**Exhibit
      10.34**




**SECURITIES
      PURCHASE AGREEMENT**




This
      Securities Purchase Agreement (this “ *Agreement* ”)
      is
      dated as of October 25, 2007 among XTL Biopharmaceuticals Ltd., a public
      company limited by shares organized under the laws of the State of Israel (the
      “ *Company* ”),
      and
      the purchasers identified on the signature pages hereto (each a “ *Purchaser* ”
and
      collectively the “ *Purchasers* ”);
      and




WHEREAS,
      subject to the terms and conditions set forth in this Agreement and pursuant
      to
      Section 4(2) of the Securities Act (as defined below), and Rule 506 and
      Regulation S promulgated thereunder, the Company desires to issue and sell
      to
      the Purchasers, and the Purchasers, severally and not jointly, desire to
      purchase from the Company (the “ *Offering* ”)
      in the
      aggregate, up to 89,000,000 Shares (as defined below) (the “ *Maximum
      Offering Amount* ”).




NOW,
      THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
      and for other good and valuable consideration the receipt and adequacy of which
      are hereby acknowledged, the Company and each Purchaser agrees as follows:




**ARTICLE
      I.**


**DEFINITIONS**




1.1  *Definitions.* In
      addition to the terms defined elsewhere in this Agreement, for all purposes
      of
      this Agreement, the following terms have the meanings indicated in this Section
      1.1:




“ *Affiliate* ”
means
      any Person that, directly or indirectly through one or more intermediaries,
      controls or is controlled by or is under common control with a Person as such
      terms are used in and construed under Rule 144 of the Securities Act. With
      respect to a Purchaser, any investment fund or managed account that is managed
      on a discretionary basis by the same investment manager as such Purchaser will
      be deemed to be an Affiliate of such Purchaser.




*“Business
      Day* ”
means
      any day except Saturday, Sunday and any day which shall be a federal legal
      holiday or a day on which banking institutions in the State of New York are
      authorized or required by law or other governmental action to close.




*“Closing* ”
means
      the closing of the purchase and sale of the Shares pursuant to this Agreement.




*“Closing
      Date* ”
means
      November 1, 2007, or as soon as reasonably practicable thereafter.




*“Commission* ”
means
      the Securities and Exchange Commission.









*“Company
      Counsel* ”
means
      Alston & Bird LLP.




*“Disclosure
      Documents”* means
      (a)
      the Company’s Annual Report on Form 20-F as filed with the Securities and
      Exchange Commission ( *“SEC”* )
      on
      March 23, 2007; and (b) the Company’s interim financial results filed on a Form
      6-K with the SEC on August 23, 2007.




*“Effective
      Date* ”
means
      the date that the Registration Statement is first declared effective by the
      Commission.




“ *Escrow
      Agent* ”
means
      Wilmington Trust Company.




“ *Escrow
      Agreement* ”
means
      the Escrow Agreement, dated as of the date of the Agreement, among the Company,
      the Escrow Agent, and the placement agents listed therein.




“ *Escrowed
      Funds* ”
has
      the
      meaning ascribed to such term in Section 2.2(b)(vii) of this
      Agreement.




*“Exchange
      Act* ”
means
      the Securities Exchange Act of 1934, as amended.




*“Expiration
      Date* ”
shall
      mean October 31, 2007, or such other date within 30 days thereafter as may
      be
      selected by the Company in its sole discretion without notice to investors.




“ *Israeli
      Company Counsel* ”
means
      Kantor & Co.




“ *Liens* ”
means
      a
      lien, charge, security interest, encumbrance, right of first refusal or other
      restriction.




*“Material
      Adverse Effect* ”
shall
      have the meaning ascribed to such term in Section 3.1(a).




*“Ordinary
      Shares”* means
      the Company’s ordinary shares, par value NIS 0.02.




*“Per
      Share Purchase Price* ”
equals
      $.135; equivalent to $1.35 per ADR.




*“Person* ”
means
      an individual or corporation, partnership, trust, incorporated or unincorporated
      association, joint venture, limited liability company, joint stock company,
      government (or an agency or subdivision thereof) or other entity of any kind.




*“Placement
      Agent Agreement”* means
      the Placement Agent Agreement, dated October 15, 2007, between the Company
      and
      certain placement agents listed therein.




*“Placement
      Agents”* means
      the placement agents named in the Placement Agent Agreement.




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*“Registration
      Statement* ”
means
      a
      registration statement meeting the requirements set forth in the Registration
      Rights Agreement and covering the resale by the Purchasers of the Shares.




*“Registration
      Rights Agreement* ”
means
      the Registration Rights Agreement, dated as of the date of this Agreement,
      among
      the Company and each Purchaser, in the form of Exhibit A hereto.




*“Rule
      144* ”
means
      Rule 144 promulgated by the Commission pursuant to the Securities Act, as
      such Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      Rule.




*“Securities”* means
      the
      Shares.




*“Securities
      Act* ”
means
      the Securities Act of 1933, as amended.




*“Shares* ”
means
      the Ordinary Shares issuable to each Purchaser pursuant to this Agreement.




*“Subscription
      Amount* ”
means,
      as to each Purchaser and the Closing, the amounts set forth below such
      Purchaser’s signature block on the signature page hereto, in United States
      dollars and in immediately available funds.




*“Trading
      Day* ”
means
      (i) a day on which American Depositary Receipts representing Ordinary
      Shares (“ *ADRs* ”),
      are
      traded on a Trading Market, or (ii) if the ADRs are not listed on a Trading
      Market, a day on which the ADRs are traded on the over-the-counter market,
      as
      reported by the OTC Bulletin Board, or (iii) if the ADRs are not quoted on
      the OTC Bulletin Board, a day on which the ADRs are quoted in the
      over-the-counter market as reported by the National Quotation Bureau
      Incorporated (or any similar organization or agency succeeding to its functions
      of reporting prices); provided, that in the event that the ADRs are not listed
      or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day
      shall mean a Business Day.




*“Trading
      Market* ”
means
      the following markets or exchanges on which the ADRs are listed or quoted for
      trading on the date in question: the American Stock Exchange, the New York
      Stock
      Exchange, or the Nasdaq Stock Market.




*“Transaction
      Documents* ”
means
      this Agreement, the Registration Rights Agreement, the Escrow Agreement and
      any
      other documents or agreements executed in connection with the transactions
      contemplated hereunder.




**ARTICLE
      II.**


**PURCHASE
      AND SALE**




2.1  *Closing.* Each
      Purchaser shall purchase from the Company, and the Company shall issue, on
      the
      terms and conditions set forth in this Agreement, and sell to each Purchaser,
      a
      number of Shares equal to such Purchaser’s Subscription Amount divided by the
      Per Share Purchase Price. Upon satisfaction of the conditions set forth in
      Section 2.2, the Closing shall occur at the offices of the Company, or such
      other location as the parties shall mutually agree. The Company may continue
      the
      Offering, in one or more Closings, until the earlier of the sale of the Maximum
      Offering Amount or until the Expiration Date. Purchasers will be required to
      deliver executed, binding Securities Purchase Agreements by the Expiration
      Date,
      the Closing of which will only be subject to the satisfaction of the Closing
      conditions in Section 2.2.




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2.2  *Closing Conditions.*




(a)  As
      a
      condition to the Purchasers’ obligation to close, at the Closing (unless
      otherwise specified below) the Company shall have satisfied each of the
      conditions set forth below or shall deliver or cause to be delivered to each
      Purchaser the items set forth below, as appropriate, any one or more of which
      may be waived in writing by the Purchasers:




(i)  this
      Agreement duly executed by the Company;




(ii)  the
      Registration Rights Agreement duly executed by the Company;




(iii)  the
      Escrow Agreement duly executed by the Company, the Escrow Agent and the
      placement agents listed therein;




(iv)  a
      legal
      opinion of each of Company Counsel and Israeli Company Counsel, in the forms
      in
      Exhibit B attached hereto;




(v)  the
      representations and warranties made by the Company herein shall be true and
      correct in all material respects (except any representation and warranty that
      is
      qualified by materiality or Material Adverse Effect shall be true and correct
      in
      all respects) as of the date hereof and as of the Closing Date with the same
      effect as if the representations and warranties were made as of the date hereof
      and as of the Closing Date;




(vi)  all
      covenants, agreements and conditions contained in this Agreement to be performed
      by the Company on or prior to the Closing shall have been performed or complied
      with in all material respects;




(vii)  no
      statute, rule, regulation, order, decree, ruling or injunction shall have been
      enacted, entered, promulgated, endorsed or threatened or is pending by or before
      any governmental authority of competent jurisdiction which in any material
      respect restricts, prohibits or threatens to restrict or prohibit the
      consummation of any of the transactions contemplated by the Transaction
      Documents; and




(viii)  as
      of the
      Closing Date, there shall have been no Material Adverse Effect with respect
      to
      the Company since the date hereof.




