Unassociated Document


    
       

      EXHIBIT 10.19

    

     

    SUBSCRIPTION
AND REGISTRATION RIGHTS AGREEMENT

     

    This
Subscription and Registration Rights Agreement (this “Agreement”), dated as
of June 22, 2008, is entered into by and between BioCancell Therapeutics Inc., a
Delaware corporation (the “Company”), and Provident Fund of the
Hebrew UniversityLtd. (the “Purchaser”).

     

    The
parties hereto agree as follows:

     

    1. Investment and Loan. In consideration of and upon the
basis of the representations, warranties and agreements and subject to the terms
and conditions set forth in this Agreement:

     

    (a)           Purchase and Sale.
The Purchaser agrees to purchase from the Company, and the Company shall issue
and allot to the Purchaser, on the Closing Date (as defined below), in
accordance with Section 2 below, 38,376 shares (the “Purchased Shares”) of the Company’s common stock,
par value $0.01 per share (the “Common
Stock”), at a price per share of
Common Stock equal to US$ 0.782 (“PPS”) (which on the relevant date was
equal to NIS 2.55), for an aggregate purchase price equal to thirty thousand
dollars (USD 30,000) (the “Share Purchase”).
Notwithstanding the foregoing, in the event that the average closing price of
the shares of Common Stock of the Company, as reported on the Tel Aviv Stock
Exchange, for the sixty (60) trading days immediately preceding the date which
is two days (the “Determination Date”)
before the Closing (as defined below) (the “Average Price”), is
lower than US$ 0.743 or higher than US$ 0.821 (i.e., five percent lower or
higher than the PPS), the PPS and the corresponding number of Purchased Shares
shall be adjusted such that the PPS shall be equal to the Average Price. The
Average Price shall be denominated in US$ by dividing the Average Price
denominated in NIS by the exchange rate of the US$ to NIS at the close of
business on the Determination Date.

     

    (b)           Convertible
Debenture. The Company shall issue to the Purchaser an assignable
convertible debenture in the form attached hereto as Exhibit
1(b) (the “Convertible
Debenture”), in consideration for the extension of a loan by the
Purchaser to the Company in the amount of e a hundred and twenty thousand
dollars (USD 120, 000) (the “Loan Amount”).

     

    (c)           Warrants. The Company
shall grant to the Purchaser a warrant, in the form attached hereto as Exhibit 1(c), to
purchase a minimum of 134,979 and up to 167,408 shares of Common Stock (the
“Warrant”).

     

    (d)           The
Purchased Shares, and the shares of Common Stock underlying the Convertible
Debenture and the Warrant shall be referred to herein as the “Issued Shares” and
the consideration paid therefor shall be referred to herein as the “Purchase
Price”.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (e)           Upon
the terms and subject to the conditions set forth in this Agreement, the closing
of (i) the sale and purchase of the Purchased Shares, (ii) the issuance of the
Convertible Debenture and (iii) the grant of the Warrant (the “Closing”) shall take
place at the offices of Baratz, Horn & Co., 1 Azrieli Center, Tel Aviv, at
10:00 a.m. on the date that is one business day after the satisfaction of all
conditions set forth in Sections 1(g) and 1(h) hereof, but not later than 90
days from the execution hereof, or such other place or date as may be agreed to
by the Company and Purchaser. The date upon which the Closing shall occur is
herein referred to as the “Closing
Date.”

     

    (f)           All
payments payable hereunder, shall be made in US dollars.

     

    (g)           Conditions
Precedent to the Obligation of the
Purchaser to Close. The obligation hereunder of the Purchaser to
purchase the Purchased Shares and to extend the Loan Amount is subject to the
fulfillment at or before the Closing of the following conditions precedent, any
one or more of which may be waived in writing, in whole or in part, by the
Purchaser, which waiver shall be at the sole discretion of the
Purchaser:

     

    (i)          Accuracy of the Company’s Representations
and Warranties. Each of the representations and warranties of the Company
shall be true and correct in all respects as of the date when made and shall be
true and correct in all material respects as of the Closing, as though made at
that time.

     

    (ii)          Performance by the
Company. The Company shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Company at or prior
to the Closing.

     

    (iii)          All Deliverables
Ready. All documents and other items to be delivered to the Purchaser at
the Closing as specified in Sections 2(A) and 2(B) shall be duly executed, ready
for delivery to the Purchaser, and in form and substance reasonably satisfactory
to counsel for the Purchaser.

     

    (iv)          Executive Committee.
The Board of Directors of the Company shall have designated an executive
committee comprised of four members of the Board of Directors as follows: Prof.
Hochberg, an external director who initially shall be Nava Epstein, a
representative of Tikcro Technologies Ltd. and a representative of Clal
Biotechnology Industries Ltd. (the “Executive Committee”). The approval of
the Executive Committee shall be required for the consummation of any material
transaction of the Company, adoption of the Company’s annual budget,
decisions relating to investment policy and working plan.

     

    (v)          Approval
of each of the Company’s undertakings and
the transactions contemplated herein, in the Convertible Debenture and in the
Warrant to the extent such transactions or undertakings require shareholder
approval under applicable law, at the Company’s General Meeting,
which shall be convened for such purpose as soon as practicable following the
date hereof.

     

    Notwithstanding
anything to the contrary in this Agreement, the Purchaser shall not be obligated
to consummate the transactions set forth in this Agreement if the Company
suffers a Material Adverse Effect prior to the Closing.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (h)           Conditions
Precedent to the Obligation of the Company
to Close. The obligation hereunder of the Company to issue and
sell the Purchased Shares, to issue the Convertible Debenture and to grant the
Warrant to the Purchaser, is subject to the fulfillment at or before the Closing
of the following conditions precedent, any one or more of which (excluding the
condition set forth in sub section (iv) below) may be waived in writing, in
whole or in part, by the Company, which waiver shall be at the sole discretion
of the Company.

     

    (i) Accuracy of the
Purchaser’s
Representations and Warranties. Each of the representations and
warranties of the Purchaser shall be true and correct in all respects as of the
date when made and shall be true and correct in all material respects as of the
Closing, as though made at that time.

     

    (ii)
Performance by the
Purchaser. The Purchaser shall have performed, satisfied and complied in
all material respects with all covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by the Purchaser at
or prior to the Closing.

     

    (iii)
Approval by the Tel Aviv Stock Exchange (“TASE”) of the
registration of the Issued Shares under the TASE rules.

     

    2. Closing. The Closing
shall take place on the Closing Date in the manner set forth below. The
deliveries specified in this Section 2 shall be deemed to occur simultaneously
as part of a single transaction, and no delivery shall be deemed to have been
made until all such deliveries have been made.

