	
   

	
   

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
   


	
 Net cash provided by financing activities 

	
   

	
   

	
 13,488 

	
   

	
   

	
 6,341 

	
   

	
   

	
 23,411 

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
 INCREASE IN CASH AND CASH EQUIVALENTS 

	
   

	
   

	
 9,044 

	
   

	
   

	
 1,385 

	
   

	
   

	
 1,102 

	
   


	
   


	
 BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF
  PERIOD 

	
   

	
   

	
 1,356 

	
   

	
   

	
 254 

	
   

	
   

	
 254 

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
 BALANCE OF CASH AND CASH EQUIVALENTS AT END OF
  PERIOD 

	
   

	
   

	
 10,400 

	
   

	
   

	
 1,639 

	
   

	
   

	
 1,356 

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   






 Supplementary information on
operating and financing activities not involving cash flows: 





	
 

	
 


	
 (1) 

	
 During
  2006, an inventory in the amount of $891 thousands was recategorized as fixed
  assets. 


	
 (2) 

	
 During
  2006, the Company issued 5,604,808 Preferred Shares, for a total amount of $13
  million. An amount of $1.1 million was received subsequent to March 31, 2006. 





 The
accompanying notes are an integral part of these condensed financial
statements. 


7









 NEGEVTECH LTD. 


 NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS 


 AS OF MARCH 31, 2006 


 (Unaudited) 


 NOTE 1 – GENERAL: 


	
 

	
 

	
 


	
   

	
 a. 

	
 The interim
  financial statements as of March 31, 2006 and for the three month period then
  ended (hereafter - the interim statements) were drawn up in condensed
  form, in accordance with generally accepted accounting principles applicable
  to interim financial statements. 


	
   

	
   

	
   


	
   

	
   

	
 The interim
  statements do not include all the information and explanations required for
  annual financial statements. Operating results for the three month period
  ended March 31, 2006 are not necessarily indicative of the results of
  operations for the full year. 


	
   

	
   

	
   


	
   

	
 b. 

	
 Following
  are the changes in the exchange rate of the U.S. dollar and the Israeli
  consumer price index during the reported periods: 








	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
   

	
   

	
 Exchange rate of one U.S. dollar 

	
   

	
 Israeli consumer price index 


	
   

	
   

	


	
   

	



	
   

	
   

	
 % 

	
   

	
 % 


	
   

	
   

	


	
   

	



	
   


	
 Three months ended March
  31: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 2006 

	
   

	
   

	
 1.3 

	
   

	
   

	
 0.6 

	
   


	
 2005 

	
   

	
   

	
 1.2 

	
   

	
   

	
 (0.6 

	
 ) 


	
   


	
 Year ended December 31, 2005 

	
   

	
   

	
 6.8 

	
   

	
   

	
 2.4 

	
   





 NOTE 2 – LOAN AGREEMENT 


	
 

	
 


	
   

	
 On
  October 13, 2005, The Company signed a loan agreement with Plenus
  Technologies Ltd (“Plenus”) for a 3 years period. According to this
  agreement, the Company can draw up to $10 million during the 3 year loan term.
  The loan will bear interest at an annual rate of Libor + 4% from the
  disbursement date of the principal amount until the date of actual repayment
  thereof. As of March, 31, 2006 the Company draw $10 million. In April 5, 2006
  the Company repaid an amount of $5.5 million. 


	
   

	
   


	
   

	
 As
  consideration for the grant of the loan, the Company granted Plenus a warrant
  exercisable during the term of the warrant, at Plenus election into series
  BB1 Preferred shares at a PPS of $2.3194. The warrant is exercisable at any
  time for a period of 10 years or through the consummation of a realization
  event, as defined. The aggregate exercise price under the new warrant is
  $2,800 thousands. 


	
   

	
   


	
   

	
 The
  Company recorded the estimated fair value of the warrants on the date of the
  grant, as determined using the Black-Scholes option pricing model, as debt
  issuance costs. Such costs are amortized over the loan term as additional
  interest expenses. The estimated fair value of the warrants granted in
  connection with the loan is $1,209 thousands of which $100 thousands was
  recorded as additional interest expense in the three month period ended March
  31, 2006. 


	
   

	
   


	
   

	
 The
  loan is also guaranteed by a first priority fixed charge on all of the
  Company rights in and to its intellectual property and by a floating charge
  on all of its present and future tangible and intangible assets, pari passu
  with the floating charge and fixed charge in favor of Bank leumi 





8








 NEGEVTECH LTD. 


 NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (continued) 


 AS OF MARCH 31, 2006 


 (Unaudited) 


 NOTE 3 – INVESTMENT AGREEMENT 


	
 

	
 


	
   

	
 In March 23,
  2006, the Company entered into an investment agreement under which the
  Company issued 5,604,808 series “BB-3” Preferred Shares, for a total
  consideration of $13 million, to current and new investors. The number of
  shares includes conversion of 862,292 Series BB-1 Preferred Shares at the
  closing. 


	
   

	
   


	
   

	
 Through
  April 3, 2006, the Company received the total consideration. The terms of
  Series BB-3 Preferred Shares are substantially similar to those of Series
  BB-1 and BB-2 preferred shares. 


	
   

	
   


	
   

	
 Subsequent
  to March 31, 2006, the Company entered into an additional investment
  agreement for the issuance of  254,376
  series “BB-3” Preferred Shares, for a total consideration of $590,000. 





 NOTE 4 – CONTINGENTS LIABILITIES: 


	
 

	
 

	
 


	
   

	
 a. 

	
 In July and
  August 2004, the Company received letters from KLA - Tencor Corporation
  (“KLA”) asserting that the Company’s 302-inspection system makes use of three
  KLA patents U.S. Patent No. 4,805,123, U.S. Patent No. 6,288,780 and U.S.
  Patent No. 6,686,995 and requesting technical information regarding the 302
  system.  In response to these letters,
  the Company has identified certain limitations of the KLA patents that are
  absent from the 302 system.  The
  Company has also requested further clarification of KLA’s claims.  The ‘123’ patent has been previously
  litigated by KLA, and has been determined by the U.S. District Court for the
  Northern District of California to be invalid. The Company disputes KLA’s
  claims, and is attempting to resolve these issues without resorting to
  litigation. No provision was recorded in the financial statements in respect
  of such claim. 


	
   

	
   

	
   


	
   

	
 b. 

	
 On August
  27, 2004, Applied Materials, Inc. filed suit in the U.S. District Court for
  the Northern District of California alleging that the Company’s
  302-inspection system infringes an Applied Materials’ patent (U.S. Patent No.
  5,982,921), and seeking an injunction and unspecified damages.  On October 12, 2004, the Company filed its
  amended answer to Applied Materials’ complaint and also filed counterclaims
  for declaratory judgment of no infringement and invalidity. On June 3, 2005
  Applied Materials, Inc. and Applied Materials Israel filed an amended
  compliant aginst the Company. On June 23, 2005 the Company filed an answer to
  the amended compliant and again filed counterclaims for declaratory judgment
  of non-infringement and invalidity. 


	
   

	
   

	
   


	
   

	
   

	
 On July 14,
  2005, the Court issued an order under the legal doctrine of assignor
  estoppels that prevents the Company from challenging the validity of the ’921 patent in this lawsuit. That order does not prevent the
  Company from challenging the validity of the ’921
  patent in the United States Patent and Trademark Office, however. On June 3,
  2005, the Company filed a request for the reexamination of the ’921
  patent with the USPTO. 


	
   

	
   

	
   


	
   

	
   

	
 On September
  2005, the Uspto granted the Company request to reexamine the ’921 patent. In October 2005, the court stayed the litigation
  on the ’921 patent pending the USPTO reexamination. 





9








 NEGEVTECH LTD. 


 NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (continued) 


 AS OF MARCH 31, 2006 


 (Unaudited) 


 NOTE 4 – CONTINGENTS LIABILITIES (continued): 


	
 

	
 

	
 


	
   

	
 

	
 On October
  24, 2005 Applied Materials filed a second amended complaint asserting two
  additional patents against Negevtech U.S. Patent Nos. 6,256,093 and
  6,924,891. On November 10, 2005, the Company filed an answer to the second
  amended complaint and filed counterclaims for declaratory judgment of
  non-infringement of each of Applied Materials’ patents, and of invalidity for ‘093
  and 891’
  patents. During December 2005 and upon hearing the Company arguments Applied
  Materials withdrew the ’093 patent and cancelled the claim. 


	
   

	
   

	
   


	
   

	
 

	
 The Company
  disputes Applied Materials’
  claims and intends to defend the lawsuit vigorously. No provision was
  recorded in the financial statements in respect of such claims. 





 NOTE 5 – SHARE-BASED COMPENSATION: 


	
 

	
 

	
 


	
   

	
 

	
 SFAS No. 123(R)
  “Share-Based Payment” (“SFAS 123(R)”) requires the recognition of
  compensation expense in the Condensed Consolidated Statements of Income
  related to the fair value of employee share-based options. Determining the
  fair value of share-based awards at the grant date requires judgment,
  including estimating the expected term that stock options will be outstanding
  prior to exercise, the associated volatility and the expected dividends.
  Judgment is also required in estimating the amount of share-based awards
  expected to be forfeited prior to vesting. If actual forfeitures differ
  significantly from these estimates, share-based compensation expenses could
  be materially impacted. Prior to adopting SFAS 123(R), the Company applied
  Accounting Principle Board (“APB”) Opinion No. 25, and related
  interpretations, in accounting for its stock-based compensation plans. 


	
   

	
   

	
   


	
   

	
 

	
 On January 1, 2006, the
  Company adopted SFAS 123(R) requiring the recognition of compensation expense
  in the Condensed Consolidated Statements of Income related to the fair value
  of its employee share-based options. SFAS 123(R) revises SFAS No. 123
  “Accounting for Stock-Based Compensation” and supersedes APB Opinion No 25
  “Accounting for Stock Issued to Employees”.
  


	
   

	
   

	
   


	
   

	
 

	
 The Company will recognize
  the cost of all employee stock options on a straight-line attribution basis
  over their respective vesting periods, net of estimated forfeitures. The
  Company has selected the modified prospective method of transition;
  accordingly’ prior periods have not been restated. Prior to adopting SFAS
  123(R), the Company applied APB Opinion No. 25, and related Interpretations
  in accounting for its share-based compensation plans. 


	
   

	
   

	
   


	
   

	
 

	
 The Company has issued
  stock options to employees under share-based compensation plans. Stock
  options are issued at the estimated fair value of the common shares, subject to
  a four-year vesting period with a contractual term of 10 years. 


	
   

	
   

	
   


	
   

	
 

	
 Such value is recognized
  as expense over the vesting period of the award adjusted for actual
  forfeitures. For stock option awards, no compensation cost was recognized
  prior to January 1, 2006. 





10








 NEGEVTECH LTD. 


 NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS (continued) 


 AS OF MARCH 31, 2006 


 (Unaudited) 


 NOTE 5 – SHARE-BASED COMPANSATION (continued): 


	
 

	
 

	
 


	
   

	
 Valuation Assumptions 


	
   

	
   

	
   


	
   

	
 

	
 In
  connection with the adoption of SFAS 123(R), the Company estimated the fair
  value of options granted using the Black-Scholes option-pricing model with
  the following assumptions: 







	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
   

	
   

	
 For options that were granted 

	
   


	
   

	
   

	


	
   


	
   

	
   

	
 2001-2004 

	
   

	
 2005 

	
   

	
 2006 

	
   


	
   

	
   

	


	
   

	


	
   

	


	
   


	
   

	
   

	
   

	
   


	
 Expected
  volatility 

	
   

	
   

	
 0 

	
 % 

	
   

	
   

	
 0 

	
 % 

	
   

	
   

	
 60 

	
 % 

	
   


	
 Risk-free
  rate 

	
   

	
   

	
 2 

	
 % 

	
   

	
   

	
 4 

	
 % 

	
   

	
   

	
 4.6 

	
 % 

	
   


	
 Expected
  term (in years) 

	
   

	
   

	
 4 

	
   

	
   

	
   

	
 4 

	
   

	
   

	
   

	
 6 

	
   

	
   


	
 Expected
  annual forfeiture 

	
   

	
   

	
 10 

	
 % 

	
   

	
   

	
 10 

	
 % 

	
   

	
   

	
 10 

	
 % 

	
   








	
 

	
 

	
 


	
   

	
   

	
 A summary of
  award activity under the stock option plan and changes is presented below: 








	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
   

	
   

	
 Three months ended 

  March 31, 2006 

	
   

	
 Year ended 

  December 31, 2005 

	
   


	
   

	
   

	


	
   

	


	
   


	
   

	
   

	
 Number 

	
   

	
 Weighted

   average

  exercise

    price  

	
   

	
 Number 

	
   

	
 Weighted

   average

  Exercise

    Price  

	
   


	
   

	
   

	


	
   

	


	
   

	


	
   

	



	
   


	
   

	
   

	
   

	
   


	
 Options outstanding at beginning of period 

	
   

	
   

	
 4,705,726 

	
   

	
 $ 

	
 0.64 

	
   

	
   

	
 2,665,361 

	
   

	
 $ 

	
 0.62 

	
   


	
 Changes during period: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Granted 

	
   

	
   

	
 337,000 

	
   

	
 $ 

	
 0.63 

	
   

	
   

	
 2,289,865 

	
   

	
 $ 

	
 0.63 

	
   


	
 Exercised 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 169,000 

	
   

	
 $ 

	
 0.05 

	
   


	
 Forfeited 

	
   

	
   

	
 (30,000 

	
 ) 

	
 $ 

	
 0.39 

	
   

	
   

	
 (80,500 

	
 ) 

	
 $ 

	
 0.73 

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
 Options outstanding at end of period 

	
   

	
   

	
 5,012,726 

	
   

	
 $ 

	
 0.64 

	
   

	
   

	
 4,705,726 

	
   

	
 $ 

	
 0.64 

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
 Options exercisable at end of period 

	
   

	
   

	
 801,125 

	
   

	
 $ 

	
 0.59 

	
   

	
   

	
 959,000 

	
   

	
 $ 

	
 0.59 

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   





11








 NEGEVTECH LTD.

2005 ANNUAL REPORT 








 NEGEVTECH LTD.

2005 ANNUAL REPORT 


 TABLE OF CONTENTS 


	
 

	
 

	
 

	
 

	
 


	
   

	
   

	
 Page 

	
   


	
   


	
 AUDITORS’ REPORT 

	
   

	
   

	
 2 

	
   


	
 CONSOLIDATED
  FINANCIAL STATEMENTS - IN U.S. DOLLARS ($): 

	
   

	
   

	
   

	
   


	
 Balance sheets 

	
   

	
   

	
 3 

	
   


	
 Statements of
operations 

	
   

	
   

	
 4 

	
   


	
 Statements of changes in
  shareholders’ equity 

	
   

	
   

	
 5-7 

	
   


	
 Statements of cash
flows 

	
   

	
   

	
 8 

	
   


	
 Notes to financial statements 

	
   

	
   

	
 9-26 

	
   








	
 

	
 

	
 

	
 

	
 


	
   

	
   

	


	
   

	
   


	
   

	


	
   


	
   

	
   

	


	
   

	
   

















	
 

	
 


	
   

	
   


	
   

	
    Kesselman & Kesselman 


	
   

	
    Certified Public Accountants (Isr.)

     Trade Tower, 25 Hamered Street

     Tel Aviv 68125 Israel 

     P.O. Box 452 Tel Aviv 61003 Israel 

     Telephone +972-3-7954555 

     Facsimile +972-3-7954556 





 AUDITORS’
REPORT 


 To the shareholders of 

NEGEVTECH LTD. 


 We have audited the consolidated balance sheets of
Negevtech Ltd. (hereafter - the Company) and its subsidiaries as of December 31,
2005 and 2004 and the related consolidated statements of operations, changes in
shareholders’ equity and cash flows for each of the three years in the period
ended December 31, 2005. These financial statements are the responsibility of
the Company’s board of directors and management. Our responsibility is to
express an opinion on these financial statements based on our audits. 


 We conducted our audits in accordance with
auditing standards generally accepted in Israel, including those prescribed by
the Israeli Auditors (Mode of Performance) Regulations, 1973. Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by the Company’s
board of directors and management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion. 


 In our opinion, the consolidated financial
statements referred to above present fairly, in all material respects, the
financial position of the Company as of December 31, 2005 and 2004 and the
results of its operations, changes in its shareholder’s equity and cash flows
for each of the three years in the period ended December 31, 2005, in
conformity with accounting principles generally accepted in the United States
of America. 


  

Kesselman & Kesselman 

Tel-Aviv, Israel 

     April 4, 2006 





 Kesselman & Kesselman
is a member of PricewaterhouseCoopers International Limited, a company limited by guarantee registered in
England and Wales 


2








 NEGEVTECH LTD. 


 CONSOLIDATED BALANCE SHEETS 


(U.S. dollars in thousands) 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
   

	
   

	
   

	
   

	
   

	
   

	
 December 31 


	
   

	
   

	
   

	
   

	
   

	
   

	
   

	


	
   


	
   

	
   

	
   

	
 Note 

	
   

	
 2005 

	
   

	
 2004 

	
   


	
   

	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   


	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 A s s e t s  

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 CURRENT ASSETS: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Cash and cash equivalents 

	
   

	
   

	
 1d 

	
   

	
   

	
   

	
 1,356 

	
   

	
   

	
 254 


	
   


	
 Short-term bank deposits 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 32 

	
   


	
 Accounts receivable: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Trade 

	
   

	
   

	
   

	
   

	
   

	
   

	
 3,219 

	
   

	
   

	
 729 

	
   


	
 Government of Israel 

	
   

	
   

	
   

	
   

	
   

	
   

	
 1,671 

	
   

	
   

	
 1,609 

	
   


	
 Other 

	
   

	
   

	
 9a 

	
   

	
   

	
   

	
 737 

	
   

	
   

	
 288 

	
   


	
 Inventories 

	
   

	
   

	
 9b 

	
   

	
   

	
   

	
 17,212 

	
   

	
   

	
 10,992 

	
   


	
   

	
   

	
   

	
   

	
   

	
   

	
   

	


	
   

	
   

	


	
   


	
 T o t a l  current assets 

	
   

	
   

	
   

	
   

	
   

	
   

	
 24,195 

	
   

	
   

	
 13,904 

	
   


	
 NON-CURRENT
  ASSET: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Restricted deposits 

	
   

	
   

	
 9c 

	
   

	
   

	
   

	
 1,199 

	
   

	
   

	
 1,207 

	
   


	
 Long-term prepaid expenses 

	
   

	
   

	
 4b 

	
   

	
   

	
   

	
 722 

	
   

	
   

	
   

	
   


	
   

	
   

	
   

	
   

	
   

	
   

	


	


	
   

	


	


	
   


	
 T o t a l  non-current assets 

	
   

	
   

	
   

	
   

	
   

	
   

	
 1,921 

	
   

	
   

	
 1,207 

	
   


	
 FIXED
  ASSETS: 

	
   

	
   

	
 2 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Cost 

	
   

	
   

	
   

	
   

	
   

	
   

	
 10,061 

	
   

	
   

	
 5,271 

	
   


	
 L e s s - accumulated depreciation and
  amortization 

	
   

	
   

	
   

	
   

	
   

	
   

	
 3,325 

	
   

	
   

	
 1,487 

	
   


	
   

	
   

	
   

	
   

	
   

	
   

	


	


	
   

	


	


	
   


	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 6,736 

	
   

	
   

	
 3,784 

	
   


	
   

	
   

	
   

	
   

	
   

	
   

	


	


	
   

	


	


	
   


	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 32,852 

	
   

	
   

	
 18,895 

	
   


	
   

	
   

	
   

	
   

	
   

	
   

	


	


	
   

	


	


	
   


	
 Liabilities and shareholders’ equity 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 CURRENT
  LIABILITIES: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Short term loans and current maturities of
  long-term bank loan 

	
   

	
   

	
 4 

	
   

	
   

	
   

	
 833 

	
   

	
   

	
 1,076 

	
   


	
 Accounts payable and accruals: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Trade 

	
   

	
   

	
   

	
   

	
   

	
   

	
 4,730 

	
   

	
   

	
 2,854 

	
   


	
 Deferred revenue 

	
   

	
   

	
   

	
   

	
   

	
   

	
 550 

	
   

	
   

	
   

	
   


	
 Other 

	
   

	
   

	
 9d 

	
   

	
   

	
   

	
 2,497 

	
   

	
   

	
 1,385 

	
   


	
   

	
   

	
   

	
   

	
   

	
   

	


	


	
   

	


	


	
   


	
 T o t a l  current liabilities 

	
   

	
   

	
   

	
   

	
   

	
   

	
 8,610 

	
   

	
   

	
 5,315 

	
   


	
 LONG-TERM
  LIABILITIES: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Accrued severance pay 

	
   

	
   

	
 3 

	
   

	
   

	
   

	
 65 

	
   

	
   

	
 71 

	
   


	
 Loans and other liabilities, net of
  current maturities: 

	
   

	
   

	
 4 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Bank loans 

	
   

	
   

	
   

	
   

	
   

	
   

	
 347 

	
   

	
   

	
 1,181 

	
   


	
 Other liabilities 

	
   

	
   

	
   

	
   

	
   

	
   

	
 7,700 

	
   

	
   

	
   

	
   


	
   

	
   

	
   

	
   

	
   

	
   

	


	


	
   

	


	


	
   


	
 T o t a l  long - term liabilities 

	
   

	
   

	
   

	
   

	
   

	
   

	
 8,112 

	
   

	
   

	
 1,252 

	
   


	
 CONVERTIBLE LOANS FROM SHAREHOLDERS 

	
   

	
   

	
 5 

	
   

	
   

	
   

	
   

	
   

	
   

	
 5,050 

	
   


	
   


	
 COMMITMENTS
  AND CONTINGENT  LIABILITIES 

	
   

	
   

	
 6 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
   

	
   

	
   

	
   

	
   

	
   

	


	


	
   

	


	


	
   


	
 T o t a l  liabilities 

	
   

	
   

	
   

	
   

	
   

	
   

	
 16,722 

	
   

	
   

	
 11,617 

	
   


	
   


	
 SHAREHOLDERS’
  EQUITY 

	
   

	
   

	
 8 

	
   

	
   

	
   

	
 16,130 

	
   

	
   

	
 7,278 

	
   


	
   

	
   

	
   

	
   

	
   

	
   

	


	


	
   

	


	


	
   


	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 32,852 

	
   

	
   

	
 18,895 

	
   


	
   

	
   

	
   

	
   

	
   

	
   

	


	


	
   

	


	


	
   








	
 

	
 

	
 

	
 


	
   

	
  

	
 ) 

	
   


	
   

	


	
   

	
   


	
   

	
   

	
 ) 

	
   DIRECTORS 


	
   

	
  

	
 ) 

	
   


	
   

	


	
   

	
   


	
   

	
   

	
 ) 

	
   





 The accompanying notes are an
integral part of the consolidated financial statements. 

3








 NEGEVTECH
LTD.


CONSOLIDATED STATEMENTS OF OPERATIONS


(U.S. dollars in thousands) 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
   

	
   

	
   

	
   

	
   

	
 Year ended December 31 

	
   


	
   

	
   

	
   

	
   

	
   

	


	
   


	
   

	
   

	
 Note 

	
   

	
 2005 

	
   

	
 2004 

	
   

	
 2003 

	
   


	
   

	
   

	


	
   

	


	
   

	


	
   

	


	
   


	
   


	
 REVENUES 

	
   

	
   

	
   

	
   

	
   

	
 15,856 

	
   

	
   

	
 3,290 

	
   

	
   

	
   

	
   


	
   


	
 COST
  OF REVENUES 

	
   

	
   

	
   

	
   

	
   

	
 8,918 

	
   

	
   

	
 2,245 

	
   

	
   

	
 615 

	
   


	
   

	
   

	
   

	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
 GROSS
  PROFIT (LOSS) 

	
   

	
   

	
   

	
   

	
   

	
 6,938 

	
   

	
   

	
 1,045 

	
   

	
   

	
 (615 

	
 ) 


	
   


	
 RESEARCH
  AND DEVELOPMENT COSTS: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Research and
  development expenses 

	
   

	
   

	
 9g 

	
   

	
   

	
 9,158 

	
   

	
   

	
 7,043 

	
   

	
   

	
 6,650 

	
   


	
 L e s s -
  royalty bearing participation from the Government of Israel 

	
   

	
   

	
   

	
   

	
   

	
 1,524 

	
   

	
   

	
 2,000 

	
   

	
   

	
 2,100 

	
   


	
   

	
   

	
   

	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
   


	
 RESEARCH
  AND DEVELOPMENT EXPENSES - net 

	
   

	
   

	
   

	
   

	
   

	
 7,634 

	
   

	
   

	
 5,043 

	
   

	
   

	
 4,550 

	
   


	
   


	
 MARKETING,
  GENERAL AND ADMINISTRATIVE EXPENSES, net 

	
   

	
   

	
 9h 

	
   

	
   

	
 12,932 

	
   

	
   

	
 4,703 

	
   

	
   

	
 2,922 

	
   


	
   


	
 NON-CASH
  EXPENSES IN RESPECT OF CONVERSION OF FOUNDERS’ ORDINARY SHARES INTO ORDINARY
  PREFERRED SHARES 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 6,437 

	
   

	
   

	
   

	
   


	
   

	
   

	
   

	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
 OPERATING
  LOSS 

	
   

	
   

	
   

	
   

	
   

	
 13,628 

	
   

	
   

	
 15,138 

	
   

	
   

	
 8,087 

	
   


	
   


	
 FINANCIAL
  EXPENSES (INCOME), net: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
   


	
 NON-CASH
  EXPENSES IN RESPECT OF CONVERSION OF CONVERTIBLE LOANS FROM SHEREHOLDERS 

	
   

	
   

	
   

	
   

	
   

	
 1,251 

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
   


	
 OTHER
  FINANCIAL EXPENSES (INCOME), net 

	
   

	
   

	
   

	
   

	
   

	
 1,232 

	
   

	
   

	
 188 

	
   

	
   

	
 (123 

	
 ) 


	
   

	
   

	
   

	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
 LOSS
  FOR THE PERIOD 

	
   

	
   

	
   

	
   

	
   

	
 16,111 

	
   

	
   

	
 15,326 

	
   

	
   

	
 7,964 

	
   


	
   

	
   

	
   

	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   





 The
accompanying notes are an integral part of the consolidated financial
statements. 


4








 (Continued) - 1 


 NEGEVTECH
LTD.


STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY


(U.S. dollars in thousands, except share amounts) 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
   

	
   

	
 Share capital 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
   

	
   

	


	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
   

	
   

	
 Ordinary

  shares 

	
   

	
 Preferred

  shares 

	
   

	
 Amount 

	
   

	
 Additional

  paid-in

  capital 

	
   

	
 Deferred 

   stock-based  

  compensation  

	
   

	
 Warrants 

	
   

	
 Accumulated

  deficit 

	
   

	
 Total 

	
   


	
   

	
   

	


	
   

	


	
   

	


	
   

	


	
   

	


	
   

	


	
   

	


	
   

	


	
   


	
   

	
   

	
 Number  of shares  

	
   

	
 U . S .     d o l l a r s     i n     t h o u s a n d s 

	
   


	
   

	
   

	


	
   

	



	
   


	
   


	
 BALANCE
  AT JANUARY 1, 2003 

	
   

	
   

	
 2,508,392 

	
   

	
   

	
 12,071,278 

	
   

	
   

	
 36 

	
   

	
   

	
 36,588 

	
   

	
   

	
 (31 

	
 ) 

	
   

	
 194 

	
   

	
   

	
 (12,724 

	
 ) 

	
   

	
 24,063 

	
   


	
   


	
 CHANGES
  DURING 2003: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Warrants issued
  to service providers 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 25 

	
   

	
   

	
   

	
   

	
   

	
 25 

	
   


	
 Issuance expenses 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 (1 

	
 ) 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 (1 

	
 ) 


	
 Exercise of warrants 

	
   

	
   

	
 71,829 

	
   

	
   

	
   

	
   

	
   

	
 (a 

	
 ) 

	
   

	
 53 

	
   

	
   

	
   

	
   

	
   

	
 (53 

	
 ) 

	
   

	
   

	
   

	
   

	
 (a
  

	
 ) 


	
 Exercise of
  employee stock options 

	
   

	
   

	
 2,500 

	
   

	
   

	
   

	
   

	
   

	
 1 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 1
  

	
   


	
 Amortization of
  deferred stock-based compensation 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 24 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 24
  

	
   


	
 Loss 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 (7,964 

	
 ) 

	
   

	
 (7,964
  

	
 ) 


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
 BALANCE
  AT DECEMBER 31, 2003-forward 

	
   

	
   

	
 2,582,721 

	
   

	
   

	
 12,071,278 

	
   

	
   

	
 37 

	
   

	
   

	
 36,640 

	
   

	
   

	
 (7 

	
 ) 

	
   

	
 166 

	
   

	
   

	
 (20,688 

	
 ) 

	
   

	
 16,148
  

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   

	


	


	
   





           (a) Represents an amount less than $ 1. 


5









 (Continued) - 2 


 NEGEVTECH LTD. 


 STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY 


 (U.S. dollars in thousands, except share) 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
   

	
   

	
   

	
 Share capital 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
   

	
   

	
   

	


	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
   

	
   

	
   

	
 Ordinary
 shares  

	
   

	
   

	
 Ordinary 

    preferred  

    shares  

	
   

	
   

	
 Preferred 

    shares  

	
   

	
   

	
 Amount 

	
   

	
   

	
 Additional

  paid-in 

  capital 

	
   

	
   

	
 Deferred

  stock-based

  compensation 

	
   

	
   

	
 Warrants 

	
   

	
   

	
 Accumulated

  deficit 

	
   

	
   

	
 Total 

	
   


	
   

	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   


	
   

	
   

	
   

	
 Number of shares 

	
   

	
   

	
 U . S .    d o l l a r s    i n    t h o u s a n d s 

	
   


	
   

	
   

	
   

	


	
   

	
   

	


	
   


	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 BALANCE AT JANUARY 1, 2004 - forward 

	
   

	
   

	
 2,582,721 

	
   

	
   

	
   

	
   

	
   

	
 12,071,278 

	
   

	
   

	
 37 

	
   

	
   

	
 36,640 

	
   

	
   

	
 (7 

	
 ) 

	
   

	
 166 

	
   

	
   

	
 (20,688 

	
 ) 

	
   

	
 16,148 

	
   


	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 CHANGES DURING 2004: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Warrrants issued to service providers 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 12 

	
   

	
   

	
   

	
   

	
   

	
 12 

	
   


	
 Exercise of warrants 

	
   

	
   

	
 53,206 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 (a 

	
 ) 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 (a 

	
 ) 


	
 Exercise of employee stock options 

	
   

	
   

	
 26,000 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 (a 

	
 ) 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 (a 

	
 ) 


	
 Conversion of founders 
ordinary shares into

ordinary preferred
  
shares, see note 8a (4) 

	
   

	
   

	
 (2,401,978 

	
 ) 

	
   

	
 2,401,978 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 6,437 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 6,437 

	
   


	
 Amortization of deferred stock-based
compensation 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 7 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 7 

	
   


	
 Loss 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 (15,326 

	
 ) 

	
   

	
 (15,326 

	
 ) 


	
   

	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   


	
 BALANCE AT DECEMBER 31, 2004 - forward 

	
   

	
   

	
 259,949 

	
   

	
   

	
 2,401,978 

	
   

	
   

	
 12,071,278 

	
   

	
   

	
 37 

	
   

	
   

	
 43,077 

	
   

	
   

	
 -,- 

	
   

	
   

	
 178 

	
   

	
   

	
 (36,014 

	
 ) 

	
   

	
 7,278 

	
   


	
   

	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   





           (a)
Represents an amount less than $ 1. 