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With
      respect to the closing conditions listed in (v), (vi), (vii) and (viii) above,
      the Company shall deliver a certificate to such effect, in form and substance
      reasonably satisfactory to the Placement Agents.




(b)  As
      a
      condition to the Company’s obligation to close, at the Closing, each Purchaser
      shall have satisfied each of the conditions set forth below or shall deliver
      or
      cause to be delivered to the Company the items set forth below, as appropriate,
      any one or more of which may be waived in writing by the Company:




(i)  this
      Agreement duly executed by such Purchaser;




(ii)  the
      Registration Rights Agreement duly executed by such Purchaser;




(iii)  the
      representations and warranties made by the Purchasers herein shall be true
      and
      correct in all material respects (except any representation and warranty that
      is
      qualified by materiality or Material Adverse Effect shall be true and correct
      in
      all respects) as of the date hereof and as of the Closing Date with the same
      effect as if the representations and warranties were made as of the date hereof
      and as of the Closing Date;




(iv)  the
      Escrow Agreement duly executed by the Company, the Escrow Agent and the
      placement agents listed therein;




(v)  each
      Purchaser shall have performed, satisfied and complied in all material respects
      with all covenants, agreements and conditions required by the Transaction
      Documents to be performed, satisfied or complied with by such Purchaser at
      or
      before the Closing;




(vi)  no
      statute, rule, regulation, executive order, decree, ruling or injunction shall
      have been enacted, entered, promulgated, endorsed or threatened or is pending
      by
      or before any governmental authority of competent jurisdiction which prohibits
      or threatens to prohibit the consummation of any of the transactions
      contemplated by the Transaction Documents; and




(vii)  each
      Purchaser shall have caused
      such Purchaser’s Subscription Amount to be deposited by wire transfer of
      immediately available funds to such non-interest bearing escrow account of
      the
      Escrow Agent as the Escrow Agent shall designate (the “ *Escrowed
      Funds* ”) ,
      and the
      Escrow Agent shall have confirmed that it is prepared to transfer such amount
      to
      the Company subject only to satisfaction of the receipt of the certificate
      provided in Section 2.3 hereof; and




(viii)  as
      of the
      Closing Date, there shall have been no Material Adverse Effect with respect
      to
      the Company since the date hereof.




(c)  As
      a
      condition to the Company’s and each Purchaser’s obligation to close, by the time
      of the Closing, the Company’s Ordinary Shares on
      the
      Official List of the United Kingdom Listing  Authority shall
      have been de-listed, and the Registration Statement shall be declared effective
      only following such de-listing.




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(d)  As
      a
      condition to the Company’s and each Purchaser’s obligation to close, by the time
      of the Closing, the board of directors of the Company shall have approved the
      issuance of the Shares.




(e)  As
      a
      condition to the Company’s and each Purchaser’s obligation to close, by the time
      of the Closing, the Tel Aviv Stock Exchange shall have approved the listing
      of
      the Shares.




2.3  *Escrow
      Arrangement.* Each
      Purchaser shall be deemed to have irrevocably instructed the Escrow Agent to
      deliver such Purchaser’s Escrowed Funds to such bank account(s) of the Company
      as the Company shall have specified to the Escrow Agent on the Effective Date,
      subject only to the Escrow Agent having received a
      certificate, dated the Effective Date, executed by the Company certifying that
      the Registration Statement shall have been declared effective by the Commission. Following
      delivery to the Escrow Agent of the certificate referred to in this Section
      2.3,
      (i) the Escrow Agent shall promptly cause the Escrowed Funds to be sent by
      wire
      transfer to the bank account(s) specified by the Company in writing, and (ii)
      the Company shall cause to be delivered to The Bank of New York a single
      certificate for Ordinary Shares, registered in the name of The Bank of New
      York
      or its designee, on the Effective Date, and shall thereafter cause The Bank
      of
      New York to immediately issue ADRs registered in the name of such Purchaser
      or
      its designee, representing the number of Shares acquired by such Purchaser,
      in
      accordance with Section 4.10 hereof. If the Company has not delivered to the
      Escrow Agent a certificate certifying that the Registration Statement shall
      have
      been declared effective by the Commission, on or before October 18, 2008, or
      the
      condition in Section 2.2(c) has not been satisfied within 60 days of the
      execution of this Agreement, then the Company shall deliver to the Escrow Agent
      a notice terminating the Offering upon the receipt of which the Escrow Agent
      shall distribute the Escrowed Funds to each Purchaser.




2.4  *Satisfaction
      of Conditions.* Following the deposit of the Escrowed Funds by the Purchaser with the Escrow
      Agent pursuant to Section 2.2(b)(vii), this Agreement shall become wholly
      unconditional except for the satisfaction of the condition specified in Section
      2.3 and shall not be capable of termination or rescission save for the
      non-satisfaction of such condition.




**ARTICLE
      III.**


**REPRESENTATIONS
      AND WARRANTIES**




3.1  *Representations
      and Warranties of the Company.* The
      Company and XTL Biopharmaceuticals Inc., and XTL Development, Inc., each a
      Delaware corporation (the “ *Subsidiaries* ”),
      the
      Company’s subsidiaries, hereby make the following representations and warranties
      as of the date hereof and as of the Closing Date to each Purchaser:




-6-




(a)  *Organization
      and Qualification.* The
      Company and each of the Subsidiaries is an entity duly organized, validly
      existing and in good standing under the laws of the jurisdiction of its
      respective organization, with the requisite corporate power and authority to
      own
      and use its properties and assets and to carry on its business as currently
      conducted. Neither the Company nor the Subsidiaries are in violation of any
      of
      the provisions of its Memorandum and Articles of Organization, bylaws, or other
      organizational documents. The Company has no wholly-owned subsidiaries other
      than the Subsidiaries. The Company and each of the Subsidiaries is duly
      qualified to conduct business and is in good standing as a foreign corporation
      or other entity in each jurisdiction in which the nature of the business
      conducted or property owned by it makes such qualification necessary, except
      where the failure to be so qualified or in good standing, as the case may be,
      would not have or reasonably be expected to result in (i) a material
      adverse effect on the legality, validity or enforceability of any Transaction
      Document, (ii) a material adverse effect on the results of operations,
      assets, properties, business or financial condition of the Company or the
      Subsidiaries, or (iii) a material adverse effect on the Company’s ability
      to perform in any material respect on a timely basis its obligations under
      any
      Transaction Document (any of (i), (ii) or (iii), a “ *Material
      Adverse Effect* ”).




(b)  *Authorization;
      Enforcement.* The
      Company has the requisite corporate power and authority to enter into and to
      consummate the transactions contemplated by each of the Transaction Documents
      and otherwise to carry out its obligations thereunder. The execution and
      delivery of each of the Transaction Documents by the Company and the
      consummation by it of the transactions contemplated thereby have been duly
      authorized by all necessary action on the part of the Company and no further
      action is required by the Company, its board of directors or its shareholders
      in
      connection therewith. Each Transaction Document has been (or, if executed after
      the date hereof, upon delivery will be) duly executed by the Company and, when
      delivered in accordance with the terms hereof, will constitute the valid and
      binding obligation of the Company enforceable against the Company in accordance
      with its terms except (i) as limited by applicable bankruptcy, insolvency,
      reorganization, moratorium and other laws of general application affecting
      enforcement of creditors’ rights generally and (ii) as limited by laws
      relating to the availability of specific performance, injunctive relief or
      other
      equitable remedies, and (iii) with respect to the indemnification
      provisions set forth in the Registration Rights Agreement, as limited by public
      policy.




(c)  *No
      Conflicts.* The
      execution, delivery and performance of the Transaction Documents by the Company
      and the consummation by the Company of the transactions contemplated thereby
      do
      not and will not (i) conflict with or violate any provision of the
      Company’s or the Subsidiaries’ Memorandum and Articles of Association, bylaws or
      other organizational documents, or (ii) conflict with, or constitute a
      default (or an event that with notice or lapse of time or both would become
      a
      default) under, or give to others any rights of termination, amendment,
      acceleration or cancellation (with or without notice, lapse of time or both)
      of,
      any agreement, credit facility, debt or other instrument (evidencing a debt
      of
      the Company or the Subsidiaries or otherwise) or other understanding to which
      any of the Company or the Subsidiaries are a party or by which any property
      or
      asset of the Company or the Subsidiaries is bound or affected, or
      (iii) result in a violation of any law, rule, regulation, order, judgment,
      injunction, decree or other restriction of any court or governmental authority
      to which any of the Company or Subsidiaries are subject (including U.S. federal
      and state securities laws and regulations and the rules and regulations of
      any
      Trading Market), or by which any property or asset of any of the Company or
      the
      Subsidiaries is bound or affected; except in the case of each of clauses
      (ii) and (iii), such as would not have or reasonably be expected to result
      in a Material Adverse Effect.