     

    (A)            The
Purchaser shall have received from the Company the following
documents:

     

    (a)           True
and correct copies of the resolutions of the Company's Board of Directors,
approving, among other things, the transactions contemplated herein, the
issuance of the Purchased Shares, the issuance of the Convertible Debenture, and
the grant of the Warrant;

     

    (b)           (i)
one or more validly issued share certificates of the Common Stock of the Company
representing, in aggregate, the Purchased Shares issued in the name of the
Purchaser in consideration for the Purchase Price paid to the Company; (ii) a
duly executed copy of this Agreement, (iii) a duly executed Convertible
Debenture, and (iv) a duly executed Warrant;

     

    (c)           A
certificate duly executed by an officer of the Company dated as of the Closing
Date (the “Compliance
Certificate”) in the form attached hereto as Exhibit
2(A)(c);

     

    (d)           Audited annual financial
statements for 2007 and audited financial statements for the first quarter (and,
to the extent required by SEC rules or regulations, first half) of 2008, both
prepared and presented in accordance with US GAAP (together with audited
comparison numbers for 2006 and 2005) and such other information as may be
required by Purchaser to comply with its obligations pursuant to SEC rules and
regulations; and

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (B)            The
Company shall have obtained, and delivered to the Purchaser copies of, the
Required Approvals and Notices (as defined below) which shall be attached to
this Agreement as Exhibit
2(B).

     

    (C)            Purchase Price: Purchaser
Deliverables. At the Closing, the Purchaser shall pay the Purchase Price
by wire transfer of immediately available funds to the account of the Company
set forth on Exhibit
2(C) hereto, and shall deliver to the Company (i) a duly executed copy of
this Agreement, (ii) a duly executed copy of the Convertible Debenture, and (iv)
a duly executed copy of the Warrant.

     

    3. Representations and
Warranties of the Company. The Company hereby represents and warrants to
the Purchaser as follows:

     

    (a)          Organization. The Company has been duly
incorporated, is validly existing and in good standing under the laws of
Delaware. The Company is duly qualified to conduct its business and has the
requisite corporate power and authority and any necessary governmental
authority, franchise, license or permit to own, operate, lease and otherwise to
hold and operate its assets and properties and to carry on its businesses. Any
entity in which the Company owns at least 50% of either the voting shares and/or
the equity (each, a “Subsidiary” and,
collectively, the “Subsidiaries”) is
listed in page 6 of the Periodical Report with respect to fiscal year 2007 filed
by the Company with the TASE on March 12, 2008 (the “Periodical Report”).
The Periodical Report also lists all other equity or similar interests, or any
interest convertible or exchangeable or exercisable for any such equity or
similar interest, in any other entities held by the Company or any
Subsidiary.

     

    (b)          Corporate Authorization;
Execution; Validity of Agreement. The execution, delivery and performance
of this Agreement and each of the other agreements, certificates or other
instruments required to be delivered hereunder by the Company at or prior to
Closing (the “Transaction Documents”), including the authorization, sale,
issuance and delivery of the Purchased Shares, the Convertible Debenture, the
Warrant, and the Issued Shares have been duly authorized by the Company and no
other corporate proceedings on the part of the Company shall be necessary to
authorize this Agreement and each of the other Transaction Documents or to
consummate the transactions contemplated hereby and thereby. The Agreement and
the Transaction Documents have been duly executed and delivered by the Company
and, when duly authorized, executed and delivered by the Purchaser, will be
valid and binding agreements enforceable against the Company in accordance with
their terms, subject to bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other similar laws of general applicability relating
to or affecting creditors’ rights generally
and to general principles of equity.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c)          Corporate Authority.
The Company has full corporate power and authority necessary to enter into this
Agreement and each of the Transaction Documents, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby.

     

    (d)          Validity of Common
Stock. When issued to the Purchaser against payment therefore, all Issued
Shares will have been duly and validly issued, fully paid and non-assessable;
shall not be subject to call or forfeiture rights and will be free and clear of
any security interests, liens, claims, encumbrances or other adverse interests,
other than those restrictions contemplated by the federal and state securities
laws of the United States and the securities laws of Israel, and the rules of
the TASE; and will not have been issued or sold in violation of any preemptive
or other similar rights of the holders of any securities of the
Company.

     

    (e)          Organizational
Documents. Set forth in Exhibit 3(e) is a complete and correct copy
of the Certificate of Incorporation and Bylaws of the Company, as amended to
date. All of such organizational documents are in full force and
effect.

     

    (f)          Capitalization.


     

    (i)           The
capitalization table of the Company prior to and immediately following the
Closing, in each case on a fully diluted basis, is set forth in Exhibit
3(f) attached hereto. As more fully set forth in the post-Closing
capitalization table, the Purchased Shares, together with Purchaser’s current holdings
will constitute, immediately following the Closing, 4.58% of the Company’s share
capital, and the Issued Shares will constitute, immediately following the
Closing, 3.50% of the Company’s share capital, on a fully diluted basis. Except
as set forth in Exhibit 3(f), there are no other shares, convertible or other
securities, outstanding warrants, options, or other rights to subscribe for,
purchase, or acquire from the Company any securities of the Company, and there
are no contracts or binding commitments providing for the issuance of, or the
granting of rights to acquire securities of the Company from the Company, or
under which the Company is, or may become, obligated to issue any of its
securities.


     

    (ii)         The
Company has not issued or granted any bonds, debentures, notes or other
indebtedness having the right to vote on any matters on which the Company’s shareholders may
vote. There are no outstanding contractual obligations of the Company or any of
its Subsidiaries to repurchase, redeem or otherwise acquire any of the Company’s
securities. All of the issued and outstanding share capital of the Company has
been duly authorized and validly issued and is fully paid and
nonassessable.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      (g)          No Conflict: Required
Filings and Consents.


       

      (i)          The
execution and delivery of this Agreement by the Company does not, and the
execution and delivery by the Company of each of the other Transaction Documents
and the performance by the Company of its obligations under this Agreement and
each of the other Transaction Documents, will not, with or without the giving of
notice or the lapse of time or both, (i) conflict with or violate the
organizational documents of the Company or any of its Subsidiaries, (ii) subject
to obtaining the Required Approvals and Notices, conflict with or violate any
law, statute, ordinance, rule, regulation, order, judgment or decree applicable
to the Company or any Subsidiary or by which any of their respective properties
or assets is bound or affected, or (iii) result in any breach of or constitute a
default under, or give to others any rights of termination, amendment,
acceleration or cancellation of any Material Agreement (as defined below), or
result in the creation of any Encumbrance (as defined below) on the properties
or assets of the Company pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company is a party or by which the Company is bound or
affected. The term “Encumbrance” means and includes any interest or equity of
any person (including any right to acquire, option, or right of preemption) or
any mortgage, charge, pledge, lien, or assignment, or any other encumbrance or
security interest or arrangement of whatsoever nature over or in the relevant
property.