6








 (Concluded) - 3 


 NEGEVTECH LTD. 


 STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY 


 (U.S. dollars in thousands, except share amounts) 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
   

	
   

	
   

	
 Share capital 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
   

	
   

	
   

	


	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
   

	
   

	
   

	
 Ordinary shares  

	
   

	
   

	
 Ordinary 

    preferred  

    shares  

	
   

	
   

	
 Preferred 

    shares  

	
   

	
   

	
 Amount 

	
   

	
   

	
 Additional

  paid-in 

  Capital 

	
   

	
   

	
 Warrants 

	
   

	
   

	
 Accumulated

  deficit 

	
   

	
   

	
 Total 

	
   


	
   

	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   


	
   

	
   

	
   

	
 Number of shares 

	
   

	
   

	
 U.S. dollars in thousands 

	
   


	
   

	
   

	
   

	


	
   

	
   

	



	
   


	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 BALANCE AT JANUARY 1, 2005 - forward 

	
   

	
   

	
 259,949 

	
   

	
   

	
 2,401,978 

	
   

	
   

	
 12,071,278 

	
   

	
   

	
 37
  

	
   

	
   

	
 43,077 

	
   

	
   

	
 178
  

	
   

	
   

	
 (36,014 

	
 ) 

	
   

	
 7,278
  

	
   


	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 CHANGES DURING 2005: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Warrants issued to a service providers 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 5 

	
   

	
   

	
   

	
   

	
   

	
 5 

	
   


	
 Warrants issued in connection with loan from
Plenus 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 1,559 

	
   

	
   

	
   

	
   

	
   

	
 1,559 

	
   


	
 Exercise of employee stock options 

	
   

	
   

	
 169,000 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 (a 

	
 ) 

	
   

	
 7 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 7 

	
   


	
 Issuance of preferred AA shares as a result of
equity consolidation (c) 

	
   

	
   

	
   

	
   

	
   

	
 (832,974 

	
 ) 

	
   

	
 1,072,792 

	
   

	
   

	
 3 

	
   

	
   

	
 (3 

	
 ) 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Interest expense in respect of conversion of
convertible
loans from shareholders 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 1,251 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 1,251 

	
   


	
 Issuance of Preferred BB1 and BB2 Shares capital
(b), (c) 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 11,749,363 

	
   

	
   

	
 26 

	
   

	
   

	
 22,115 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 22,141 

	
   


	
 Loss 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 (16,111 

	
 ) 

	
   

	
 (16,111 

	
 ) 


	
   

	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   

	
   

	

	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   


	
 BALANCE AT DECEMBER 31, 2005 

	
   

	
   

	
 428,949 

	
   

	
   

	
 1,569,004 

	
   

	
   

	
 24,893,433 

	
   

	
   

	
 66
  

	
   

	
   

	
 66,447 

	
   

	
   

	
 1,742 

	
   

	
   

	
 (52,125 

	
 ) 

	
   

	
 16,130 

	
   


	
   

	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   

	
   

	

	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   

	
   

	


	
   


	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   





                     (a)
Represents an amount less than $ 1. 
                     (b)
Net of Issuance expenses of $ 859 thousands. 
                     (c)
See note 8a(5) 


 The accompanying notes are an integral part of the
consolidated financial statements. 



7









 NEGEVTECH
LTD.


CONSOLIDATED
STATEMENTS OF CASH FLOWS 


(U.S. dollars in thousands) 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
   

	
   

	
 Year ended December 31 

	
   


	
   

	
   

	


	
   


	
   

	
   

	
 2005 

	
   

	
 2004 

	
   

	
 2003 

	
   


	
   

	
   

	


	
   

	


	
   

	



	
   


	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 CASH FLOWS FROM OPERATING ACTIVITIES: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Loss for the period 

	
   

	
   

	
 (16,111 

	
 ) 

	
   

	
 (15,326 

	
 ) 

	
   

	
 (7,964 

	
 ) 


	
 Adjustments required to reconcile loss to net cash
used in operating
  activities: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Depreciation and amortization 

	
   

	
   

	
 1,838 

	
   

	
   

	
 649 

	
   

	
   

	
 439 

	
   


	
 Accrued severance pay - net 

	
   

	
   

	
 (6 

	
 ) 

	
   

	
 (32 

	
 ) 

	
   

	
 34 

	
   


	
 Issuance of warrants to service providers 

	
   

	
   

	
 

	
   

	
   

	
 12 

	
   

	
   

	
 25 

	
   


	
 Amortization of debt insurance cost 

	
   

	
   

	
 435 

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Amortization of deferred stock based
  compensation in
  respect of options granted to employees 

	
   

	
   

	
 

	
   

	
   

	
 7 

	
   

	
   

	
 24 

	
   


	
 Interest expenses related to convertible
loan 

	
   

	
   

	
 310 

	
   

	
   

	
 50 

	
   

	
   

	
   

	
   


	
 Interest expense in respect of conversion of
convertible loans from
  shareholders 

	
   

	
   

	
 1,251 

	
   

	
   

	
 

	
   

	
   

	
 

	
   


	
 Non cash expenses in respect of conversion of
founders’
  ordinary-shares into ordinary preferred shares 

	
   

	
   

	
 

	
   

	
   

	
 6,437 

	
   

	
   

	
 

	
   


	
 Changes in operating asset and liability
items: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Decrease (increase) in trade accounts
receivable 

	
   

	
   

	
 (2,490 

	
 ) 

	
   

	
 311 

	
   

	
   

	
 (1,040 

	
 ) 


	
 Decrease (increase) in other accounts
receivable 

	
   

	
   

	
 (104 

	
 ) 

	
   

	
 (910 

	
 ) 

	
   

	
 407 

	
   


	
 Increase in inventories 

	
   

	
   

	
 (9,707 

	
 ) 

	
   

	
 (4,475 

	
 ) 

	
   

	
 (4,127 

	
 ) 


	
 Increase (decrease) in trade payables 

	
   

	
   

	
 1,876 

	
   

	
   

	
 2,263 

	
   

	
   

	
 (12 

	
 ) 


	
 Increase in other accounts payable and
accruals 

	
   

	
   

	
 1,112 

	
   

	
   

	
 798 

	
   

	
   

	
 25 

	
   


	
 Increase (decrease) in deferred revenues 

	
   

	
   

	
 550 

	
   

	
   

	
 (1,040 

	
 ) 

	
   

	
 1,040 

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
   


	
 Net cash used in operating activities 

	
   

	
   

	
 (21,046 

	
 ) 

	
   

	
 (11,256 

	
 ) 

	
   

	
 (11,149 

	
 ) 


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
 CASH FLOWS FROM INVESTING ACTIVITIES: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Purchase of fixed assets 

	
   

	
   

	
 (1,303 

	
 ) 

	
   

	
 (2,978 

	
 ) 

	
   

	
 (321 

	
 ) 


	
 Long-term deposit 

	
   

	
   

	
 8 

	
   

	
   

	
 (1,094 

	
 ) 

	
   

	
 (24 

	
 ) 


	
 Short-term deposit 

	
   

	
   

	
 32 

	
   

	
   

	
 1,503 

	
   

	
   

	
 (1,535 

	
 ) 


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
   


	
 Net cash used in investing activities 

	
   

	
   

	
 (1,263 

	
 ) 

	
   

	
 (2,569 

	
 ) 

	
   

	
 (1,880 

	
 ) 


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
 CASH
  FLOWS FROM FINANCING ACTIVITIES: 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 Short-term bank credit - net 

	
   

	
   

	
 (243 

	
 ) 

	
   

	
 243 

	
   

	
   

	
 

	
   


	
 Long term bank loan 

	
   

	
   

	
 

	
   

	
   

	
 2,500 

	
   

	
   

	
 

	
   


	
 Long term loan from other 

	
   

	
   

	
 7,700 

	
   

	
   

	
 

	
   

	
   

	
 

	
   


	
 Repayment of long term bank loan 

	
   

	
   

	
 (834 

	
 ) 

	
   

	
 (486 

	
 ) 

	
   

	
 

	
   


	
 Proceeds from convertible loan received 

	
   

	
   

	
 9,404 

	
   

	
   

	
 5,000 

	
   

	
   

	
   

	
   


	
 Exercise of warrants by a service
providers 

	
   

	
   

	
 

	
   

	
   

	
   

	
 * 

	
   

	
   

	
 * 


	
 Exercise of Employee stock options 

	
   

	
   

	
 7 

	
   

	
   

	
   

	
 * 

	
   

	
 1 

	
   


	
 Issuance of share capital, net of share issuance
expenses 

	
   

	
   

	
 7,377 

	
   

	
   

	
   

	
   

	
   

	
 12,349 

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
   


	
 Net cash provided by financing activities 

	
   

	
   

	
 23,411 

	
   

	
   

	
 7,257 

	
   

	
   

	
 12,350 

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
 INCREASE
  (DECREASE) IN CASH AND CASH EQUIVALENTS 

	
   

	
   

	
 1,102 

	
   

	
   

	
 (6,568 

	
 ) 

	
   

	
 (679 

	
 ) 


	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 BALANCE
  OF CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR 

	
   

	
   

	
 254 

	
   

	
   

	
 6,822 

	
   

	
   

	
 7,501 

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   


	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
 BALANCE
  OF CASH AND CASH EQUIVALENTS AT END OF THE YEAR 

	
   

	
   

	
 1,356 

	
   

	
   

	
 254 

	
   

	
   

	
 6,822 

	
   


	
   

	
   

	


	


	
   

	


	


	
   

	


	


	
   





 Supplementary information on
operating and financing activities not involving cash flows:

During 2005, an
inventory in the amount of $3,487 thousands was recategorized as fixed assets. 


 * Represents an amount less than $1.


The accompanying notes are an integral
part of the consolidated financial statements. 


8
















Schedule 2.24  




Negevtech Ltd.

List of Officers, Employees and Consultants [3]


[***]



*** Text omitted and filed separately
with the Securities and Exchange Commission pursuant to 17 CFR § 230.406 and §
200.80(b)(4). 













Schedule 2.25  



Government Sponsored
Programs  



	1.  	Office
of the Chief Scientist  






	 	
On
April 18, 2000 the OCS approved a grant in the amount of NIS 4,262,066 which was fully
provided to the Company. 






	 	
On
April 3, 2001, the OCS approved an additional grant in the amount of NIS 9,972,714 which
was fully provided to the Company. 






	 	
On
July 15, 2002, the OCS approved an additional grant in the amount of NIS 10,217,368 which
was fully provided to the Company. 






	 	
On
June 10, 2003, the OCS approved an additional grant in the amount of NIS 9,499,968 which
was fully provided to the Company. 






	 	
On
June 13, 2004, the OCS approved an additional grant in the amount of NIS 9,000,000 which
was fully provided to the Company. 






	 	
On
May 2, 2005, the OCS approved an additional grant in the amount of NIS 6,800,000 out of
which an amount of NIS 5,069,553 was provided to the Company. 






	 	
On
June 20 ,2006 the OCS approved an additional grant in the amount of NIS 6,208,568 out of
which an amount of NIS 1,641,307 was provided to the Company. 






	2.  	Fund
for the Encouragement of Marketing Activities  






	 	
On
December 15, 2002, the Fund for the Encouragement of Marketing Activities approved a grant
in the amount of $40,000 which was fully provided to the Company. 






	3.  	Investment
Center  






	 	
On
December 20, 2001 the Company applied for an approved enterprise status from the
Investment Center of the Israeli Ministry of Trade and Industry. Approval was granted on
March 24, 2002. 






	 	
On
October 19, 2004 the Investment Center approved an extension of the plan until March 23,
2005. 






	 	
On
July 27, 2005 the Investment Center approved an extension of the plan until March 23,
2006  

















Schedule
2.28  



List of Insurance Policies  



Negevtech maintains the following
valid insurance policies: 



	Medical Insurance Policy	 	The policy covers the medical insurance of Israeli employees during their stay abroad for short periods and for relocation periods
	Professional & Product Liability Insurance Policy	$5,000,000	 
	Directors & Officers Liability Insurance Policy	$5,000,000	 
	Marine Cargo Insurance Policy	$5,000,000	 
	Property in business interruption to cover Negevtech Property	$1,050,000 - $8,000,000	The coverage is for Negevtech Ltd., for more details please see Migdal's Hi-Tech Business Insurance Policy
	Third Party Liability	$5,000,000	 
	Employer Liability	$9,000,000	 
	Employees' Loyalty	$250,000	 
	Electronic Equipment	$50,000 - $700,000	 
	Business and Personal Property Insurance Policy


Commercial Umbrella and Business & Personal Property Insurance policy	$2,500 - $250,000


$5,000,000	The coverage is for Negevtech Inc. and Negevtech Ltd., for more details please See The Hatford's Policy


















Schedule 3.5 A  



Venture Capital Fund  


Poalim Ventures Ltd.



Poalim Ventures I Ltd.



Poalim Ventures II L.P.



SVE Star Ventures Enterprises Gmbh & Co. No. IX KG.



Star Management of Investments No. II (2000) L.P.



Star Growth Enterprise, a German Civil Law Partnership (with limitation of liability)



Genesis Partners II, L.D.C.



Genesis Partners II (Israel) L.P.



Wellington Partners Ventures III Technology Fund L.P



Amadeus III



Amadeus III Affiliates Fund LP















Schedule 3.5 B  



Non Israeli Resident  



Intel Atlantic, Inc. 













Schedule 4.5  


	
 

	
 

	
 


	


	
 

	
Doron Cohen

  Tali Yaron-Eldar

  Shirin H. Herzog* 

  Gladys
  Fleischer (Keroub) 
Moshe Brenner 

  Liora Lotenberg 

  Yifat Mor* 

  Einav Neeman-Gadish  

  Rami Eliyahu  

  Tal Shank  

  Moran Harari  

  Rany Schwartz  

  Michal Yeret  

  Zeev Levy 


	
 


	
 


	
 


	
 

	
 


	
 

	
 


	
 

	
 

	
 


	
September 28, 2006 

	
 

	
* Also member of the


	
Ref: 739/82

	
 

	
   New York State Bar


	
 

	
 

	
 





TO:     The Investors Listed
on Annex A Hereto 


Dear Sirs:


Re: Negevtech Ltd. 


          We
have acted as counsel to Negevtech Ltd., a company limited by shares, formed and
existing under the laws of the State of Israel (the “Company”), in connection with the Series BB-4 Preferred Share
Purchase Agreement dated September 26, 2006 (the “Share Purchase Agreement”) between the Company and yourselves
and all the Schedules, Exhibits and all ancillary documents related thereto to
which the Company is a party (the “Transaction
Documents”). Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Transaction
Documents.


          In
connection with the opinions set forth below, we have examined originals, or
copies certified or otherwise identified to our satisfaction, of such
documents, corporate records, certificates and other instruments as we have
deemed necessary or appropriate for the purpose of this opinion. In our
examination, we have assumed the due execution and delivery of documents by the
parties (other than the Company) thereto (pursuant to due authorization), the
genuineness of all signatures, the authenticity of all documents submitted to
us as originals, the conformity to original documents of all documents
submitted to us as certified, conformed or photostatic copies and the
authenticity of the originals of such latter documents and legal capacity of
all signatories to such documents.


          The
opinions hereinafter expressed are qualified to the extent that the validity or
enforceability of any of the agreements, documents or obligations referred to
herein may be limited by, subject to or affected by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or affecting
the rights of creditors generally, or by statutory or decisional law concerning
recourse by creditors to security in the absence of notice and hearing, or by general
equitable principles, or by the discretionary powers of any court or
administrative body. We do not express any opinion herein as to the
availability of any equitable or other specific remedy, including specific
performance, upon breach of any of the agreements, documents or obligations
referred to herein.








Cohen, Cohen, Yaron-Eldar &
Co.



          Insofar
as this opinion relates to factual matters, information with respect to which
is in possession of the Company, we have relied (without independent
investigation) upon the representations by the Company in the Transaction
Documents and on representations or certificates of, or communications with
directors, officers, employees or representatives of the Company and certain
public officials. Except as expressly set forth in this opinion, we have not
undertaken any independent investigation to determine the existence or absence
of such facts. Apart from an examination of the public records of the Israeli
Registrar of Companies, we have not examined any records of any court,
administrative tribunal or other similar entity in connection with our opinions
expressed herein. Except to the extent expressly set forth herein, we have not
undertaken any independent investigation to determine the existence or absence
of any fact, and no inference as to our knowledge of the existence or absence
of any fact should be drawn from our representation of the Company or the
rendering of the opinion set forth below. In using the term “knowledge” or any
variation thereof with respect to the existence or absence of facts we rely
solely on representations, certificates or communications as aforesaid and
indicate that during the course of our representation of the Company, no
information has come to our attention that has given us actual knowledge of the
existence or absence of such facts, and such terms refer to the current actual
knowledge of the attorneys of this firm who have worked on matters for the
Company.


          For
purposes of our opinion in paragraph 1 below, we have relied solely upon the
Certificate of Incorporation and Registration as a Private Company issued by
the Registrar of Companies dated 22.12.91 and upon documents filed and held on
record with the Registrar of Companies.


          For
purposes of our opinion in paragraphs 3 and 4(ii) below, we have relied, inter
alia, on your representations in Section 3 of the Share Purchase Agreement.


          We
do not represent ourselves as being familiar with the laws of any jurisdiction
other than the laws of the State of Israel. Accordingly, we express no opinion
in respect to matters governed by or construed in accordance with the laws of
any jurisdiction other than the laws of the State of Israel.


          Based
upon and subject to the foregoing, we are of the opinion that other than as set
forth in the Transaction Documents:


	
 

	
 


	
1.

	
The Company is a company limited by shares, duly
  incorporated and validly existing under the laws of the State of Israel. The
  Company has all requisite corporate power and authority to own and operate
  its properties and assets and to carry on its business as, to our knowledge,
  it is presently conducted.


	
 

	
 


	
2.

	
The Company has all the requisite corporate power and
  authority to execute, deliver and perform the Transaction Documents and to
  perform its obligations set forth therein. The Company has the requisite
  corporate power and authority to offer, issue and sell the Issued Shares to
  be sold to you pursuant to the Share Purchase Agreement.


	
 

	
 


	
3.

	
Each of the Transaction Documents has been duly
  authorized by all necessary corporate action on the part of the Company, has
  been executed and delivered by duly authorized officers of the Company and
  constitutes a legal, valid and binding obligation of the Company, enforceable
  against the Company in accordance with its terms. No other corporate act or
  proceeding on the part of the Company is necessary for the execution of the
  Transaction Documents and/or the fulfillment of the Company’s obligations
  under the Transaction Documents.


	
 

	
 





- 2 -








Cohen, Cohen, Yaron-Eldar & Co.


	
 

	
 


	
4.

	
The execution and delivery by the Company of the
  Transaction Documents, the issue and sale of the Issued Shares and the
  performance by the Company of its obligations under the Transaction Documents will not conflict with, constitute
  a violation of, result in a breach of any provision of, or constitute a
  default under, (i) the Memorandum or Articles of Association of the Company;
  or (ii) any applicable statute, rule or regulation to which the Company is
  subject, including applicable Israeli securities laws, or (iii) those
  Material Agreements (as defined in Section 2.10(c) of the Share Purchase
  Agreement) listed as numbers 34, 35 and 36 in the list of Material Agreements
  referenced to Section 2.10 of the Schedule of Exceptions to the Share
  Purchase Agreement; or (iv) any judgment, decree or order known to us to
  which the Company is a party or by which it is bound, except in relation to
  subsections (ii), (iii) and (iv) above for such conflicts, violations,
  breaches or defaults that are not reasonably likely to have a material
  adverse effect on the Company and the ability of the Company to perform its
  obligations under the Transaction Documents. Compliance by the Company with
  the terms of the Transaction Documents does not require the consent or
  agreement of any Israeli government entity (other than the Investment Center
  of the Ministry of Industry, Trade and Labor and the Office of the Chief
  Scientist, the approval in principle of both have been obtained, as set forth
  in the Schedule of Exceptions), nor does it require a filing with any Israeli
  government entity (other than the Registrar of Companies, the Investment
  Center of the Ministry of Industry, Trade and Labor and the Office of the
  Chief Scientist).


	
 

	
 


	
5.

	
The Issued Shares being purchased by you once issued
  and paid for in full in accordance with the provisions of the Share Purchase
  Agreement and the Amended Articles, will be duly and validly issued, fully
  paid and non-assessable, and, to the best of our knowledge, not issued in violation
  of any pre-emptive rights, and, to the best of our knowledge, you will hold
  such shares free and clear of any liens, security interests, pledges or
  charges in favor of the Company, except as set forth in the Transaction
  Documents. Upon conversion in accordance with the Amended Articles of the
  Issued Shares being purchased by you when fully paid, the Ordinary Shares
  into which the Issued Shares are convertible will be duly authorized, validly
  issued, fully paid, and non assessable, and, to the best of our knowledge,
  will not be issued in violation of any preemptive rights existing as of the
  date hereof.


	
 

	
 


	
6.

	
As of the Closing, the authorized share capital of
  the Company is NIS 950,001 divided into six (6) classes of shares: 53,000,060
  Ordinary Shares, nominal value NIS 0,01 each, 15,000,000 Series AA Preferred
  Shares, nominal value NIS 0.01 each, 12,137,708 Series BB-1 Preferred Shares,
  nominal value NIS 0.01 each, 4,000,000 Series BB-2 Preferred Shares, nominal
  value NIS 0.01 each, 5,862,292 Series BB-3 Preferred Shares, nominal value
  NIS 0.01 each and 5,000,040 Series BB-4 Preferred Shares, nominal value NIS
  0.01 each. Based on a review of the Company’s records and shareholder
  register, the issued and outstanding share capital of the Company immediately
  prior to the Closing and the changes in the Company’s share capital is
  469,449 Ordinary Shares, nominal value NIS 0.01 each, 1,569,004
  Ordinary-Preferred Shares, nominal value NIS0.01 each, 13,144,070 Series AA
  Preferred Shares, nominal value NIS 0.01 each, 8,152,256 Series BB-1
  Preferred Shares, nominal value NIS 0.01 each, 3,597,106 Series BB-2
  Preferred Shares, nominal value NIS 0.01 each and 5,859,274 Series BB-3
  Preferred Shares, nominal value NIS 0.01 each. All such issued and
  outstanding shares have been duly authorized, validly issued, and to the best
  of our knowledge, are free of any liens or encumbrances in favor of the
  Company, except as set forth in the Transaction Documents. To the best of our
  knowledge on the basis of our review of the documents provided to us by the
  Company (except with respect to options granted pursuant to the Company’s
  share option plans and shares issued upon exercise thereof, in respect of
  which we have relied solely on representations made by certain officers of the
  Company), and except as disclosed in the Transaction Documents, there are
not as of the date hereof, any outstanding or
  authorized subscriptions, options, warrants, calls, rights, commitments
  (including conversion or pre-emptive rights), or any other agreements of any
  character directly obligating the Company to issue (a) any additional shares,
  except that we express no opinion as to the number of shares issuable in
  respect of the anti-dilution rights of any of the classes of shares of the
  Company in connection with the Share Purchase Agreement or as a result of the
  issuance of the Issued Shares; or (b) any securities convertible into, or
  exchangeable for, or evidencing the right to subscribe for, any shares. To the
  best of our knowledge, except as disclosed in the Transaction Documents, the
  Company has not adopted or authorized any plan for the benefit of its
  officers, employees, or directors which requires or permits the issuance,
  sale, purchase, or grant of any shares of the Company’s share capital or any
  securities convertible into, or exercisable or exchangeable for, or
  evidencing the right to subscribe for any such shares.





- 3 -








Cohen, Cohen, Yaron-Eldar & Co.


	
 

	
 


	
7.

	
All necessary corporate proceedings have been taken
  to adopt the Amended Articles as they appear in Exhibit A of the Share
  Purchase Agreement, and such Amended Articles were validly adopted.


	
 

	
 


	
8.

	
Except as set forth in the Transaction Documents, we
  do not know of any civil, criminal or arbitration proceedings pending before
  any court or administrative agency to which the Company is party, nor is
  there in any investigation pending or threatened against the Company being
  handled by us.





This opinion is being furnished only to you and is
solely for your benefit in connection with the Transaction Documents. This
opinion may not be relied upon by you for any other purpose nor may this
opinion be provided to or relied upon by any other person or entity or
published, quoted or otherwise used for any other purpose without our prior
written consent. This opinion is based on the law (and the interpretations
thereof) and facts existing as of the date hereof. We disclaim any obligations
to advise you of any changes therein that may be brought to our attention after
the date hereof. Please note that we are opining only as to the matters
specifically and expressly set forth herein and no opinion should be inferred
as to any other matters.


	
 

	
 

	
 


	
 

	
Sincerely,



	
 


	
 

	
Liora
  Lotenberg, Adv. 

  Cohen, Yaron-Eldar, Herzog & Co. 

  Law Offices

	
 





- 4 -








Cohen, Cohen, Yaron-Eldar & Co.


SCHEDULE A


List of Investors


Investor


SVE Star Ventures Enterprises GmbH & Co. No. IX KG.

Star Management of Investments No. II (2000) L.P.

Star Growth Enterprise, a German Civil Law Partnership (with limitation of
Liability)

Poalim Ventures Ltd.
Poalim Ventures I Ltd.
Poalim Ventures II L.P.
Genesis Partners II, L.D.C.

Genesis Partners II (Israel) L.P.

Intel Atlantic, Inc.

Wellington Partners Venture III Technology Fund L.P.

Amadeus III
Amadeus III Affiliates Fund LP


- 5 -












Schedule 4.10  



Officer Certificate  



	To:  	The
Investors Listed on Schedule A hereto (the "Investors")  






	From:  	Arnon
Gat - chief executive officer of Negevtech Ltd. (the "Company")  






	Re:  	Officer's
Certificate Pursuant to Section 4.10 to the Series BB-4 Preferred Share
Purchase Agreement by and between the Company and the Investors dated
September 26, 2006 (the "Agreement")  






I, the undersigned, in my capacity as
chief executive officer of the Company, hereby certify the following: 



	1.  	The
representations and warranties contained in Section 2 of the Agreement are
               true as of the date hereof. 






	2.  	The
Company has performed and complied with all the agreements, obligations and
               conditions contained in the Agreement that are required to be performed or
               complied with on or before the Closing (as defined in the Agreement). 






	3.  	There
has been no material adverse change in the financial or business condition
               of the Company from the date of the Agreement until the date hereof. 






	4.  	As
of the date hereof, there is no action, suit, or proceeding pending or
               threatened before any court or quasi-judicial or administrative agency of
any                state, municipal, or foreign jurisdiction or before any arbitrator
wherein an                unfavorable injunction, judgment, order, decree, ruling, or
charge would: (i)                prevent consummation of any of the transactions
contemplated by the Agreement;                (ii) cause any of the transactions
contemplated by the Agreement to be rescinded                following consummation 






IN WITNESS WHEREOF, I have
executed this certificate on this __ day of Septmber 2006.  




			——————————————

Chief Executive Officer of Negevtech Ltd.


















Schedule 8.3  



Broker’s Fee  



Bear, Stearns & Co. Inc. is
entitled to a cash fee equal to 7% (plus VAT if applicable) of the amount of equity (or
equity-linked) that Amadeus III and Amadeus III Affiliates Fund LP will actually invest in
the Company. 











	
   

  
	
  Schedule
  of Exceptions

  
	
   

  
	
  Corresponding to the

  
	
   

  
	
  PREFERRED SHARE PURCHASE AGREEMENT

  
	
   

  
	
  Dated as of September 26, 2006

  
	
   

  
	
  By and Among

  
	
   

  
	
  Negevtech Ltd.

  
	
   

  
	
  And

  
	
   

  
	
  Several Investors

  
	
   

  
	
  

  











 The following information in
any of the sections is provided for the purposes of disclosure pursuant to the
Series BB-4 Preferred Share Purchase Agreement (the “Series BB-4 SPA”) only, and does not grant, and should not be
interpreted as granting, any rights to any third parties. Each Section is
intended to relate to the corresponding Section of the Series BB-4 SPA. Certain
disclosure information may be categorized in one section and not another. When
the same disclosure information would be required in more than one section of
these Disclosure Schedules, the Company has included the disclosure information
in each section or provided an appropriate cross-reference to the section in
which the disclosure is contained, except where the relevancy of such
disclosure would be readily apparent. 


 All capitalized terms used
in any of the Sections and not otherwise defined shall have the meanings
assigned to them in the Series BB-4 SPA. 


 Unless otherwise indicated,
all information included is provided as of the date of the Series BB-4 SPA. 


 General Note: The investors’
due diligence, conducted by Amadeus, referred, per Amadeus’s request, only to
events which occurred following September 2005 (Poalim round) and therefore the
Company has not provided Amadeus with due diligence material dated prior to
September 2005 (this note refers also to Section 2.15 of the Series BB-4 SPA). 








	
   

  	
   

  	
   

  
	
   Section 2.1: 

  	
   The Company does not have
  a business license (“Rishayon Esek”).
  The Company believes that the lack of such license is not reasonably likely
  to have a Material Adverse Effect on its business. 