-7-




(d)  *Filings,
      Consents and Approvals.* The
      Company is not required to obtain any consent, waiver, authorization or order
      of, give any notice to, or make any filing or registration with, any court
      or
      other U.S. federal, state, local or other governmental authority or other Person
      in connection with the execution, delivery and performance by the Company of
      the
      Transaction Documents, other than (i) the filing with the Commission of the
      Registration Statement, and one or more Forms D with respect to the Securities
      as may be required under Regulation D of the Securities Act, the
      application(s) to each Trading Market for the listing of the ADRs representing
      the Securities for trading thereon in the time and manner required thereby,
      and
      applicable Blue Sky filings, and (ii) such as have already been obtained or
      such exemptive filings as are required to be made under applicable state and
      federal securities laws.




(e)  *Capitalization.* As
      of
      September 30, 2007, the authorized capital stock of the Company consisted of
      300,000,000 Ordinary Shares, of which 220,156,932 Ordinary
      Shares were issued and outstanding. As of October 2, 2007, the Company’s
      shareholders approved an increase in the authorized capital stock of the
      Company, and the Company therefore now has, as of the date hereof, authorized
      capital stock of the Company consisting of 500,000,000 Ordinary Shares. All
      of
      such outstanding Ordinary Shares are, and all of the Shares, when issued, will
      be, duly authorized, validly issued, fully paid and nonassessable, and free
      and
      clear of all liens created by the Company, and all such Ordinary Shares were,
      and the Shares will be, issued in material compliance with all applicable U.S.
      federal and state securities laws, including available exemptions therefrom,
      and
      none of such issuances were, and the issuance of the Shares will not be, made
      in
      violation of any pre-emptive or other rights. The Company has reserved from
      its
      duly authorized capital stock the maximum number of Shares issuable pursuant
      to
      this Agreement. The issuance of the Shares will not trigger any anti-dilution
      rights of any existing securities of the Company. Except as set forth on Schedule
      3.1(e) ,
      as of
      the Closing Date, there will be no rights, subscriptions, warrants, options,
      conversion rights, or agreements of any kind outstanding to purchase from the
      Company, or otherwise require the Company to issue, any shares of capital stock
      of the Company or securities or obligations of any kind convertible into or
      exchangeable for any shares of capital stock of the Company.




(f)  *Reports
      and Financial Statements.* The
      Company has filed all reports required to be filed by it under the Exchange
      Act
      on a timely basis or has received a valid extension of such time of filing
      and
      has filed any such reports prior to the expiration of any such extension. The
      Company has made available to the Purchasers, prior to the execution of this
      Agreement, a copy of the Company’s annual report on Form 20-F filed with the
      Commission on March 23, 2007, and will make available any Current Reports on
      Form 6-K filed by the Company (as such documents have since the time of their
      filing been amended or supplemented, and together with all reports, documents
      and information filed on or after the date first written above through the
      date
      of Closing with the Commission, including all information incorporated therein
      by reference, collectively, the “ *SEC
      Reports* ”).
      The
      SEC Reports (a) complied and will comply as to form in all material respects
      with the requirements of the Securities Act and the Exchange Act, and (b) did
      not, at the time of their filing, contain any untrue statement of a material
      fact or omit to state a material fact required to be stated therein or necessary
      in order to make the statements therein, in light of the circumstances under
      which they were made, not misleading.  The
      financial statements included in the SEC Reports comply in all material respects
      with the applicable accounting requirements and the rules and regulations of
      the
      SEC with respect thereto as in effect at the time of filing. The financial
      statements included in the SEC Reports and the Disclosure Documents, have been
      prepared in accordance with generally accepted accounting principles in the
      United States applied on a consistent basis (“ *GAAP* ”),
      and
      fairly represent the financial position of the Company and its Subsidiaries
      as
      of and for the dates thereof and the results of operations and cash flows for
      the periods then ended, subject, in the case of unaudited statements, to normal,
      year-end audit adjustments and the omission of certain footnotes.




-8-




(g)  *No
      Material Change* .
      Since
      June 30, 2007, and except as disclosed in its SEC Reports, (i) the Company
      has
      not incurred any material liabilities or obligations, indirect, or contingent,
      or entered into any material oral or written agreement or other transaction
      which is not in the ordinary course of business or which could reasonably be
      expected to result in a material reduction in the future earnings of the
      Company; (ii) the Company has not sustained any loss or interference with its
      businesses or properties (whether or not covered by insurance) that could
      reasonably be expected to have a Material Adverse Effect; (iii) the Company
      has
      not paid or declared any dividends or other distributions with respect to its
      capital stock, or redeemed or purchased or otherwise acquired any of its stock
      and the Company is not in default in the payment of principal or interest on
      any
      outstanding debt obligations; (iv) the Company has not changed any compensation
      arrangement or agreement with any of its key employees or executive officers,
      or
      change the rate of pay of its employees as a group, other than in the ordinary
      course of business; (v) the Company has not changed or amended any contract
      by
      which the Company or any of its asset are bound or subject that would have
      a
      Material Adverse Effect; (vi) there has not been any change in the capital
      stock
      of the Company other than the sale of the Securities hereunder or shares or
      options issued pursuant to employee equity incentive plans or purchase plans
      approved by the Company’s Board of Directors, or indebtedness not incurred in
      the ordinary course of business that is material to the Company; and (vii)
      there
      has not been any other event which has caused, or is likely to cause, a Material
      Adverse Effect.




(h)  *Litigation.* Except
      as
      would not reasonably be expected to result in a Material Adverse Effect on
      the
      Company, there is no action, suit, claim, proceeding, inquiry or investigation
      before or by any court, public board, government agency, self-regulatory
      organization or body pending against or, to the knowledge of the Company,
      threatened against the Company or either of the Subsidiaries. The Company is
      not
      subject to any order, writ, judgment, injunction, decree or award of any court
      or any governmental authority which would reasonably be expected to result
      in a
      Material Adverse Effect on the Company.




-9-




(i)  *Compliance* .
      The
      Company has not been advised, nor does the Company have reason to believe,
      that
      it is not conducting its business in compliance with all applicable laws, rules
      and regulations of the jurisdictions in which it is conducting its business,
      except where failure to be so in compliance would not reasonably be expected
      to
      have a Material Adverse Effect.




(j)  *Intellectual
      Property* .
      (i) The
      Company owns or has obtained licenses or options for the inventions, patent
      applications, patents, trademarks (both registered and unregistered), trade
      names, copyrights and trade secrets necessary for the conduct of the Company’s
      business as currently conducted (collectively, the “ *Intellectual
      Property* ”);
      and
      (ii) (a) to the knowledge of the Company, there are no third parties who have
      any ownership rights to any Intellectual Property that is owned by, or has
      been
      licensed to, the Company for the products described in the Disclosure Documents
      that would preclude the Company from conducting its business as currently
      conducted and have a Material Adverse Effect, except for the ownership rights
      of
      the owners of the Intellectual Property licensed or optioned by the Company;
      (b)
      there is no pending or, to the Company’s knowledge, threatened action, suit,
      proceeding or claim by others challenging the rights of the Company in or to
      any
      Intellectual Property owned, licensed or optioned by the Company, other than
      claims which would not reasonably be expected to have a Material Adverse Effect;
      (c) there is no pending or, to the Company’s knowledge, threatened action, suit,
      proceeding or claim by others challenging the validity or scope of any
      Intellectual Property owned, licensed or optioned by the Company, other than
      non-material actions, suits, proceedings and claims; and (d) there is no pending
      or, to the Company’s knowledge, threatened action, suit, proceeding or claim by
      others that the Company infringes or otherwise violates any patent, trademark,
      copyright, trade secret or other proprietary right of others, other than
      non-material actions, suits, proceedings and claims.




(k)  *Material
      Agreements* .
      All
      material agreements (“ *Material
      Agreements* ”)
      to
      which the Company or either of the Subsidiaries is a party or to which the
      property or assets of the Company or either of the Subsidiaries are subject
      are
      included as part of or specifically identified in the SEC Reports to the extent
      required by the rules and regulations of the SEC as in effect at the time of
      filing. Except for the Material Agreements, the Company has no material
      contracts. Neither the Company nor, to the Company’s knowledge, any other party
      to the Material Agreements, is in breach of or default under any of such
      contracts which would reasonably be expected to have a Material Adverse
      Effect.