       

      (ii)          The
execution and delivery of this Agreement by the Company does not, and the
execution and delivery of each of the other Transaction Documents and the
performance of this Agreement and each of the other Transaction Documents by the
Company, will not, require any consent, approval, authorization or permit of or
filing with or notification to any Governmental Entity (as defined below) or
other third party, by or with respect to the Company, except (i) for applicable
requirements, if any, of the consents, approvals, authorizations, permits or
notification described in Exhibit 3(g) (the
“Required
Approvals and Notices”), and
(ii) where failure to obtain the required consents, approvals, authorizations or
permits, or to make such filings or notifications would not prevent or delay
consummation of any of the transactions contemplated by this Agreement or any
other Transaction Document in any material respect, or otherwise prevent the
Company from performing its obligations under this Agreement or any other
Transaction Document in any material respect. The term “Governmental Entity” means any governmental
or legal authority exercising executive, legislative, judicial, regulatory or
administrative function of or pertaining to government.

       

      (h)          Financial
Statements.

       

      The term
“Financial Statements” means the audited
consolidated financial statements of the Company for each of the two years ended
on December 31, 2006 and 2007, and the unaudited but reviewed financial
statements for the quarter ended on March 31, 2008, including its balance sheet,
statements of income, cash-flow and changes in shareholder equity for the
periods ended thereon, prepared in accordance with Israeli generally accepted
accounting principles (“GAAP”) by a recognized firm of
independent certified public accountants, including all notes and reports
thereto.

       

      (1)               Each
of the Financial Statements, attached as Exhibit 3(h)(1)
hereto
has been prepared in accordance with GAAP consistently applied. Each of the
Financial Statements fairly reflects, in accordance with GAAP, the financial
condition and results of operations of the Company and its Subsidiaries at the
relevant dates and for the periods indicated therein, and in the case of the
unaudited but reviewed financial statements, to year-end audit
adjustments.


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      (2)               A
complete list of the Company’s loan facilities in excess of US$ 100, 000 as of
the date hereof, is set forth in Exhibit
3(h)(2).

       

      (3)              Since
December 31, 2007 and except as specifically disclosed in Exhibit 3(h)(3):



       

      (i)           the
Company has not entered into any material transaction which was not in the
ordinary course of its business or which was not reported to the TASE as
required under applicable law;

       

      (ii)           there
has been no material adverse change in the Company’s operations results, assets,
liabilities, debts, or financial condition:

       

      (iii)           the
Company has not declared or paid any cash dividend or made any distribution on
its shares; and

       

      (iv)           there
has been no sale, assignment, or transfer of any tangible or intangible material
asset of the Company.

       

      (i)         Operations in the Ordinary
Course. Between December 31, 2007 and the date of this Agreement, the
Company has operated its business in the usual and ordinary course consistent
with past practices and has not suffered any Material Adverse Effect. The term
“Material Adverse Effect” means a material adverse effect on the business, as
now conducted or as proposed to be conducted by, the assets, condition
(financial or otherwise), liabilities or operations of, the Company and its
Subsidiaries taken as a whole. It is hereby clarified that a decrease in the
price of the Company’s shares, as
reported on the TASE, following the execution hereof, shall not be regarded as a
Material Adverse Effect; provided that the underlying reasons for such decrease
may nevertheless constitute a Material Adverse Effect.

       

      (j)         Litigation. Except as
set forth in Exhibit
3(i) hereto, there are no claims, actions or proceedings pending or, to
the Company’s knowledge, threatened against the Company or any of its
Subsidiaries, any of their respective properties or any of their respective
officers or directors, in their capacity as such, before any court,
administrative, governmental, arbitral, mediation or regulatory authority or
body, domestic or foreign.

       

      (k)         Compliance with Laws.
To the Company’s knowledge, the
Company is not in violation of Applicable Law which would reasonably be likely
to have a Material Adverse Effect. The term “Applicable Law” means
any provision of any statute, law, ordinance, rule, regulation, decree, order,
concession, grant, permit or license or other governmental authorization or
approval applicable to the Company.

       

      (l)         Intellectual
Property.

       

      (i)         The
Company and its Subsidiaries, to the extent applicable, own and have good and
valid title to, or have the exclusive right to use, free and clear of any
Encumbrances, all patents, trademarks, service marks, logos, slogans, designs,
copyrights, trade names, design registrations, and other intellectual property
and any trade secrets, know-how, computer programs, documentation and technology
which can reasonably be anticipated to be material to the conduct of the
businesses of the Company and its Subsidiaries, taken as a whole (all of the
foregoing items collectively referred to as the “Intellectual
Property”).


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      (ii)         (a)
No proceedings are pending or, to the Company’s knowledge, threatened, which
challenge the validity of the ownership (to the extent applicable), or the
exclusive right to use, by the Company and/or any of its Subsidiaries of the
Intellectual Property; (b) the Company has no knowledge of any infringement or
infringing use of any of the Intellectual Property or licenses by any person or
entity; (c) no infringement by the Company of any intellectual property right or
other proprietary right of any third party has occurred and no claim has been
made by any third party based upon an allegation of any such infringement; and
(d) other than as set forth in the agreements listed in Schedule 3(l)(ii) hereto
and the obligations of the Company towards the OCS, there are no restrictions on
the direct or indirect transfer of any license, or any interest therein, held by
the Company or any Subsidiary in respect of the Intellectual
Property.

       

      (iii)         The
Company takes commercially reasonable efforts to ensure that all officers,
employees and consultants of the Company and its Subsidiaries sign and deliver
to their respective employer an agreement regarding the protection of
proprietary information and the assignment to such entity of any intellectual
property arising from services performed for such employer by such persons, all
in form satisfactory to the Company.

       

      (iv)         The
Company takes commercially reasonable efforts to ensure that all use, disclosure
or appropriation of confidential information of the Company or any of its
Subsidiaries by or to a third party shall be subject to the terms of a written
agreement between the Company or such Subsidiary and such third party, all in
form satisfactory to the Company.

       

      (m)         Material
Agreements. The material agreements to which the Company or any of
its Subsidiaries is a party (the “Material
Agreements”) are listed and described in section 1.24 of the Periodical
Report. Such Material Agreements are valid and in full force and effect on the
date hereof, and neither the Company nor, to the Company’s knowledge, any other
party, has violated any material provision thereof, or committed or failed to
perform any act which with or without notice, lapse of time or both would
constitute a material default under the provisions of, any Material
Agreement.


       

      (n)         Employees.

       

      The
employment agreements currently in force for each of the three most highly paid
individuals employed by the Company and its Subsidiaries (treated as a group for
such purposes) are listed and described in section 1.18 of the Periodical
Report.


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      (o)         Taxation.

      


      (i)         
The Financial Statements make full provision for all taxation
for which the Company was then or thereafter became or may hereafter
become liable or accountable in respect of or by reference to any income, sales,
value added, profit, receipt, gain, transaction, agreement, distribution or
event which was earned, accrued, received, or realized, entered into, paid, made
or accrued on or before December 31, 2007, and the Company has promptly paid or
provided in its books of account for all taxation for which it has or may
hereafter become liable or accountable in the period from that date and until
the date hereof.