  
	
     

  	
     

  	
     

  
	
   Section 2.2: 

  	
   The Company’s outstanding
  shares confer upon their holders certain pre­emptive rights, anti-dilution
  rights and registration rights as set forth in the Company’s Articles of
  Association in effect prior to Closing (the “Current Articles”),the
  Shareholders Rights Agreement dated September 13, 2005 as amended on March
  22, 2006 (the “SRA”) and the
  Second Amendment of the Transition Agreement dated September 13, 2005 (the “Second Amendment”).Following the
Closing, any pre­emptive
  rights, anti-dilution rights and registration rights attached to the
  Company’s shares or granted to holders of such shares shall be set forth in
  the SRA (as amended by the Second Amendment thereto) and the Amended Articles
  (all as defined in the Series BB-4 SPA). 

  
	
     

  	
     

  	
     

  
	
     

  	
   The outstanding
  Ordinary-Preferred Shares confer upon their holders certain rights as set
  forth in the Current Articles and in the Second Amendment to the Transition
  Agreement entered into between the Company, Dr. Gadi Neumann and Mr. David
  Alumot (the “Founders” and, including the amendments thereto,
  the “Transition Agreement”). Dr. Gadi Neumann is also a director of
  the Company and it is contemplated that he will resign from his directorship
  as of the Closing. Certain of these rights will be amended as provided for in
  the Series BB-4 SPA, in the Second Amendment to Shareholders Rights Agreement
  and in the Amended Articles (as defined therein). 

  



- 2 -








	
   

  	
   

  	
   

  
	
     

  	
   Pursuant to the terms of
  the Employment Agreement and the Option Agreement entered into by the Company
  and Arnon Gat, the Company’s CEO and a director of the Company, in December
  2004 (collectively, “Arnon’s Agreements”),
  Arnon Gat is entitled to certain acceleration rights as set forth therein.
  Mr. Gat was also entitled to certain anti-dilution rights that were fully
  granted, as set forth in the list of security holders of the Company
  (Schedule 2.2 to the Series BB-4 SPA). 

  
	
     

  	
     

  	
     

  
	
     

  	
   Pursuant to the terms of
  Warrants issued on January 14, 2005, July 18, 2005 and November 6, 2005 to
  Plenus Technologies Ltd., exercisable, in accordance with their terms, into
  1,556,437 Series BB-1 Preferred Shares (“Plenus”
  and the “Plenus Warrants”,
  respectively), the shares issuable upon exercise of the Plenus Warrants
  confer upon the holders thereof certain pre-emptive rights and registration
  rights. 

  
	
     

  	
     

  	
     

  
	
     

  	
   The Preferred Shares and
  the Ordinary-Preferred Shares of the Company may be converted into Ordinary
  Shares of the Company as set forth in the Current Articles. In connection
  with the Closing, the Ordinary-Preferred Shares will be converted into
  Ordinary Shares and the Ordinary Shares and sold to Amadeus and such Ordinary
  Shares held by Amadeus shall be converted into Series BB-4 Preferred Shares.
  Following the Closing, the Series AA, BB-1, BB-2, BB-3 and BB-4 Preferred
  Shares of the Company may be converted into Ordinary Shares of the Company as
  set forth in the Amended Articles. 

  



- 3 -








	
   

  	
   

  	
   

  
	
     

  	
   See Schedules 2.2 and
  2.2(a) to the Series BB-4 SPA (including the footnotes set forth therein). 

  
	
     

  	
     

  	
     

  
	
     

  	
   Proxies were executed in
  favor of the trustees under the Company’s Option Plans by all grantees under
  such Plans. 

  
	
     

  	
     

  	
     

  
	
     

  	
   The 32,769 warrants to
  service providers are comprised of the following warrants: 

  
	
     

  	
     

  	
     

  
	
     

  	
   Irit Cohen - a warrant to
  purchase 7,015 Ordinary Shares; 

  
	
     

  	
   Doron Cohen - a warrant to
  purchase 7,015 Ordinary Shares; 

  
	
     

  	
   Giora Lentz - a warrant to
  purchase 10,923 Ordinary Shares; 

  
	
     

  	
   Yuval Horn - a warrant to
  purchase 3,507 Ordinary Shares; 

  
	
     

  	
   Doron Cohen - David Cohen,
  Law Offices - a warrant to purchase 4,309 Ordinary Shares. 

  
	
     

  	
     

  	
     

  
	
     

  	
   The 238,000 Ordinary
  Shares held by EH Lerner, CPA (trustee under the Company’s IL Share Option
  Plan) are a result of the exercise by the following ex-employees of the
  Company: 

  
	
     

  
	
     

  	
   Doron Schlumm - exercised
  2,500 options; 

  
	
     

  	
   Hava Shapira - exercised
  1,000 options; 

  
	
     

  	
   Shai Silberstein -
  exercised 20,000 options; 

  
	
     

  	
   Shula Mazor - exercised
  5,000 options; 

  
	
     

  	
   Offer Saig - exercised
  1,000 options; 

  
	
     

  	
   Ran Yam - exercised 5,000
  options; 

  
	
     

  	
   Mark Wagner - exercised
  160,000 options; 

  
	
     

  	
   Tidhar Mor - exercised
  3,000 options. 

  
	
     

  	
   Silvi Levi - exercised
  18,750 options. 

  
	
     

  	
   Shiri Bloom - exercised
  8,250 options. 

  
	
     

  	
   Miri Ofir - exercised
  3,000 options. 

  
	
     

  	
   Ran Zaslavski - exercised
  3,000 options. 

  
	
     

  	
   Shay Cohen - exercised
  7,500 options. 

  
	
     

  	
     

  	
     

  
	
     

  	
   Five additional employees
  of the Company exercised options as follows: Gidon Samuels (1,500), Merav
  Arzi (3,000), Noam Dotan (90,000), Dalia Harel (750), and Ilan Moshe (9,000
  options). Such exercises and the issuance of Ordinary Shares in connection
  therewith were not yet reported to the Companies Registrar and are not
  reflected in Eli Lerner’s holdings as set forth in Schedule 2.2 of the Series
  BB-4 SPA. 

  
	
     

  	
     

  	
     

  
	
   Section 2.3: 

  	
   Subsection
  (a) 

  
	
     

  	
   All grantees under the
Company’s Share Ownership and Option Plan (2001, as amended 2003 & 2004
& 2005 & 2006) (the “IL Plan”) have provided Mr. Eliahu Lerner and/or
Mr. Yehuda Zviel with a proxy for the exercise of all rights granted to them
with respect to their shares and options, including voting rights, until the
consummation of an IPO. All grantees under the Company’s Employee Share
Option Plan (2002, as amended 2003 & & 2004 & 2005 & 2006)
(the “US Plan”) have provided Wilson, Sonsini, Goodrich & Rosati with a
proxy for the exercise of all rights granted to them with respect to their
shares and options, including voting rights, until the consummation of an
IPO.  

  



- 4 -








	
   

  	
   

  	
   

  
	
     

  	
   See also the Current
  Articles, the Series BB-1/2 SPA, the Series BB-3 SPA and the SRA, with
  respect to appointment of directors and observers. 

  
	
     

  	
     

  	
     

  
	
     

  	
   During the Term of the
  Plenus Loan Agreement, Plenus is entitled to nominate a non-voting observer
  to the Board of Directors of the Company. 

  
	
     

  	
     

  	
     

  
	
     

  	
   Pursuant to the Intel Side
  Agreement dated July 31, 2002, Intel is entitled to appoint a non-voting
  observer to the Board of Directors of the Company and all committees thereof. 

  
	
     

  	
     

  	
     

  
	
     

  	
   Subsection
  (b) 

  
	
     

  	
   The Company has contracted
  to provide its directors and the directors of its wholly-owned subsidiary,
  Negevtech, Inc. (the “Subsidiary”),with Directors and Officers liability
  insurance with a coverage limit of US$5 million. 

  
	
     

  	
     

  	
     

  
	
     

  	
   The Company provided its
  directors with Indemnification and Release Letters (whereby, inter alia, the
  Company released them from any liability due to a breach of their duty of
  care to the Company) with respect to acts or omissions taken or not taken in
  their capacity as directors and officers of the Company. In addition, the
  Founders and Arnon Gat received complementary Indemnification and Release
  Letters as Service Providers of the Company. 

  
	
     

  	
     

  	
     

  
	
     

  	
   Haim Russo (previously a
  director of the Company) and Rafi Yizhar, (currently a director of the
  Company), were granted options to purchase Ordinary Shares of the Company,
  according to Option Agreements dated December 31, 2002 (Haim Russo - 10,000
  options and Rafi Yizhar -20,000 options). The Option Agreement with Haim
  Russo was amended in order to extend the exercise period his options in
  December 2004 and again in May 2006. In June 2006, the Company granted Rafi
  Yizhar an additional option to purchase 40,000 Ordinary Shares. 

  
	
     

  	
     

  	
     

  
	
     

  	
   The Company is a party to
  the Transition Agreement (as amended) with the Founders. 

  
	
     

  	
     

  	
     

  
	
     

  	
   The Company is a party to
  Arnon’s Agreements and the Company’s US Subsidiary is a party to a Services
  Agreement with AGS Associates LLC, a limited liability company registered
  under the laws of Delaware (wholly-owned by Arnon Gat) dated December 2004. 

  



- 5 -








	
   

  	
   

  	
   

  
	
     

  	
   In addition to the
  foregoing, the Company entered into employment agreements with each of the
  following officers of the Company (and with respect to Glyn, Roi, Markus and
  Yanki - of a subsidiary of the Company): 

  
	
     

  	
     

  	
     

  
	
     

  	
  t

  	
   Rivi Sherman, dated
  September 23, 2003 as amended on November 1, 2003 and February 18, 2005; 

  
	
     

  	
     

  	
     

  
	
     

  	
  t

  	
   Michal Rozenkrantz, dated
  December 15, 2004; 

  
	
     

  	
     

  	
     

  
	
     

  	
  t

  	
   Moti Gatenio, dated June
  7, 2001, as amended on August 1, 2003, on January 1, 2005 and on January 1,
  2006; 

  
	
     

  	
     

  	
     

  
	
     

  	
  t

  	
 Oz Desheh, dated April 5,
  2004, as amended on January 1, 2005, on April 1, 2005 and on January 1, 2006;
  

  
	
     

  	
     

  	
     

  
	
     

  	
  t

  	
   Yuval Levin, dated
  September 9, 2002, as amended effective as of April 1, 2005; 

  
	
     

  	
     

  	
     

  
	
     

  	
  t

  	
   Dvir Harmelech, dated
  August 2, 2005; 

  
	
     

  	
     

  	
     

  
	
     

  	
  t

  	
   Shmuel Gov, dated February
  15, 2006; 

  
	
     

  	
     

  	
     

  
	
     

  	
  t

  	
   The Company’s US
  Subsidiary entered into an agreement with its officer Glyn Davies, dated
  November 15, 2004; 

  
	
     

  	
     

  	
     

  
	
     

  	
  t

  	
   The Company’s Japan
  Subsidiary entered into an agreement with its officer Roi Shefts, dated
  January 6, 2005; 

  
	
     

  	
     

  	
     

  
	
     

  	
  t

  	
   The Company’s German
  Subsidiary entered into an agreement with its officer Markus Kindler, dated
  May 17, 2005; 

  
	
     

  	
     

  	
     

  
	
     

  	
  t

  	
   The Company’s Taiwan
  branch entered into an agreement with its officer Yanki Avni, dated October 31,
  2005, effective as of March 1, 2006. 

  
	
     

  	
     

  	
     

  
	
     

  	
   In addition, the
  abovementioned officers received options to purchase Ordinary Shares of the
  Company pursuant to Option Agreement with each such officer. 

  
	
     

  	
     

  	
     

  
	
     

  	
   The officers of the
  Company are rewarded annually in accordance with the Company’s Management
  Bonus Plan (see reference to Section 2.24 below). 

  
	
     

  	
     

  	
     

  
	
     

  	
   The Company is considering
  engaging a high-level local executive as the chairman of its Korean presence. 

  
	
     

  	
     

  	
     

  
	
   Section 2.4: 

  	
   The Company’s Singapore
  subsidiary registered a branch in Taiwan. 

  
	
     

  	
     

  	
     

  
	
     

  	
   The Company’s Singapore
  subsidiary registered a subsidiary in Korea, Negevtech Korea Co., Ltd. 

  
	
     

  	
     

  	
     

  
	
     

  	
   The Company is not a
  participant in any registered partnership or joint venture. The Company is
  not participating in any other partnership, joint venture or business
  association, other than those listed on the List of Material Agreements
  hereof. 

  



- 6 -








	
   

  	
   

  	
   

  
	
   Section 2.5: 

  	
   The Company received the
  approval in principle of the Office of the Chief Scientist of the Ministry of
  Industry, Trade and Labor (“OCS”)
  and the Investment Center of the Ministry of Industry, Trade and Labor (the “Investment Center”) for the current
investment of the
  Investors. 

  
	
     

  	
     

  	
     

  
	
     

  	
   Pursuant to the letters
  received by the Company from the OCS and Investment Center, in order to
  receive the final approval of the Investment Center and the OCS, the Company
  must provide them with a lawyer/accountant approval with respect to the new
  ownerships composition. In addition, the Company must provide the OCS with
  undertakings signed by each foreign investor to comply with the provisions of
  the Research Law (as defined below). 

  



- 7 -








	
   

  	
   

  	
   

  
	
   Section 2.7: 

  	
   (a) 

  	
   In July and August 2004
  and in March 2005, the Company received letters from KLA-Tencor asserting
  that its 302 inspection system makes use of five KLA patents and requesting
  technical information regarding the 302 system. In response to these letters,
  the Company has identified certain limitations of the KLA patents that are
  absent from the 302 system. The Company also requested further clarification
  of KLA’s claims. 

  
	
     

  
	
     

  	
     

  	
   The Company disputes KLA’s
  claims and is attempting to resolve these issues without resorting to
  litigation, although these assertions by KLA-Tencor could lead to patent
  litigation. On January 30, 2006 the Company provided KLA with Mr. Gadi
  Nuemann’s declaration that the Company’s tools do not include particular
  claim limitations from KLA’s patents (the content of such declaration was
  agreed between KLA and the Company). There have been no further communications
  from KLA since February 2006. 

  
	
     

  	
     

  	
     

  
	
     

  	
   (b) 

  	
   On August 27, 2004,
  Applied Materials, Inc. filed suit in the U.S. District Court for the
  Northern District of California alleging that the Company’s 302 inspection
  system infringes an Applied Materials’ patent (U.S. Patent No. 5,982,921) and
  seeking an injunction and unspecified damages. On October 12, 2004, the
  Company filed an amended answer to Applied Materials’ complaint and also
  filed counterclaims for declaratory judgment of non-infringement and
  invalidity. The Company disputes Applied Materials’ claims and further
  believes that some or all of the claims of the ‘921 patent are invalid. 

  
	
     

  	
     

  	
     

  
	
     

  	
     

  	
   On June 3, 2005, Applied
  Materials, Inc. and Applied Materials Israel (collectively, “Applied Materials”) filed an amended
  complaint against the Company. On June 23, 2005, the Company filed an answer
  to the amended complaint and again filed counterclaims for declaratory
  judgment of non-infringement and invalidity. On July 14, 2005, the Court
  issued an order under the legal doctrine of assignor estoppel that prevents
  the Company from challenging the validity of the ‘921 patent in this lawsuit.
  The Company is not barred, however, from seeking reexamination of the ‘921
  patent in the United States Patent and Trademark Office (“PTO”). 

  
	
     

  	
     

  	
     

  
	
     

  	
     

  	
   On June 3, 2005, the
  Company filed with the PTO a request for reexamination of the ‘921 patent
  seeking reexamination of certain claims of the ‘921 patent. On June 10, 2005,
  Applied Materials asserted against the Company additional claims of the ‘921
  patent that were not specifically addressed in the Company’s request for
  reexamination. On August 22, 2005, the Company filed with the PTO a second
  request for reexamination addressing the additional asserted claims. In
  September 2005, the PTO granted the Company’s first and second request for
  reexamination, finding a “substantial new question of patentability”
  regarding seven of the asserted claims in the ‘921 patent. In October 2005,
  the Court stayed the California litigation on the ‘921 patent pending the
  PTO’s decision on the Company’s second request for reexamination, which
  addresses the four asserted claims that were not specifically addressed by
  the Company’s first request. 

  



- 8 -








	
   

  	
   

  	
   

  
	
     

  	
     

  	
   Following the Court’s stay
  of litigation on the ‘921 patent, Applied Materials asserted two additional
  patents against the Company, U.S. Patent Nos. 6,256,093 and 6,924,891. In
  December 2005, Applied Materials withdrew its claims on the 093 patent,
  which have been dismissed with prejudice. Also in December 2005, Applied
  Materials filed a motion for a preliminary injunction on the ‘891 patent The
  parties stipulated to the terms of a preliminary injunction that terminates
  any prospective exposure under this patent and are now engaged in settlement
  discussions concerning Applied Material’s claim for past demages. The Company
  disputes Applied Material’s claim of infringement and if settlement
  discussions are unsuccesful, intends to defend the claim. 

  
	
     

  	
     

  	
     

  
	
     

  	
     

  	
   In July 2006 an employee
  of the Company (at that time, later he resigned) complained that his eyes
  were injured during his work in Negevtech’s clean room. The employee went
  through medical examinations which identified that he suffers from sore eyes
  but did not reveal any major damage. To the Company’s knowledge, the employee
  filed forms with request to an industrial accident with the National
  Insurance Agency (***) but the Company has not received any notice with
  respect thereto. 

  



- 9 -








	
   

  	
   

  	
   

  
	
   Section
  2.8: 

  	
   Subsections
  (a), (b), (c) and (b) 

  
	
     

  	
     

  	
     

  
	
     

  	
   On January 2, 2000 TO
  Software Products Ltd. (“TICI”)
  and the Company entered into a Non-Disclosure and Non-Use Agreement (the “TICI NDA”). Under the Cooperation
  Agreement the Company entered into with TICI on February 15, 2000 (the “TICI Cooperation Agreement”), it was agreed
  that TICI would not be precluded from working for and with any other entity
  in the semi conductor industry, so long as the TICI NDA is not breached. 

  
	
     

  	
     

  	
     

  
	
     

  	
   Under the TICI Cooperation
  Agreement the Company was granted a perpetual, worldwide, nonexclusive free
  license to use for any purpose and in any way the TICI Legacy Code, which
  shall remain the sole property of TICI. 

  
	
     

  	
     

  	
     

  
	
     

  	
   The Company has received
and may in the future receive participations through the OCS. According to
the provisions of the Law for the Encouragement of Industrial Research and
Development, 5744-1984 and of Regulations promulgated thereunder (the
“Research Law”) and their applicability to the Company, the following shall
apply: 

  
	
     

  	
     

  	
     

  
	
     

  	
   (a) Upon sales the Company
  is obligated to pay royalties to the State of Israel; 

  
	
     

  	
     

  	
     

  
	
     

  	
   (b) The manufacture of any
  product developed as a result of any project so funded shall take place in
  the State of Israel unless the Research Committee of the OCS pursuant to the
  Research Law otherwise determines, subject to and pursuant to the Research
  Law; and 

  
	
     

  	
     

  	
     

  
	
     

  	
   (c) The know-how derived
  from any project so funded may not be transferred to third parties without
  the approval of the Research Committee of the OCS subject to and pursuant to
  the Research Law. 

  
	
     

  	
     

  	
     

  
	
     

  	
   The Intellectual Property
  required by the Company to conduct its business includes readily and
  commercially available off-the-shelf software. This software is owned by
  third parties, and would require the payment of fees or royalties. 

  
	
     

  	
     

  	
     

  
	
     

  	
   The Company is a party to
  several Evaluation Agreements and Joint Development Agreements with respect
  to the evaluation by existing and potential customers of the Company’s
  products, which include provisions with respect to IP rights created in the
  course of such evaluation and with respect to the possible purchase of the
  Company’s products pending the results of the evaluation. 

  



- 10 -








	
   

  	
   

  	
   

  
	
     

  	
   Please see Section 2.7 for
  patent litigation. 

  
	
     

  	
     

  	
     

  
	
     

  	
   Please see Section 2.18
  with respect to Liens over the Company’s IP. 

  
	
     

  	
     

  	
     

  
	
   [***] 

  	
     

  	
     

  
	
     

  	
    

  
	
     

  	
     

  	
     

  
	
     

  	
   Subsection
  (b) 

  
	
   [***] 

  	
     

  	
     

  
	
     

  	
    

  
	
     

  	
     

  	
     

  
	
     

  	
   Subsection
  (e) 

  
	
     

  	
   6 employees of the
  Company, who terminated their employment with Applied Materials (“AMAT”) and began working for the Company,
  informed the Company that they did not receive severance payments from AMAT
  since AMAT claimed that they breached their non-competition undertaking.
  Neither the Company nor, to the Company’s best knowledge, any of such
  employees have received any written claim or demand from AMAT. The Company
  deposited in the managers insurance plan of 3 of such employees the amount of
  severance payments to which they were entitled in connection with the
  termination of their employment with AMAT and undertook to deposit the
  severance payments to which the other 3 employees were entitled to, if such
  amount will not be paid to them by AMAT. With respect to only one of such
  employees, the Company undertook to provide her with legal representation, if
  AMAT should bring a legal action against her and further undertook to pay up
  to 3 months salary to such employee if she will be legally prohibited to work
  for the Company. 

  
	
     

  	
     

  	
     

  
	
     

  	
   Subsection
  (f) 

  
	
     

  	
   Gili Tamir, a management consultant to the
  Company, signed a confidentiality undertaking but did not sign a
  non-competition and assignment of invention undertaking. 

  
	
     

  	
     

  	
     

  
	
   Section 2.9: 

  	
   The Company does not have
  a business license (“Rishayon Esek”).
  The Company believes that the lack of such license is not reasonably likely
  to have a Material Adverse Effect on its business. 

  
	
     

  	
     

  	
     

  
	
     

  	
   See Section 2.5 for OCS
  and Investment Center approvals. 

  
	
     

  	
     

  	
     

  
	
   Section 2.10: 

  	
   Subsection
  (a) 

  
	
     

  	
   Please see Sections 2.2
  and 2.3 for certain agreements listed therein. 

  
	
     

  
	
     

  	
   Subsection
  (a), (b), (c) and (d) 

  
	
     

  	
   General: 

  
	
     

  	
   (1) 

  	
   Please see reference to
  Sections 2.2 and 2.3 for certain agreements listed therein. 

  





 *** Text omitted and filed separately
with the Securities and Exchange Commission pursuant to 17 CFR § 230.406 and §
200.80(b)(4). 


- 11 -








	
   

  	
   

  	
   

  
	
     

  	
   (2) 

  	
   The Company signed
  numerous Non-Disclosure Agreements. 

  
	
     

  
	
     

  	
   (3) 

  	
   The Company signed
  undertakings and related documents with the OCS and the Investment Center. 

  
	
     

  
	
     

  	
   (4) 

  	
   The Company entered into
  Recruitment Service Agreements with several companies. 

  
	
     

  
	
     

  	
   (5) 

  	
   The Company entered into
  agreements and undertakings with Bank Leumi, which are detailed below in
  Section 2.18. 

  
	
     

  
	
     

  	
   (6) 

  	
   See reference to
  agreements with Plenus in Section 2.2 and 2.18 and in the list of Material
  Agreements below. 

  
	
     

  
	
     

  	
   (7) 

  	
   The Company entered into
  various agreements with Citibank in connection with the opening of a global
  account with Citibank. 

  
	
     

  
	
     

  	
   (8) 

  	
   The Company was party to
  several SPAs in connection with the issuance of the outstanding Preferred
  Shares of the Company. 

  
	
     

  
	
     

  	
   (9) 

  	
   The Company signed in
  March 2006 an understating for the benefit of Wellington Partners Ventures
  III Technology Fund L.P. for the grant of certain audit rights. 

  
	
     

  
	
     

  	
   (10) 

  	
   The Company signed in
  March 2006 a confidentiality undertaking for the benefit of Intel Atlantic,
  Inc. 

  



- 12 -








	
   

  	
   

  	
   

  
	
     

  	
   Material
  Agreements: please
  refer to the list of Material Agreements below. 

  
	
     

  	
     

  	
     

  
	
     

  	
   Pending
  Purchase Orders: 

  






 [***] 





	
   

  	
   

  
	
     

  	
   Please see reference to
  Section 2.7 for patent litigation. 

  
	
     

  	
     

  
	
   Section 2.11: 

  	
   Please see reference to
  Sections 2.2, 2.3 and the Material Agreements numbered 1, 2, 3, 22, 23, 28,
  33 and 36 in the list of Material Agreements in Section 2.10 for
  related-party transactions/Agreements. 

  
	
     

  	
     

  
	
     

  	
   Star has appointed Ms.
  Yaffa Krindel, Pitango has appointed Mr. Aaron Mankovsky, Orbotech has
  appointed Mr. Amichai Steinberg, Genesis has appointed Mr. Eddy Shalev and
  Poalim has appointed Mr. Eran Gersht as directors of the Company. Rail Yizhar
  was appointed as an industry expert director. Arnon Gat, the Company’s CEO,
  is a director of the Company. Dr. Gadi Neumann is a director of the Company
  and it is contemplated that he will resign from his directorship as of the
  Closing. The Company has not undertaken any independent investigation to determine the existence or absence of any
  interests of such directors or their familiy members. 

  





 *** Text omitted and filed separately
with the Securities and Exchange Commission pursuant to 17 CFR § 230.406 and §
200.80(b)(4). 



- 13 -








	
   

  	
   

  
	
   Section 2.12: 

  	
   The Company does not have
  a business license (“Rishayon Esek”).
  The Company believes that the lack of such license is not reasonably likely
  to have a Material Adverse Effect on its business. 

  
	
     

  	
     

  
	
     

  	
   See reference to Section
  2.5 with regards to the OCS and Investment Center approvals. 

  
	
     

  	
     

  
	
   Section 2.14: 

  	
   See reference to the
  Material Agreements numbered 4, 5, 13, 19, 23, 29, 33, 36, 44, 46 and 52 in
  Section 2.10 (Material Agreements). 

  
	
     

  	
     

  
	
   Section 2.17: 

  	
   Pursuant to the terms of
  the Plenus Warrants, the shares issuable upon exercise of the Plenus Warrants
  confer upon the holders thereof certain registration rights. 

  
	
     

  	
     

  
	
   Section 2.18: 

  	
   The Company’s respective
  property and assets may be subject to Hens for current taxes and assessments
  not yet due (and which the Company is not aware of), minor imperfections of
  title and encumbrances and minor liens that may exist by operation of law;
  and liens, loans and encumbrances shown in the Company’s Audited Financial
  Statements. 

  
	
     

  	
     

  
	
     

  	
   The Company is under a
  general restriction of the OCS – Please see reference to Section 2.8 and the
  Research Law for more details. 

  
	
     

  	
     

  
	
     

  	
   Bank Leumi 

  
	
     

  	
   The Company received on
  May 24, 2004, a loan in the amount of US$2.5 million from Bank Leumi for the
  purchase of a certain electronic microscope (SEMIV1SION). To secure this loan
  (and any interest thereon) the Company created in favor of Bank Leumi: (a) a
  fixed charge over a deposit currently in an amount of US$347,500; and (b) a
  general first degree floating charge over the Company’s assets. The U.S.
  Subsidiary has provided Bank Leumi with a guarantee with respect to the
  Company’s indebtedness to Bank Leumi and has signed a Security Agreement over
  the microscope in favor of Bank Leumi. In addition, the Company has signed a
  negative pledge in favor of Bank Leumi. In connection with the Plenus loan
  (see below) the Company also created in favor of Bank Leumi a floating charge
  and a fixed charge over the Company’s intellectual property, pan passu with
  Plenus (see letters of undertaking to Bank Leumi dated January 13, 2005 and
  November 6, 2005). The balance of the loan as of September 2006 is
  approximately $550,000. 

  



- 14 -








	
   

  	
   

  
	
     

  	
   Plenus Technologies Ltd. 

  
	
     

  	
   The Company received a
  loan in the amount of US$10 million from Plenus ($4.5 million of which were
  used to repay a previous loan granted to the Company by Plenus). To secure
  this loan (and any interest thereon) the Company created: (a) a general
  first-degree floating charge over the Company’s assets in favor of Plenus,
  Bank Leumi, Golden Gate Bridge Fund L.P (“Golden Gate”), Plenus II L.P, and
  Plenus II (D.S.M) L.P., pari passu with Bank Leumi’s floating charge and
  subject to Bank Leumi’s pledges over the deposit; (b) a fixed charge over the
  Company’s intellectual property in favor of Plenus, Bank Leumi, Golden Gate,
  Plenus II L.P, and Plenus II (D.S.M) L.P., pari passu with Bank Leumi’s fixed
  charge over the Company’s intellectual property, all subject to the terms of
  the Loan Agreement between the Company and Plenus dated October 11, 2005 and
  consummated November 6, 2005. 

  
	
     

  	
     

  
	
   Section 2.21: 

  	
     

  
	
     

  	
   See amendments to
  employment agreements with officers, set forth in reference to Section 2.3
  above. 

  
	
     

  	
     

  
	
     

  	
   See list of open orders in
  reference to Section 2.10. 

  
	
     

  	
     

  
	
     

  	
   See list of Material
  Agreements below for agreements executed following December 31, 2005 

  
	
     

  	
     

  
	
     

  	
   On February 23, 2006 the
  Board approved a Management Bonus Plan for 2006. On September 10, 2006 the
  Board approved Arnon Gat’s 2006 Bonus targets. 

  
	
     

  	
     

  
	
     

  	
   On February 08, 2006 the
  Company granted its employee, Oren Kashi, a loan in the amount of NIS 20,000. 

  
	
     

  	
     

  
	
     

  	
   The Company utilized an
  amount of approximately $1,750,000 from Plenus’s line of credit (in addition
  to the $4.5 million that was used to repay Plenus’s previous loan). 

  
	
     

  	
     

  
	
     

  	
   The Company raised
  approximately $11 million from Wellington Partners Ventures III Technology
  Fund L.P. and existing shareholders in two financing rounds in March and May
  2006. 

  
	
     

  	
     

  
	
     

  	
   The Company issued to
  Tmura - the Israeli Public Service Venture Fund a warrant to purchase up to
  5,000 Ordinary Shares of the Company at an exercise price of $0.63 each, as a
  charitable contribution (reflected in the Cap Table Schedule 2.2). 

  
	
     

  	
     

  
	
   Section 2.22: 

  	
   The Company or its
  Subsidiaries have not made any provision for taxes since neither or them has
  earned any profits up to date. 