(l)  *Taxes* .
      Except
      as disclosed in the Disclosure Documents or the SEC Reports, the Company and
      each of the Subsidiaries have filed all necessary federal, state and foreign
      income and franchise tax returns and has paid or accrued all taxes shown as
      due
      thereon, and the Company has no knowledge of a tax deficiency which has been
      or
      might be asserted or threatened against it which might reasonably be expected
      to
      have a Material Adverse Effect.




-10-




(m)  *Governmental
      Permits, Etc* .
      The
      Company has all franchises, licenses, certificates and other authorizations
      from
      such federal, state or local government or governmental agency, department
      or
      body that are currently required for the operation of the business of the
      Company as currently conducted, except where the failure to posses currently
      such franchises, licenses, certificates and other authorizations is not
      reasonably expected to have a Material Adverse Effect. The Company has not
      received any notice of proceedings relating to the revocation or modification
      of
      any such permit which, if the subject of an unfavorable decision, ruling or
      finding, could reasonably be expected to have a Material Adverse
      Effect.




(n)  *Conformity
      of Descriptions.* The
      Shares conform in all material respects to the descriptions of the Company’s
      Ordinary Shares contained in the Company’s SEC Reports and other filings with
      the Commission and the Disclosure Documents.




(o)  *Statements
      True and Correct.* No
      representation, warranty, statement, certificate, instrument, or other writing
      furnished or to be furnished by the Company to Purchaser or its representatives
      pursuant to this Agreement, the Disclosure Documents or any other document,
      agreement, or instrument referred to herein contains or will contain any untrue
      statement of material fact or will omit to state a material fact necessary
      to
      make the statements therein not misleading.




(p)  *Certain
      Fees.* Any
      brokerage, finder’s fees or commissions that are or will be payable by the
      Company to any broker, financial advisor or consultant, finder, placement agent,
      investment banker, bank or other Person with respect to the transactions
      contemplated by this Agreement will be paid solely by the Company.




(q)  *Private
      Placement.* Neither
      the Company nor any Person acting on behalf of the Company has sold or offered
      to sell or solicited any offer to buy the Securities by means of any form of
      general solicitation or advertising. Assuming the accuracy of the Purchasers
      representations and warranties set forth in Section 3.2, no registration
      under the Securities Act is required for the offer, issuance and sale of the
      Securities by the Company to the Purchasers as contemplated hereby. The issuance
      and sale of the Securities hereunder does not contravene the rules and
      regulations of any Trading Market.




(r)  *Offering
      Materials* .
      The
      Company has not distributed and will not distribute prior to the Closing Date
      any offering material in connection with the offering and sale of the Securities
      other than the Disclosure Documents or any amendment or supplement thereto.
      Neither the Company nor any person acting on its behalf has in the past or
      will
      hereafter take any action independent of the placement agent to sell, offer
      for
      sale or solicit offers to buy any securities of the Company which would subject
      the offer, issuance or sale of the Securities, as contemplated by this
      Agreement, to the registration requirements of Section 5 of the Securities
      Act.




(s)  *Investment
      Company.* The
      Company is not, and is not an Affiliate of, an “investment company” within the
      meaning of the Investment Company Act of 1940, as amended.




-11-




(t)  *Application
      of Takeover Protections.* Assuming
      the Purchasers beneficially own any Ordinary Shares prior to the date hereof,
      the Company and its Board of Directors have taken all necessary action, if
      any,
      in order to render inapplicable any control share acquisition, business
      combination, poison pill (including any distribution under a rights agreement)
      or other similar anti-takeover provision under the Company’s charter documents)
      or the laws of its jurisdiction of organization that is or could become
      applicable to the Purchasers as a result of the Purchasers and the Company
      fulfilling their obligations or exercising their rights under the Transaction
      Documents, including without limitation the Company’s issuance of the Shares and
      the Purchasers’ ownership of the Shares.




(u)  *No
      Integrated Offering.* Neither
      the Company, nor any of its Affiliates, nor any Person acting on its or their
      behalf has, directly or indirectly, made any offers or sales of any security
      or
      solicited any offers to buy any security, under circumstances that would cause
      this offering of the Shares to be integrated with prior offerings by the Company
      for purposes of the Securities Act or any applicable shareholder approval
      provisions, including, without limitation, under the rules and regulations
      of
      any exchange or automated quotation system on which any of the securities of
      the
      Company are listed or designated.




(v)  *Listing
      and Maintenance Requirements.* Except
      as disclosed in Schedule
      3.1(v) ,
      the
      Company has been in compliance with all listing and maintenance requirements
      of
      each applicable Trading Market and the Tel Aviv Stock Exchange. Except as
      disclosed in Schedule
      3.1(v) ,
      the
      Company has not, in the 12 months preceding the date hereof, received notice
      from any Trading Market on which the Ordinary Shares or ADRs representing
      Ordinary Shares are or have been listed or quoted, or the Tel Aviv Stock
      Exchange to the effect that the Company is not in compliance with the listing
      or
      maintenance requirements of such market. Except as disclosed in Schedule
      3.1(v) ,
      the
      Company is, and has no reason to believe that it will not in the foreseeable
      future continue to be, in compliance with all such listing and maintenance
      requirements.




(w)  *Sarbanes-Oxley;
      Internal Accounting Controls* .
      The
      Company is in material compliance with all provisions of the Sarbanes-Oxley
      Act
      of 2002 which are applicable to it as of the date hereof. The
      Company has disclosure controls and procedures (as defined in Rule 13a-14 under
      the Exchange Act) that are designed to ensure that material information relating
      to the Company is made known to the Company’s principal executive officer and
      the Company’s principal financial officer or persons performing similar
      functions.




(x)  *Disclosure.* The
      Company confirms that, neither the Company nor any other Person acting on its
      behalf has provided any of the Purchasers or their agents or counsel with any
      information, other than information relating to the Offering, that constitutes
      or might constitute material, non-public information. The Company understands
      and confirms that the Purchasers will rely on the foregoing representations
      and
      covenants in effecting transactions in securities of the Company. All disclosure
      provided to the Purchasers regarding the Company, its business and the
      transactions contemplated hereby, including the Disclosure Documents and the
      Exhibits to this Agreement, furnished by or on behalf of the Company with
      respect to the representations and warranties made herein are true and correct
      with respect to such representations and warranties and do not contain any
      untrue statement of a material fact or omit to state any material fact necessary
      in order to make the statements made therein, in light of the circumstances
      under which they were made, not misleading. The Company acknowledges and agrees
      that no Purchaser makes or has made any representations or warranties with
      respect to the transaction contemplated hereby other than those specifically
      set
      forth in Section 3.2 hereof.




-12-




(y)  *Independent
      Public Accountants.* The
      Company confirms that Kesselman
      & Kesselman, Israeli certified public accounts and a member of
      PricewaterhouseCoopers International Limited, are independent public accountants
      as required by the Securities Act and the rules and regulations promulgated
      thereunder.




3.2  *Representations
      and Warranties of the Purchasers.* Each
      Purchaser hereby, for itself and for no other Purchaser, represents and warrants
      as of the date hereof and as of the Closing Date to the Company as follows:




(a)  *Organization;
      Authority.* Such
      Purchaser is an entity duly organized, validly existing and in good standing
      under the laws of the jurisdiction of its organization with full right,
      corporate, limited liability or partnership power and authority to enter into
      and to consummate the transactions contemplated by the Transaction Documents
      and
      otherwise to carry out its obligations thereunder. The execution, delivery
      and
      performance by such Purchaser of the transactions contemplated by this Agreement
      have been duly authorized by all necessary corporate or similar action on the
      part of such Purchaser. Each Transaction Document to which it is a party has
      been duly executed by such Purchaser, and when delivered by such Purchaser
      in
      accordance with the terms hereof, will constitute the valid and legally binding
      obligation of such Purchaser, enforceable against it in accordance with its
      terms except (i) as limited by applicable bankruptcy, insolvency,
      reorganization, moratorium and other laws of general application affecting
      enforcement of creditors’ rights generally and (ii) as limited by laws
      relating to the availability of specific performance, injunctive relief or
      other
      equitable remedies, and (iii) with respect to the indemnification
      provisions set forth in the Registration Rights Agreement, as limited by public
      policy.




(b)  *General
      Solicitation.* Such
      Purchaser is not purchasing the Securities as a result of any advertisement,
      article, notice or other communication regarding the Securities published in
      any
      newspaper, magazine or similar media or broadcast over television or radio
      or
      presented at any seminar or any other general solicitation or general
      advertisement.




(c)  *No
      Public Sale or Distribution.* Such
      Purchaser is acquiring the Securities for its own account and not with a view
      towards, or for resale in connection with, the public sale or distribution
      thereof, except pursuant to sales registered or exempted under the Securities
      Act; *provided* , *however* ,
      that by
      making the representations herein, such Purchaser does not agree to hold any
      of
      the Securities for any minimum or other specific term and reserves the right
      to
      dispose of the Securities at any time in accordance with or pursuant to a
      registration statement or an exemption under the Securities Act. Such Purchaser
      is acquiring the Securities hereunder in the ordinary course of its business.
      Such Purchaser does not have any agreement or understanding, directly or
      indirectly, with any Person to distribute any of the Securities.