       

      (ii)        The
Company has at all times and within the requisite time limits promptly, fully
and accurately observed, performed and complied with all material obligations or
conditions imposed on it, or to which any claim, deduction, allowance or relief
made, claimed by or afforded to it was made subject, under any legislation
relating to taxation.

       

      (iii)          The
Company is not aware of any circumstances which will or may, whether by lapse of time or
the issue of any notice of assessment or otherwise, give rise to any dispute
with any relevant taxation authority in relation to its liability or
accountability for taxation, any claim made by it, any relief, deduction, or
allowance afforded to it, or in relation to the status or character of the
Company or any of its enterprises under or for the purpose of any
provision of any legislation relating to taxation.

       

      (p)         
Insurance. The
Company has the benefit of adequate insurance against such risks as are usually
and reasonably insured against by companies carrying on the same or a similar
business.

       

      (q)         
Properties and
Assets.

       

      The real
property owned and leased by the Company and any other Company interest in real
property (including any facilities used by the Company in consideration for
service fees, e.g. labs etc.) is listed and described in section 1.15 of the
Periodical Report.

       

      (r)         
Brokers. Except
as set forth in the Agreement attached hereto as Exhibit 3(r) hereto
as to amounts payable by the Company, no person or firm has, or will have, as a result of
any act or omission by the Company or anyone acting on behalf of the Company,
any right, interest or valid claim against the Company or
the Purchaser for any commission, fee or other compensation as a finder or
broker or in any similar capacity with respect to the transactions contemplated
under this Agreement.

       

      (s)         
Compliance with
Israeli securities rules and regulations. The Company is, and at all
times has been, in all material respects, in compliance with all applicable
regulatory requirements, including without limitation, all filing requirements
stipulated by the Israeli Securities Law, 1968 and the regulations promulgated
thereunder (the “Filings”). The
Filings contain all statements required to be included therein. The Filings were
prepared in accordance with applicable law and regulations.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      (t)           Related
Party Transactions. Except as set forth in Exhibit 3(t) attached hereto, no
Related Party (as defined below) has any direct or indirect interest in any
asset used in or otherwise relating to the business of the Company or any of its
Subsidiaries; (b) no Related Party is indebted to the Company or any of its
Subsidiaries; (c) no Related Party has entered into, or has had any direct or
indirect financial interest in, any agreement, transaction or business dealing
with or involving the Company or any of its Subsidiaries; (d) no Related Party
is competing directly or indirectly with the Company or any of its Subsidiaries;
and (e) no Related Party has any claim or right against the Company or any of
its Subsidiaries (other than rights to receive amounts not yet due with respect
to compensation for services performed as an employee or director of the Board
of Directors of the Company or any of its Subsidiaries).

       

      For
purposes of this Agreement, “Related Party” means any person or entity who is,
or who has at any time since December 31, 2005 been, an “Interested Party” , or a “Relative”  of
an “Interested Party”, both terms as defined in the Israeli Companies Law,
1999.

       

      4.         
Representations and
Warranties of the Purchaser. The Purchaser hereby represents and
warrants to the Company as follows:

       

      (a)          Corporate Authorization; Validity of Agreement. The
execution, delivery and performance of this Agreement by the Purchaser have been
duly authorized by all requisite corporate actions and no further corporate
consent or authorization of the Purchaser or its shareholders is required. This
Agreement has been duly executed and delivered by the Purchaser and, when duly
authorized, executed and delivered by the Company, will be a valid and binding
agreement enforceable against the Purchaser in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other similar laws of general applicability relating to or
affecting creditors’ rights generally and to general principles of
equity.

       

      (b)          Accredited Investor
Status. The Purchaser is an “accredited investor” as that term is defined
in Rule 501(a)(3) of Regulation D promulgated under the U.S. Securities Act of
1933, as amended (the “Securities
Act”).

       

      (c)          Reliance on
Exemptions. The Purchaser understands that the Issued Shares are being
offered and sold to in reliance on specific exemptions from the registration
requirements of the United States federal and state securities laws and that the
Company is relying in part upon the truth and accuracy of the Purchaser’s representations
and warranties set forth herein in order to determine the availability of such
exemptions and the eligibility of the Purchaser to acquire the Issued
Shares.

       

      (d)          The Purpose. The
Purchaser is purchasing the Issued Shares for its own account not with a view to
or for resale in connection with, the public sale or distribution thereof,
except pursuant to sales registered under the Securities Act (such as those
contemplated by Section 6 hereof) or an exemption therefrom.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      (e)         
Knowledge and
Experience. The Purchaser has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of
purchasing the securities of the Company, has the ability to bear the economic
risks of such purchase for an indefinite period of time, can afford the complete
loss of the value of the securities it is purchasing and recognizes that such
purchase of securities of the Company involves substantial risk; provided,
however, that nothing set forth herein shall be deemed to detract from the
Company’s
representations and warranties as set forth, herein or from the Purchaser's
right to fully rely thereon.

       

      (f)         
Transfer
or Resale. The Purchaser understands and acknowledges that (i) the
Issued Shares, the Convertible Debenture and the Warrant are restricted for
resale through the TASE in accordance to the Israeli Securities Law, 5728-1968
for the periods and amounts specified therein; and (ii) unless the Issued Shares
are registered under the Securities Act as set forth in Section 6 below and
qualified under any state or foreign securities laws, the Issued Shares may not
be offered for sale, sold, assigned or transferred in the United States except
through an exemption from the registration and prospectus delivery requirements
of the Securities Act, to the extent applicable.

       

      5.   
Legend. Until a
registration statement under the Securities Act as described in Section 6 below
is in effect, the Purchaser understands that the certificates or other
instruments representing the Issued Shares shall bear a restrictive legend
composed of exactly the following words capitalized below:

       

      “THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE SECURITIES
LAWS. SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, ASSIGNED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISTRIBUTED IN THE ABSENCE OF REGISTRATION
UNDER THE ACT OR RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
ACT”.


       

      Additional
language may be added at any time to the legend to the extent required to be
placed thereon by applicable securities laws, contract or
otherwise.


       

      6.   
Registration.

       

      6.1         
Filing
of Registration Statement. Subject to Section 6.4 hereof,
the Company shall use its best efforts to prepare and file a registration
statement which shall include the Issued Shares within nine (9) months from the
Closing Date, on a registration statement on Form S-1 or such other applicable
form of registration available under the Securities Act (the “Registration
Statement”). Following such filing, the Company shall use its best
efforts to cause the Registration Statement to be declared effective under the
Securities Act as promptly as practicable after the filing thereof, subject to
the resolution of any comments received from the staff of the United States
Securities and Exchange Commission (the “SEC”). The
Registration Statement shall be effective for a continuous period of at least
four (4) years following the declaration thereof as effective. Immediately after
the Registration Statement is declared effective, the Company shall list the
shares of the Company for trading in NASDAQ (and if the Company does not meet
NASDAQ qualifications for listing, list the shares at the OTCQX). The Company
shall make best efforts to cause a market maker to trade in the Company’s shares in order
to allow for sufficient trading volume on the stock exchange.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      6.2         
Demand
Registration.