  
	
     

  	
     

  
	
   Section 2.24: 

  	
   (a) Certain of the
  Company’s employment compensation arrangements are fixed and do not
  differentiate between compensation for regular hours and overtime work. 

  



- 15 -








	
   

  	
   

  
	
     

  	
   (b) All grantees under the
  US Plan have provided Wilson, Sonsini, Goodrich & Rosati with a proxy for
  the exercise of all rights granted to them with respect to their shares and
  options, including voting rights, until the consummation of an IPO. 

  
	
     

  	
     

  
	
     

  	
   See obligations towards
  former employees of AMAT referred to in Section 2.8. 

  
	
     

  	
     

  
	
     

  	
   On February 23, 2006 the
  Board approved a Management Bonus Plan for 2006. On September 10, 2006 the
  Board approved Arnon Gat’s 2006 Bonus targets. 

  
	
     

  	
     

  
	
     

  	
   The Company agreed with two of its former employees,
  Jeremy Topaz and Shmuel Roth, that they will be able to exercise the options
  granted to them under the Company’s Share Option Plan (5,000 options each)
  following termination of their employment. No specific time limit was agreed
  with respect to such right to exercise. 

  
	
     

  	
     

  
	
   Section 2.26: 

  	
   See Schedule 8.3. 

  



- 16 -








 Material Agreements: 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 Number 

	
   

	
   

	
 The Company or its Subsidiary 

	
   

	
   

	
 Name of
  the other party 

	
   

	
   

	
 Title of  Agreement  

	
   

	
   

	
 Effective
  Date 

	
   

	
   

	
 Comments 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 
1. 

	
   

	
   

	
 
Company 

	
   

	
   

	
 
Rami Sher, employee 

	
   

	
   

	
 
Loan Agreement 

	
   

	
   

	
 
July 31, 2005 

	
   

	
   

	
 
Loan amount of NIS 20,000. 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 2. 

	
   

	
   

	
 Company 

	
   

	
   

	
 Oren Kashi, employee 

	
   

	
   

	
 Loan Agreement 

	
   

	
   

	
 February 08, 2006 

	
   

	
   

	
 Loan amount of NIS 20,000 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 [***] 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 

	
   

	
   

	
   


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 [***] 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 5. 

	
   

	
   

	
 Company 

	
   

	
   

	
 Eastman Kodak Company 

	
   

	
   

	
 Sales Agreement 

	
   

	
   

	
 December 27, 2005 

	
   

	
   

	
 Shall be paid US$750,000
  for developing image sensor technology for use in imaging products 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 6. 

	
   

	
   

	
 Company 

	
   

	
   

	
 NTRA Economic Advisors Ltd. 

	
   

	
   

	
 Finder Fee Agreement 

	
   

	
   

	
 November 2005 (as amended March 13, 2006) 

	
   

	
   

	
   


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 7. 

	
   

	
   

	
 Company 

	
   

	
   

	
 Applied Materials, Inc. 

	
   

	
   

	
 Full Service Contract 

	
   

	
   

	
 May 31, 2005 

	
   

	
   

	
 Shall be paid US$100,000 in monthly payments of US$8,333
  each for maintenance services in respect to W206 machine 






 *** Text omitted and filed separately
with the Securities and Exchange Commission pursuant to 17 CFR § 230.406 and §
200.80(b)(4). 


- 17 - 









	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 Number 

	
   

	
   

	
 The Company or its Subsidiary 

	
   

	
   

	
 Name of
  the other party 

	
   

	
   

	
 Title of  Agreement  

	
   

	
   

	
 Effective
  Date 

	
   

	
   

	
 Comments 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 
8. 

	
   

	
   

	
 
Company 

	
   

	
   

	
 
Plenus Technologies Ltd. 

	
   

	
   

	
 
Loan Agreement 

	
   

	
   

	
 
October 11, 2005 

	
   

	
   

	
 
Loan in the amount of $10 million, $4.5 of which were used to return a previous loan. 


	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 The company  received
  a credit ine  in the amount
  of  $5.5M
  from Plenus,  $1.75 million
  of  which
  is currently  utilized. 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 9. 

	
   

	
   

	
 Company 

	
   

	
   

	
 Bear, Stearns & Co. Inc. 

	
   

	
   

	
   

	
   

	
   

	
 December 2004 (amended on November
  21, 2005) 

	
   

	
   

	
 Assistance in distribution of a
  private placement memorandum in connection with the  Company’s
  contemplated  placement of its  Preferred
  Shares 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 10. 

	
   

	
   

	
 Company 

	
   

	
   

	
 Phoenix contacts 

	
   

	
   

	
 Statement of work 

	
   

	
   

	
 March 9, 2006 

	
   

	
   

	
 Spatial
  Filter Module Printer 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 11. 

	
   

	
   

	
 Company 

	
   

	
   

	
 Big Sky 

	
   

	
   

	
 Statement of work 

	
   

	
   

	
 June 13, 2006 

	
   

	
   

	
 Development
  & Supply Flash Lamp Pumped. 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 12. 

	
   

	
   

	
 Company 

	
   

	
   

	
 Fraunhofer Gesellschaft 

	
   

	
   

	
 Purchase Order 

	
   

	
   

	
 December 9, 2004 

	
   

	
   

	
 Purchased
  wafer inspection system. Acceptance June 29, 2005 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 13. 

	
   

	
   

	
 Company 

	
   

	
   

	
 Hermes-Epitek Corp. 

	
   

	
   

	
 Sales Representative Agreement 

	
   

	
   

	
 December 1, 2004 

	
   

	
   

	
   


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 [***] 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 [***] 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 [***] 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
   


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 [***] 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
   







 *** Text omitted and filed separately
with the Securities and Exchange Commission pursuant to 17 CFR § 230.406 and §
200.80(b)(4). 


- 18 - 










	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 Number 

	
   

	
   

	
 The Company or its Subsidiary 

	
   

	
   

	
 Name of
  the other party 

	
   

	
   

	
 Title of  Agreement  

	
   

	
   

	
 Effective
  Date 

	
   

	
   

	
 Comments 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 
[***] 

	
   

	
   

	
 
 

	
   

	
   

	
 
 

	
   

	
   

	
 
 

	
   

	
   

	
 
 

	
   

	
   

	
   


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 19. 

	
   

	
   

	
 Company 

	
   

	
   

	
 Canon
  Sales Co., Inc. 

	
   

	
   

	
 Distribution
  and Sales
  Agreement 

	
   

	
   

	
 November
  30, 2005 

	
   

	
   

	
   


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 [***] 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 21. 

	
   

	
   

	
 Company 

	
   

	
   

	
 Morrison
  & Foerster L.L.P 

	
   

	
   

	
   

	
   

	
   

	
 October
  20, 2004. 

	
   

	
   

	
 IP
  litigation legal counsels; US corporate counsel 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 22. 

	
   

	
   

	
 Company 

	
   

	
   

	
 Shai
  Silberstein 

	
   

	
   

	
 Consulting
  Agreement 

	
   

	
   

	
 October
  11, 2004 

	
   

	
   

	
   


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 23. 

	
   

	
   

	
 Company 

	
   

	
   

	
 Taiwan
  Branch 

	
   

	
   

	
 Services
  Agreement 

	
   

	
   

	
 September
  1, 2004 

	
   

	
   

	
   


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 [***] 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 [***] 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
   


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 [***] 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 27. 

	
   

	
   

	
 Reserved 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 [***] 

	
   

	
   

	
 Company 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 29. 

	
   

	
   

	
 Company 

	
   

	
   

	
 JNC
  Co. Ltd. 

	
   

	
   

	
 Cooperation
  Agreement 

	
   

	
   

	
 July
  1, 2003 

	
   

	
   

	
   








 *** Text omitted and filed separately
with the Securities and Exchange Commission pursuant to 17 CFR § 230.406 and §
200.80(b)(4). 


- 19 - 










	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 Number 

	
   

	
   

	
 The Company or its Subsidiary 

	
   

	
   

	
 Name of
  the other party 

	
   

	
   

	
 Title of  Agreement  

	
   

	
   

	
 Effective
  Date 

	
   

	
   

	
 Comments 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 
[***] 

	
   

	
   

	
 
 

	
   

	
   

	
 
 

	
   

	
   

	
 
 

	
   

	
   

	
 
 

	
   

	
   

	
 
 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 [***] 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
   


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 [***] 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 33. 

	
   

	
   

	
 Company 

	
   

	
   

	
 Negevtech Inc. 

	
   

	
   

	
 Inter Company Loan Agreement 

	
   

	
   

	
 January 1, 2003 

	
   

	
   

	
   


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 34. 

	
   

	
   

	
 Company 

	
   

	
   

	
 Eldan Car Rent
(1965) Ltd. 

	
   

	
   

	
 Car Lease Agreement 

	
   

	
   

	
 April 17, 2000 

	
   

	
   

	
   







 *** Text omitted and filed separately
with the Securities and Exchange Commission pursuant to 17 CFR § 230.406 and §
200.80(b)(4). 


- 20 - 










	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 Number 

	
   

	
   

	
 The Company or its Subsidiary 

	
   

	
   

	
 Name of
  the other party 

	
   

	
   

	
 Title of  Agreement  

	
   

	
   

	
 Effective
  Date 

	
   

	
   

	
 Comments 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 
35. 

	
   

	
   

	
 
Company 

	
   

	
   

	
 
Dorban
  Investments Ltd. 

	
   

	
   

	
 
Lease
  Agreement 

	
   

	
   

	
 
February
  22,
  2000 (as extended). 

   

	
   

	
   

	
 
Regarding
  the Company’s
  offices at 12
  Hamada Street, Rehovot. 


	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
 A new
  agreement
  was signed
  on June 26,
  2006. 

	
   

	
   

	
 The
  Company has  provided the lessor a  bank guarantee in the amount of NIS  526,620
  dated  November 20, 2000,  which was extended  on
  May 29, 2005 (the  amount of the  extended guarantee is  NIS
  565,304.56  linked to the  consumer price
  index). 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 36. 

	
   

	
   

	
 Company 

	
   

	
   

	
 TICI
  Software Products Ltd. 

	
   

	
   

	
 Cooperation Agreement 

	
   

	
   

	
 February
  15,
  2000 

	
   

	
   

	
   


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 [***] 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
   


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 38. 

	
   

	
   

	
 Company 

	
   

	
   

	
 Hoffman, Wasson & Gitier, PC 

	
   

	
   

	
 Power
  of Attorney 

	
   

	
   

	
   

	
   

	
   

	
 Appointed
  to represent the Company
  in the  US Patent and Trademark Office in connection  with the Company’s  Patent
  applications  and any continuation thereof 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 39. 

	
   

	
   

	
 Company 

	
   

	
   

	
 Kesselman
  Corporate Finance Ltd. / Kesselman and Kesselman, CPA 

	
   

	
   

	
 Power
  of Attorney 

	
   

	
   

	
   

	
   

	
   

	
 Appointed
  to transact all business with  respect to the  application to the  Investment
  Center for an approved  enterprise status 







 *** Text omitted and filed separately
with the Securities and Exchange Commission pursuant to 17 CFR § 230.406 and §
200.80(b)(4). 



- 21 - 












	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 Number 

	
   

	
   

	
 The Company or its Subsidiary 

	
   

	
   

	
 Name of
  the other party 

	
   

	
   

	
 Title of  Agreement  

	
   

	
   

	
 Effective
  Date 

	
   

	
   

	
 Comments 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 
40. 

	
   

	
   

	
 
US
  Subsidiary 

	
   

	
   

	
 
Devane
  Realty LLC 

	
   

	
   

	
 
Lease
  Agreement 

	
   

	
   

	
 
June
  20, 2005 

	
   

	
   

	
 
Offices
  in Alvin Devane, Austin, Texas. The US Subsidiary provided the landlord a
  security deposit
  in the amount of US$ 1,318.18. 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 41. 

	
   

	
   

	
 German
  Subsidiary 

	
   

	
   

	
 TechnologieZentr
  urn
  Dresden 

	
   

	
   

	
 Lease
  Agreement 

	
   

	
   

	
 August
  18, 2005 

	
   

	
   

	
 Offices
  in Dresden, Germany 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 42. 

	
   

	
   

	
 US
  Subsidiary 

	
   

	
   

	
 T.M
  Norris Company LLC 

	
   

	
   

	
 Lease
  Agreement 

	
   

	
   

	
 March 2006 

	
   

	
   

	
 Offices
  in Southwind Center, Boise 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 43. 

	
   

	
   

	
 Reserved 

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   

	
   


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 44. 

	
   

	
   

	
 US
  Subsidiary 

	
   

	
   

	
 VLSI
  Research Inc. 

	
   

	
   

	
 Subscription
  Agreement 

	
   

	
   

	
 April
  25, 2005 

	
   

	
   

	
   


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 45. 

	
   

	
   

	
 US
  Subsidiary 

	
   

	
   

	
 Bet-Israel
  101 Ltd. 

	
   

	
   

	
 Engagement
  Agreement 

	
   

	
   

	
 April
  19, 2005 

	
   

	
   

	
 Relocation.
  


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 46. 

	
   

	
   

	
 US
  Subsidiary 

	
   

	
   

	
 Palmborg
  Associates, Inc. 

	
   

	
   

	
 Representation
  Agreement 

	
   

	
   

	
 June
  14, 2004 

	
   

	
   

	
   


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 47. 

	
   

	
   

	
 US
  Subsidiary 

	
   

	
   

	
 Lakeside
  Drive Inc. 

	
   

	
   

	
 Lease
  Agreement 

	
   

	
   

	
 May
  1, 2002 

	
   

	
   

	
 Offices
  in Lakeside Drive, Santa Clara, California. The US Subsidiary provided the landlord a letter
  of credit
  in the amount of US$ 50,000. 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 48. 

	
   

	
   

	
 Company 

	
   

	
   

	
 Alta 

	
   

	
   

	
 Sales
  agreement 

	
   

	
   

	
 May
  23, 2006 

	
   

	
   

	
 NTW
  waffers project 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 49. 

	
   

	
   

	
 Company 

	
   

	
   

	
 Aerotech 

	
   

	
   

	
 Statement
  of work 

	
   

	
   

	
 April
  06, 2006 

	
   

	
   

	
 3500
  XY Stage system Project 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 50. 

	
   

	
   

	
 Company 

	
   

	
   

	
 Physik
  Instrument 

	
   

	
   

	
 Statement
  of work 

	
   

	
   

	
 March
  19, 2006 

	
   

	
   

	
 3500
  Z-Stage system Project 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 [***]  

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 


	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 

	 


	
 [***] 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
 

	
   

	
   

	
   







 *** Text omitted and filed separately
with the Securities and Exchange Commission pursuant to 17 CFR § 230.406 and §
200.80(b)(4). 


- 22 - 












































Exhibit A  


THE COMPANIES LAW

A COMPANY LIMITED BY SHARES


AMENDED AND RESTATED ARTICLES OF ASSOCIATION OF

NEGEVTECH LTD.




PRELIMINARY


	
 

	
 


	
1.

	
Reserved.


	
 

	
 


	
2.

	
In these Articles, unless the context otherwise
  requires:


	
 

	
 


	
 

	
These “Articles” - shall mean
the Articles of Association of the Company as shall be in force from time to time. 


	
 

	
 


	
 

	
“Amadeus” – shall mean Amadeus III and Amadeus III
  Affiliates Fund LP and their Permitted
  Transferees to which they transfer shares.


	
 

	
 


	
 

	
The “Amadeus Agreement” shall mean the Series BB-4 Preferred
  Share Purchase Agreement dated
  September 26, 2006 between the Company and certain investors.


	
 

	
 


	
 

	
“as converted
  basis” - shall mean
  assuming the theoretical conversion of all outstanding Preferred Shares into Ordinary Shares, at the
  then applicable conversion ratio.


	
 

	
 


	
 

	
“Board” or 
  “Board of Directors” –
  shall mean the Board of Directors of the Company.


	
 

	
 


	
 

	
“Business Day” – shall mean a day on which commercial banks in
  Israel are open for business
  (including, for the avoidance of doubt, Fridays).


	
 

	
 


	
 

	
The “Company” - shall mean NEGEVTECH LTD.


	
 

	
 


	
 

	
The “Companies Law” - shall mean the Companies Law, 5759-1999 as
  shall be in effect from time to
  time and any other law that shall be in effect from time to time with respect
  to companies and that shall apply to the Company.


	
 

	
 


	
 

	
“Genesis” – shall mean Genesis Partners II, L.D.C.,
  Genesis Partners II (Israel) L.P. and their Permitted Transferees to which they transfer shares.


	
 

	
 


	
 

	
“Intel” shall mean Intel Atlantic, Inc., a corporation
  established and existing under the laws of the State of Delaware, USA.


	
 

	
 


	
 

	
The “Office” - shall mean the registered office of the Company
  as it shall be from time to time.


	
 

	
 


	
 

	
The term “Major Holder” shall mean a holder of at
  least 2.5% of the issued and outstanding shares of the Company, on an as converted basis and with respect
  solely to Article 14 - a holder of
  at least 2% of the issued and outstanding shares of the Company, on an as converted basis.












	
 

	
 


	
 

	
“Majority Preferred Shareholders” – shall mean the
  holders of the majority of the issued and outstanding Preferred Shares (calculated on
  an as converted basis).


	
 

	
 


	
 

	
“Ordinary Shares” – shall mean Ordinary Shares of the Company, par
  value NIS 0.01 each.


	
 

	
 


	
 

	
“Original Issue Price” – shall mean: (i)
  with respect to the Series AA Preferred Shares, $2.4385 per share,
  provided, that with respect to any Series AA Preferred Share issued upon the
  exercise of warrants outstanding as of the closing of the Poalim Agreement,
  the Original Issue Price shall be $3.4885 and provided further that with respect
  solely to Article 9 the Original
  Issue Price per each Series AA Preferred Share shall be the same as the
  Original Issue Price of the Series BB-1
  Preferred Shares; (ii) with respect to the Series BB-1 Preferred Shares and the Series BB-3 Preferred
  Shares, $2.3194 per share; (iii) with respect to the Series BB-2 Preferred
  Shares, $1.97149 per share; and (iv) with respect to the Series BB-4 Preferred Shares, $2.4354 per share, as
  such prices may be adjusted, for certain purposes set forth in these Articles, upon the occurrence of a
  Recapitalization Event.


	
 

	
 


	
 

	
“Orbotech” – shall mean Orbotech Technology Ventures L.P.
  and its Permitted Transferees to which it transfers shares.


	
 

	
 


	
 

	
“Permitted Transferee” - shall mean: (i) a
  person or entity that controls or is controlled by or is under common
  control with the respective shareholder; (ii) spouse, brothers, sisters, parents and children
  of the transferor or a trust for the benefit of the transferor and/or any of the foregoing, in the
  event the shares are held by individuals; (iii) in the case of any shareholder which is
  a limited or general partnership or a trust, to its partners (including retired partners) or
  beneficiaries and to affiliated partnerships managed by the same management
  company or managing (general) partner or by an entity which directly or indirectly controls,
  is controlled by, or is under common control with, such management company or managing or general partner;
  (iv) a trustee of the Company’s incentive plans may transfer to a beneficiary and vice versa; (v) in the case of
  Plenus Technologies Ltd., Plenus II, L.P., Plenus II (D.C.M.), Limited
  Partnership, Golden Gate Bridge Fund, L.P., Bank
  Leumi Le-Israel B.M. and the Participants (listed in Schedule 1 of the Loan
  Agreement between the Company,
  Plenus II, L.P. and Plenus II (D.C.M.), Limited Partnership dated October 11, 2005), each shall be considered a
  Permitted Transferee of each other, as long as such Permitted Transferee is not a competitor of the Company; and
  (vi) Bank Leumi Le-Israel BM (“BLL”) shall be a Permitted Transferee of
  Pitango Principals Fund III (Israel)
  LP (“Pitango
  Principals”), who may freely
  pledge and subject any of its shares and other securities in the Company to a charge in favor of BLL, without being
  subject to any restrictions
  hereunder with respect to the creation or imposition of such pledge or
  charge, including, without
  limitation, the requirement for Board approval or any other approval, any right of first refusal, co-sale offer or
  otherwise. However, the sale of the said securities on behalf of Bank
  Leumi Le-Israel BM pursuant to a realization of the said charge shall be subject to the right of first refusal and any
  other restrictions on the transfer of shares contained herein.


	
 

	
 


	
 

	
The term “control” shall
  have the same meaning as designated to it under the Companies Law and shall also mean the possession, directly
  or indirectly, of more than 50% of the voting power or the right to appoint more than 50% of the members of
  the Board of Directors or the
  right to receive more than 50% of the distributed profit.





- 2 -








	
 

	
 


	
 

	
“Pitango” – shall mean Pitango Venture Capital Fund III
  (Israeli Sub) L.P., Pitango Venture Capital Fund III (Israeli Sub.) Non-Q L.P.,
  Pitango Venture Capital Fund III (Israeli Investors) L.P., Pitango JP Morgan Fund III
  (Israel), L.P., Pitango Principles Fund III (Israel) L.P., Pitango Venture
  Capital Fund III Trusts 2000 L.P., all of which shall be deemed Permitted Transferees
  of each other, and their Permitted Transferees to which they transfer shares


	
 

	
 


	
 

	
The “Poalim Agreement” shall mean the Series
  BB Preferred Share Purchase Agreement dated September 13, 2005 between the
  Company and certain investors.


	
 

	
 


	
 

	
“Poalim Ventures” means Poalim Ventures Ltd., Poalim Ventures I
  Ltd. and Poalim Ventures II L.P., who shall be deemed Permitted Transferees of each
  other, and their Permitted Transferees to which they transfer shares.


	
 

	
 


	
 

	
“Preferred Shares” – shall mean Series AA
  Preferred Shares and Series BB Preferred Shares.


	
 

	
 


	
 

	
“Qualified
  IPO” or “QIPO” – shall mean the consummation of a
  firm commitment underwritten public
  offering of the Company’s shares, netting to the Company at least US$30,000,000 (Thirty Million), at an offering
  price per share in excess of 3 (three) times the Original Issue Price of the Series BB-1
  Preferred Shares.


	
 

	
 


	
 

	
“Recapitalization Event” – shall mean any event
  of share combination or subdivision, distribution of bonus shares or any other
  similar reclassification, reorganization or recapitalization of the Company’s share where
  the shareholders retain their proportionate holdings in the Company.


	
 

	
 


	
 

	
“Series
  AA Preferred Shares” - shall
  mean Series AA Preferred Shares of the Company, par value NIS 0.01
  each.


	
 

	
 


	
 

	
“Series
  BB Preferred Shares” - shall mean
  Series BB-1 Preferred Shares, Series BB-2 Preferred Shares,
  Series BB-3 Preferred Shares and Series BB-4 Preferred Shares.


	
 

	
 


	
 

	
“Series
  BB-1 Preferred Shares” - shall
  mean Series BB-1 Preferred Shares of the Company, par value
  NTS 0.01 each.


	
 

	
 


	
 

	
“Series
  BB-2 Preferred Shares” - shall
  mean Series BB-2 Preferred Shares of the Company, par value NIS
  0.01 each,


	
 

	
 


	
 

	
“Series BB-3 Preferred Shares” – shall mean Series
  BB-3 Preferred Shares of the Company, par value NIS 0.01 each.


	
 

	
 


	
 

	
“Series BB-4 Preferred Shares” – shall mean Series
  BB-4 Preferred Shares of the Company, par value NIS 0.01 each.


	
 

	
 


	
 

	
“Star” – shall mean SVE Star Ventures Enterprises Gmbh
  & Co. No. IX KG., Star Management of Investments No. II (2000) L.P., SVM Star
  Ventures Managementgesellschaft
  mbH No. 3, Star Growth Enterprise, a German Civil Law Partnership (with
  limitation of liability) and their Permitted Transferees to which they transfer shares.





- 3 -








	
 

	
 

	
 


	
 

	
“Wellington” - shall mean Wellington Partners Ventures III
  Technology Fund L.P. and its Permitted Transferees to which it transfers shares.


	
 

	
 


	
 

	
The “Wellington Agreement” - shall mean the
  Series BB Preferred Share Purchase Agreement dated March 22, 2006.


	
 

	
 


	
 

	
In
  these Articles, subject to this Article 2 and unless the context otherwise
  requires, expressions defined in the Companies Law, or any modification thereof
  in force at the date at which these Articles become binding on the Company,
  shall have the meanings so defined; and words importing the singular shall
  include the plural, and vice versa, and words importing the masculine gender shall include the
  female, and words importing persons shall include bodies corporate. The
  titles of the articles are not part of the articles.


	
 

	
 


	
 

	
For
  purposes of determining the availability of any right or the applicability of
  any limitation under these Articles, all Ordinary Shares and
  Preferred Shares entitled to such right or the application of such limitation
  held or acquired by affiliated entities or persons constituting Permitted Transferees
  of each other, shall be aggregated and such entities or persons shall be viewed as a single
  Shareholder.


	
 

	
 


	
 

	
In
  the event that an article that has been added to these Articles contradicts
  an original article found in these Articles - the article added shall take
  precedence.


	
 

	
 


	
3.

	
PRIVATE COMPANY


	
 

	
 

	
 


	
 

	
(a)

	
The
  Company is a private Company.


	
 

	
 

	
 


	
 

	
(b)

	
The
  right to transfer the shares of the Company shall be restricted in the manner
  hereinafter
  appearing;


	
 

	
 

	
 


	
 

	
(c)

	
The number of the
  shareholders of the Company (not including persons who are in the employment of the Company, and persons who,
  having been formerly in the employment
  of the Company were while in that employment and have continued after the termination of that employment to be
  shareholders of the Company) shall be limited to fifty, provided that, for the purposes of this provision,
  where two or more persons hold one
  or more shares in the Company jointly they shall be treated as a single shareholder; and


	
 

	
 

	
 


	
 

	
(d)

	
No invitation shall be
  issued to the public to subscribe for any shares or debentures or debenture stocks of the Company.


	
 

	
 

	
 


	
3A

	
CHARITABLE
  CONTRIBUTIONS


	
 

	
 

	
 


	
 

	
The
  Company may donate reasonable sums of money and/or issue securities of the
  Company representing up to tenth of one percent (0.1%) of its issued and
  outstanding share capital, to any worthy purpose or entity approved by the Board of
  Directors of the Company even if such donation is not made for business consideration.





- 4 -








	
 

	
 


	
4.

	
OFFICE


	
 

	
 


	
 

	
The Office of the Company shall
  be at such place as the Board shall from time to time designate.


	
 

	
 


	
5.

	
THE CAPITAL


	
 

	
 


	
 

	
The authorized capital of the Company is comprised
  of NIS 950,001 divided into: 53,000,060
  Ordinary Shares, par value 0.01 NIS per share, 15,000,000 Series AA Preferred
  Shares, par value 0.01 NIS per
  share, 12,137,708 Series BB-1 Preferred Shares, par value 0.01 NIS per share,
  4,000,000 Series BB-2 Preferred Shares, par value 0.01 NIS per share, 5,862,292 Series BB-3 Preferred Shares, par
  value 0.01 NIS per share and 5,000,040 Series BB-4 Preferred Shares, par
  value 0.01 NIS per share.


	
 

	
 


	
6.

	
RIGHTS, PREFERENCES AND
  RESTRICTIONS OF PREFERRED SHARES


	
 

	
 


	
 

	
The rights, preferences,
  privileges, and restrictions granted to and imposed on the Preferred Shares
  are as set forth in these Articles.


	
 

	
 


	
7.

	
DIVIDEND PROVISIONS


	
 

	
 


	
 

	
Subject to Article 8 below,
  any dividends declared by the Company shall be distributed, subject to Article 30 below, between all holders
  of shares of the Company, pari passu, based upon the number of Ordinary Shares (on an as converted basis) held by
  any such holder.








	
 

	
 

	
 

	
 


	
8.

	
DIVIDEND AND LIQUIDATION
  PREFERENCE


	
 

	
 

	
 

	
 


	
 

	
(a)

	
Upon the happening of any of
  the following events:


	
 

	
 

	
 

	
 


	
 

	
 

	
(1)

	
any liquidation, dissolution or
  winding up of the Company, either voluntary or involuntary; or


	
 

	
 

	
 

	
 


	
 

	
 

	
(2)

	
any consolidation, or merger
  of the Company with or into another corporation following which the
  shareholders of the Company prior to such transaction do not hold following such transaction more than
  50% of the outstanding shares and
  the voting power of the surviving corporation by virtue of their holdings in
  the Company prior to such transaction (“Merger”); or


	
 

	
 

	
 

	
 


	
 

	
 

	
(3)

	
any sale or transfer to
  another corporation of all or substantially all of the assets of the Company, or all or substantially
  all of the shares in the Company (other
  than to a wholly owned subsidiary of the Company or to a corporation in which the shareholders of the Company prior
  to the transaction hold more than 50% of the outstanding voting rights) (“Acquisition”); or


	
 

	
 

	
 

	
 


	
 

	
 

	
(4)

	
any distribution of dividends;


	
 

	
 

	
 

	
 


	
 

	
 

	
(any of the events described in
  sections (1) to (4) above shall be hereinafter referred to as a “Liquidation Event”)





- 5 -








	
 

	
 

	
 


	
 

	
 

	
then the amount of declared
  dividends or any assets of the Company available for distribution in connection with, or the
  consideration received in, such Liquidation Event
  (hereinafter referred to as “Distribution
  Assets”) shall be distributed pursuant to the following order
  of preference:


	
 

	
 

	
 


	
 

	
(b)

	
The
  holders of the Series BB-3 Preferred Shares and the holders of the Series
  BB-4 Preferred Shares shall be entitled to receive, prior and in preference
  to any distribution
  of any of the assets of the Company to the holders of all other equity securities of the
  Company by reason of their ownership thereof, an amount per each Series BB-3 Preferred Share and per each
  Series BB-4 Preferred Share equal to: (i) the applicable Original Issue Price
  for each such share, plus (ii) an amount equal to declared but unpaid
  dividends on each such share, plus (iii) an amount equal to 8% return per annum, compounded annually, on the
  applicable Original Issue Price, for each
  such share to be calculated from the date of payment to the Company on account of such share, and with respect to the
  Series BB-4 Preferred Shares resulting from the conversion provided for in the Amadeus Agreement, from the
  date of payment of the Conversion Consideration by Amadeus to the
  Company, until such distribution, less (iv)
  any amount of dividend preference paid on account of such share until such
  distribution (the “BB-3/4 Preference
  Amount”). In the event that the Distribution Assets are not sufficient for a full payment of the
  BB-3/4 Preference Amount to the
  holders of the Series BB-3 Preferred Shares and the holders of the Series BB-4 Preferred Shares pursuant to this
  subarticle (b), such Distribution Assets as are available for distribution, shall be distributed among the
  holders of the Series BB-3 Preferred Shares and the holders of the Series
  BB-4 Preferred Shares pro-rata in
  proportion to the preferential amount each such holder is otherwise entitled
  to receive.