-13-




(d)  *Accredited
      Investor Status.* If
      Purchaser is purchasing Securities pursuant to the exemption from the
      registration requirements of United States federal securities laws provided
      by
      Regulation D promulgated under the Securities Act, such Purchaser is an
“accredited investor” as that term is defined in Rule 501(a) of
      Regulation D.




(e)  *Regulation
      S.* If
      Purchaser is purchasing Securities pursuant to the exemption from the
      registration requirements of United States federal securities laws provided
      by
      Regulation S promulgated under the Securities Act, such Purchaser:




(i)  is
      not a
      U.S. person (as defined in Regulation S) and is not acquiring the Securities
      for
      the account or benefit of any U.S. person; and




(ii)  agrees
      to
      resell such Securities only in accordance with the provisions of Regulation
      S,
      pursuant to registration under the Securities Act, or pursuant to an available
      exemption from registration; and agrees not to engage in hedging transactions
      with regard to such Securities unless in compliance with the Securities
      Act.




(f)  *Reliance
      on Exemptions.* Such
      Purchaser understands that the Securities are being offered and sold to it
      in
      reliance on specific exemptions from the registration requirements of United
      States federal and state securities laws and that the Company is relying in
      part
      upon the truth and accuracy of, and such Purchaser’s compliance with, the
      representations, warranties, agreements, acknowledgments and understandings
      of
      such Purchaser set forth herein and on the signature page hereto in order to
      determine the availability of such exemptions and the eligibility of such
      Purchaser to acquire the Securities.




(g)  *Information;
      Confidentiality.* Such
      Purchaser and its advisors, if any, have been furnished with all publicly
      available materials relating to the business, finances and operations of the
      Company and such other publicly available materials relating to the offer and
      sale of the Securities as have been requested by such Purchaser. The Purchaser
      acknowledges and understands that the fact that the Company is seeking to effect
      the private placement of the Securities is itself material, non-public
      information, and accordingly,
      the Purchaser agrees not to engage in disclosure
      of such information or use of such information by the Purchaser or anyone
      receiving such information from the Purchaser in connection with the purchase,
      sale or trade of the Company’s securities (other than use by the Purchaser in
      acquiring the Securities), or any hedging, derivative or similar transactions
      or
      activities involving the Company’s securities. Such Purchaser and its advisors,
      if any, have been afforded the opportunity to ask questions of the Company.
      Neither such inquiries nor any other due diligence investigations conducted
      by
      such Purchaser or its advisors, if any, or its representatives shall modify,
      amend or affect such Purchaser’s right to rely on the Company’s representations
      and warranties contained herein. Such Purchaser understands that its investment
      in the Securities involves a high degree of risk. Such Purchaser has sought
      such
      accounting, legal and tax advice as it has considered necessary to make an
      informed investment decision with respect to its acquisition of the Securities.




-14-




(h)  *No
      Governmental Review.* Such
      Purchaser understands that no United States federal or state agency or any
      other
      government or governmental agency has passed on or made any recommendation
      or
      endorsement of the Securities or the fairness or suitability of the investment
      in the Securities nor have such authorities passed upon or endorsed the merits
      of the offering of the Securities.




(i)  *Experience
      of Such Purchaser.* Such
      Purchaser, either alone or together with its representatives, has such
      knowledge, sophistication and experience in business and financial matters,
      including investing in biotechnology companies, so as to be capable of
      evaluating the merits and risks of the prospective investment in the Securities,
      and has so evaluated the merits and risks of such investment. Such Purchaser
      is
      able to bear the economic risk of an investment in the Securities and, at the
      present time, is able to afford a complete loss of such investment.




(j)  *Sales;
      Short Selling.* From
      and
      after the date that the Purchaser receives any information about the existence
      of the Offering, and through the Closing Date, the Purchaser has not and shall
      not, directly or indirectly, sell Ordinary Shares in any open Trading Market
      or
      elsewhere, and has not and shall not directly or indirectly, through related
      parties, affiliates or otherwise sell “short” or “short against the box” (as
      those terms are generally understood) any equity security of the
      Company.




(k)  *Information
      Regarding Purchaser* .
      Purchaser has provided the Company with true, complete, and correct information
      regarding all applicable items set forth on the signature page to this
      Agreement.




The
      Company acknowledges and agrees that each Purchaser does not make or has not
      made any representations or warranties with respect to the transactions
      contemplated hereby other than those specifically set forth in this
      Section 3.2.




**ARTICLE
      IV.**


**OTHER
      AGREEMENTS OF THE PARTIES**




4.1  *Transfer
      Restrictions.* The
      Securities may only be disposed of in compliance with U.S. state and federal
      securities laws. In connection with any transfer of Securities other than (i)
      pursuant to an effective registration statement, (ii) to the Company, or (iii)
      to an Affiliate of a Purchaser, the Company may require the transferor thereof
      to provide to the Company an opinion of counsel selected by the transferor,
      the
      form and substance of which opinion shall be reasonably satisfactory to the
      Company, to the effect that such transfer does not require registration of
      such
      transferred Securities under the Securities Act. As a condition of transfer,
      any
      such transferee shall agree in writing to be bound by the terms of this
      Agreement and shall have the rights of a Purchaser under this Agreement and
      the
      Registration Rights Agreement.




-15-




4.2  *Furnishing
      of Information.* During
      the Effectiveness Period (as such term is defined in the Registration Rights
      Agreement), the Company covenants to use its commercially reasonable efforts
      to
      timely file (or obtain extensions in respect thereof and file within the
      applicable grace period) all reports required to be filed by the Company after
      the date hereof pursuant to the Exchange Act. During the Effectiveness Period,
      the Company further covenants to use its commercially reasonable efforts to
      take
      such further action as any Purchaser may reasonably request, all to the extent
      required from time to time to enable such Person to sell such Securities without
      registration under the Securities Act within the limitation of the exemptions
      provided by Rule 144 under the Securities Act.




4.3  *Integration.* The
      Company shall not sell, offer for sale or solicit offers to buy or otherwise
      negotiate in respect of any security (as defined in Section 2 of the
      Securities Act) that would be integrated with the offer or sale of the
      Securities in a manner that would require the registration under the Securities
      Act of the sale of the Securities to the Purchasers or that would be integrated
      with the offer or sale of the Securities for purposes of the rules and
      regulations of any Trading Market.




4.4  *Securities
      Laws Disclosure; Publicity* .
      The
      Company shall, by 8:30 a.m., New York City time, on the Business Day following
      the Closing Date, issue a press release to be disseminated in the public domain
      describing the terms of the transactions contemplated by the Transaction
      Documents. Notwithstanding the foregoing, the Company shall not publicly
      disclose the name of any Purchaser, or include the name of any Purchaser in
      any
      filing with the Commission or any regulatory agency or Trading Market, without
      the prior written consent of such Purchaser, except (i) as required by
      federal securities law or the Commission in connection with the registration
      statement contemplated by the Registration Rights Agreement and (ii) to the
      extent such disclosure is required by law or Trading Market regulations, in
      which case the Company shall provide the Purchasers with prior notice of such
      disclosure permitted under subclause (i) or (ii).




4.5  *Shareholders
      Rights Plan.* No
      claim
      will be made or enforced by the Company or any other Person that any Purchaser
      is an “Acquiring Person” under any shareholders rights plan or similar plan or
      arrangement in effect or hereafter adopted by the Company, or that any Purchaser
      could be deemed to trigger the provisions of any such plan or arrangement,
      in
      each case solely by virtue of receiving Securities under the Transaction
      Documents or under any other agreement between the Company and the Purchasers.




4.6  *Reservation
      of Ordinary Shares.* As
      of the
      date hereof, the Company has reserved and the Company shall continue to reserve
      and keep available at all times, free of preemptive rights, a sufficient number
      of Ordinary Shares for the purpose of enabling the Company to issue Shares
      pursuant to this Agreement.




4.7  *Listing
      of Ordinary Shares; ADR Facility.* The
      Company hereby agrees to use commercially reasonable efforts to maintain the
      listing of ADRs representing Ordinary Shares on the Nasdaq Stock Market. The
      Company further agrees, if the Company applies to have ADRs representing
      Ordinary Shares traded on any other Trading Market, it will include in such
      application the Shares, and will take such other action as is necessary or
      desirable in the opinion of the Purchasers to cause the Shares to be listed
      on
      such other Trading Market as promptly as possible. The Company will take all
      action reasonably necessary to continue the listing and trading of ADRs
      representing its Ordinary Shares on a Trading Market and will comply in all
      respects with the Company’s reporting, filing and other obligations under the
      bylaws or rules of the Trading Market. The Purchasers acknowledge that the
      Shares will not be eligible for deposit into the American Depositary Receipt
      trading facility maintained by the Company at The Bank of New York until the
      Effective Date.