       

      (a)           Form S-1
Demand. If at any time after six (6)
months following the end of the effectiveness of the Registration Statement or
following twelve (12) months of the Closing Date if a Registration Statement is
not in effect by that time, the Purchaser requests in writing that the Company
file a registration statement on Form S-1 (or such other applicable form for
registration of such Registrable Securities) for the registration under the
Securities Act of Registrable Securities in an amount equal to at least 25% of
the Registrable Securities, then the Company shall as soon as practicable, and
in any event within sixty (60) days after the date of receipt of such request,
file a Form S-1 registration Statement (or such other applicable form) under the
Securities Act covering all Registrable Securities that the Purchaser requested
to be registered as specified in such notice, and including any other securities
of the Company that the Company deems proper to include in such registration, in
each case subject to the limitations set forth in this Section 6.2 and
6.4.

       

      (b)           The
Company shall be permitted to register other Common Stock in any registration
contemplated by 6.2(a) provided, however, that subject to the last sentence of
Section 8.4 below, if the managing underwriter advises the Company in writing
that marketing factors require a limitation of the number of shares to be
underwritten, the Purchaser's Registrable Securities shall be subject to
customary underwriter cutbacks applicable to all holders of securities subject
to registration in such offering; provided further that such cutbacks shall
apply to the Purchaser and other participants in such offering on a pro rata
basis. The Company shall not be obligated to effect, or to take any action to
effect, any registration pursuant to this Section 6.2(i) during the period that
is sixty (60) days before the Company's good faith estimate of the date of
filing of, and ending on date that is one hundred eighty (180) days after the
effective date of, a Company-initiated registration, provided, that the Company is actively
employing in good faith all reasonable efforts to cause such registration
statement to become effective. The Company shall not be required to effect more
than two (2) registrations pursuant to this Section 6.2. The
Company shall not be required to effect any registration statement demanded by
Purchaser under this Section 6.2 if any registration statement demanded by
Purchaser was effective within the twelve (12) months prior to the Company's
receipt of the demand for registration under this Section 6.2, unless the
Purchaser shall bear all cost and expenses of such registration
statement.


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      6.3         
S-3
Registration; Piggyback
Registration. The Purchaser shall have the right to request the Company
to register Registrable Securities on a registration statement Form S-3 at any
time that the Company is eligible to use a Form S-3 under applicable United
State securities law. If the Company at any time proposes to register any of its
securities (other than (i) in a demand registration under Section 6.2, (ii) in a
registration relating solely to employee benefit plans; (iii) in a registration
relating solely to a Rule 145 transaction (such as a registered stock merger
transaction); or (iv) in a registration relating to a corporate reorganization
or other transaction on Form S-4, or in each case a foreign equivalent thereof)
under the Securities Act, it shall give notice to the Purchaser of such intention.
Upon the written request of the Purchaser given to the Company within
twenty (20) days after receipt of any such notice, the Company shall include in
such registration all of the Registrable Securities requested to be registered
in such request. The Company will cause the managing underwriter or
underwriters, if any, of any proposed registration of securities of the Company
through underwriters in such offering to permit the Purchaser, if holding
Registrable Securities requested to be included in such registration in the
Shareholder's notice, to include in the registration for such offering all such
requested Registrable Securities on the same terms and conditions as any
securities of the Company included therein: provided, that the Purchaser shall
have given customary representations and warranties and indemnifications in
connection therewith. Subject to the last sentence of Section 8.4 below, if the
managing underwriter advises the Company in writing that marketing factors
require a limitation of the number of shares to be underwritten, the Purchaser's
Registrable Securities shall be subject to customary underwriter cutbacks
applicable to all holders of securities subject to registration in such
offering;  provided, that such cutbacks shall
apply to the Purchaser and other participants in such offering on a pro rata
basis.

       

      6.4         
Blackout Periods. Notwithstanding the foregoing
obligations in Section 6.1, 6.2 and 6.3, if the Company furnishes to the
Purchaser a certificate signed by the Company's chief executive officer stating
that in the good faith judgment of the Company's Board of Directors it would be
materially detrimental to the Company to maintain the effectiveness of such
Registration Statement (or, if no Registration Statement has yet been filed or
become effective, to file such a Registration Statement or cause it to become
effective) because such action would (i) require the public disclosure of
material non-public information concerning any transaction or negotiations
involving the Company or any of its affiliates that would interfere with such
transaction or negotiations, (ii) otherwise require premature disclosure of
information, in either case that would be significantly disadvantageous or (iii)
render the Company unable to comply with requirements under the Securities Act,
the Securities and Exchange Act of 1934 and/or the securities laws of Israel or
the Tel Aviv Stock Exchange (a “Disadvantageous
Condition”), then the Company shall have the right to defer taking action
with respect to any filing or cause such Registration Statement or other filing
to become unavailable for use, in each case for such period as a Disadvantageous
Condition shall exist; provided, that the Company shall not
exercise such rights for a period of more than sixty (60) consecutive days from
the date of delivery of such notice to the Purchaser, and in any event when
aggregated with any other Disadvantageous Condition not more than an aggregate
of one hundred (100) days in any 365-day period. If the Company exercises such
right, it will provide written notice thereof to the Purchaser, and upon the
receipt of any such notice, the Purchaser shall forthwith discontinue use of the
prospectus contained in such registration statement as provided in this Section
6 and otherwise act as instructed in such notice. If any Disadvantageous
Condition shall cease to exist, the Company shall promptly notify the Purchaser
to such effect.


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      6.5         
Definitions. As
used in this Agreement,

       

      (a)         
“Registrable
Securities” shall mean the Issued Shares and any Common Stock
issued or issuable with respect to any Issued Shares, including by way of
conversion, exercise, stock split or stock dividend, in connection with a
recapitalization or merger, consolidation or other reorganization, or pursuant
to a distribution; provided that any such Registrable
Securities shall cease to be considered Registrable Securities if and when (i) a
registration statement with respect to the disposition of such securities shall
have become effective under the Securities Act and such securities shall have
been disposed of pursuant to such effective registration statement, (ii) such
securities shall have been sold under circumstances in which all of the
applicable conditions of Rule 144 (or any similar provisions then in force) are
met, (iii) such securities may be sold pursuant to Rule I44(k) or otherwise in
the public market without being registered pursuant to the Securities Act, or
(iv) such securities shall have ceased to be outstanding, provided, further, that any such
securities that have ceased to be Registrable Securities pursuant any of the
foregoing clauses cannot thereafter become Registrable Securities and securities
that are issued or distributed following the date of such disposition or sale by
way of dividends or otherwise in respect of such securities that has ceased to
be Registrable Securities shall not be Registrable Securities.