	
 

	
 

	
 


	
 

	
(c)

	
Following the payment in
  full of the BB-3/4 Preference Amount, the holders of the Series BB-1 Preferred Shares and the holders of
  the Series BB-2 Preferred Shares shall be entitled to receive, prior
  and in preference to any distribution of any of the assets of the Company to the holders of all other equity securities
  of the Company by reason of their ownership thereof, an amount per
  each Series BB-1 Preferred Share and per
  each Series BB-2 Preferred Share equal to: (i) the applicable Original Issue Price for each such share, plus (ii) an amount
  equal to declared but unpaid dividends on each such share, plus (iii) an
  amount equal to 8% return per annum, compounded annually, on the applicable
  Original Issue Price, for each such share to be calculated from the date of payment to the Company on
  account of such share until such distribution,
  less (iv) any amount of dividend preference paid on account of such share
  until such distribution (the “BB-1/2
  Preference Amount”). In the event that the Distribution Assets are not sufficient for a
  full payment of the BB-1/2 Preference Amount to the holders of the Series BB-1 Preferred Shares and the
  holders of the Series BB-2
  Preferred Shares pursuant to this subarticle (c), such Distribution Assets as are available for distribution, shall be
  distributed among the holders of the Series BB-1 Preferred Shares and the
  holders of the Series BB-2 Preferred Shares pro-rata in proportion to the preferential amount each
  such holder is otherwise entitled to receive.


	
 

	
 

	
 





- 6 -








	
 

	
 

	
 

	
 


	
 

	
(d)

	
Following
  the payment in full of the BB-3/4 Preference Amount and the BB-1/2 Preference Amount,
  the holders of the Series AA Preferred Shares shall be entitled to receive prior and in
  preference to any distribution of any of the assets of the Company to the holders
  of all other equity securities of the Company by reason of their
  ownership thereof, an amount per each Series AA Preferred Share equal to: (i)
  the
  Original Issue Price for each Series AA Preferred Share, plus (ii) an amount equal to declared but
  unpaid dividends on each such Series AA Preferred Share, plus (iii) an amount
  equal to 8% return per annum, compounded annually, on the Original Issue Price for each
  outstanding Series AA Preferred Share to be calculated from the later of the
  date of payment to the Company on account of such Series AA Preferred Share
  or May 23, 2002 and until such distribution, less (iv) any amount of dividend
  preference paid on account of such Series AA Preferred Share until such
  distribution (the “AA Preference Amount”).


	
 

	
 

	
 


	
 

	
 

	
In
  the event that, following the payment in full of the BB-3/4 Preference Amount
  and the
  BB-1/2 Preference Amount, the remaining Distribution Assets are not
  sufficient for a full payment of the AA Preference Amount pursuant to this
  subarticle (d), then such remaining Distribution Assets shall be distributed
  among the holders of Series AA
  Preferred Shares pro-rata in proportion to the preferential amount each such holder is otherwise entitled to receive.


	
 

	
 

	
 


	
 

	
(e)

	
Thereafter,
  the holders of the Preferred Shares and the holders of the Ordinary Shares shall be entitled to
  receive any remaining Distribution Assets available for distribution pro rata
  based on the number of Ordinary Shares (on an as converted basis) held by any
  such holder.


	
 

	
 

	
 


	
 

	
(f)

	
Notwithstanding the
  foregoing, if distribution of the Distribution Assets among all shareholders of the Company, pro-rata to the
  number of shares they hold on an as converted
  basis, will result in the holders of Series BB-3 Preferred Shares receiving
  in respect of each Series BB-3 Preferred Share they hold an amount of at
  least three (3) times the Original
  Issue Price of the Series BB-3 Preferred Shares, then the provisions of subarticles (b)-(e)
  above shall not apply and the Distribution Assets shall be distributed among all shareholders of
  the Company, pro-rata to the number of
  share they hold, on an as converted basis.


	
 

	
 

	
 


	
 

	
(g)

	
In the
  event of a Merger or an Acquisition in which the shareholders (and not the Company) are the
  intended recipients of the proceeds resulting therefrom (such as with a sale of shares
  transaction), no transfer of securities in accordance thereto will be considered valid,
  unless the provisions of the distribution preferences under this Article 8 shall apply.


	
 

	
 

	
 


	
 

	
(h)

	
Whenever
  the Distribution Assets are in securities or property other than cash, the value of such assets
  shall be the fair market value of such securities or other property as shall be determined
  by the Board, or by the liquidator in case of winding up. Such proceeds shall
  be made payable in US dollars unless any holder of fully paid share elects to
  receive such distributions in NIS. The NIS equivalent of the dollar value of
  any distribution shall be determined in accordance with the Representative
  Rate last published by the Bank of Israel prior to the date of the making of
  the distribution.





- 7 -







	
 

	
 

	
 

	
 


	
9.

	
CONVERSION
  OF PREFERRED SHARES


	
 

	
 

	
 

	
 


	
 

	
The
  holders of the Preferred Shares shall have conversion rights as follows (the “Conversion
  Rights”):






	
 

	
 

	
 

	
 


	
 

	
(a)

	
Right
  to Convert.


	
 

	
 

	
 


	
 

	
 

	
(1)

	
Subject
  to Article 9(c), each fully paid Preferred Share shall be convertible, at the option of the
  holder thereof, at any time after the date of issuance of such Preferred Share at the
  Office or any transfer agent for the Preferred Shares, into one fully paid
  and non-assessable Ordinary Share nominal value NIS 0.01 and the Company
  shall, at such time, issue to the holders thereof, for no additional charge (a
  portion of the premium paid for such Preferred Shares being attributed as
  payment on account of the nominal value of such additional Ordinary
  Shares – in the event that the then applicable law requires that shares are
  issued for no less than their nominal value and to the extent no other source available
  pursuant to the provisions of the then applicable law may be used for such
  purpose), such number of fully-paid and non-assessable Ordinary Shares as
  required so that the total number of Ordinary Shares so issued (i.e.
  including the Ordinary Share into which the Preferred Share was converted) will be equal to the number
  determined by dividing the Original Issue
  Price applicable to such Preferred Share by the Conversion Price (as defined
  below) at the time in effect for such share. In the event that the then
  applicable law requires that shares are issued for not less than their
  nominal value, and the aggregate nominal
  value of all such Ordinary Shares shall exceed the consideration paid to the Company with respect to such
  Preferred Share, the holder
  thereof shall pay the Company such excess nominal value to the extent no other source available pursuant to
  the provisions of the then applicable
  law (such as premiums paid for other shares of the Company) may be used for such purpose. The initial Conversion
  Price per each Preferred Share
  shall be its Original Issue Price, provided, however, that the Conversion Price for the Preferred Shares shall be subject
  to adjustment as set forth in subarticles
  9(c), 9(d) and 9(e).


	
 

	
 

	
 


	
 

	
 

	
(2)

	
Each
  Preferred Share shall automatically be converted into Ordinary Shares at the Conversion Price at the time in effect
  for such Preferred Share upon the earlier
  of: (A) a Qualified IPO, or (B) the written consent of the Majority Preferred Shareholders, provided however that
  if such conversion is not part of,
  or conditioned upon the closing of, a Qualified Transaction (as defined in Article (12)(e) below), such conversion shall be
  subject to the Special BB Consent as set forth in Article 12(e) below.
  The Series AA Preferred Shares shall also
  automatically be converted into Ordinary Shares as aforesaid upon the consent of the holders of at least sixty six
  percent (66%) of the issued and then
  outstanding Series AA Preferred Shares.





- 8 -









	
 

	
 

	
 

	
 


	
 

	
 

	
 


	
 

	
(b)

	
Mechanics
  of Conversion.


	
 

	
 

	
 


	
 

	
 

	
(1)

	
Before
  any holder of Preferred Shares shall be entitled to convert the same into Ordinary Shares
  such holder shall surrender the certificate or certificates therefor at the Office and shall give
  written notice to the Company of the election to convert the same (or any
  part thereof) and shall state therein the name or names of any nominee for
  such holder in which the certificate or certificates for shares of Ordinary
  Shares are to be issued. The Company shall, as soon as practicable thereafter unless
  such notice states that
  conversion is to be effective on any later date or when any conditions specified in the
  notice have been fulfilled in which case conversion shall take effect on such
  other date or when such conditions have been fulfilled, issue and deliver at
  such office to such holder of Preferred Shares, or subject to the transfer
  restrictions contained in these Articles to the nominee or nominees of such
  holder, a certificate or certificates for the number of shares of Ordinary Shares to
  which such holder shall be entitled as aforesaid. Such conversion shall be
  deemed to have been made immediately prior to the close of business on
  the date of such surrender of the shares of Preferred Shares to be
  converted, or on any later date or when any conditions specified in the
  notice have been fulfilled and the person or persons entitled to receive the Ordinary Shares
  issuable upon such conversion shall be treated for all purposes as the record
  holder or holders of such Ordinary Shares as of such date. If the conversion
  is in connection with a QIPO, the conversion may, at the option of any
  holder tendering Preferred Shares for conversion, be conditioned upon the
  closing with the underwriter of the sale of securities pursuant to such
  offering, in which event the person(s) entitled to receive the Ordinary
  Shares issuable upon such conversion of the Preferred Shares shall not be deemed to have
  converted such Preferred Shares until immediately prior to the closing
  of such sale of securities. In the event that the certificate(s)
  representing the Preferred Shares to be converted as aforesaid are not delivered to
  the Company, then the Company shall not be obligated to issue any
  certificate(s) representing the Ordinary Shares issued upon such conversion, unless
  the holder of such Preferred Shares notifies the Company in writing that such
  certificate(s) have been lost, stolen or destroyed and executes an agreement
  satisfactory to the Company to indemnify the Company from any loss incurred by it in
  connection with such certificates.


	
 

	
 

	
 


	
 

	
 

	
(2)

	
A conversion of Preferred
  Shares pursuant to one of the events described in Article 9(a)(2) shall be deemed to have taken place automatically
  regardless of whether the certificates representing such shares have
  been tendered to the Company but from and
  after such conversion any such certificates not tendered to the Company shall be deemed to
  evidence solely the Ordinary Shares
  received upon such conversion and the right to receive a certificate for such Ordinary Shares.


	
 

	
 

	
 


	
 

	
(c)

	
Conversion
  Price Adjustments of Preferred Shares


	
 

	
 

	
 


	
 

	
 

	
Until
  the QIPO, the applicable Conversion Price of the Preferred Shares shall be subject to adjustment
  from time to time as follows:


	
 

	
 

	
 


	
 

	
 

	
(1)

	
During the period
  commencing on the closing of the Poalim Agreement, and ending on the earlier
  of (x) the QIPO or (y) 24 months following such date (the “Initial Period”), upon each issuance by the
Company of
  any “Additional Securities” (as
  defined below) without consideration or for a price per share less than the applicable Conversion Price for any
  issued and outstanding Series BB Preferred Shares in effect immediately prior
  to the issuance of such Additional Securities, the applicable
  Conversion Price for any such issued and
  outstanding Series BB Preferred Share in effect immediately
  prior to each such issuance shall be adjusted to the price per share paid at such
  issuance.





- 9 -








	
 

	
 

	
 

	
 


	
 

	
 

	
(2)

	
With
  respect to the Series BB Preferred Shares during the period after the Initial Period and
  until the QIPO and with respect to the Series AA Preferred Shares during the
  Initial Period and thereafter until the QIPO, upon each issuance by the
  Company of any “Additional Securities” (as defined below), without consideration
  or for a price per share less than the applicable Conversion Price for
  any issued and outstanding applicable series of Preferred Shares in effect
  immediately prior to the issuance of such Additional Securities, the
  applicable Conversion Price for any such issued and outstanding series of
  Preferred Shares in effect immediately prior to each such issuance shall be
  adjusted to a price (calculated to the nearest ten thousandth of a US Dollar
  ($0.0001)) determined by dividing (1) the sum of (A) the total number of Ordinary
  Shares issued and outstanding prior to the issuance of such Additional Securities multiplied by
  the applicable Conversion Price of such
  series, as the case may be, in effect prior to the issuance of such Additional Securities, plus (B) the total amount
  of the consideration received by
  the Company for such Additional Securities by (2) the sum of the total number
  of Ordinary Shares issued and outstanding immediately prior to the issuance of such Additional Securities plus the
  number of such Additional Securities
  issued. For the purpose of the above calculation, the number of shares
  of Ordinary Shares issued and outstanding immediately prior to such issue shall be calculated on an as converted and
  fully diluted basis, as if all outstanding
  warrants, options or other rights for the purchase of shares or convertible securities had been fully exercised
  (and the resulting securities fully
  converted into Ordinary Shares, if so convertible) as of such date.


	
 

	
 

	
 


	
 

	
 

	
(3)

	
In
  the event that the full application of the anti dilution protection in subarticles 9(c)(l)
  and 9(c)(2) cannot be implemented mathematically, then the Series BB
  Preferred Shares shall have absolute priority over the Series AA Preferred
  Shares in implementation of the above, such that only the Series BB Preferred
  Shares shall be provided with the anti-dilution protection.






	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
(4)

	
(A)

	
No adjustments of any
  applicable Conversion Price shall be made in an amount less than ten thousandth of a US Dollar ($0.0001). No adjustment of any
applicable Conversion Price
  pursuant to subarticles 9(c)(1) and (2) shall be made if it has the
  effect of increasing the applicable
  Conversion Price above the applicable Conversion Price in effect immediately
  prior to such adjustment.


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(B)

	
In
  the case of the issuance of Additional Securities (as defined below) for cash, the consideration, for the
  purpose of subarticles 9(c)(1) and (2),
  shall be deemed to be the amount of cash received therefore before any payment of commissions, expenses and
  the like.


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(C)

	
In
  the case of the issuance of Additional Securities (defined below) for a consideration, in
  whole or in part other than cash, the consideration other than cash shall, for the
  purpose of subarticles 9(c)(l)
  and (2), be deemed to be the fair value thereof as determined, in good faith, by the
  Board of Directors.





- 10 -








	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(D)

	
In the
  case of the issuance of options to purchase or rights to subscribe for Ordinary
  Shares, or securities by their terms convertible into or exchangeable
  for Ordinary Shares or options to purchase or rights to subscribe for such convertible or
  exchangeable securities, the aggregate maximum number of Ordinary Shares deliverable
  upon exercise
  (assuming the satisfaction of any conditions to exercise, including without limitation, the passing
  of time, but without taking into account
  potential antidilution adjustments) of such options to purchase or rights to subscribe for Ordinary
  Shares or upon conversion or an
  exchange of such convertible or exchangeable security shall be deemed to have been issued at the time of the issuance of such
options, rights, or securities
  at a consideration equal to the consideration (determined in the manner
  provided in subarticle 9(c)(4)(B) and (c)(4)(C)), if any, received by
  the Company upon the issuance of such
  options or rights or securities plus any additional consideration payable to the Company pursuant to
  the term of such options or rights
  or securities (without taking into account potential antidilution adjustments) for the Ordinary
  Shares covered thereby, and the applicable Conversion Price shall be
  adjusted accordingly. Upon the expiration
  of any such options or rights, the termination of any such rights to convert or exchange or the
  expiration of any options or rights
  related to such convertible or exchangeable securities, the Conversion
  Price for such series of Preferred Shares to the extent in any way affected by or computed using such
  options, rights or securities or
  options or rights related to such securities (unless such options or rights were merely to be included in
  the numerator and denominator for
  purposes of determining the number of Ordinary Shares outstanding for purposes of Article 9(c)(2)) shall be recomputed to reflect
the issuance of only the
  number Ordinary Shares (and
  convertible or exchangeable securities that remain in effect) actually
  issued upon the exercise of such options or rights, or upon the conversion or exchange of such
  securities or upon the exercise of
  the options or rights related to such securities. The number of Ordinary Shares deemed issued and the
  consideration deemed paid therefor
  shall be appropriately adjusted to reflect any change, termination or expiration of the type described in this
  Article 9(c)(4)(D).


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(E)

	
For
  purpose of subarticles 9(c)(l) and (2) hereof, the consideration for any Additional
  Securities shall be taken into account at the U.S. dollar equivalent thereof,
  on the day such Additional Securities are issued or deemed to be issued
  pursuant to subarticle 9(c)(4)(D).







- 11 -








	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
(5)

	
“Additional
  Securities” shall mean any Ordinary Shares, options to purchase or rights to
  subscribe for Ordinary Shares, or securities which by their terms are convertible into or
  exchangeable for Ordinary Shares, or any securities convertible
  into or exercisable for any securities of the foregoing. Notwithstanding the
  foregoing, “Additional Securities” does not include:


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(A)

	
Securities
  issued pursuant to a transaction described in subarticle 9(c)(6) hereof;


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(B)

	
The
  issuance, pursuant to the approval of the Board, of Ordinary Shares or Options to
  purchase Ordinary Shares to employees, directors and bona-fide consultants;


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(C)

	
Securities
  issued pursuant to options, warrants or other rights outstanding on the
  closing of the Poalim Agreement or on the closing of the Wellington
  Agreement or on the closing of the Amadeus Agreement, provided that such options, warrants
  or other rights are reflected in the respective Capitalization Table attached to any of
  such agreements;


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(D)

	
Ordinary
  Shares issued upon conversion of Preferred Shares;


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(E)

	
Issuance
  of bonus shares, providing such bonus shares are issued to all the then existing
  shareholders, or shares issued pursuant to a rights offering in which all
  such shares are offered exclusively to existing shareholders;


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(F)

	
Shares issued in the
  acquisition of another company provided that the issuance of such shares is approved by the Board of Directors;


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(G)

	
Shares
  issued in connection with equipment leases, bank loans or secured debt
  financings approved by the Board of Directors provided the number of such
  shares issued shall not exceed 1% of the then issued and outstanding share capital of the
  Company on a fully diluted, as converted basis;


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(H)

	
Securities issued or
  issuable following written approval of Majority Preferred Shareholders in which they agree to waive their
  anti-dilution or pre-emptive rights
  (as the case may be) with respect to such specific issuance; and


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
(I)

	
Securities
  issued as a charitable donation pursuant to Article 3A.


	
 

	
 

	
 

	
 


	
 

	
 

	
(6)

	
If
  the Company shall subdivide or combine its Ordinary Shares, the applicable Conversion
  Price shall be proportionately reduced, in case of subdivision of shares, as
  at the effective date of such subdivision, or if the Company shall fix a
  record date for the purpose of so subdividing, as at such record date,
  whichever is earlier, or shall be proportionately increased, in the case of combination
  of shares, as at the effective date of such combination, or, if the Company shall
  fix a record date for the purpose of so combining, as at such record date,
  whichever is earlier.





- 12 -








	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
(7)

	
Subject
  to the liquidation preference of the Preferred Shares as set forth in Article 8 above, if the Company at any time
  shall make a distribution of its assets to the holders of its Ordinary Shares
  as a dividend in liquidation or partial
  liquidation or by way of return of capital or other than as a dividend payable out of earnings or surplus legally
  available for dividends, each holder of
  Preferred Shares shall be entitled to receive without payment of any additional consideration, a sum equal to the
  amount of such assets as would have
  been payable to such holder as owner of that number of Ordinary Shares receivable by exercise of the conversion rights
  had such holder been the holder of
  record of such Ordinary Shares on the record date for such distribution; and an appropriate provision
  therefor shall be made a part of any such distribution.


	
 

	
 

	
 

	
 


	
 

	
(d)

	
Other
  Distributions


	
 

	
 

	
 

	
 


	
 

	
 

	
Subject
  to the liquidation preference of the Preferred Shares as set forth in Article
  8 above, in the event the Company shall declare a distribution payable in
  securities of other persons, evidences of indebtedness issued by the
  Company or other persons, assets (excluding cash dividends) or options or
  rights not referred to in subarticle 9(c)(5) or if the Company at any time
  shall pay a dividend payable in additional Ordinary Shares or other
  securities or rights convertible into, or entitling the holder thereof to receive
  directly or indirectly, additional Ordinary Shares then, in each such case for the purpose
  of this subarticle 9(d), the holders of the Preferred Shares shall be entitled to receive
  such distribution, in respect of their holdings on an as-converted basis as of
  the record date for such distribution.


	
 

	
 

	
 

	
 


	
 

	
(e)

	
Recapitalizations


	
 

	
 

	
 

	
 


	
 

	
 

	
If at
  any time or from time to time there shall be a Recapitalization Event (other
  than a subdivision,
  combination or merger or sale of assets transaction provided for elsewhere in this Article 9 or Article 8)
  provisions shall be made so that the holders of the Preferred Shares shall thereafter be entitled to receive upon
  conversion of the Preferred Shares
  the number of Ordinary Shares or other securities or property of the Company
  or otherwise, to which a holder of Ordinary Shares deliverable upon conversion would have been entitled immediately
  prior to such Recapitalization Event.
  In any such case, appropriate adjustment shall be made in the application of
  the provisions of this Article 9
  with respect to the rights of the holders of the Preferred Shares after such Recapitalization
  Event to the end that the provisions of this Article (including
  adjustment of the Conversion Price then in effect and the number of shares issuable upon conversion of the
  Preferred Shares) shall be applicable
  after that event in a manner as nearly equivalent as may be practicable.


	
 

	
 

	
 

	
 


	
 

	
(f)

	
No
  Impairment


	
 

	
 

	
 

	
 


	
 

	
 

	
The
  Company will not, by amendment of these Articles or through any reorganization,
  recapitalization, transfer of assets, consideration, merger, dissolution, issue or sale of
  securities or any other voluntary action, avoid or seek to avoid the observance or performance of the Conversion
  Rights of the holders of Preferred Shares,
  but will at all times in good faith assist in the carrying out of all the provisions of this Article 9
  and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion
  Rights of the holders of the Preferred Shares against impairment.





- 13 -








	
 

	
 

	
 

	
 

	
 


	
 

	
(g)

	
No Fractional Shares and
  Certificate as to Adjustments


	
 

	
 

	
 

	
 


	
 

	
 

	
(1)

	
No fractional shares shall be
  issued upon conversion of the Preferred Shares, and the number of Ordinary Shares to be issued
  shall be rounded to the nearest
  whole share. Whether or not fractional shares are issuable upon such conversion shall be determined on the basis of
  the total number of Preferred Shares held by the holder and the number of
  Ordinary Shares issuable upon such
  aggregate conversion.


	
 

	
 

	
 

	
 


	
 

	
 

	
(2)

	
Upon the occurrence of each
  adjustment or readjustment of any applicable Conversion Price pursuant to this Article 9, the Company, at its
  expense, shall promptly compute
  such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to each
  holder of Preferred Shares a certificate
  setting forth each adjustment or readjustment and showing in detail the facts upon which such adjustment or
  readjustment is based. The Company
  shall furnish or cause to be furnished to such holder a like certificate setting forth (A) such adjustment
  and readjustment, (B) the applicable
  Conversion Price at the time in effect, and (C) the number of Ordinary Shares and the amount, if any, of other
  property which at the time would
  be received upon the conversion of a Preferred Share.


	
 

	
 

	
 

	
 


	
 

	
(h)

	
Notices of Record Date


	
 

	
 

	
 

	
 


	
 

	
 

	
In the event of any taking by
  the Company of a record of the holders of any class of securities for the purpose of determining the
  holders thereof who are entitled to receive
  any dividend (including a cash dividend) or other distribution, any right to
  subscribe for, purchase or otherwise acquire any shares of any class or any
  other securities or property, or to
  receive any other right, the Company shall provide to each holder of Preferred Shares, at least 20
  days prior to the date specified therein, a notice specifying the date on
  which any such record is to be taken for the purpose of such dividend, distribution or right, and the
  amount and character of such dividend, distribution or right.


	
 

	
 

	
 

	
 


	
 

	
(i)

	
Reservation of Shares Issuable
  Upon Conversion


	
 

	
 

	
 

	
 


	
 

	
 

	
The Company shall at all times
  reserve and keep available out of its authorized but unissued shares
  of Ordinary Shares solely for the purpose of effecting the conversion of the
  Preferred Shares such number of its Ordinary Shares as shall from time to
  time be sufficient to effect the conversion of all outstanding Preferred
  Shares; and if at any time the number of authorized but unissued Ordinary Shares
  shall not be sufficient to effect the
  conversion of all then outstanding Preferred Shares, in addition to such other remedies as shall be available to the
  holder of such Preferred Shares, the Company
  will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but
  unissued Ordinary Shares to such number of shares as shall be
  sufficient for such purposes.





- 14 -










	
 

	
 


	
10.

	
RESERVED


	
 

	
 


	
11.

	
VOTING RIGHTS


	
 

	
 


	
 

	
Subject to Article 58 below,
  each holder of Ordinary Shares and Preferred Shares shall be entitled to one (1) vote per Ordinary Share or
  Ordinary Share into which such Preferred Share is convertible at the time of voting, whether in a vote by show
  of hands, secret ballot or written consent. Each holder of Preferred
  Shares shall vote together with the Ordinary Shares as a single class (except as otherwise expressly provided in
  these Articles or as required by
  law) and shall be entitled to notice of any general meeting of shareholders
  in accordance with these Articles. Fractional votes shall not be
  permitted and any fractional vote
  resulting from the conversion mechanism described above in these Articles
  shall be rounded up or down to the
  nearest whole number (with one-half (1/2) being rounded upward).


	
 

	
 


	
12.

	
PROTECTIVE PROVISIONS








	
 

	
 

	
 


	
 

	
(a)

	
Until the QIPO, the Company
  shall not take any of the following actions without approval of the Majority Preferred Shareholders
  (which may be obtained by way of a written consent and shall not
  require the convening of a shareholders meeting for such purpose, unless required by applicable law):








	
 

	
 

	
 


	
 

	
(1)

	
any amendment to or modification of these Articles
  and/or the Memorandum of Association of
  the Company or any other action which would amend, change or modify the rights, preferences or
  privileges of the Preferred Shares.


	
 

	
 

	
 


	
 

	
(2)

	
declaration of any dividend;


	
 

	
 

	
 


	
 

	
(3)

	
the authorization of any share capital, or other
  rights or securities convertible into or
  exchangeable for share capital, or the conversion of any existing shares
  into shares, in each case with rights equal to or superior to the rights of the Preferred Shares;


	
 

	
 

	
 


	
 

	
(4)

	
any action or transaction which
  is outside the business of the Company as contemplated in the Updated Work Plan of the Company (as defined in
  the Amadeus Agreement);


	
 

	
 

	
 


	
 

	
(5)

	
any action which effects a
  merger, reorganization, liquidation, disposition, acquisition or sale of the Company or of any
  subsidiary thereof, or any transfer
  of a material asset of the Company or of any subsidiary thereof, or the
  creation of or purchase of or into any entity;


	
 

	
 

	
 


	
 

	
(6)

	
any action which may alter or change the capital
  structure of the Company or of any
  subsidiary thereof, any action which effects a reclassification or recapitalization of the outstanding capital
  shares of the Company, and any increase
  in the registered share capital of the Company or of any subsidiary thereof;





- 15 -








	
 

	
 

	
 


	
 

	
(7)

	
the creation of any guarantee,
  mortgage, pledge or security interest in a material asset, or in all
  or substantially all of the assets of the Company or a subsidiary;


	
 

	
 

	
 


	
 

	
(8)

	
the replacement of the
  independent auditors to the Company, which in any event shall be one
  of the “big four”; and


	
 

	
 

	
 


	
 

	
(9)

	
the incurrence by the Company
  or by any subsidiary thereof of any indebtedness
  that shall exceed the sum of $250,000 (Two Hundred Fifty Thousand US
  Dollars), calculated on a cumulative basis in respect of any one transaction or in respect of a series of
  connected transactions;








	
 

	
 

	
 


	
 

	
(b)

	
Until the QIPO, the Company shall not issue any
  securities of any kind or options to purchase
  securities of any kind without the approval of the majority of the directors appointed by the holders of the Preferred
  Shares, provided however that shares issued
  upon the exercise of warrants, options, or other rights outstanding as of the
  closing of the Poalim Agreement, the closing of the Wellington Agreement or
  the closing of the Amadeus Agreement or the grant of options (and
  shares issued upon exercise of such
  options) under the Company’s incentive plans are not subject to such approval.


	
 

	
 

	
 


	
 

	
(c)

	
Any amendment or modification of
  the rights and obligations of Intel set forth in Article 29(e) (Right of First Refusal), Article
  29A (Co-Sale) and Article 29(B)(b) (Bring
  Along) and 65(c) (Directors) shall require the consent of Intel.


	
 

	
 

	
 


	
 

	
(d)

	
Until the QIPO, the Company shall not take, without
  the consent of the holders of at least a
  majority of the issued and outstanding Preferred Shares of the affected
  class, an action that amends or
  modifies the rights attached to such class of Preferred Shares, provided however that (a) the
  authorization or issuance of a new class of shares with preferential rights, or (b) a change, waiver of other
  modification that applies to the rights of the Preferred Shares in the same
  proportional manner and without
  treating a certain series proportionally different from the other series, in
  each case – that was approved by
  holders of a majority of the issued and outstanding Preferred Shares, shall not be deemed a change
  hereunder.


	
 

	
 

	
 


	
 

	
(e)

	
Until the QIPO, the Company shall not take, without
  the consent of the holders of at least a
  majority of the issued and outstanding Series BB Preferred Shares (which must
  include also the affirmative consent of the holders of the majority of the
  Series BB-1 Preferred Shares, Series BB-3
  Preferred Shares and Series BB-4 Preferred Shares (voting together as
  one group) that were issued at the closing of the Poalim Agreement, at the closing of the Wellington
  Agreement and at the closing of the Amadeus
  Agreement to investors who were not shareholders of the Company immediately
  prior to the closing of the Poalim Agreement or affiliates or Permitted Transferees of such shareholders (the “Special
BB Consent”)) an action that
  effects (i) any change or waiver of
  rights of the Series BB Preferred Shares that does not apply to the
  rights of all Preferred Shares in the same proportional manner and that
  treats a certain series proportionally differently from the other series;
  (ii) any waiver of liquidation
  preferences, anti-dilution, board representation or information rights of the
  Series BB Preferred Shares, (iii) an IPO, merger or the sale of all or
  substantially all of the Company’s shares
  or assets, unless, in each such case, the applicable IPO or transaction
  reflects a price per share of more than two times the Original Issue Price of
  the Series BB-1 Preferred Shares (a “Qualified
  Transaction”), or (iv) conversion of the Series BB Preferred Shares, other than as part of, and
  conditioned upon the closing of, a
  Qualified Transaction.