-16-




4.8  *Subsequent
      Financings Prior to Effective Date.* From
      the
      date hereof until 90 days after the Effective Date, other than as contemplated
      by this Agreement, neither the Company nor either of the Subsidiaries shall
      issue or sell any Ordinary Shares, excluding the issuance of securities issued
      upon the exercise of currently outstanding options and warrants.




4.9  *Non-Public
      Information.* The
      Company covenants and agrees that neither it nor any other Person acting on
      its
      behalf will provide any Purchaser or its agents or counsel with any information
      that the Company believes constitutes material non-public information, unless
      prior thereto such Purchaser shall have executed a written agreement regarding
      the confidentiality and use of such information. The Company understands and
      confirms that each Purchaser shall be relying on the foregoing representations
      in effecting transactions in securities of the Company.




4.10  *Delivery
      of ADRs.* On
      the
      Effective Date, the Company shall deliver the Shares to The Bank of New York,
      and shall cause The Bank of New York to immediately deliver to each Purchaser
      ADRs representing a number of Shares equal to such Purchaser’s Subscription
      Amount divided by the Per Share Purchase Price, registered in the name of such
      Purchaser.




**ARTICLE
      V.**


**MISCELLANEOUS**




5.1  *Fees
      and Expenses.* Except
      as
      set forth in Section 3.1(p) and in the Placement Agent Agreement, each party
      shall pay the fees and expenses of its advisers, counsel, accountants and other
      experts, if any, and all other expenses incurred by such party incident to
      the
      negotiation, preparation, execution, delivery and performance of this Agreement.
      The Company shall pay all stamp and other taxes and duties levied in connection
      with the sale of the Securities.




5.2  *Entire
      Agreement.* The
      Transaction Documents, together with the exhibits and schedules thereto, the
      Disclosure Documents and the Placement Agent Agreement, contain the entire
      understanding of the parties with respect to the subject matter hereof and
      supersede all prior agreements and understandings, oral or written, with respect
      to such matters, which the parties acknowledge have been merged into such
      documents, exhibits and schedules.




-17-




5.4  *Notices.* Any
      and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be in writing and shall be deemed given and effective
      on the earliest of (a) the date of transmission, if such notice or
      communication is delivered via facsimile at the facsimile number specified
      on
      the signature pages attached hereto prior to 6:30 p.m. (New York City time)
      on a Trading Day, (b) the next Trading Day after the date of transmission,
      if such notice or communication is delivered via facsimile at the facsimile
      number on the signature pages attached hereto on a day that is not a Trading
      Day
      or later than 6:30 p.m. (New York City time) on any Trading Day,
      (c) the Trading Day following the date of mailing, if sent by U.S.
      nationally recognized overnight courier service, or (d) upon actual receipt
      by the party to whom such notice is required to be given. The address for such
      notices and communications shall be as set forth on the signature pages attached
      hereto.




5.5  *Amendments;
      Waivers.* No
      provision of this Agreement may be waived or amended except in a written
      instrument signed, in the case of an amendment, by the Company and each
      Purchaser or, in the case of a waiver, by the party against whom enforcement
      of
      any such waiver is sought. No waiver of any default with respect to any
      provision, condition or requirement of this Agreement shall be deemed to be
      a
      continuing waiver in the future or a waiver of any subsequent default or a
      waiver of any other provision, condition or requirement hereof, nor shall any
      delay or omission of either party to exercise any right hereunder in any manner
      impair the exercise of any such right.




5.6  *Construction.* The
      headings herein are for convenience only, do not constitute a part of this
      Agreement and shall not be deemed to limit or affect any of the provisions
      hereof. The language used in this Agreement will be deemed to be the language
      chosen by the parties to express their mutual intent, and no rules of strict
      construction will be applied against any party.




5.7  *Successors
      and Assigns.* This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and permitted assigns. The Company may not assign this
      Agreement or any rights or obligations hereunder without the prior written
      consent of each Purchaser. Any Purchaser may assign any or all of its rights
      under this Agreement to any Person, provided such transferee agrees in writing
      to be bound, with respect to the transferred Securities, by the provisions
      hereof that apply to the “Purchasers.”




5.8  *No
      Third-Party Beneficiaries.* This
      Agreement is intended for the benefit of the parties hereto and their respective
      successors and permitted assigns and is not for the benefit of, nor may any
      provision hereof be enforced by, any other Person, except as otherwise set
      forth
      in Section 4.1.




5.9  *Governing
      Law.* All
      questions concerning the construction, validity, enforcement and interpretation
      of the Transaction Documents shall be governed by and construed and enforced
      in
      accordance with the internal laws of the State of New York, without regard
      to
      the principles of conflicts of law thereof. Each party agrees that all legal
      proceedings concerning the interpretations, enforcement and defense of the
      transactions contemplated by this Agreement and any other Transaction Documents
      (whether brought against a party hereto or its respective affiliates, directors,
      officers, shareholders, employees or agents) shall be commenced exclusively
      in
      the state or federal courts sitting in the City of New York. Each party hereto
      hereby irrevocably submits to the jurisdiction of the state and federal courts
      sitting in the City of New York, New York, exclusive of all other jurisdictions,
      for the adjudication of any dispute hereunder or in connection herewith or
      with
      any transaction contemplated hereby or discussed herein (including with respect
      to the enforcement of any of the Transaction Documents), and hereby irrevocably
      waives, and agrees not to assert in any suit, action or proceeding, any claim
      that it is not personally subject to the jurisdiction of any such court, that
      such suit, action or proceeding is improper. If either party shall commence
      an
      action or proceeding to enforce any provisions of a Transaction Document, then
      the prevailing party in such action or proceeding shall be reimbursed by the
      other party for its attorneys fees and other costs and expenses incurred with
      the investigation, preparation and prosecution of such action or
      proceeding.




-18-




5.10  *Survival.* The
      representations, warranties, agreements and covenants contained herein shall
      survive the Closing and delivery of the Shares.




5.11  *Execution.* This
      Agreement may be executed in two or more counterparts, all of which when taken
      together shall be considered one and the same agreement and shall become
      effective when counterparts have been signed by each party and delivered to
      the
      other party, it being understood that both parties need not sign the same
      counterpart. In the event that any signature is delivered by facsimile
      transmission, such signature shall create a valid and binding obligation of
      the
      party executing (or on whose behalf such signature is executed) with the same
      force and effect as if such facsimile signature page were an original thereof.




5.12  *Severability.* If
      any
      provision of this Agreement is held to be invalid or unenforceable in any
      respect, the validity and enforceability of the remaining terms and provisions
      of this Agreement shall not in any way be affected or impaired thereby and
      the
      parties will attempt to agree upon a valid and enforceable provision that is
      a
      reasonable substitute therefor, and upon so agreeing, shall incorporate such
      substitute provision in this Agreement.




5.13  *Replacement
      of Shares.* If
      any
      certificate or instrument evidencing any Securities is mutilated, lost, stolen
      or destroyed, the Company shall issue or cause to be issued in exchange and
      substitution for and upon cancellation thereof, or in lieu of and substitution
      therefor, a new certificate or instrument, but only upon receipt of evidence
      reasonably satisfactory to the Company of such loss, theft or destruction and
      customary and reasonable indemnity, if requested.




5.14  *Independent
      Nature of Purchasers’ Obligations and Rights.* The
      obligations of each Purchaser under any Transaction Document are several and
      not
      joint with the obligations of any other Purchaser, and no Purchaser shall be
      responsible in any way for the performance of the obligations of any other
      Purchaser under any Transaction Document. Nothing contained herein or in any
      Transaction Document, and no action taken by any Purchaser pursuant thereto,
      shall be deemed to constitute the Purchasers as a partnership, an association,
      a
      joint venture or any other kind of entity, or create a presumption that the
      Purchasers are in any way acting in concert or as a group with respect to such
      obligations or the transactions contemplated by the Transaction Document. Each
      Purchaser shall be entitled to independently protect and enforce its rights,
      including without limitation, the rights arising out of this Agreement or out
      of
      the other Transaction Documents, and it shall not be necessary for any other
      Purchaser to be joined as an additional party in any proceeding for such
      purpose. Each Purchaser has been represented by its own separate legal counsel
      in their review and negotiation of the Transaction Documents.




*(Signature
      Page Follows)*




-19-




IN
      WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
      Agreement to be duly executed by their respective authorized signatories as
      of
      the date first indicated above.