       

      (b)         
“Damages” shall
mean any losses, damages, claims, liabilities, joint or several, costs and
expenses (including any amounts paid in any settlement effected with the
Company's consent) to which a party hereto or its underwriter or controlling
person may become subject under the Securities Act, the Securities Exchange Act
of 1934, the Israeli Securities Law, 1968, as amended, or other United States
federal or state law or foreign securities laws, insofar as such losses,
damages, claims, liabilities (or actions or proceedings in respect thereof),
costs or expenses arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in the registration
statement or included in the prospectus, as amended or supplemented, or (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances in which they are made, not misleading.

       

      6.6            Purchaser to
Furnish Information. The
Company may require the Purchaser to furnish to the Company a certified
statement as to the number of shares of Common Stock that it beneficially owns
and, if required by the SEC, the person thereof that has voting and dispositive
control over such Common Stock. It shall be a condition precedent of the Company
to take any action pursuant to this Section 6 with respect to the Registrable
Securities of the Purchaser, that the Purchaser shall furnish to the Company
such information regarding itself, the Registrable Securities held by it, and
the intended method of disposition of such securities as is reasonably required
to effect the registration of the Purchaser's Registrable
Securities.

       

      6.7            Registration Procedures.
In   connection   with   the
Company's registration obligations hereunder, the Company shall:

       

      (a)         
Prepare and file with the SEC a registration statement with respect to such
Registrable Securities and use all commercially reasonable efforts to cause such
registration statement to become effective, and keep such registration statement
(or in the case of Section 6.1, the Registration Statement) effective for up to
forty eight (48) months after the applicable effective date or, if earlier,
until the Purchaser has completed the distribution related
thereto.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      (b)           Not
less than five (5) business days prior to the filing of the Registration
Statement or any related prospectus or any amendment or supplement thereto, the
Company shall furnish to the Purchaser copies of all such documents proposed to
be filed. The Company shall not file in the Registration Statement or any such
prospectus or any amendments or supplements thereto information to which the
Purchaser shall reasonably object in good faith, provided that
such objection by the Purchaser is based solely on information provided in
writing to the Company by the Purchaser relating to information contained
therein regarding the Purchaser, and provided, the Company is notified of
such objection in writing no later than three (3) business days after the
Purchaser has been so furnished copies of such documents. The Purchaser shall
within five (5) business days after receipt of the request therefor by the
Company provide revised information which the Company reasonably requests for
purposes of compliance with the rules and regulations governing the Registration
Statement and the exhibits and documents in connection therewith.

       

      (c)           Prepare
and file with the SEC such amendments and supplements to such Registration
Statement, and the prospectus used in connection with such registration
statement, as may be necessary to comply with the Securities Act in order to
enable the disposition of all securities covered by such Registration
Statement.

       

      (d)           Furnish
to the Purchaser such number of copies of a prospectus, including a preliminary
prospectus, as required by the Securities Act, and such other documents as the
Purchaser may reasonably request in order to facility its disposition of the
Registrable Securities.

       

      (e)           Use
its commercially reasonable efforts to register and qualify the securities
covered by such Registration Statement under such blue-sky laws in the United
States as shall be necessary for compliance by the Purchaser with such laws;
provided, that the Company shall not
be required to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions, unless the Company is already
subject to service in such jurisdiction and except as may be required by the
Securities Act.

       

      (f)           Notify
the Purchaser, promptly after the Company receives notice thereof, of the time
when a Registration Statement has been declared effective by the SEC, when a
supplement to any prospectus forming a party of such Registration Statement has
been filed, and when there is any request by the SEC that the Company amend or
supplement such Registration Statement or prospectus.

       

      (g)           Provide
a transfer agent and registrar for all Registrable Securities registered
pursuant to this Agreement and provide a CUSIP number for all such Registrable
Securities, in each case not later than the effective date of such
registration.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      7.     Indemnification
relating to Registration. In
the event of any registered offering of Registrable Securities pursuant to
Section 6 of this Agreement:

       

      (a)           The
Company will indemnity and hold harmless, to the fullest extent permitted by
law, the Purchaser, any underwriter for the Purchaser, and each person, if any,
who controls the Purchaser, from and against any and all Damages, and the
Company will reimburse the Purchaser, such underwriter and each such controlling
person of the Purchaser, promptly upon demand, for any reasonable legal or any
other expenses reasonably incurred by them in connection with investigating or
defending against such loss, claim, Damages, liability, action or proceeding;
provided, however, that the Company
will not be liable in any such case to the extent that any such loss, damage,
liability, cost or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in conformity
with information furnished in writing by or on behalf of the Purchaser, such
underwriter or such controlling persons expressly for use in connection with
such registration; provided, that this indemnity shall
not be deemed to relieve any underwriter of any of its due diligence
obligations; and provided, further, that the indemnity agreement
contained in this subsection 7(a) shall not apply to amounts paid in settlement
of any such claim, loss, damage, liability or action if such settlement is
effected without the consent of the Company, which consent shall not be
unreasonably withheld.

       

      (b)         
The Purchaser will indemnify and hold harmless, to the fullest extent permitted
by law, the Company, any underwriter for the Company, and each person, if any,
who controls the Company, from and against any and all Damages, and the
Purchaser will reimburse the Company, any underwriter and each such controlling
person of the Company, promptly upon demand, for any reasonable legal or other
expenses incurred by them in connection with investigating, preparing to defend
or defending against such loss, claim, Damages, liability, action or proceeding;
in each case to the extent, but only to the extent, that such loss, claim,
Damages, liability, action or proceeding arise out or are based upon actions or
omissions made in reliance upon and in conformity with written information
furnished by or on behalf of the Purchaser expressly for use in connection with
such registration; provided, that this indemnity shall
not be deemed to relieve any underwriter of any of its due diligence
obligations; and provided, further, that the indemnity
agreement contained in this subsection 7(b) shall not apply to amounts paid in
settlement of any such claim, loss, damage, liability or action if such
settlement is effected without the consent of the Purchaser, as the case may be,
which consent shall not be unreasonably withheld. In no event shall the
liability of a Purchaser exceed the net proceeds from the offering received by
such Purchaser, except in the case of fraud or willful misconduct by the
Purchaser.

       

      (c)         
The foregoing indemnity agreement in Section 7(a) and (b) is subject to the
condition that, insofar as it relates to any such untrue statement (or alleged
untrue statement) or omission (or alleged omission) made in the preliminary
prospectus but eliminated or remedied in the amended prospectus at the time the
registration statement becomes effective or in the final prospectus, such
indemnity agreement shall not inure to the benefit of an indemnified party
hereunder if a copy of the final prospectus was not furnished to the person or
entity asserting the loss, liability, claim or damage at or prior to the time
such furnishing is required by the Securities Act.