- 16 -








	
 

	
 

	
 


	
 

	
(f)

	
The required consents as set
  forth in Articles 12(a) – (e) above shall also apply to any action taken by
  any wholly owned subsidiary of the Company.








	
 

	
 


	
13.

	
ALLOTMENT
  OF SHARES


	
 

	
 


	
 

	
Subject to the provisions of
  Articles 12 and 14, the authorized but unissued shares shall be under the
  control of the Board of Directors, who shall have the power to allot shares
  or otherwise dispose of them to such persons, on such terms and conditions
  (including, interalia, terms
  relating to calls as set forth in Article 31 hereof), and either at par or at
  a premium, or, subject to the provisions of the Companies Law, at a
  discount, and at such times, as the Board of Directors may think fit, and the
  power to give any person the option to acquire from the Company any shares,
  either at par or at premium, or subject as aforesaid, at a discount, during such time and for such
  consideration as the Board of Directors may think  fit.


	
 

	
 


	
14.

	
PREEMPTIVE RIGHTS








	
 

	
 

	
 

	
 


	
 

	
(g)

	
Until the QIPO, the provisions of this Article 14
  shall apply:


	
 

	
 

	
 

	
 


	
 

	
 

	
(1)

	
Any Additional Securities (as
  defined in Article 9 above) to be issued by the Company (the “Offered
  Securities”) shall first be offered by the Board of Directors
  by written notice to each Major Holder (for purposes of this Article 14, the “Offerees”).
  The number of Offered Securities offered to each Offeree shall be the
  result of the multiplication of the Offered Securities by a fraction: (i) the
  numerator of which shall be the total number of outstanding Ordinary Shares of the Company (on an
  as-converted basis) held by such Offeree as determined prior to the
  offer made pursuant to this Article 14, and (ii)
  the denominator of which is the total number of outstanding Ordinary Shares
  of the Company (on an as-converted basis), as determined prior to the Offer made pursuant to this Article 14.


	
 

	
 

	
 

	
 


	
 

	
 

	
(2)

	
The Company shall provide each
  Offeree with a Notice (the “Notice of Offer”) specifying the number of Offered
  Securities he is entitled to purchase and
  which shall state the terms of the proposed issuance, and any such Offeree may accept such offer, as to all or any
  part of the Offered Securities so
  offered to him, by giving the Company written notice of acceptance within
  twenty (20) days after being served with such Notice of Offer; provided
  that if the purchase by such Offeree is being effected prior to, or
  concurrently with such issuance of
  Offered Securities (rather than subsequent thereto) then such Offeree shall be obligated to consummate the
  purchase of such Offered Securities
  only if the Company consummates the sale of the balance of the Offered Securities pursuant to the terms
  described in such Notice of Offer





- 17-








	
 

	
 

	
 

	
 


	
 

	
 

	
(3)

	
Any and all preemption rights
  set forth in this Article 14, may be exercised by a Permitted
  Transferee of a Major Holder instead of by such Major Holder if such Major Holder so notifies the Company in
  writing.








	
 

	
 

	
 


	
 

	
(h)

	
Any Offered Securities not
  subscribed for by the Offeree as aforesaid, shall be under the control of the Board of Directors and may be
  issued without regard to this Article
  14, except to the extent that said Offered Securities may not be allotted on terms
  more favorable to the purchaser than those offered pursuant to this Article
  14. In the event the Offered Securities are not acquired by the expiration of
  120 days from the date of expiration of
  the twenty (20) day period referred to in Article 14(a)(2), they may not be issued except by compliance with
  the provisions of Article 14.


	
 

	
 

	
 


	
15.

	
REGISTERED HOLDER


	
 

	
 

	
 


	
 

	
(a)

	
If two or more persons are
  registered as joint holders of a share they shall be jointly and severally liable for any calls or any other
  liability with respect to such share. However, with respect to voting,
  power of attorney and furnishing notices, the one registered first in the register of shareholders, insofar as all the
  registered joint holders shall not
  notify the Company in writing to relate to another one of them as the
  sole owner of the share, as aforesaid, shall be deemed to be the sole owner
  of the share.


	
 

	
 

	
 


	
 

	
(b)

	
In the case that two or more
  persons are registered together as holders of a share, each one of them shall be permitted to give
  receipts binding all the joint holders for dividends or other monies in connection with the share and the Company
  shall be permitted to pay all the dividends or other monies due with respect
  to the share to one or more of the
  joint holders, as it shall choose.


	
 

	
 

	
 


	
 

	
(c)

	
Except as otherwise provided
  in these Articles, the Company shall be entitled to treat the registered holder of any share as the
  absolute owner thereof, and, accordingly, shall not, except as ordered by a
  court of competent jurisdiction, or as required by statute, be bound to recognize any equitable or
  other claim to, or interest in, such share,
  on the part of any other person.


	
 

	
 

	
 


	
16.

	
SHARE CERTIFICATES


	
 

	
 

	
 


	
 

	
(a)

	
A shareholder shall be entitled to receive from the
  Company without payment, one certificate
  that shall contain that number of shares registered in the name of such shareholder,
  their class and serial numbering. However, in the event of joint holders holding a share, the Company shall not be
  obligated to issue more than one certificate to all of the joint
  holders, and the delivery of such a certificate to one of the joint holders
  shall be deemed to be a delivery to all of the joint holders.


	
 

	
 

	
 


	
 

	
(b)

	
Each certificate shall carry the
  signature or signatures of a director or such other persons appointed
  by the Board of Directors for this purpose and the rubber stamp or the seal of the Company.





- 18 -








	
 

	
 

	
 


	
 

	
(c)

	
If a share certificate is defaced, lost or
  destroyed, it may be replaced upon payment of such fee, if any, and on such terms, if any, as to evidence and
  indemnity as the Board of Directors may think fit.








	
 

	
 


	
17.

	
MODIFICATIONS OF SHARE RIGHTS


	
 

	
 


	
 

	
If at any time the share
  capital is divided into different classes of shares (unless otherwise provided
  for by the terms of issue of the shares of that class) it shall be permitted,
  subject to the provisions of Article 12
  above, to change, convert, broaden, add or vary in any other manner the rights, advantages, restrictions and
  provisions attached at that time to one or more of the classes by a resolution of the general meeting of the
  shareholders of the Company,
  without the need for any separate class vote or class meeting.


	
 

	
 


	
 

	
It is hereby clarified that any resolution required
  to be adopted pursuant to these Articles by the
  consent of a separate class of shares, whether by way of a separate general
  meeting of such class or by way of written consent, shall be given by
  the holders of shares of such class entitled
  to vote or give consent thereon and no holder of shares of a certain class
  shall be banned from voting or
  consenting by virtue of being a holder of more than one class of shares
  of the Company, irrespective of any conflicting interests that may exist
  between such different classes of shares.
  A shareholder shall not be required to refrain from participating in the
  discussion, voting and/or consenting on any resolution concerning an
  amendment to any class of shares
  held by such shareholder, due to the fact that such shareholder may benefit in one way or another from the outcome
  of such resolution.


	
 

	
 


	
 

	
Without derogating from the need to receive any
  consents or approvals required pursuant to Article
  12, it is hereby clarified and agreed that the enlargement of an existing
  class of shares, or the issuance or allotment of additional shares
  thereof, or the creation of additional shares of that class as a result of
  conversion of shares from another class or unification with another class, shall not be deemed, for
  purposes of these Articles, to amend, change, vary, modify or abrogate
  the rights attached to the previously issued shares of such class or of any other class.


	
 

	
 


	
PLEDGE


	
 

	
 


	
18.

	
The Company shall have a lien and first pledge on
  all the shares, not fully paid, registered in the name of any shareholder (whether registered in his name only or
  together with another or others)
  and on the proceeds from the sale thereof, for any amount still outstanding
  with respect to that share, whether presently payable or not. Such a
  pledge shall exist whether the dates of
  payment or fulfillment or execution of the obligations, debts or commitments
  have become due or not, and shall apply to all dividends that shall be
  decided upon from time to time in connection with these shares. No
  benefit shall be created with respect to this share based upon the rules of equity which shall frustrate this pledge,
  however the Board may declare at any
  time with respect to any share, that it is released, wholly or in part, temporarily
  or permanently, from the provisions of this article.





- 19 -








	
 

	
 


	
19.

	
The Company may sell, in such
  manner and at such time as the Board thinks fit, any of the pledged
  shares, but no sale shall be made unless the date of payment of the monies or
  a part thereof has arrived, or the date of
  fulfillment and performance of the obligations and commitments in consideration of which the pledge
  exists has arrived, and after a written request has been furnished to the shareholder or person who has
  acquired a right in the shares, which sets out the amount or
  obligation or commitment due from him and which demands their payment, fulfillment or execution, and which informs the
  person of the Board’s desire to
  sell the shares in the event of non-fulfillment of the notice, and the person
  has not fulfilled his obligation pursuant to the notice within seven days
  after the notice has been sent to him.


	
 

	
 


	
20.

	
The net proceeds of such sale after payment of the
  costs thereof, shall be applied in payment of
  such sum due to the Company or to the fulfillment of the obligation or
  commitment (including debts, liabilities and engagements which have
  not yet fallen due for payment or satisfaction),
  and the remainder (if there shall be any) shall be paid to the shareholder or
  to the person who has acquired a right in the share sold pursuant to
  the above.


	
 

	
 


	
21.

	
After execution of a sale as
  aforesaid, the Board shall be permitted to sign or to appoint someone to sign a deed of transfer of the sold
  shares and to register the buyer’s name in the register of
  shareholders as the owner of the sold shares and it shall not be the obligation
  of the buyer to supervise the application of monies nor will his right in the
  shares be affected by a defect or
  illegality in the sale proceedings after his name has been registered in the register of shareholders with respect to those
  shares. The sole remedy of any person aggrieved by the sale shall be in damages only and against the
  Company exclusively.


	
 

	
 


	
TRANSFER OF SHARES AND THE
  MANAGEMENT THEREOF


	
 

	
 


	
22.

	
Each transfer of shares shall
  be made in writing in the form appearing herein below, or in a similar
  form, or in any form as to be determined upon by the Board from time to time,
  such form shall be delivered to the Office together with the transferred
  share certificates and any other proof the
  Board shall require, if it shall so require, in order to prove the title of
  the transferor. The instruments and
  documents notifying the Company with respect to the transfer are a prerequisite to the effectuation
  of such transfer. Notwithstanding the above, any transfer of shares to any person or entity that is not at the
  time of transfer a shareholder of the Company and that competes with
  the Company, directly or indirectly, in the field of optical inspection or
  metrology for semiconductors or the transfer of shares which have not been fully paid up will require the consent and
  approval of the Board of Directors, except if such transfer is to a
  Permitted Transferee.





Deed of Transfer of Shares


I, _______________ of ______________  in
consideration of the sum of NIS__________________(New Israeli Shekels) paid to me by_____________,  of
_______________ (hereinafter called “the said transferee”) do hereby transfer to the said transferee ___________
share (or shares) having par value of NIS______________________each one numbered____________________ until
_________ inclusive in
Negevtech Ltd., to hold unto the said transferee, his executors,
administrators, and assigns, subject to the conditions on which I held the same
at the time of the execution hereof; and I, the said transferee, do hereby
agree to accept the said share (or shares)
subject to the conditions aforesaid. As witness we have hereunder set out hands the ______________day
of________20_________.


	
 

	
 

	
 

	
 


	


	
 

	


	
 


	
Transferee

	
 

	
Transferor

	
 


	
 

	
 

	
 

	
 


	


	
 

	


	
 


	
Address

	
 

	
Address

	
 





- 20 -








	
 

	
 


	
23.

	
The deed of share transfer
  shall be executed both by the transferor and transferee, and the transferor
  shall be deemed to remain a holder of the share until the name of the
  transferee is entered into the register
  of shareholders in respect thereof.


	
 

	
 


	
24.

	
The Company shall be permitted to demand a fee for
  registration of transfer, in a reasonable rate as to be determined by the
  Board from time to time, with the exception of transfers to Permitted
  Transferees.


	
 

	
 


	
25.

	
The Register shall be closed for
  a period of seven (7) days before every ordinary general meeting of
  the Company.


	
 

	
 


	
26.

	
Upon the death of a shareholder, the remaining
  holders (in the event that the deceased was a joint holder in a share) or the administrators or executors or heirs of
  the deceased (in the event the
  deceased was the sole holder of the share or was the only one of the joint
  holders of the share to remain alive) shall be recognized by the Company as
  the sole holders of any title to
  the shares of the deceased. However, nothing aforesaid shall release the
  estate of a joint holder of a share from any obligation with respect
  to the share that he held jointly with any
  other holder.


	
 

	
 


	
27.

	
Any person becoming entitled to
  a share in consequence of the death or bankruptcy or liquidation of a shareholder shall, upon such
  evidence being produced as may from time to time be required by the Board, have the right, either to be registered
  as a shareholder in respect of the share upon the consent of the Board
  or, instead of being registered himself, to transfer such share to another
  person, subject to the provisions contained in these Articles with respect to
  transfers.


	
 

	
 


	
28.

	
A person becoming entitled to a share because of the
  death of a shareholder shall be entitled to
  receive, and to give receipts for, dividends or other payments paid with
  respect to the share, but he shall not be entitled to receive notices
  with respect to Company meetings or to participate
  or vote therein with respect to that share, or aside from the aforesaid, to
  use any right of a shareholder, until he has been accepted as a
  shareholder with respect to that share.


	
 

	
 


	
29.

	
RIGHT OF FIRST REFUSAL








	
 

	
 

	
 


	
 

	
(a)

	
Until the QIPO, a shareholder
  in the Company shall not be permitted to make any Transfer (as hereinafter defined) of his shares
  in the Company, other than to a Permitted Transferee, except pursuant
  to the following provisions set forth below.


	
 

	
 

	
 


	
 

	
 

	
For the purposes of this
  Agreement, the term “Transfer” shall
  mean any sale, assignment, transfer, hypothecation or other encumbrance or
  disposition of in any way.


	
 

	
 

	
 


	
 

	
(b)

	
A shareholder, desirous of
making any Transfer of the shares held by him to others, in whole or in part (hereinafter the
“Transferor”) shall be obligated to offer them first to the Offerees
(as defined in Article 14 above), by giving notice in writing to such Offerees (hereinafter “Sale
Notice”). 





- 21 -








	
 

	
 

	
 


	
 

	
(c)

	
In the Sale Notice the
  Transferor shall mention the number of shares he wishes to Transfer (hereinafter the “Offered Shares”), the
price forming the
  consideration for the Offered Shares,
  the name of the transferee (the “Transferee”)
  and the other conditions of the sales.


	
 

	
 

	
 


	
 

	
(d)

	
The Sale Notice shall be
  irrevocable unless all of the Offerees agree otherwise.


	
 

	
 

	
 


	
 

	
(e)

	
Each of the Offerees may
  inform the Transferor in writing within 21 Business Days from the date of receipt of the Sale Notice as to
  his/her intention to purchase that number
  of Offered Shares, in whole or in part, which is the result of the multiplication
  of the Offered Shares by a fraction: (i) the numerator of which is the number of Ordinary Shares (on an as-converted
  basis) of the Company held by such Offeree
  and (ii) the denominator of which is the total number of outstanding Ordinary Shares (on an as-converted basis) held
  by all Offerees (hereinafter the “Offerees’ Offered Shares”), the purchase of which shall be at the
purchase
  price and in accordance with the
  payment conditions as provided for in the Sale Notice (hereinafter the “Purchase Notice”). An Offeree who has
  submitted a Purchase Notice shall be referred to hereinafter as “Buyer”. Notwithstanding the foregoing,
  Intel (to the extent it is a Major Holder) shall be required to provide the
  Transferor with a Purchase Notice within 10 days of receipt of the Sale
  Notice and, in the event Intel is the Transferor, the Offerees will be
  required to provide Intel with a Purchase Notice within 10 days of receipt of
  the Sale Notice.


	
 

	
 

	
 


	
 

	
(f)

	
Thereafter, the Transferor shall give each Buyer who
has fully exercised his rights pursuant to Article 29(e) a written notice
(the “Excess Notice”) stating the amount of Offered Shares with respect to
which no Purchase Notice was submitted (hereinafter referred to as “Excess Offered
Shares”) and each such Buyer shall be entitled, subject to Article 29(j) below, provided he so
notifies the Transferor in writing (the “Excess Reply Notice”), such Excess Reply Notice to be
received by the Transferor within 7
Business Days following the delivery by the Transferor to such Buyer of the
Excess Notice, to purchase any or all of such Excess Offered Shares. 


	
 

	
 

	
 


	
 

	
(g)

	
If by the end of the time
  referred to in Articles 29(e) and 29(f) above no Purchase Notices have been received by the Transferor or
  the Transferor has received Purchase Notices
  with respect to a total number of shares that is less than the number of Offered
  Shares, the Transferor may, within 30 days from the expiration of the time
  for submission of the Purchase Notices or, in the event that Article 29(f)
  applies, the Excess Reply Notice, sell all
  (but not less than all) of the Offered Shares to the Transferee and/or to any Buyer that submitted a
  Purchase Notice and, if applicable, an
  Excess Notice, up to the number of shares requested to be purchased by such Buyer (though he shall be under no obligation to
  do so) at a price not less than the price mentioned in the Sale Notice (as
  linked to the representative rate of the U.S. dollar from the day of the furnishing of the notice to the date of
  sale in fact) and upon all other conditions not less favorable to the
  Transferor than those provided for in the Sales Notice.


	
 

	
 

	
 


	
 

	
(h)

	
If the Transferor shall not
  transfer the Offered Shares as aforesaid, within the period of time specified in Articles 29(e), (f) and
  (g) above, he shall be obligated, before selling the Offered Shares to another, to offer them again to the
  Offeree in accordance with the aforementioned procedure, and such procedure
  shall apply to any further offer.





- 22 -








	
 

	
 

	
 


	
 

	
(i)

	
If
  there have been received Purchase Notices and, if applicable, Excess Reply Notices, for a total
  number of shares equal to the number of Offered Shares, then every Buyer shall buy
  the number of shares as mentioned in the Purchase Notice and, if applicable,
  the Excess Reply Notices, he has submitted.


	
 

	
 

	
 


	
 

	
(j)

	
If
  Purchase Notices and Excess Reply Notices shall have been received for a
  total number of shares greater than the number of Offered Shares, the
  Buyers may acquire shares in a manner proportionate to the share capital of
  the Company held by them at that time, as determined in accordance with Article
  29(e) above. However, no Buyer shall be required to buy a greater number of shares
  than the number provided for in the Purchase Notice and, if applicable, the
  Excess Reply Notice, submitted by him and upon the allocation to him of the full
  number of Offered Shares so requested by him in the Purchase Notice, such
  Buyer shall be disregarded for the purpose of any further allocation of
  the remaining Excess Offered Shares.


	
 

	
 

	
 


	
 

	
(k)

	
In every one of the events
  referred to in Articles 29(e), 29(f), 29(g), 29(h), 29(i) and 29(i) the Transferor shall send within five (5)
  days after the last date for the submission
  of each of the Purchase Notices and the Excess Reply Notices to each of the
  Buyers, a notice accompanied by the copies of all Purchase Notices received
  by the Transferor of either
  non-acceptance of the offer pursuant to the Sale Notice or the acceptance thereof (hereinafter the “Acquisition
Notice”).


	
 

	
 

	
 


	
 

	
(1)

	
After
  receipt of the Acquisition Notice notifying acceptance, each Buyer shall purchase from the
  Transferor, and the Transferor shall sell and transfer to such Buyer the number of shares
  referred to in such notice according to the terms of the Sale Notice (other than in
  circumstances set forth in Article 29(g) above, in which case the provisions of
  said Article 29(g) will apply). Upon the transfer to Buyer such shares must be free and clear of any liens
  or encumbrances unless otherwise specified
  in the Sale Notice. The Transferor and such Buyer shall each have all remedies for breach of contract available under
  applicable laws in connection with the
  transactions set forth in this Article 29.


	
 

	
 

	
 


	
 

	
(m)

	
Any
  Transfer of shares by any Offeree pursuant to the exercise of its co-sale
  rights under Article 29A shall not give the other Offerees additional rights
  of first refusal and shall be deemed to have been part of the Offered Shares and
  included in the Sale Notice to the extent that the number of the shares
  being Transferred has not changed as a result of the exercise of co-sale
  rights. To the extent such number has changed, the provisions hereof shall apply to the
  transaction again, ab initio, and the Transferor shall give a new Sale Notice
  hereunder.





- 23 -








	
 

	
 


	
29A

	
CO SALE








	
 

	
 

	
 


	
 

	
(a)

	
Should
  any holder of Preferred Shares (other than Intel) (“Selling Shareholder”) wish to make a Transfer, other than
to a Permitted
  Transferee, then each of the holders of Preferred
  Shares other than Intel (the “Entitled
  Shareholders”) shall have the right to participate in the Selling Shareholder’s
  Transfer of such Offered Shares, in accordance with this Article 29A, pursuant to the
  specified terms and conditions stated in the Sale Notice, provided
  that an Entitled Shareholder who is also an Offeree for purposes of Article 29 above shall be entitled to elect
  whether to exercise its rights under either Article 29 or Article 29A and
  shall not be entitled to contingently exercise its rights under both such articles. Each of the Entitled
  Shareholders shall be entitled, upon written
  notice to the Selling Shareholder within twenty-one (21) Business Days after receipt
  of the Sales Notice (“Participating
  Preferred Shareholders”), to sell to the Transferee up to that
  number of the Shares in the Company owned by such Participating Preferred Shareholder (the “Equity Shares”)
determined by multiplying
  the total number of Offered Shares times a fraction the numerator of
  which is the number of Ordinary Shares
  owned by such Participating Preferred Shareholders (on an as-converted basis)
  and the denominator of which is the total number of Ordinary Shares owned by
  all Participating Preferred
  Shareholders (on an as-converted basis) and the Selling Shareholder. Such written notice shall
  indicate, subject to the terms of this Article 29A, the number of Shares that
  the Participating Preferred Shareholder intends to transfer to the
  Transferee. At the closing of the sale of the Offered Shares to the
  Transferee, the Selling Shareholder shall transfer his shares to the
  Transferee only if the Transferee concurrently therewith purchases, on the
  same terms and conditions specified in the Article
  29A Notice, all of the Shares as to which participation notices have been delivered.


	
 

	
 

	
 


	
 

	
(b)

	
Notwithstanding the provisions of Article 29A(a), no
  Transfer in one transaction or in a series of related transactions, of shares
  representing more than 50% of the issued and outstanding shares of the Company (on an as converted basis) may be
  made, other than to a Permitted
  Transferee, unless the proposed Transferee of such shares offers to purchase
  the remaining issued and outstanding shares of the Company upon the same terms and conditions. In such event, the
  consideration payable by the Transferee shall be distributed among all
  selling shareholders participating in such Transfer in accordance with the
  terms of Article 8.








	
 

	
 


	
29B

	
BRING ALONG








	
 

	
 

	
 


	
 

	
(a)

	
At any time prior to the
  Company’s QIPO, in the event that:


	
 

	
 

	
 


	
 

	
 

	
Shareholders holding 60% (sixty percent) or more
  (the “Threshold Percent”) of the
  Company’s issued and outstanding shares, on an as converted basis (the “Proposing Shareholders”)
  accept an offer to
  affect a Merger or Acquisition (the “Offer”);
  and


	
 

	
 

	
 


	
 

	
 

	
Such Merger or Acquisition is conditioned upon the
  consent and/or sale of all of the remaining
  issued shares of the Company; then all remaining shareholders (the “Non Proposing Shareholders”) will be
required, if so demanded by the
  Proposing Shareholders, to vote in
  favor of, execute the relevant documents, and otherwise take all
  necessary and reasonable actions relating to such Offer, including to sell
  their shares upon the same terms and conditions as in the Offer made to the
  Proposing Shareholders and the proceeds
  shall be allocated in accordance with the provisions of Article 8, provided however, that absent the
  written consent of the holders of the majority of the outstanding Series BB Preferred Shares (which must
  include also the Special BB
  Consent), the holders of the Preferred Shares shall not be forced to take any actions or sell their shares as aforesaid,
  if the Merger or the Acquisition does not reflect a Company price per
  share of more than two times the Original Issue Price of the Series BB-1
  Preferred Shares. In the event that the Threshold Percent is met, any sale, assignment, transfer, pledge,
  hypothecation, mortgage, disposal or encumbrance of the Shares by the Non Proposing Shareholders
  other than in connection with the Offer, shall be absolutely
  prohibited.





- 24 -








	
 

	
 

	
 


	
 

	
(b)

	
Notwithstanding the foregoing,
  the obligation of Intel to sell its shares (the “Transaction”) pursuant to this Article 29B
  shall be subject to the satisfaction of each of the following conditions:








	
 

	
 

	
 


	
 

	
(i)

	
Form of Consideration. Intel shall not be required to accept any
  consideration for its shares other than cash or freely tradeable
  equity securities (subject to a lock-up
  period of no more than 90 days following the issuance of such securities
  to Intel) which have been admitted to or listed upon (i) the Official List of the UK Listing Authority or (ii) the
  New York or American Stock Exchange or the NASDAQ National Market in
  the United States of America or (iii) the
  Neuer Markt or (iv) Euronext Paris S.A. or (v) such other stock exchange as Intel may agree.


	
 

	
 

	
 


	
 

	
(ii)

	
Equal Consideration. Subject to section (iii) below, upon the
  consummation of the Transaction,
  all of the holders of Preferred Shares will receive the same form and amount of consideration per Preferred
  Share, respectively, taking into account any liquidation preference to
  which the holders of Preferred Shares are
  entitled, and if any holders of Preferred Shares are given an option as
  to the form and amount of consideration to be received, all holders will be given the same option.


	
 

	
 

	
 


	
 

	
(iii)

	
Costs/Expenses. Intel shall not be required to incur any costs
  or expenses (without limitation whether by way of out of pocket expenses
  or by way of set off) in connection with the Transaction except its pro rata
  share of any costs incurred for the benefit of all of the Company’s
  shareholders and for which Intel has
  agreed in writing to be responsible in advance of such costs being incurred.
  For the avoidance of doubt Intel shall be solely responsible for any costs that it decides to incur
  including the costs of its own counsel.


	
 

	
 

	
 


	
 

	
(iv)

	
Representations, Warranties and
  Indemnities. The only
  representations, warranties or
  indemnities that Intel shall be required to make in connection with the Transaction are representations,
  warranties and indemnities concerning
  (i) legal ownership of the Company’s securities to be sold by Intel (the “Intel Securities”), and (ii) the
  corporate authority of Intel to convey
  title to the Intel Securities, and the ability to do so free and clear of liens,
  encumbrances or adverse claims (the “Intel
  Required Obligations”). The Intel Required Obligations shall be in
  the same form as those to be given by each of the other shareholders of the
  Company and shall be given by Intel on a
  several (but not joint) basis only.





- 25 -








	
 

	
 

	
 


	
 

	
(v)

	
Liability. Intel shall not accept, assume or be deemed to
  have assumed any joint, or joint
  and several, liability with any other shareholders), the Company or any other party, with respect to any
  representation, warranty, indemnity,
  covenant or combination thereof made by such other shareholder(s), the Company or other party in
  connection with the Transaction. Intel’s liability shall in any event
  be limited to the amount of consideration
  actually received by Intel in cleared funds.


	
 

	
 

	
 


	
 

	
(vi)

	
Escrow and Liability upon
  Escrow. In the event that
  consideration for any of the shares
  in the Company is to be placed in escrow (the “Escrow Amount”), such Escrow Amount will not exceed
  15% of the total consideration payable to
  all shareholders of the Company and that the Escrow Amount, to the extent that no claim has been made against it and for
  such amount as might remain following such claim, will be released to the
  shareholders at the latest three (3) months following the end of the
  acquiring company’s first accounting period
  after the consummation of the transfer of Intel’s shares or eighteen (18) months after the consummation of such transfer
  (the later of the two). Intel’s liability shall be limited to its pro
  rata share of the Escrow Amount (Intel’s pro rata share to be calculated on
  the basis of the consideration due to Intel as a proportion of the aggregate
  consideration due to all shareholders in the Company). For the avoidance of
  doubt, the Escrow Amount may be used to
  satisfy claims arising out of breaches by the Company of representations and
  warranties given by the Company in connection with a Transaction, all subject to the foregoing terms and conditions.


	
 

	
 

	
 


	
 

	
(vii)

	
US Securities. If the consideration proposed for Intel’s
  shares is in the form of
  securities of an issuer incorporated in the United States, Intel shall not be
  obligated to participate in the Transaction unless it is provided an
  opinion of counsel to the effect that the
  sale in connection with such Transaction is not in violation of the
  registration or qualification requirements of federal or applicable state securities laws in the United
  States, or, if Intel is not provided with such an opinion, the Company shall
  indemnify Intel for any violation.


	
 

	
 

	
 


	
 

	
(vii)

	
Other Agreements. Intel shall not be required to amend, extend or
  terminate any contractual or other relationship with the Company, the
  acquirer or their respective affiliates.


	
 

	
 

	
 


	
 

	
(viii)

	
Covenant Not to Compete. Intel shall not be required to agree to any covenants
  including without limitation any covenant not to compete or any covenant not to solicit any of the customers,
  employees or suppliers of any party to the Transaction.








	
 

	
 


	
 

	
Furthermore, notwithstanding
  the foregoing, the obligation of Orbotech to sell its shares (the “Orbotech
  Transaction”) pursuant to this Article 29B shall be subject to the
  condition that the only representations, warranties or indemnities that
  Orbotech shall be required to make in
  connection with the Orbotech Transaction are representations,
  warranties and indemnities concerning (i) legal ownership of the Company’s
  securities to be sold by Orbotech (the “Orbotech
  Securities”), and (ii) the
  corporate authority of Orbotech to convey title to the Orbotech Securities,
  and the ability to do so free and
  clear of liens, encumbrances or adverse claims (the “Orbotech Required
  Obligations”). The Orbotech
  Required Obligations shall be in the same form as those to be given by each
  of the other shareholders of the Company and shall be given by
  Orbotech on a several (but not joint) basis only.





- 26 -








	
 

	
 


	
29C.