**XTL
                Biopharmaceuticals Ltd.**
              
              By:/s/
                Ron Bentsur
              
              Name:Ron
                Bentsur
              Title:Chief
                Executive Officer
            *Address
                for Notice:*
              711
                Executive Blvd., Suite Q
              Valley
                Cottage, NY 10989
              Attn:
                Ron Bentsur
              Tel:
                (845) 267-0707
              Fax:
                (845) 267-0926*With
                copy to (which shall not constitute notice):*Alston
                & Bird LLP
              90
                Park Avenue
              New
                York, New York 10016
              Attn:
                Mark F. McElreath
              Tel:
                (212) 210-9400
              Fax:
                (212) 210-9444




*(Signature
      Page Continues)*









[PURCHASER
      SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]




EYAL
                CARMON
            
            By:
            /s/
                Eyal Carmon
              Name:  
                Eyal Carmon
              Title:




Date: October
      25 ,
      2007




NUMBER
                OF ORDINARY SHARES SUBSCRIBED FOR
            
            PRICE
                PER SHARE
            
            TOTAL
              PURCHASE
                PRICE900,000
            
            $
            .135
            
            $
            121,500.00









[PURCHASER
      SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]




M.D.K
                INC.
            
            By:
            /s/
                Wayne Rothbaum
              Name:  
                Wayne Rothbaum
              Title:




Date: October
      27 ,
      2007




NUMBER
                OF ORDINARY SHARES SUBSCRIBED FOR
            
            PRICE
                PER SHARE
            
            TOTAL
                PURCHASE PRICE750,000
            
            $
            0.135
            
            $
            101,250.00









[PURCHASER
      SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]




MANIV
                (BRUNSTEIN) BUSINESS PROMOTION AND DEVLOPMENT LTD.
            
            By:
            /s/
                Brunstein
              Name:
              Title:    President
                and CEO




Date: October
      28 ,
      2007




NUMBER
                OF ORDINARY SHARES SUBSCRIBED FOR
            
            PRICE
                PER SHARE
            
            TOTAL
                PURCHASE PRICE750,000
            
            $
            0.135
            
            $
            101,250.00









[PURCHASER
      SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]




THE
                ISRAEL AIRCRAFT INDUSTRIES WORKER PROVIDENT FUND
            
            By:
            /s/
                Yael Aroshas
              Name:  
                Yasl Aroshas
              Title:    Investment
                Manager




Date: October
      25 ,
      2007




NUMBER
                OF ORDINARY SHARES SUBSCRIBED FOR
            
            PRICE
                PER SHARE
            
            TOTAL
                PURCHASE PRICE7,500,000
            
            $
            0.135
            
            $
            1,012,500.00









[PURCHASER
      SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]




PUNK
                ZIEGEL & CO.
            
            By:
            /s/
                Ira Z. Leiderman
              Name:  
                Ira Z. Leiderman
              Title:    Managing
                Director




Date: October
      25 ,
      2007




NUMBER
                OF ORDINARY SHARES SUBSCRIBED FOR
            
            PRICE
                PER SHARE
            
            TOTAL
                PURCHASE PRICE3,703,703
            
            $
            .135
            
            $
            500,000.00









[PURCHASER
      SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]




MEITAV
                UNDERWRITING LTD.
            
            By:
            /s/
                Yonatan Malca
              Name:  
                Yonatan Malca
              Title:    CEOBy:
            /s/
                Ben Amrani
              Name:  
                Ben Amrani
              Title:    Nostro
                Manager




Date: October
      25, 2007




NUMBER
                OF ORDINARY SHARES SUBSCRIBED FOR
            
            PRICE
                PER SHARE
            
            TOTAL
                PURCHASE PRICE1,111,111
            
            $
            0.135
            
            $
            150,000.00









[PURCHASER
      SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]




MEITAV
                PENSION LTD.
            
            By:
            /s/
                Ari Berkowitz
              Name:  
                Ari Berkowitz
              Title:




Date: October
      25 ,
      2007




NUMBER
                OF ORDINARY SHARES SUBSCRIBED FOR
            
            PRICE
                PER SHARE
            
            TOTAL
                PURCHASE PRICE22,222
            
            $
            0.135
            
            $
            3,000.00









[PURCHASER
      SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]




MEITAV
                MISHAN LTD.
            
            By:
            /s/
                Avi Berkowitz
                Name:  
                Avi Berkowitz
              Title:




Date: Ocotober
      25 ,
      2007




NUMBER
                OF ORDINARY SHARES SUBSCRIBED FOR
            
            PRICE
                PER SHARE
            
            TOTAL
                PURCHASE PRICE200,000
            
            $
            0.135
            
            $
            27,000









[PURCHASER
      SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]




MEITAV
                GEMEL LTD.
            
            By:
            /s/
                Avi Berkowitz
              Name:  
                Avi Berkowitz
              Title:




Date: October
      25 ,
      2007




NUMBER
                OF ORDINARY SHARES SUBSCRIBED FOR
            
            PRICE
                PER SHARE
            
            TOTAL
                PURCHASE PRICE1,629,630
            
            $
            0.135
            
            $
            220,000









[PURCHASER
      SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]




GADI
                BEN ARI
            
            By:
            /s/
                Gadi Ben Ari
              Name:  
                Gadi Ben Ari
              Title:




Date: October
      25 ,
      2007




NUMBER
                OF ORDINARY SHARES SUBSCRIBED FOR
            
            PRICE
                PER SHARE
            
            TOTAL
                PURCHASE PRICE600,000
            
            $
            0.135
            
            $
            81,000.00









[PURCHASER
      SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]




SONOSTAR
                CAPITAL PARTNERS, LLC
            
            By:
            /s/
                Gregory Kiernan
              Name:  
                Gregory Kiernan
              Title:    Managing
                Member




Date: October
      19 ,
      2007




NUMBER
                OF ORDINARY SHARES SUBSCRIBED FOR
            
            PRICE
                PER SHARE
            
            TOTAL
                PURCHASE PRICE1,481,481
            
            $
            0.135
            
            $
            200,000.00









[PURCHASER
      SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]




GREGORY
                KIERNAN
            
            By:
            /s/
                Gregory Kiernan
              Name:  
                Gregory Kiernan
              Title:




Date: October
      19 ,
      2007




NUMBER
                OF ORDINARY SHARES SUBSCRIBED FOR
            
            PRICE
                PER SHARE
            
            TOTAL
                PURCHASE PRICE1,851,852
            
            $
            0.135
            
            $
            250,000.00







[PURCHASER
      SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]




DAVID
                TUBOUL
            
            By:
            /s/
                David TuBoul
              Name:  
                David TuBoul
              Title:




Date: October
      25 ,
      2007




NUMBER
                OF ORDINARY SHARES SUBSCRIBED FOR
            
            PRICE
                PER SHARE
            
            TOTAL
                PURCHASE PRICE750,000
            
            $
            0.135
            
            $
            101,250.00









[PURCHASER
      SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]




QUOGUE
                CAPITAL LLC
            
            By:
            /s/
                Wayne Rothbaum
              Name:  
                Wayne Rothbaum
              Title:    President




Date: October
      23 ,
      2007




NUMBER
                OF ORDINARY SHARES SUBSCRIBED FOR
            
            PRICE
                PER SHARE
            
            TOTAL
                PURCHASE PRICE9,250,000
            
            $
            0.135
            
            $
            1,248,750.00









[PURCHASER
      SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]




PERCEPTIVE
                LIFE SCIENCES MASTER FUND LTD.
            
            By:
            /s/
                James Mannix
              Name:  
                James Mannix
              Title:    Chief
                Operating Officer




Date: October
      22 ,
      2007




NUMBER
                OF ORDINARY SHARES SUBSCRIBED FOR
            
            PRICE
                PER SHARE
            
            TOTAL
                PURCHASE PRICE[$]
            
            $
            1,250,000









[PURCHASER
      SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]




DELAWARE
                CHARTER GUARANTEE AND TRUST
            
            By:
            /s/
                Steven Oliveira
              Name:  
                Steven Oliveira
              Title:    Trustee




Date: October
      22 ,
      2007




NUMBER
                OF ORDINARY SHARES SUBSCRIBED FOR
            
            PRICE
                PER SHARE
            
            TOTAL
                PURCHASE PRICE3,750,000
            
            $
            .135
            
            $
            506,250.00









[PURCHASER
      SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]




TMW
                CAPITAL, LLC
            
            By:
            /s/
                Todd Wider
              Name:  
                Todd Wider
              Title:    President




Date: October
      22 ,
      2007




NUMBER
                OF ORDINARY SHARES SUBSCRIBED FOR
            
            PRICE
                PER SHARE
            
            TOTAL
                PURCHASE PRICE2,962,963
            
            $
            .135
            
            $
            400,000.00









[PURCHASER
      SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]




VERSANT
                CAPITAL MANAGEMENT LLC
            
            By:
            /s/
                Herriot Tabuteau
              Name:  
                Herriot Tabuteau
              Title:    Managing
                Member




Date: October
      24 ,
      2007




NUMBER
                OF ORDINARY SHARES SUBSCRIBED FOR
            
            PRICE
                PER SHARE
            
            TOTAL
                PURCHASE PRICE3,703,704
            
            $
            0.135
            
            $
            500,000.00









[PURCHASER
      SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]




CAT
                TRAIL CAPITAL, LLC
            
            By:
            /s/
                David Dakkar
              Name:  
                David Dakkar
              Title:    Managing
                Partner




Date: October
      22 ,
      2007




NUMBER
                OF ORDINARY SHARES SUBSCRIBED FOR
            
            PRICE
                PER SHARE
            
            TOTAL
                PURCHASE PRICE[$]
            
            $
            500,000.00









[PURCHASER
      SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]




IROQUOIS
                MASTER FUND LTD.
            