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      (d)         
Promptly after receipt by an indemnified party pursuant to the provisions of
Sections 7(a) or 7(b) of notice of the commencement of any action involving the
subject matter of the foregoing indemnity provisions, such indemnified party
will, if a claim thereof is to be made against the indemnifying party pursuant
to the provisions of said 7(a) or 7(b), promptly notify the indemnifying party
of the commencement thereof; but the omission to notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party otherwise than hereunder. In case such action is brought against any
indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party shall have the right to participate in, and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof with counsel reasonably satisfactory to
such indemnified party; provided, however, that if the
defendants in any action include both the indemnified party and the indemnifying
party and there is a conflict of interests which would prevent counsel for the
indemnifying party from also representing the indemnified party, the indemnified
party or parties shall have the right to select one separate counsel to
participate in the defense of such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party will not
be liable to such indemnified party pursuant to the provisions of said Sections
7(a) or 7(b) for any legal or other expense subsequently incurred by such
indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed counsel in accordance with the provision
of the preceding sentence, (ii) the indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after the notice of the commencement
of the action and within fifteen (15) days after written notice of the
indemnified party’s intention to employ separate counsel pursuant to the
previous sentence, or (iii) the indemnifying party has authorized the employment
of counsel for the indemnified party at the expense of the indemnifying party.
No indemnifying party will consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation.

       

      (e)         
If recovery is not available under the foregoing indemnification provisions, for
any reason other than as specified therein, the parties entitled to
indemnification by the terms thereof shall be entitled to contribution to
liabilities and expenses as more fully set forth in an underwriting agreement to
be executed in connection with such registration. In determining the amount of
contribution to which the respective parties are entitled, there shall be
considered the parties’ relative knowledge and access to information concerning
the matter with respect to which the claim was asserted, the opportunity to
correct and prevent any statement or omission, and any other equitable
considerations appropriate under the circumstances.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


       

      8.   Anti Dilution
and Most Favored Nation
Protection

      


      8.1         
Adjustment due to Future Issuance of Securities. Until such time in which an
aggregate amount of US$ 15,000,000 has been invested in the Company (excluding
the Excluded Capital (as defined below)), in any event that the Company issues
any additional securities to Purchaser or to any third party, save for Excluded
Issuances (as defined below), either at a purchase price, conversion price or
exercise price per share less than any of the purchase price, conversion price
or exercise price per share paid or payable for an Issued Share, the Purchaser
will benefit from a “full ratchet” anti-dilution protection, such that the price
paid or payable in consideration for such Issued Share shall be reduced
retroactively to the Closing Date to the lowest of the purchase price,
conversion price or exercise price per share at which such additional new
securities have been issued and if such price reduction applies for the purchase
price, the Company shall immediately upon issuance of such shares issue to the
Purchaser a number of additional shares of Common Stock that is equal to the
difference between the number of Common Stock issued to the Purchaser before the
relevant anti-dilution adjustment and the number of Common Stock that would have
been issued to the Purchaser at the reduced purchase price per
share.

       

      “Excluded
Capital” means the Purchase Price, the Loan Amount, the aggregate exercise price
of the Warrant, any amounts invested in the Company up to US$ 5,000,000
(including the Share Purchase and the Loan Amount) within 3 months from the
Closing Date, any amount invested by the Purchaser, any amounts received by the
Company not for equity or securities convertible into equity, funds from the OCS
or other governmental funding (including BIRD) and all other types of funded
R&D either for royalties or for other non-equity consideration.

       

      8.2         
“Excluded Issuances” shall mean any of the following: (i) securities issued in
the ordinary course of business to directors, officers, employees, or
consultants of the Company pursuant to any stock option or stock incentive plan
reserved for Company officers, directors, employees or consultants and approved
by the Company's Board, and, if applicable, any securities issued upon the
exercise of such securities; (ii) securities issued pursuant to any stock split,
recapitalization, reclassification or payment of any dividend or distribution
with respect to the Company’s issued and outstanding share capital, including
any bonus shares; (iii) securities issued upon the conversion of any issued and
outstanding options or warrants granted as of the date of the Closing; or (iv)
securities issued in connection with an acquisition transaction of another
entity in the field of business of the Company as approved by the Company’s
Board of Directors, which issuances shall not exceed in the aggregate 15% of the
Company’s issued and outstanding share capital as of the date of this Agreement
and provided that the current assets of the acquired entity do not exceed its
current liabilities as reflected in the last audited financial statements of
such entity immediately preceding the acquisition.

       

      8.3         
Whenever the purchase price is adjusted pursuant hereto, the Company shall
promptly mail to the Purchaser a notice setting forth the conversion price after
such adjustment and setting forth a brief statement of the facts requiring such
adjustment.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      8.4         
Most Favored
Terms. Until such time as an aggregate amount of US$ 15,000,000 has been
invested in the Company (excluding the Excluded Capital), in the event that any
person or entity is issued any type of security including, but not limited to,
any type of debt, warrant or equity securities of the Company under terms more
favorable than those set forth in this Agreement, the Convertible Debenture or
the Warrant (collectively, the “Issued Securities”), then, at the option of the
Purchaser, the Issued Securities shall be construed as containing the more
favorable terms afforded to such third party, as though such terms were
previously provided herein retroactively from the Closing Date. In the event
that the Company issues convertible debentures which are publicly traded, the
Purchaser shall have the right to replace the Convertible Debenture with such
publicly traded convertible debentures in an amount equal to the outstanding
Loan Amount at such time, the Convertible Debenture shall be cancelled and the
provisions of the publicly traded debentures shall apply. For example, if the
Company issues shares of the Company with a higher purchase price per share but
with liquidation preferences rights and/or anti-dilution rights that are
superior to the rights of the Purchased Shares, the Purchased Shares shall be
deemed to include such superior liquidation preference and/or anti-dilution
rights while all other terms of the Purchased Shares will remain unchanged and
in effect. The Company shall immediately (subject to applicable law) notify the
Purchaser in writing on the terms of any issuance of equity of the Company. In
the event that any person or entity is granted by the Company registration
rights (including, but not limited to, preferences in underwriter's cutbacks)
under terms more favorable than Purchaser's rights then in effect, such
favorable rights shall be deemed to have been granted to Purchaser as of the
Closing Dates.

       

      8.5         
Any dispute on matters under this Section 8 shall be referred to a resolution by
Giza Singer Even and Kesselmam and Kesselman (PWC Israel). In the event of
different determinations by Giza Singer Even and PWC, the dispute shall be
resolved by calculating the average between the values determined by each of
Giza Singer Even and PWC with respect to each parameter of their determination.
The determination of Giza Singer Even and PWC will be exclusive and final. The
non-prevailing party in such dispute shall bear the expenses of Giza Singer Even
and PWC. The Company hereby acknowledges that the Purchaser and its affiliates
retain the services of Giza Singer Even and PWC in the ordinary course of
business for various tasks (including, but not limited to accounting, tax,
financial and fairness opinion, advisory services and the like) and that they
will not be limited from retaining them also in the future. In that respect, the
Company waives any claim it may have against the Purchaser and its affiliates in
connection with a conflict of interest regarding the matters contemplated in
this Section 8.5.