	
STAND STILL


	
 

	
 


	
 

	
Notwithstanding anything to the contrary in these
  Articles, any issuance of securities by the Company,
  and any sale, transfer, pledge, encumbrance or other disposal of any of the securities of the Company (by the Company or any
  shareholder), or any other action (including repurchase of any shares
  of the Company by the Company or by any subsidiary thereof), other than any action in which the provisions of Article
  29B (Bring Along) shall apply, which results in a Strategic Investor (as
  defined below) whether or not a shareholder of the Company, holding (together
  with affiliates, Permitted Transferees, or other parties acting in concert
  with it) more than 20% of the voting rights in the Company, is prohibited unless approved in writing in advance by the
  Majority Preferred Shareholders (excluding, for the purposes of such majority, any Strategic
  Investors and their affiliates and Permitted Transferees or other parties acting in concert with them) and on terms
  and conditions approved by them. Any
  of the transactions set forth in the forgoing sentence not so approved shall be null and void and shall not
  be registered in the Company’s Shareholders Register. For purpose hereof a “Strategic Investor” shall mean a
  corporation or other business
  entity whose business is related to the Company’s business and who is likely
  to have a business or technologic
  interest in the Company’s business, as distinguished from an interest
  for the sole purpose of a financial investment.





CALLS


	
 

	
 


	
30.

	
A shareholder shall not be
  entitled to receive dividends nor to use any right a shareholder has, or receive any benefit or entitlement
  stated in these Articles (including without limitation, the rights set forth in Articles 7, 8,11, 12, 14, 29,29A,
  65 and 86 hereof), unless he has
  paid all the calls that shall be made from time to time prior to or on the
  date appointed for payment
  thereof, with respect of money unpaid on all of his shares, whether he is the
  sole holder or holds the shares together with another person, in addition to
  interest and expenses if there shall be any.


	
 

	
 


	
31.

	
The Board may, subject to the
  provisions of these Articles, make calls upon the shareholders from
  time to time in respect of any moneys unpaid on their shares, as they shall
  determine proper, upon the condition that
  there shall be given prior notice of fourteen (14) days on every call and each shareholder shall be
  obligated to pay the total amount requested from him, or the installment on account of the call
  (if there shall so be) at the times and places to be determined by the
  Board.


	
 

	
 


	
32.

	
The calls for payment shall be deemed to have been
  requested from the date the Board shall have decided upon the calls for
  payment.


	
 

	
 


	
33.

	
The joint holders of a share
  shall be jointly and severally liable to pay the calls for payment in
  full and the installment on account, in connection with such calls.


	
 

	
 


	
34.

	
If a sum called in respect of a
  share is not paid the holders of the share or the person to whom it has been issued shall be liable to pay
  interest and linkage differentials upon the amount of the call or the payments on account, as determined by the
  Board of Directors commencing from
  the day appointed for the payment thereof to the time of actual payment, but
  the Board shall be at liberty to waiver payment of that interest, wholly or
  in part.





- 27 -








	
 

	
 


	
35.

	
My amount that according to the condition of
  issuance of a share must be paid at the time of issuance or at a fixed date,
  whether on account of the sum of the share or premium, shall be deemed for the purposes of these Articles to be
  a call of payment that was made duly and the date of payment shall be the
  date appointed for payment. In the event of non-payment of this amount all of the Articles herein dealing with
  payment of interest, expenses, forfeiture, pledge and the like and all
  the other Articles connected therewith, shall apply, as if this sum had been duly requested and notice had been
  given, as aforesaid.


	
 

	
 


	
36.

	
The Board may make arrangements at the time of issue
  of shares for a difference between the
  holders with respect to the amount of calls to be paid and the times of
  payment, and the rate of interest.


	
 

	
 


	
37.

	
The Board may, if it thinks fit, receive from any
  shareholder willing to pay in advance all of the monies or a part thereof that shall be due on account of his
  shares, in addition to any amounts
  or a part thereof that shall be due on account of his shares, in addition to
  any amounts mat the payment in
  fact has been requested and they shall be permitted to pay him interest at the rate the Board and shareholders
  shall agree upon, for the amounts paid in advance as aforesaid, or upon the part thereof which is in excess of
  the amounts whose payment was at
  the time requested on account of his shares in connection with which the payments
  have been made in advance, in addition to paying dividends that will be paid
  for that part of the share which has been
  paid in advance. The Board of Directors may at any time repay any
  amount so advanced without premium or penalty by giving such shareholder
  seven days’ prior notice in writing. Nothing in this Article 37 shall
  derogate from the right of the Board of
  Directors to make any call before or after receipt by the Company of any such advance.





FORFEITURE OF SHARES


	
 

	
 


	
38.

	
If a shareholder fails to pay
  any call or installment of a call on the day appointed for payment thereof, the Board may, at any time thereafter
  during such time as any part of such call or installment remains unpaid, serve a notice on him requiring payment
  of so much of the call or
  installment as is unpaid, together with any interest which may have accrued
  and any expenses that were
  incurred as a result of such non-payment.


	
 

	
 


	
39.

	
The notice shall name a further day, not earlier
  than the expiration of seven days from the date
  of the notice, on or before which the amount of the call or installment or a
  part thereof is to be made together
  with interest and any expenses incurred as a result of such non-payment. The notice shall also state the place
  the payment is to be made and that in the event of non-payment, at or before the time appointed, the shares in
  respect of which the call was made will be liable to be forfeited.


	
 

	
 


	
40.

	
If the requirements of any such
  notice as aforesaid are not complied with, any share in respect of which the notice has been given may
  at any time thereafter, before the payment required by the notice has
  been made, be forfeited by a resolution of the Board to that effect. In such event, the provisions of Section 181 of
  the Companies Law shall apply, and the shares so forfeited shall be “dormant shares” as provided for therein.
  The forfeiture shall include those
  dividends that were declared but not yet distributed, with respect to the forfeited
  shares.





- 28 -








	
 

	
 


	
41.

	
A share so forfeited shall be deemed to be the
  property of the Company and can be sold or otherwise
  disposed of, on such terms and in such manner as the Board thinks fit,
  subject to applicable law. Such
  shares shall not be deemed, for the purposes of these Articles, to comprise part of the issued and outstanding share
  capital of the Company, and shall be disregarded
  for the purposes of calculations based thereon. At any time before a sale or disposition
  the forfeiture may be canceled on such terms as the Board thinks fit.


	
 

	
 


	
42.

	
A person whose shares have
  been forfeited shall cease to be a shareholder in respect of the forfeited
  shares, but shall notwithstanding remain liable to pay to the Company all
  monies which, at the date of forfeiture,
  were presently payable by him to the Company in respect of the shares, but
  his liability shall cease if and when the Company receives payment in full of
  all moneys that, at the date of forfeiture, were presently payable by
  him to the Company in respect of the shares (including interest and
  expenses).


	
 

	
 


	
43.

	
Without derogating from
  Article 30 above, the forfeiture of a share shall cause, at the time of forfeiture, the cancellation of all rights in
  the Company or any claim or demand against it with respect to that share and the other rights and obligations
  between the share owner and the
  Company accompanying the share, except for those rights and obligations not
  included in such a cancellation
  according to these Articles or that the Companies Law imposes upon former shareholders.


	
 

	
 


	
44.

	
The provisions of these
  Articles as to forfeiture shall apply in the case of non-payment of any sum which, by the terms of issue of a
  share, becomes payable at a fixed time, whether on account of this nominal
  value amount of the share, or by way of premium, as if the same had been
  payable by virtue of a call duly made and notified.


	
 

	
 


	
MODIFICATION OF CAPITAL


	
 

	
 


	
45.

	
Subject to the provisions of
  Article 12 above and to any applicable law, the Company may, from time
  to time, by resolution duly adopted according to these Articles:








	
 

	
 

	
 


	
 

	
(a)

	
consolidate and divide all or any of its issued or
  unissued share capital into shares of larger
  nominal value than its existing shares;


	
 

	
 

	
 


	
 

	
(b)

	
cancel any shares which have
  not been taken or agreed to be taken by any person;


	
 

	
 

	
 


	
 

	
(c)

	
by subdivision of its existing shares, or any of
  them, divide the whole, or any part, of its
  share capital into shares of smaller amounts than is fixed by the Memorandum
  of Association in a manner that with
  respect to the shares created as a result of the division it will be
  possible within the resolution of division to grant to one or more shares a preferable right or advantage with
  respect to dividend, capital, voting or otherwise over the remaining share or other similar shares;


	
 

	
 

	
 


	
 

	
(d)

	
reduce its share capital and any fund reserved for
  capital redemption in the manner that it shall deem to be correct.






- 29 -








INCREASE OF SHARE CAPITAL

	
 

	
 


	
46.

	
Subject to
  the provisions of Article 12 above and to any applicable law, the Company
  shall be permitted from time to time, by resolution duly adopted according to
  these Articles, to increase its share capital - whether or not all its shares
  have been issued, or whether the shares issued have been paid in full - by
  creation of new shares. This new capital shall be in such an amount, divided
  into shares in such amounts and have such preferable or deferred or other
  special rights (subject always to the special rights conferred upon an
  existing class of share), subject to any condition and restrictions with
  respect to dividends, return of capital, voting or otherwise, all as shall be
  directed by the general meeting in its resolution sanctioning the increase of
  the share capital.


	
 

	
 


	
47.

	
Subject to
  any decision to the contrary in the resolution sanctioning the increase in
  share capital, pursuant to these Articles, the new share capital shall be
  deemed to be part of the original share capital of the Company and shall be
  subject to the same provisions with reference to payment of calls, liens,
  title, forfeiture, transfer and otherwise as apply to the original share
  capital.


	
 

	
 


	
GENERAL
  MEETINGS


	
 

	
 


	
48.

	
A general
  meeting shall be held once in every calendar year at such time, being not
  more than fifteen months after the holding of the last preceding general
  meeting, and place as may be prescribed by the Board. The above mentioned
  general meetings shall be called “Annual General Meetings”. All other general
  meetings shall be called “Special General Meetings”.


	
 

	
 


	
49.

	
Subject to
  the provisions of these Articles the function of the Annual General Meeting
  shall be to receive and to deliberate with respect to the profit and loss
  statements, the balance sheets, the ordinary reports and accounts of the
  Board and auditors; to declare dividends, to appoint auditors and to fix
  their salaries. Every other matter shall be deemed to be special and shall be
  discussed at a Special General Meeting.


	
 

	
 


	
50.

	
The
  directors or anyone of them may, whenever they think fit, and upon a
  requisition in writing as provided for in the Companies Law, convene a
  Special General Meeting. Every such requisition shall include the objects for
  which a meeting should be convened, shall be signed by the requisitioners and
  shall be sent to the registered Office of the Company. If the Board of
  Directors does not convene a meeting within 21 days from the date of the
  submission of the requisition as aforesaid, the requisitioners may convene by
  themselves a meeting. However, the meeting which was so convened shall not be
  held after three months have passed since the date of the submission of the
  requisition.


	
 

	
 


	
NOTICE OF
  GENERAL MEETINGS


	
 

	
 


	
51.

	
A prior
  notice of 14 days at least shall be sufficient for any general meeting,
  including any meeting at which it is being proposed to amend the Memorandum
  of Association and/or Articles of Association and, accordingly, prior notice
  of at least 14 days shall be given with respect to the place, date and hour
  of the meeting, and in the event that a special matter shall be discussed, a
  general description of the nature of that matter. The notice shall be given,
  as herein below provided for, to the shareholders entitled pursuant to these
  Articles to vote at the meeting. The notice shall be sufficient for any
  meeting of shareholders including a meeting at which it is proposed to amend
  the Memorandum of Association and/or Articles of Association. If, by chance,
  a notice as aforesaid was not given or not received by a shareholder,
  this shall not amount to a disqualification of the resolution passed or
  disqualification of the proceedings held at that meeting. With the consent of
  all the shareholders who are entitled, at that time, to vote, it shall be
  permitted to convene all meetings and to resolve all types of resolutions,
  upon a shorter advance notice or without any notice and in such manner,
  generally, as such be approved by the shareholders.





- 30 -








	
 

	
 


	
QUORUM


	
 

	
 


	
52.

	
No
  deliberation shall be commenced with respect to any matter at the general or
  special meeting unless there shall be present a quorum at the time when the
  general meeting proceeds to deliberate. In any meeting a quorum shall be
  formed when there are present personally or by proxy not less than two shareholders
  who hold or represent together the majority of the voting rights of the
  issued share capital of the Company, providing that one of such two
  shareholders present shall be a holder of Preferred Share(s) of the Company.


	
 

	
 


	
53.

	
If within
  half an hour from the time appointed for the meeting a quorum is not present,
  the meeting, if convened by the Board upon the demand of shareholders or upon
  the demand of less than 50% of the directors then in office or directly by
  such shareholders or directors, shall be cancelled. Otherwise, if within half
  an hour from the time appointed for the meeting a quorum is not present, the
  meeting shall stand adjourned to the same day in the next week at the same
  place and time, or any other day and/or any other hour and/or any other place
  as the Board shall notify the shareholders, and, if at the second meeting a
  quorum is not present within half an hour from the time appointed for the
  meeting any two shareholders present personally or by proxy shall be a
  quorum, and shall be entitled to deliberate and to resolve in respect of the
  matters for which the meeting was convened. Shareholders may participate by
  means of conference telephone or similar communications equipment by means of
  which all persons participating in the meeting can hear each other, and such
  participation in a meeting shall constitute attendance in person at the
  meeting. The secretary of the meeting shall confirm attendance by telephone
  to the Chairman.


	
 

	
 


	
CHAIRMAN


	
 

	
 


	
54.

	
The
  Chairman of the Board of Directors shall preside as chairman at all general
  meetings. If there is no Chairman or he is not present within 15 minutes from
  the time appointed for the meeting or if he shall refuse to preside at the
  meeting, the shareholders present shall elect one of the directors to act as
  Chairman, and if only one director is present he shall act as Chairman. If no
  directors are present or if they all refuse to preside at the meeting the
  shareholders present shall elect one of the shareholders present to preside
  at the meeting. The Chairman shall have no special rights or privileges and
  no second or casting vote.


	
 

	
 


	
POWER TO
  ADJOURN


	
 

	
 


	
55.

	
The
  Chairman may, with the consent of any meeting at which a quorum is present,
  and shall if so directed by the meeting, adjourn the meeting from time to
  time and from place to place, as the meeting shall decide. At an adjourned
  meeting no matters shall be discussed except for those permissible to be
  discussed at that meeting which decided upon the adjournment.





- 31 -








	
 

	
 


	
ADOPTION OF
  RESOLUTIONS


	
 

	
 


	
56.

	
At every
  meeting a resolution put to the vote of the meeting shall be decided upon by
  a show of hands, unless before or upon the declaration of the result of the
  show of hands a secret ballot in writing be demanded by the Chairman (if he
  is entitled to vote) or by any shareholder present, in person or by proxy,
  and entitled to vote at the meeting. Except if a secret vote is demanded as
  aforesaid, the declaration of the Chairman that the resolution has been
  carried or carried unanimously or by a particular majority, or lost, or not
  carried by a particular majority, shall be final, and an entry to that effect
  in the minute book of the Company, shall be conclusive evidence of the fact
  without the necessity of proving the number or proportion of the votes
  recorded in favor or against such a resolution. Subject to any provision in
  this regard in the Companies Law, or in these Articles, all resolutions of
  the shareholders including without limitation with respect to a merger, a
  change of the Company’s name, modification or alterations of the Company’s
  share capital and the amendment of the Company’s Memorandum of Association in
  accordance with such resolution and the amendment or replacement of the
  Company’s Articles of Association shall be deemed adopted at a General
  Meeting at which a quorum is present if approved by a simple majority of the
  voting rights of the Company represented personally or by proxy and voting
  thereon.


	
 

	
 


	
57.

	
If a secret
  ballot is duly demanded, it shall be taken in such manner as the Chairman
  directs, whether immediately or after an adjournment or in a postponed manner
  or otherwise, and the results of the ballot shall be deemed to be a
  resolution of the meeting wherein the secret ballot was demanded. Those
  requesting a secret ballot can withdraw their request at any time before the
  secret ballot is held. A secret ballot demanded on the election of a
  Chairman, or on a question of adjournment shall be taken forthwith. A secret
  ballot demanded on any other question shall be taken at such time as the
  Chairman of the meeting directs. A demand for a secret ballot shall not
  prevent the continuation of the meeting with respect to the transaction of
  any other business, except for the manner with respect to which the secret
  ballot was demanded. All demands or notices hereunder may be submitted by
  facsimile.


	
 

	
 


	
VOTES OF
  SHAREHOLDERS


	
 

	
 


	
58.

	
Subject to
  and without derogating from the right or preference rights or restrictions
  existing at that time with respect to a certain class of shares forming of
  the capital of the Company, each shareholder present at a meeting, personally
  or by proxy, shall be entitled, whether at a vote by show of hands or by
  secret ballot, to one vote for each Ordinary Share held by him calculated,
  with respect to the Preferred Shares, on an as-converted basis, provided that
  no shareholder shall be permitted to vote any shares at a general meeting or
  appoint a proxy to vote therein except if he has paid all calls for payment
  prior to or on the day appointed for payment thereof and all monies due to
  the Company from him prior to or on the day appointed for payment thereof
  with respect to such shares.


	
 

	
 


	
59.

	
In the case
  of joint holders the vote of the senior who tenders a vote, whether in person
  or by proxy, shall be accepted to the exclusion of the votes of the other
  joint holders; and for the purpose of this article seniority shall be
  determined by the order in which the names stand in the register of
  shareholders. Joint holders of a share of which one of them is present at a
  meeting shall not vote by proxy. The appointment of a proxy to vote on behalf
  of a share held by joint holders shall be executed by the signature of the
  senior of the joint holders.





- 32 -








	
 

	
 

	
 


	
60.

	
PROXIES


	
 

	
 

	
 


	
 

	
(a)

	
In every
  vote a shareholder shall be entitled to vote either personally or by proxy. A
  proxy present at a meeting shall also be entitled to request a secret ballot.
  A proxy need not be a shareholder of the Company.


	
 

	
 

	
 


	
 

	
(b)

	
A
  shareholder of the Company that is a corporation or partnership shall be
  entitled by decision of its Board of Directors or by a decision of a person
  or other duly authorized body, to appoint a person who it shall deem fit to
  be its representative at every meeting of the Company. The representative,
  appointed as aforesaid, shall be entitled to perform on behalf of the
  corporation he represents all the powers that the corporation itself may use
  just as if it was a person.


	
 

	
 

	
 


	
61.

	
(a)

	
A vote
  pursuant to an instruction appointing a proxy shall be valid notwithstanding
  the death of the appointor or the appointor becoming of unsound mind or the
  cancellation of the proxy or its expiration in accordance with any law, or
  the transfer of the shares with respect to which the proxy was given, unless
  a notice in writing was given of the death, becoming of unsound mind,
  cancellation or transfer and was received at the Office before the meeting
  took place.


	
 

	
 

	
 


	
 

	
(b)

	
A
  shareholder is entitled to vote by a separate proxy with respect to each
  share held by him provided that each proxy as aforesaid shall have a separate
  letter of appointment containing the serial number of the shares with respect
  to which the proxy is entitled to vote. If a specific share is included by
  the holder in more than one letter of appointment, that share shall not
  entitle any of the holders of such instrument to a vote.


	
 

	
 

	
 


	
INSTRUMENT
  OF APPOINTMENT


	
 

	
 

	
 


	
62.

	
A letter of
  appointment of a proxy or power of attorney or other certificate (if there
  shall be such) pursuant to which the appointee is acting, shall be in writing
  and such instrument or a copy thereof shall be deposited in the Office, or in
  another place in Israel or abroad - as the Board shall direct from time to
  time generally or with respect to a particular case, no later than upon the
  commencement of the meeting or adjourned meeting wherein the person referred
  to in the instrument is appointed to vote, otherwise that person shall not be
  entitled to vote that share. An instrument appointing a proxy and which is
  not limited in time or by the occurrence of an event (such as an IPO) shall
  not be valid 12 months after the date of its execution. If the appointment
  shall be for a limited period or until the occurrence of an event (such as an
  IPO), the instrument shall be valid for the period or until the occurrence of
  the event contained therein.


	
 

	
 

	
 


	
63.

	
An
  instrument appointing a proxy (whether for a specific meeting or otherwise)
  may be in the following form or in any other similar form which the
  circumstances shall permit:


	
 

	
 

	
 


	
“I, ____________, of ______________, a
  shareholder holding shares in ____________ and entitled to __________ votes
  hereby appoint _____________, of __________, or in his place
  ________________, of ______________, to vote in my name and in my place at
  the general meeting (annual, special, adjourned - as the case may be) of the
  Company to be held on the ____ day of ____________, 2______ and at any
  adjournment thereof.





- 33 -









In witness
  whereof, I have hereby affixed my signature the___ day of____________, 2____.


	
 

	
 

	
 

	
 


	




	
 

	
 

	
 

	
 


	
Appointor’s
  Signature


	
 

	
 

	
 

	
 


	
64.

	
RESERVED


	
 

	
 

	
 

	
 


	
65.

	
DIRECTORS


	
 

	
 

	
 

	
 


	
 

	
(a)

	
The Board of
  Directors shall consist of up to nine (9) members who shall be appointed as
  follows:


	
 

	
 

	
 

	
 


	
 

	
 

	
(1)

	
each of
  Pitango, Star, Genesis and Orbotech shall be entitled to appoint one (1) director
  to the Board of Directors of the Company for so long as it holds Preferred
  Shares constituting more than 5% of the issued and outstanding share capital
  of the Company, on an as converted basis, and thereafter the directorship
  which was vacated shall be held by a director appointed by the holders of the
  majority of the Series AA Preferred Shares not otherwise entitled to appoint
  a director pursuant to this Article 65(a)(l);


	
 

	
 

	
 

	
 


	
 

	
 

	
(2)

	
each of
  Poalim Ventures and Wellington shall be entitled to appoint one (1) director
  for so long as it holds Preferred Shares constituting more than 3% of the
  issued and outstanding share capital of the Company, on an as converted basis
  and thereafter the directorship which was vacated shall be held by a director
  appointed by the holders of the majority of the Series BB Preferred Shares;


	
 

	
 

	
 

	
 


	
 

	
 

	
(3)

	
the majority
  of the directors appointed pursuant to Articles 65(a)(l) and(2) above shall
  be entitled to appoint up to two (2) directors, who shall be independent
  industry experts; and


	
 

	
 

	
 

	
 


	
 

	
 

	
(4)

	
the Chief
  Executive Officer (“CEO”) of the Company shall be a director if he or she is
  appointed as a director by a majority of the directors appointed pursuant to
  Articles 65(a)(l) and(2) above;


	
 

	
 

	
 

	
 


	
 

	
(b)

	
Amadeus
  shall be entitled to appoint one (1) observer to the Board for so long as it
  holds Preferred Shares constituting more than 5% of the issued and
  outstanding share capital of the Company, on as converted basis.


	
 

	
 

	
 

	
 


	
 

	
(c)

	
Observers to
  the Board of Directors shall be entitled to attend all Board of Directors
  meetings and in this capacity, to receive all notices of meetings and any
  documentation the Company provides to the Company’s directors before, during
  or after such meetings, subject to restrictions relating to attorney-client
  privilege, and shall be subject (other than an observer appointed by Intel)
  to the same fiduciary duties that apply to members of the Board of Directors.





- 34 -








	
 

	
 

	
 


	
 

	
(d)

	
The
  provisions of this Article 65 shall be in force until the QIPO.


	
 

	
 

	
 


	
66.

	
(a)

	
The
  directors and observers shall be appointed as set forth in Article 65 and may
  be removed and vacancies filled by those entitled to appoint, as specified in
  Article 65. Notice of appointment or removal shall become effective on the
  date fixed in the notice of appointment or removal, or upon delivery thereof
  to the Company, whichever is later. For avoidance of doubt, in the event that
  a seat of the Board of Directors is vacated, and no one is entitled to
  replace such vacated seat, then such vacated seat shall remain vacant and the
  number of directors shall be reduced accordingly.


	
 

	
 

	
 


	
 

	
(b)

	
If the
  office of any member of the Board of Directors is vacated, the other members
  of the Board of Directors may act in every way and manner so long as their
  number does not fall below two, at least one of which was appointed by the
  holders of the Preferred Shares. If their number falls below two, or if there
  are only two directors but none of them were appointed by the holder of the
  Preferred Shares, they may act only in an emergency, for convening General
  Meetings and for providing written notice to those shareholders or groups of
  shareholders who are entitled to fill the vacancies, of such vacancies. In
  the event that within 10 days following mailing of such written notices the
  vacancies are not filled, the directors in office, whatever their number or
  by whom appointed, may act in every way and manner.


	
 

	
 

	
 


	
67.

	
Subject to
  the provisions of these Articles or to the provisions of an existing
  contract, the tenure of office or the director shall automatically be
  terminated:


	
 

	
 

	
 


	
 

	
(1)

	
if he
  becomes bankrupt;


	
 

	
 

	
 


	
 

	
(2)

	
if he is
  declared lunatic or becomes of unsound mind;


	
 

	
 

	
 


	
 

	
(3)

	
if he has
  resigned by an instrument in writing to the Company;


	
 

	
 

	
 


	
 

	
(4)

	
if he is
  removed from office pursuant to Articles 65 and 66 above;


	
 

	
 

	
 


	
 

	
(5)

	
with his
  death;


	
 

	
 

	
 


	
 

	
(6)

	
if he is the
  CEO, upon termination of his position as CEO (or earlier, if removed pursuant
  to Articles 65 and 66 above, as aforesaid); or


	
 

	
 

	
 


	
 

	
(7)

	
if a
  company, with its liquidation.


	
 

	
 

	
 


	
68.

	
ALTERNATIVE
  DIRECTOR


	
 

	
 

	
 


	
 

	
(a)

	
Any person
  who is qualified to be appointed as a Director may serve as a substitute
  director even if he is a member of the Board of Directors or a substitute
  Director, (hereinafter “substitute”).


	
 

	
 

	
 


	
 

	
(b)

	
A substitute
  shall have one vote.





- 35 -








	
 

	
 

	
 


	
 

	
(c)

	
A substitute
  shall have, subject to the provisions of the instrument by which he was
  appointed, all the powers and authorities that the director for which he is
  serving as director, has.


	
 

	
 

	
 


	
 

	
(d)

	
The provision
  of this Article with respect to the appointment of a director shall apply
  with respect to an appointment of a substitute.


	
 

	
 

	
 


	
 

	
(e)

	
The office
  of a substitute director shall be automatically vacated if his appointment is
  terminated by the director who appointed him in accordance with these
  regulations, or upon the occurrence of one of the events described in
  Articles (1), (2), (3), (5), (6) or (7) of Article 67 or, if the office of
  the member of the Board of Directors with respect to whom he serves as a
  substitute shall be vacated for any reason whatsoever.


	
 

	
 

	
 


	
 

	
(f)

	
The
  substitute director has the right to receive notice of convening of a Board
  of Directors meeting and may participate or vote at such meeting only if the
  director appointing said substitute is absent from said meeting.


	
 

	
 

	
 


	
69.

	
REMUNERATION
  OF DIRECTOR


	
 

	
 

	
 


	
 

	
Members of
  the Board of Directors, not being employees of the Company or professionals
  providing special professional services for consideration to its members -
  shall not receive a salary from funds of the Company unless the general
  meeting has so decided and in the amount that the general meeting shall
  decide upon. The directors, and their substitutes, shall be entitled to
  receive expenses, in an acceptable rate, for travel expenses, board and
  lodging that have been expended for or during the performance of their duties
  as directors, and including travel expenses to the Board meetings and return.
  If pursuant to a decision of the Board, one of the directors shall perform
  services or tasks aside from his regular duties as a director, whether as a
  result of his particular profession or by a trip or stay abroad or otherwise,
  the Board may decide to pay him a preferred wage in addition to his regular
  salary, and such a wage shall be paid by way of salary, commission,
  participation in profits or otherwise and this wage shall be in addition to
  his regular salary, if there shall be any, or will be in place thereof, as
  shall be decided.


	
 

	
 

	
 


	
70.

	
POWER AND
  DUTIES


	
 

	
 

	
 


	
 

	
The
  management of the business of the Company shall be vested in the Board of
  Directors. They shall be entitled to exercise all the powers and authorities
  that the Company has and to perform in its name all the acts that it is
  entitled to do according to its memorandum of association and/or Articles
  and/or the Companies Law except for those which are pursuant to the Companies
  Law or the Articles vested in the general meeting of the Company, subject to
  any provisions in the Companies Law or in these Articles or the regulations that
  the Company shall adopt in its general meeting (insofar as they do not
  contradict the Companies Law or these Articles). However any article adopted
  by the Company in its general meeting shall not affect the legality of any
  prior act of the Board that would be legal and valid, if not for such an
  article.


	
 

	
 

	
 


	
71.

	
A director
  shall not be required to hold qualifying shares.






- 36 -








CONFLICT OF
  INTEREST

	
 

	
 

	
 


	
72.

	
A director
  shall not be prohibited from fulfilling his rights and duties under these
  Articles or from entering into contracts with the Company whether as a
  seller, buyer or otherwise, and no such contract or arrangement which shall
  be made on behalf of the Company or in its name wherein the director is or
  will be an interested party, either directly or indirectly, shall be void
  provided, however that:


	
 

	
 

	
 


	
 

	
(a)

	
any
  transaction between a director and the Company must be approved both by the
  Board of Directors and the Audit Committee of the Company, or, if no Audit
  Committee has been created, by the General Meeting;


	
 

	
 

	
 


	
 

	
(b)

	
the
  interested director may not participate or vote at the Board of Directors at
  which approval is sought unless all other directors are interested directors,
  but shall be counted toward the quorum necessary for commencing deliberations
  at such meeting; and


	
 

	
 

	
 


	
 

	
(c)

	
the
  interested director must, in addition to disclosing the substance of his
  interest in the transaction for which approval is sought, also disclose any
  material facts and documents relating thereto. The provisions of this article
  shall apply also to a substitute or alternate director, if it is appropriate.


	
 

	
 

	
 


	
73.

	
A director
  may hold another paid position or function in the Company or in any other
  company that the Company is a shareholder of or that it has some other
  interest in, together with his position as a director (except an auditor)
  upon those conditions with respect to salary and other matters as decided by
  the Board.


	
 

	
 

	
 


	
74.