       

      9.      Survival of
Representations, Warranties,
etc. The respective representations, warranties, and agreements
made herein by or on behalf of the parties hereto shall remain in full force and
effect, regardless of any investigation made by or on behalf of the other party
to this Agreement or any officer, director or employee of, or person controlling
or under common control with, such party and will survive delivery of and
payment for the Purchased Shares issuable hereunder; provided that the representations and
warranties made herein shall survive until the third anniversary of the Closing
Date; and provided further, that any such representations,
warranties or agreements that survive for a time expressly provided herein shall
only survive for such period of time.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      10. Notices. All notices,
consents, waivers or other communications required or permitted hereunder shall
be in writing and shall be mailed by registered or certified mail, return
receipt requested, postage prepaid or otherwise delivered by hand, messenger,
internationally recognized courier or facsimile transmission, addressed as set
forth below or at such other address as the party shall have furnished to the
other party in writing in accordance with this provision:

      


      
        
          
            
              	
                      If
      sent to the Company to:

                       

                    
	
                      8
      Hartom St. Har Hotzvim

                    
	
                      Jerusalem
      97775

                    
	
                      Fax:
      02-5486550

                    
	
                      Email:
      avi.barak@biocancell.com

                    
	
                      Attention:
      Avi Barak

                    


            

          

        

      

       

      with a
copy (which shall not constitute notice) to:

      


      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      	
                                              Baratz,
      Horn & Co.

                                            
	
                                              1
      Azrieli Center

                                            
	
                                              Tel
      Aviv, Israel 67021

                                            
	
                                              Fax:
      +972-3-6960986

                                            
	
                                              Email:
      y.horn@bar-law.com

                                            
	
                                              Attention:
      Yuval Horn, Adv.

                                            
	 
      
	
                                              If
      sent to the Purchaser to:

                                            
	
                                              Provident
      Fund of the Hebrew University Ltd.

                                            
	  
      	 
      
	  
      	 
	 
      
	
                                              With
      a copy to:

                                            
	  
      	 
	  
      	 


                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

      Each such
notice or other communication shall for all purposes of this Agreement be
treated as effective or as having been given (i) if mailed, seven (7) business
days after mailing, (ii) if sent by hand or by messenger, upon delivery, and
(iii) if sent via facsimile transmission, twenty four (24) hours after
electronic confirmation of receipt, except if such facsimile transmission was
transmitted and received on a non-business day, on the first business day
following transmission and electronic confirmation of receipt.


       

      11. Miscellaneous

       

      (a)          Immediately
following the Closing, the board representative of Purchaser will be added to
the indemnification and insurance arrangements currently existing in the Company
with respect to all members of the Board of Directors.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      (b)        
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
ISRAEL, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF.

       

      (c)        
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto, and their respective successors and assigns, and no other person
will have any rights or obligation hereunder. Either Party may freely assign or
transfer the rights granted pursuant to this Agreement. If, as a result of such
assignment by the Purchaser, the Company is required under applicable law to
file any registration statement or prospectus with the US Securities and
Exchange Commission or any stock exchange or other similar institution in any
jurisdiction, that the Company would not be required to file under this
Agreement, the Party that seeks such assignment will cover the Company's
expenses for such filing. Notwithstanding the foregoing, the Anti Dilution and
Most Favored Nation rights set forth in Section 8 herein shall not be
transferable to any third party.

       

      (d)        
This Agreement and the Transaction Documents constitute the full and entire
understanding and agreement between the parties hereto with regard to the
subject matter hereof and supersede all prior oral or written (and all
contemporaneous oral) agreements or understandings with respect to the subject
matter hereof.

       

      (e)        
No delay or omission to exercise any right power or remedy accruing to any party
hereto upon any breach or default of the other party hereto under this Agreement
shall impair any such right, power or remedy or such party, nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereunder occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default therefore or thereafter occurring. Any waiver, permit, consent
or approval of any kind or character on the part of any party hereto of any
breach or default under this agreement, or any waiver on the part of any party
hereto of any provisions or conditions of this Agreement, must be in writing and
shall be effective only to the extent specifically set forth in such writing. AH
remedies, either under this Agreement, or by law or otherwise afforded to any
party, shall be cumulative and not alternative.

       

      (f)         
This Agreement may be executed in any number of counterparts, each of which may
be executed by less than all of the parties hereto, each of which shall be
enforceable against the parties actually executing such counterparts, and all of
which together shall constitute one instrument.

       

      (g)      
  If any provision of this Agreement, or its application to any party
hereto, shall be, or be found by an authority of competent jurisdiction to be,
invalid or unenforceable in whole or in part, such provision shall be
constructed and applied so as to give effect, to the greatest extent possible,
the original intent of the parties hereto. The invalidity or unenforceability of
any of the provisions of this Agreement shall not affect the other validity
herein, all of which shall remain in full force and effect.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      (h)          This
Agreement may be amended, modified or supplemented only by a written instrument
signed by each of the Purchaser and the Company.


       

      [Signature
Page Follows]


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      IN
WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Subscription and Registration Rights Agreement as of the date first written
above.

      


      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  BIOCANCELL
      THERAPEUTICS INC.

                                
	 	 
	
                                  By:    

                                	
                                  /s/
      Avi
      Barak                
      /s/
      A. Hochberg

                                
	 
      	
                                  Name:
       Avi
      Barak              
      A.
      Hochberg

                                
	 
      	
                                  Title:

                                


                        

                      

                    

                  

                

              

            

          

        

      

       

      
        
          
            
              
                	
                        
                          
                            PROVIDENT FUND OF THE EMPLOYEES

                            OF
      THE HEBREW UNIVERSITY LTD.

                          

                        

                      
	 	 
	
                        By:    

                      	
                        /s/  Shmuel
      Rosenbloom

                      
	 
      	
                        Name:
      Shmuel Rosenbloom

                        Title:
      CEO

                      


              

            

          

        

      

      

        
          
            	 
      	
                    PROVIDENT FUND 

                  
	 
      	
                    OF THE EMPLOYEES

                  
	 
      	
                    OF THE HEBREW UNIVERSITY 

                  
	 
      	
                    OF JERUSALEM

                  


          

        

      


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      Exhibit 1(b)

       

      CONVERTIBLE
DEBENTURE

       

      (attached)


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      Exhibit
1(c)

      


      WARRANT

      


      (attached)


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      Exhibit
2(a)

       

      COMPANY
WIRE INSTRUCTIONS

       

      Bank
Leumi Le Israel Ltd. Branch 968, Har Hotzvim, Account 724100/97

       

      Name:
BioCancell Therapeutics Inc.