	
FUNCTIONS OF
  THE DIRECTORS


	
 

	
 

	
 


	
 

	
The Board
  may meet in order to transact business, to adjourn its meetings or to
  organize them otherwise as it shall deem fit and to determine the legal
  quorum necessary to conduct business, provided that the quorum for a meeting
  of the Board of Directors shall consist of at least a majority of the directors
  then in office. A director whose presence is required for purposes of a
  quorum as aforesaid may by written notice to the Company waive the
  requirement for his presence in order to constitute a quorum. If within half
  an hour from the time appointed for the meeting a quorum is not present, the
  meeting shall stand adjourned to the second business day following the day
  originally scheduled, and at such adjourned meeting 4 directors shall
  constitute a quorum notwithstanding that a director appointed by any specific
  shareholder or class of shareholders is not present.


	
 

	
 

	
 


	
75.

	
CHAIRMAN


	
 

	
 

	
 


	
 

	
The Board
  may from time to time elect, by a simple majority, a Chairman, and decide the
  period of time he shall hold such an office, and he shall preside at the
  meetings of the Board of Directors. However, if such a Chairman is not
  elected or if he is not present at any meeting, the Board may, by a simple
  majority, choose one of its members to serve as Chairman of that meeting.


	
 

	
 

	
 


	
 

	
The Chairman
  shall have no rights or privileges other than those granted to directors and
  shall not have a second of casting vote.





- 37 -








	
 

	
 

	
 


	
MEETINGS


	
 

	
 

	
 


	
76.

	
A member of
  the Board of Directors may at any time call a Board of Directors’ meeting,
  and the secretary shall be required on the request of such member to convene
  a Board of Directors’ meeting.


	
 

	
 

	
 


	
 

	
(a)

	
Any notice
  of a Board of Directors’ meeting can be given, in writing, or by fax or email
  provided that the notice is given seven (7) days before the time appointed
  for the meeting, unless all the members of the Board of Directors having
  received a shorter notice, shall agree to such a shorter notice, provided,
  however, that a four (4) days notice will be sufficient if the majority of
  the directors then in office agree to such shorter notice.


	
 

	
 

	
 


	
 

	
(b)

	
Unless
  otherwise provided by these Articles, all acts and determinations of the
  Board of Directors shall be determined by a simple majority of those
  attending and voting.


	
 

	
 

	
 


	
 

	
(c)

	
Members of
  the Board of Directors, or any committee designated by the Board of
  Directors, may participate in a meeting of the Board of Directors, or any
  committee, by means of conference telephone or similar communications
  equipment by means of which all persons participating in the meeting can hear
  each other, and such participation in a meeting shall constitute attendance
  in person at the meeting.


	
 

	
 

	
 


	
77.

	
DELEGATION
  OF POWER


	
 

	
 

	
 


	
 

	
(a)

	
Subject to
  applicable law, the Board of Directors may delegate any of their powers to
  committees consisting of such member or members of their body as they deem
  fit and may, from time to time, revoke such delegation. No committee of the
  Board of Directors shall be established except by unanimous consent of all
  directors.


	
 

	
 

	
 


	
 

	
(b)

	
In the
  exercise of any power delegated to it by the Board of Directors all
  committees shall conform to any regulations that may be imposed upon them by
  the Board of Directors, if there shall be any such regulation. If no such
  regulations are adopted by the Board of Directors or if there are no complete
  and encompassing regulations, the committees shall act pursuant to these
  Articles dealing with organization of meetings, meetings and functions of the
  Board of Directors, mutatis mutandis, and insofar as no provision of the
  Board of Directors shall replace it pursuant to this article.


	
 

	
 

	
 


	
 

	
(c)

	
All actions
  performed in a bona fide fashion by the Board of Directors or by a committee
  of the Board of Directors, or by any person acting as a director or as a
  substitute shall be as valid, even if at a later date a flaw shall be
  discovered in the appointment of such a director or such a person acting as
  aforesaid, or that all or some of them were unfit as if each and every one of
  those persons shall have been duly appointed and fit to serve as a director
  or substitute as the case may be.


	
 

	
 

	
 


	
80.

	
GENERAL
  MANAGER


	
 

	
 

	
 


	
 

	
(a)

	
The Board
  may from time to time appoint one or more persons, whether or not he is a
  member of the Board of Directors, as the CEO of the Company, either for a
  fixed period of time or without limiting the time that he or they will stay
  in office, and the Board may
  from time to time (subject to any provision in any contract between him or
  them and the Company) release him or them from their office and appoint
  another or others in his or their place.





- 38 -








	
 

	
 

	
 

	
 


	
 

	
(b)

	
The Board of
  Directors may from time to time grant and bestow upon the general manager, at
  that time, those powers and authorities that it exercises pursuant to these
  Articles, as it shall deem fit, and may grant those powers and authorities
  for such period, and to be exercised for such objectives and purposes and in
  such time and conditions, and on such restrictions, as it shall decide; and
  it may grant such authorities whether concurrently with the Board of
  Directors’ authorities in that area, or in excess of them, or in place
  thereof or any one of them, and it can from time to time revoke, repeal, or
  change any one or all of those authorities.


	
 

	
 

	
 

	
 


	
 

	
(c)

	
Notwithstanding
  the aforesaid in Article 69 the wages of the general manager shall be
  determined from time to time by the Board of Directors (subject to any
  provision in any contract between him and the Company) and it may be paid by
  way of a fixed salary or commission or dividends, or a percentage of profits
  or the Company profit turnover or of any other Company that the Company has
  an interest in, or by participation in such profits, or in one or more of the
  aforementioned methods.


	
 

	
 

	
 

	
 


	
81.

	
MINUTES


	
 

	
 

	
 

	
 


	
 

	
(a)

	
The Board
  shall cause minutes to be taken of all general meetings of the Company, of
  the appointments of officials of the Company, of Board of Directors’ meetings
  and of committee meetings that shall include the following items, if
  applicable:


	
 

	
 

	
 

	
 


	
 

	
 

	
(1)

	
the names of
  the members present;


	
 

	
 

	
 

	
 


	
 

	
 

	
(2)

	
the matters
  discussed at the meeting;


	
 

	
 

	
 

	
 


	
 

	
 

	
(3)

	
the results
  of the vote;


	
 

	
 

	
 

	
 


	
 

	
 

	
(4)

	
resolutions
  adopted at the meeting;


	
 

	
 

	
 

	
 


	
 

	
 

	
(5)

	
directives
  given by the meeting to the committees;


	
 

	
 

	
 

	
 


	
 

	
 

	
(6)

	
if
  requested, any reservation of a shareholder or director with regard to a
  matter discussed or resolution passed.


	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 


	
 

	
(b)

	
The minutes
  of any meeting shall serve as prima facie proof as to the facts in the
  minutes if the minutes are reviewed and approved at the next succeeding
  meeting and are signed by the Chairman of that next succeeding meeting.


	
 

	
 

	
 

	
 


	
82.

	
RESOLUTION
  IN WRITING


	
 

	
 

	
 

	
 


	
 

	
A resolution
  in writing signed by all shareholders of the Company or by all the members of
  the Board of Directors, or of a committee, or such a resolution that all the
  shareholders of the Company then entitled to vote at General Meetings, the
  members of the Board of Directors or a committee have agreed to in writing or
  by fax shall be valid for every purpose as a resolution adopted at a General
  Meeting, Board of Directors’ or committee meeting, as the case may be, that
  was duly convened and held. In place of a shareholder or director, as the
  case may be, any such aforesaid resolution may be signed and delivered by his
  substitute.





- 39 -








	
 

	
 

	
 


	
83.

	
SEAL, STAMP
  AND SIGNATURES


	
 

	
 

	
 


	
 

	
(a)

	
The Board
  shall cause the seal (if the Company shall have a seal) to be kept in
  safekeeping and it shall be forbidden to use the seal unless prior permission
  of the Board of Directors is given. If such permission was given, the seal
  shall be affixed in the presence of whoever has been so appointed by the
  Board of Directors, and he shall sign any document upon which the seal has
  been affixed.


	
 

	
 

	
 


	
 

	
(b)

	
The Company
  shall have at least one rubber stamp. The Board shall ensure that such a
  stamp is kept in a safe place.


	
 

	
 

	
 


	
 

	
(c)

	
The Board of
  Directors may designate and authorize any person or persons (even if they are
  not members of the Board of Directors) to act and to sign in the name of the
  Company, and the acts and signatures of such a person or persons shall bind
  the Company, insofar as such persons have acted and signed within the limits
  of their aforesaid authority.


	
 

	
 

	
 


	
 

	
(d)

	
The printing
  of the name of the Company by a typewriter or by hand next to the signatures
  of the authorized signatories of the Company, pursuant to sub-article (c)
  above, shall be valid as if the rubber stamp of the Company was affixed.


	
 

	
 

	
 


	
84.

	
BRANCH
  REGISTERS


	
 

	
 

	
 


	
 

	
The Company
  may, subject to the provisions of the Companies Law or any other applicable
  law that may substitute such provisions, keep in every other country where
  those provisions shall apply, a register or registers of shareholders living
  in that other country as aforesaid, and to exercise any other powers referred
  to in the laws with respect to such branch registers.


	
 

	
 

	
 


	
85.

	
THE
  SECRETARY, OFFICERS AND ATTORNEYS


	
 

	
 

	
 


	
 

	
(a)

	
The Board of
  Directors may appoint a secretary of the Company upon the conditions that it
  deems fit. The Board may as well, from time to time, appoint an associate
  secretary who shall be deemed to be the secretary for the period of his
  appointment.


	
 

	
 

	
 


	
 

	
(b)

	
The Board of
  Directors may, from time to time appoint to the Company, officers, workers,
  agents and functionaries to permanent, temporary or special positions, as it
  shall, from time to time, see fit and set compensation for them.


	
 

	
 

	
 


	
 

	
(c)

	
The Board
  may, at any time and from time to time, authorize any Company, firm, person
  or group of people, whether this authorization is done by the Board directly
  or indirectly, to be the attorneys in fact of the Company for those purposes
  and with those powers and discretion which shall not exceed those conferred
  upon the Board of Directors or that the Board of Directors can exercise
  pursuant to these Articles - and for such a period of time and upon such
  conditions as the Board deems proper, and every such authorization may
  contain such directives as the Board of Directors deems proper for the
  protection and benefit of the persons dealing with such attorneys.





- 40 -








	
 

	
 

	
 


	
86.

	
DIVIDEND


	
 

	
 

	
 


	
 

	
Subject to
  the provisions of the Companies Law and these Articles, including without
  limitation the provisions of Articles 7, 8 and 12 and subject to any rights
  or conditions of Preferred Shares and other rights and conditions attached at
  that time to any share in the capital of the Company granting preferential,
  special or deferred rights or not granting any rights with respect to
  dividends, the profits of the Company shall be distributable to the
  shareholders of the Company according to the proportion of the nominal value
  paid up or credited as paid up on account of the shares held by them at the
  date so appointed by the Company, without regard to the premium paid in
  excess of the nominal value. A distribution, setting aside or declaration of
  dividend requires a decision of the Board of Directors.


	
 

	
 

	
 


	
 

	
The Board of
  Directors may issue any share upon the condition that a dividend shall be
  paid at a certain date or that a portion of the declared dividend for a
  certain period shall be paid, or that the period for which a dividend shall
  be paid shall commence at a certain date, or a similar condition, all as
  decided by the Board of Directors. In every such case - subject to the
  provision mentioned in the beginning of this article - the dividend shall be
  paid in respect of such a share in accordance with such a condition.


	
 

	
 

	
 


	
87.

	
Subject to
  the provisions of the Companies Law, at the time of declaration of a dividend
  the Board of Directors may decide that such a dividend shall be paid in part
  or in whole, by way of distribution of certain properties, especially by way
  of distribution of fully paid up shares or debentures or debenture stock of
  the Company, or by way of distribution of fully paid up shares or debentures
  or debenture stock of any other Company or in one or more of the aforesaid
  ways. For purposes of any such distribution, the outstanding Preferred Shares
  shall be deemed to have been converted into Ordinary Shares as of the time
  appointed by the Board of Directors for the purpose of determining
  entitlement to participate in such distribution.


	
 

	
 

	
 


	
88.

	
dividends
  payable on shares which are not fully paid up, will be first applied to any
  unpaid amount on such shares even if such payments are not yet due, pursuant
  to the terms of issuance or as provided in these Articles, and any excess
  will be distributed to the holder of such shares as set forth herein.


	
 

	
 

	
 


	
89.

	
The Board of
  Directors may put a lien on any dividend on which the Company has a charge,
  and it may use it to pay any debts, obligations or commitments with respect
  to which the charge exists.


	
 

	
 

	
 


	
90.

	
A transfer
  of shares shall not transfer the right to a dividend which has been declared
  after the transfer but before the registration of the transfer. The person
  registered in the register as a shareholder on the date appointed by the company
  for that purpose shall be the one entitled to receive a dividend.


	
 

	
 

	
 


	
91.

	
Reserved.


	
 

	
 

	
 


	
92.

	
A notice of
  the declaration of a dividend, whether an interim dividend or otherwise,
  shall be given to the shareholders registered in the register, in the manner
  provided for in these Articles.





- 41 -








	
 

	
 

	
 


	
93.

	
If no other
  provision is given, the dividend may be paid by check or payment order to be
  mailed to the registered address of a shareholder or person entitled thereto
  in the register or, in the case of registered joint owners, to the addresses
  of one of the joint owners as registered in the register. Every such check
  shall be made out to the person it is sent to. The receipt of the person who,
  on the date of declaration of dividend, is registered as the holder of any
  share or, in the case of joint holders, of one of the joint holders, shall
  serve as a release with respect to payments made in connection with that
  share.


	
 

	
 

	
 


	
94.

	
(a)

	
Subject to
  Article 12 above, if at any time the share capital shall be divided into
  different classes of shares, the distribution of fully paid up shares, from
  funds pursuant to Article 95 below, shall be made in one of the two following
  manners as to be decided upon by the Board:


	
 

	
 

	
 


	
 

	
 

	
(i) In such
  a manner so that all the holders of a share entitled to fully paid up shares
  shall receive one uniform class of shares; or


	
 

	
 

	
 


	
 

	
 

	
(ii) In such
  manner so that each holder of shares entitled to fully paid up shares as
  aforesaid shall receive shares of the class of shares held by him and entitling
  him to fully paid up shares, as aforesaid.


	
 

	
 

	
 


	
 

	
(b)

	
In order to
  give effect to any resolution in connection with the distribution of
  dividends, or distribution of property, fully paid-up shares or debentures,
  the Board of Directors may resolve any difficulty that shall arise with
  distribution as it shall deem necessary, especially to issue certificates for
  fractional shares and to determine the value of certain property for purposes
  of distribution, and to decide that payment in cash shall be made to the
  shareholder on the basis of the value decided for mat purpose, or that
  fractions the value of which is less man one New Israeli Shekel shall not be
  taken into account for the purpose of coordinating the rights of all the
  parties. The Board of Directors shall be permitted, in this regard, to grant
  cash or property to trustees in escrow for the benefit of persons entitled
  thereto, as the Board shall see beneficial. Wherever required, an agreement
  shall be submitted to the registrar of companies and the Board may appoint a
  person to execute such an agreement in the name of the persons entitled to a
  dividend, property, fully paid up shares or debentures as shares or
  debentures as aforesaid, and such an appointment shall be valid.


	
 

	
 

	
 


	
 

	
(c)

	
The Company
  shall not be obligated to pay interest on a dividend.


	
 

	
 

	
 


	
 

	
(d)

	
The Board of
  Directors may, with respect to all dividends not collected within one year
  after their declaration, invest or use them in another way for the benefit of
  the Company, until they shall be demanded. The Company shall not pay interest
  for dividends or interest not collected.





- 42 -








	
 

	
 

	
 


	
95.

	
FUNDS


	
 

	
 

	
 


	
 

	
The Board
  may set aside from the profits of the Company the sums it deems proper, as a
  reserve fund or reserve funds for extraordinary uses, or for preferred
  dividends or equalization of dividends or other funds or for the purpose of
  correcting, bettering or retaining any property of the Company and for those
  other purposes which shall, in the absolute discretion of the Board of
  Directors, be beneficial to the Company and it may invest the various sums so
  invested in such investments as it finds proper, and from time to time deal with
  such investments, change or transfer them, in part or in whole, for the
  benefit of the Company. The Board of Directors may, as well, divide any
  reserve liability fund to preferred funds as it shall deem proper, transfer
  moneys from fund to fund and use every fund or any part thereof in the
  business of the Company, without being required to keep such sums separate
  from the rest of the Company’s property. The Board of Directors may, from
  time to time, also transfer, to the next year, profits out of such sums which
  are, in its absolute discretion, beneficial to the Company. Generally the
  Board of Directors may create funds as it deems necessary, either those
  resulting from profits of the Company or from re-evaluation of property, or
  from premiums paid for shares or from any other source, and to use them in
  its discretion as it deems fit insofar as that in the creation of such funds,
  the changes or uses do not exceed the provisions of the Companies Law or
  accepted accounting principles.






	
 

	
 

	
 

	
 


	
96.

	
All premiums
  received from the issue of shares shall be capital funds and they shall be
  treated for every purpose as capital and not as profits distributable as
  dividends. The Board of Directors may organize a reserve capital liability
  account and transfer, from time to time, all such premiums to the reserve
  capital liability account or use such premiums and monies to cover
  depreciation or doubtful loss. All losses from sale of investments or other
  property of the Company shall be debited from other funds of the Company. The
  Board of Directors may use any monies credited to the capital reserve
  liability account in any manner that these Articles or the Companies Law
  permits.


	
 

	
 

	
 

	
 


	
97.

	
Any amounts
  transferred and credited to the account of income and expense fund or general
  reserve liability account or capital liability reserve account, may, until
  otherwise used in accordance with these Articles, be invested together with
  such other monies of the Company in the day to day business of the Company,
  without having to differentiate between these investments and the investment
  of the monies of the Company.


	
 

	
 

	
 

	
 


	
98.

	
ACCOUNTS AND
  AUDIT


	
 

	
 

	
 

	
 


	
 

	
The Board
  shall cause correct accounts to be kept:


	
 

	
 

	
 

	
 


	
 

	
 

	
(a) of the
  assets and liabilities;


	
 

	
 

	
 

	
 


	
 

	
 

	
(b) of any
  amount of money received or expended by the Company and the mattes for which
  such sum of money is expended or received; and


	
 

	
 

	
 

	
 


	
 

	
 

	
(c) of all
  purchases and sales made by the Company.


	
 

	
 

	
 

	
 


	
99.

	
The account
  books shall be kept in the Office or at such other place as the Board deems
  fit and they shall also be open for inspection by the directors.


	
 

	
 

	
 

	
 


	
100.

	
The Board of
  Directors shall determine from time to time, in any specific case or type of
  case, or generally, whether and to what extent and at what times and places
  and under what conditions or regulations the accounts and books of the
  Company, or any of them, shall be open for inspection by the shareholders,
  and no shareholder, not being a director, shall have any right of inspecting
  any account book or document of the Company except as conferred by law or
  authorized by the Board of Directors or by the Company in a general meeting.





- 43 -








	
 

	
 


	
101.

	
Not less
  than once a year, the Board shall submit before the Company at the Annual
  General Meeting a profit and loss account for the period after the previous
  account, and if it is the first account for the period after registration of
  the Company, it shall be prepared as of a date not more than nine months
  before the date of the meeting and in accordance with the relevant provisions
  of the Companies Law, and the Board shall submit a balance sheet that is
  correct as of the date of the profit and loss account. To the balance sheet
  shall be attached a report of the auditor and it shall be accompanied by a
  report from the Board with respect to the situation of the Company business
  and the amount they propose as a dividend and the amount (if any) that they
  propose be set aside for the fund accounts.


	
 

	
 


	
102.

	
Auditors
  shall be appointed and their function shall be set out in accordance with the
  Companies Law.


	
 

	
 


	
NOTICES


	
 

	
 


	
102.

	
A notice or
  any other document may be served by the Company upon any shareholder either
  personally or by sending it by prepaid letter, fax or e-mail addressed to
  such shareholder at his address, wherever situated, as appearing in the
  register of shareholders, provided, however that a shareholder may notify the
  Company in writing of its objection to the use of e-mail as the sole means of
  notice in which event the Company shall provide notice to such shareholder by
  e-mail and one of the other means permitted by this Article 102.


	
 

	
 


	
103.

	
All notices
  directed to be given to the shareholders shall, with respect to any shares to
  which persons are jointly entitled, be given to one of the joint holders, and
  any notice so given shall be sufficient notice to the holders of such share.


	
 

	
 


	
104.

	
Prior and
  timely notice of the convening of a shareholders meeting shall be given to
  each shareholder, wherever situated, at the last address provided by the
  shareholder. Any shareholder registered in the register who shall, from time
  to time, furnish the Company with an address at which notices may be served,
  shall be entitled to receive all notices he is entitled to receive according
  to these Articles at that address.


	
 

	
 


	
105.

	
A notice may
  be given by the Company to the persons entitled to a share in consequence of
  the death or bankruptcy of a shareholder by sending it through the post in a
  prepaid letter or fax or e-mail addressed to them by name, at the address
  furnished for the purpose by the persons claiming to be so entitled or, until
  such an address has been so furnished, by giving the notice in any manner in
  which the same might have been given if the death or bankruptcy had not
  occurred.


	
 

	
 


	
106.

	
Any notice
  or other document, (i) if delivered personally, shall be deemed to have been
  served upon delivery, (ii) if sent by post, shall be deemed to have been
  served five (5) days after the time when the letter was delivered to the
  post, if sent by airmail, and two (2) days after the letter was delivered to
  the post, if sent by domestic post, and (iii) if sent by facsimile or
  electronic mail, shall be confirmed by appropriate answer back and shall be
  effective upon actual receipt if received during the recipient’s normal
  business hours, or beginning the recipient’s next business day after receipt
  if not received during recipient’s normal business hours. In proving such
  service it shall be sufficient to prove that the letter, facsimile, or
  electronic mail containing the notice was properly addressed and delivered at
  the post office or sent by facsimile or electronic mail, as the case may be. Any
  list kept in the ordinary
  manner in any mail list of the company or any copy of any fax in the
  Company’s possession shall be prima facie proof of the delivery.





- 44 -








	
 

	
 


	
107.

	
(a)
       In any case where it is necessary to give prior
  notice of a certain number of days or a notice valid for a certain period,
  the date of delivery shall be taken into account in the number of days or
  period.


	
 

	
 


	
 

	
(b)
       In addition to the furnishing of a notice
  pursuant to the above article, the Company may furnish a notice to the
  shareholders entitled to receive notice, or to part of them, by publication
  of a notice in a newspaper distributed in the area wherein the Office is
  located, or any other place, in Israel or abroad, as the Board shall
  determine from time to time.


	
 

	
 


	
108.

	
RESERVED


	
 

	
 


	
109.

	
INDEMNITY


	
 

	
 


	
(a)

	
The Company
shall, subject and pursuant to the provisions of the Companies Law, indemnify
an “Office Holder” of the Company (as such term is defined in the Companies
Law) for all liabilities and expenses incurred by him arising from or as a
result of any act (or omission) carried out by him as an Office Holder of the
Company and which is indemnifiable pursuant to the Companies Law, to the
maximum extent permitted by law. The Company may indemnify an Office Holder
post-factum and may also undertake to indemnify an Office Holder in advance,
provided that, to the extent required under applicable law, such undertaking
is limited to types of occurrences which, in the opinion of the Board of
Directors are, at the time of the undertaking, foreseeable and to an amount
of the Board of Directors has determined is reasonable in the circumstances.  


	
 

	
 


	
(b)

	
The Company
  shall, subject and pursuant to the provisions of the Companies Law, enter
  into contracts to insure the liability of Office Holders of the Company for
  any liabilities incurred by him arising from or as a result of any act (or
  omission) carried out by him as an Office Holder of the Company and for which
  the Company may insure Office Holders pursuant to the Companies Law, to the
  maximum extent permitted by law.


	
 

	
 


	
(c)

	
The Company
  may, subject to the provisions of the Companies Law, procure insurance for or
  indemnify any person who is not an Office Holder including, without
  limitation, any employee, agent, consultant or contractor of the Company who
  is not an Office Holder.


	
 

	
 


	
(d)

	
The Company
  may, to the maximum extent permitted by law, exempt and release an Office
  Holder, including in advance, from all or part of his or her liability for
  monetary or other damages due to, arising or resulting from, a breach of his
  or her duty of care to the Company. The Directors of the Company are released
  and exempt from all liability as aforesaid to the maximum extent permitted by
  law with respect to any such breach, which has been or may be committed.





- 45 -










Exhibit B  


SECOND
AMENDMENT TO SHAREHOLDERS RIGHTS AGREEMENT


This amendment (the “Second
Amendment”) dated September 26, 2006, to the Shareholders Rights Agreement (the “SRA”) dated September 13, 2005, as
amended on March 22, 2006 by and among Negevtech Ltd. (the “Company”), the Founders (as defined in the SRA), the
Prior Investors (as
defined in the SRA), the New Investors (as
defined in the SRA), Amadeus III and Amadeus III Affiliates Fund LP (collectively,
“Amadeus”).  


	
 

	
 


	
WHEREAS

	
The Company, the Founders, the
  Prior Investors and the New Investors are parties to the SRA;


	
 

	
 


	
WHEREAS

	
Pursuant to the Series BB-4 Share Purchase Agreement
  of even date hereof, Amadeus and certain
  of the Prior Investors and certain of the New Investors are purchasing Series
  BB-4 Preferred Shares of the Company;


	
 

	
 


	
WHEREAS

	
Concurrently with the purchase
  of Series BB-4 Preferred Shares, Amadeus
  is purchasing all of the shares of the Company held by the Founders, which shares will be converted, upon
  their transfer to Amadeus and
  payment by Amadeus to the Company of the amount of $1,412,784, into Series
  BB-4 Preferred Shares; and


	
 

	
 


	
WHEREAS

	
the parties hereto wish to amend the SRA in order to
  include Amadeus in the definition of New
  Investor, to include the Series BB-4 Preferred Shares in the definition of Registrable Securities and to remove the Founders from
the SRA, all as defined and
  provided for in this Second Amendment.





NOW, THEREFORE, the parties
hereto agree as follows, effective as of and subject to the Closing of the Series BB-4 Share Purchase
Agreement:


	
 

	
 


	
1.

	
Schedule B annexed to the SRA is
  hereby amended by the addition thereto of the following entities which, for the purpose of the SRA, shall be
  considered as one of the New
  Investors:








	
 

	
 

	
 

	
 


	
 

	
Investor

	
 

	
Address


	
 

	


	
 

	



	
 

	
Amadeus
  III

	
 

	
Mount Pleasant House, 2 Mount Pleasant, Cambridge England 


	
 

	
 

	
 

	
 


	
 

	
Amadeus III Affiliates Fund LP

	
 

	
2711 Centerville Road, Suite
  400, Wilmington, New Castle County, Delaware
  19808 








	
 

	
 


	
2.

	
The Series BB-4 Preferred
  Shares being issued pursuant to the Series BB-4 Share Purchase Agreement of even date hereof and
  the Series BB-4 Preferred Shares
  resulting from the conversion of the shares purchased by Amadeus from the Founders, are hereby included in the
  term Registrable Securities. Accordingly,
  the definition of the term “Preferred BB Shares” in Section 1.11 of the SRA
  is hereby deleted in its entirety and replaced with the following:














	
 

	
 


	
 

	
“1.11 The term “Preferred BB
  Shares” shall mean Series BB-1 Preferred Shares of the
  Company, Series BB-2 Preferred Shares of the Company, Series BB-3 Preferred Shares
  of the Company and Series BB-4 Preferred Shares of the Company, par
  value NIS Q.01 each.”


	
 

	
 


	
3.

	
The
  Founders are hereby removed from the SRA, shall no longer be a party to the SRA and shall cease
  to have any rights or obligations pursuant to or by virtue of the SRA
  effective as of the date hereof. Accordingly, any and all reference to the term
  “Founder” or “Founders” in the SRA is hereby deleted from the SRA.


	
 

	
 


	
4.

	
Section
  1.8 of the SRA is hereby deleted and any and all reference to “Ordinary-Preferred
  Shares” in the SRA is hereby deleted from the SRA.


	
 

	
 


	
5.

	
Except
  as expressly provided in this Amendment, the SRA and each of the provisions contained
  therein shall remain in full force and effect.





[Remainder of Page Intentionally Left Blank]










IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized
representatives, on the dates set forth below:


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	



	
Intel Atlantic, Inc.

	
 

	
Pitango Venture Capital Fund III (Israeli Sub) L.P.

	
 

	
Pitango Venture Capital Fund III (Israeli Sub.) Non-Q L.P. 


	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	



	
Pitango Venture Capital Fund III (Israeli Investors) L.P.

	
 

	
Pitango Principles Fund III (Israel) L.P.

	
 

	
Pitango Venture Capital Fund
  III Trusts 2000 Ltd. 


	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	



	
Pitango JP Morgan Fund III (Israel), L.P.

	
 

	
Qualitau Ltd.

	
 

	
Shrem Fudim Kelner Founders Group II L.P. 


	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	



	
Shrem Fudim Kelner & Co.
  Ltd.

	
 

	
Canada Israel Opportunity Fund III, L.P.

	
 

	
SVE Star Ventures Enterprises
  Gmbh & Co. No. IX KG 


	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	



	
Star Management of Investments No. II (2000) L.P. 

	
 

	
Star Growth Enterprise, a German Civil Law Partnership (with limitation of liability)

	
 

	
SVM Star Ventures Managementgesellschaft mbH Nr. 3 


	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	



	
Orbotech Technology Ventures L.P.

	
 

	
Lehman Brothers European Venture Capital L.P.

	
 

	
Lehman Brothers Holdings PLC
  (on behalf of pre-tax plan) 


	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	



	
Lehman Brothers Partnership Account 2000/2001, L.P.

	
 

	
Lehman Brothers Offshore Partnership Account 2000/2001, L.P.

	
 

	
Genesis Partners II L.D.C.
  


	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	



	
Genesis Partners II (Israel)
  L.P.

	
 

	
Poalim Ventures Ltd.

	
 

	
Poalim Ventures I Ltd. 


	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	



	
Poalim Ventures II L.P.

	
 

	
Wellington Partners Ventures III Technology Fund,
  L.P.

	
 

	
Amadeus III 


	
 

	
 

	
 

	
 

	
 


	


	
 

	


	
 

	



	
Amadeus III Affiliates Fund LP

	
 

	
Negevtech Ltd.

	
 

	
Shrem Fudim Kelner Founders
  Group II Annex Fund L.P.





[signature
page to Second Amendment to SRA September 2006]











	
 

	
 

	
 


	


	
 

	



	
Gad Neumann

	
 

	
David Alumot





[signature
page to Second Amendment to SRA September 2006]