            By:
            /s/
                Joshua Silverman
              Name:  
                Joshua Silverman
              Title:    Authorized
                Signatory




Date: October
      23 ,
      2007




NUMBER
                OF ORDINARY SHARES SUBSCRIBED FOR
            
            PRICE
                PER SHARE
            
            TOTAL
                PURCHASE PRICE1,111,111
            
            $
            .135
            
            $
            150,000.00









[PURCHASER
      SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]




JAMES
                F. OLIVIERO
            
            By:
            /s/
                James F. Oliviero
                Name:  
                James F. Oliviero
              Title:




Date: October
      19 ,
      2007




NUMBER
                OF ORDINARY SHARES SUBSCRIBED FOR
            
            PRICE
                PER SHARE
            
            TOTAL
                PURCHASE PRICE55,000
            
            $
            .135
            
            $
            7,425.00









[PURCHASER
      SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]




BRIAN
                S. WATERMAN
            
            By:
            /s/
                Brian S. Waterman
              Name:  
                Brian S. Waterman
              Title:




Date: October
      19 ,
      2007




NUMBER
                OF ORDINARY SHARES SUBSCRIBED FOR
            
            PRICE
                PER SHARE
            
            TOTAL
                PURCHASE PRICE1,050,000
            
            $
            .135
            
            $
            141,750.00









[PURCHASER
      SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]




JAMES
                D. KUHN
            
            By:
            /s/
                James D. Kuhn
              Name:  
                James D. Kuhn
              Title:    President




Date: October
      19 ,
      2007




NUMBER
                OF ORDINARY SHARES SUBSCRIBED FOR
            
            PRICE
                PER SHARE
            
            TOTAL
                PURCHASE PRICE2,500,000
            
            $
            .135
            
            $
            337,500.00









[PURCHASER
      SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]




PROMED
                OFFSHORE FUND, LTD.
            
            By:
            /s/
                Barry Kurokawa
              Name:  
                Barry Kurokawa
              Title:    Managing
                Director




Date: October
      19 ,
      2007




NUMBER
                OF ORDINARY SHARES SUBSCRIBED FOR
            
            PRICE
                PER SHARE
            
            TOTAL
                PURCHASE PRICE525,000
            
            $
            .135
            
            $
            70,875.00









[PURCHASER
      SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]




PROMED
                PARTNERS, LP
            
            By:
            /s/
                Barry Kurokawa
              Name:  
                Barry Kurokawa
              Title:    Managing
                Director




Date: October
      19 ,
      2007




NUMBER
                OF ORDINARY SHARES SUBSCRIBED FOR
            
            PRICE
                PER SHARE
            
            TOTAL
                PURCHASE PRICE3,179,000
            
            $
            .135
            
            $
            429,165.00







[PURCHASER
      SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]




SCO
                CAPITAL PARTNERS, LP
            
            By:
            /s/
                Steven H. Rouhandeh
              Name: Steven
                H. Rouhandeh
              Title:   Managing
                Member




Date: October
      22 ,
      2007




NUMBER
                OF ORDINARY SHARES SUBSCRIBED FOR
            
            PRICE
                PER SHARE
            
            TOTAL
                PURCHASE PRICE3,703,703
            
            $
            .135
            
            $
            500,000.00









[PURCHASER
      SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]




SENVEST
                ISRAEL PARTNERS LP
            
            By:
            /s/
                Gregory Malikonis
              Name:  Gregory
                Malikonis
              Title:    Vice
                President




Date: October
      19 ,
      2007




NUMBER
                OF ORDINARY SHARES SUBSCRIBED FOR
            
            PRICE
                PER SHARE
            
            TOTAL
                PURCHASE PRICE[$]
            
            $
            150,000.00









[PURCHASER
      SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]




KENNETH
                HOBERMAN
            
            By:
            /s/
                Kenneth Hoberman
              Name:  
                Kenneth Hoberman
              Title:




Date: October
      19 ,
      2007




NUMBER
                OF ORDINARY SHARES SUBSCRIBED FOR
            
            PRICE
                PER SHARE
            
            TOTAL
                PURCHASE PRICE[$]
            
            $
            75,000.00









[PURCHASER
      SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]




CLEARWATER
                OFFSHORE FUND, LTD.
            
            By:
            /s/
                H. Heye
              Name: H.
                Heye
              Title:   Trading
                Manager




Date: October
      22 ,
      2007




NUMBER
                OF ORDINARY SHARES SUBSCRIBED FOR
            
            PRICE
                PER SHARE
            
            TOTAL
                PURCHASE PRICE1,851,850
            
            $
            0.135
            
            $
            249,999.75









[PURCHASER
      SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]




CLEARWATER
                FUND I, LP
            
            By:
            /s/
                H. Heye
              Name: 
                H. Heye
              Title:    Managing
                Member




Date: October
      22 ,
      2007




NUMBER
                OF ORDINARY SHARES SUBSCRIBED FOR
            
            PRICE
                PER SHARE
            
            TOTAL
                PURCHASE PRICE1,851,850
            
            $
            0.135
            
            $
            249,999.75









[PURCHASER
      SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]




SENVEST
                MASTER FUND LP
            
            By:
            /s/
                George Malikonis
              Name:  
                George Malikonis
              Title:    
                Vice President




Date: October
      19 ,
      2007




NUMBER
                OF ORDINARY SHARES SUBSCRIBED FOR
            
            PRICE
                PER SHARE
            
            TOTAL
                PURCHASE PRICE[$]
            
            $
            150,000.00













The
      above-signed Purchaser hereby provides the following information to the
      Company:




1.  Please
      provide the following information regarding the Purchaser:




**Purchaser
                Name and Address:**______________________________________________
              
              ______________________________________________
              
              ______________________________________________**Telephone:**(    ) ______-________
              
              **Facsimile:**(    ) ______-_________
              
              **Email:**_______________________
              
              **Tax
                ID #:**_____________________




2.  If
      different from the information provided in Item 1 above, please provide the
      exact name that the Purchaser’s Shares are to be registered in (this is the name
      that will appear on the share certificate(s)) (the “ *Registered
      Holder* ”).
      The
      Purchaser may use a nominee name if appropriate:




**Registered
                Holder of the Shares Name and Address:**______________________________________________
              
              ______________________________________________
              
              ______________________________________________**Facsimile:**(    )
                ______-_________









3.  Please
      describe the relationship between the Purchaser of the Shares and the Registered
      Holder of the Shares listed in response to Item 2 above, if
      different:



















4.  If
      different from the information provided in Item 1 above, please provide the
      mailing address of the Registered Holder of the Shares listed in response to
      Item 2 above:







5.  If
      different from the information provided above, please provide the number of
      Ordinary Shares beneficially owned (as determined in accordance with SEC Rule
      13d-3 under the Exchange Act) by the Purchaser immediately after Closing.
      Explain the nature of such beneficial ownership, including Ordinary Shares
      not
      held of record by the Purchaser. Disclose the details of any rights to acquire
      Ordinary Shares.




6.  Describe
        any position, office or other material relationship within the past three
        years
        that the Purchaser has, or has had, with the Company or its Affiliates other
        than as disclosed in the Registration Statement? If none, please state “Not
        Applicable.”







**Please
      note that it is the Purchaser’s obligation to advise the Company promptly if any
      of the foregoing information changes during the effectiveness of the
      Registration Statement (except due to sales of Ordinary Shares pursuant
      thereto).**









**Exhibit
      A**




**Registration
      Rights Agreement**







**Exhibit
      B**




*Form
      of Opinion of Kantor & Co.*





1.  The
      Company is a corporation, validly existing and in good standing under the laws
      of the State of Israel, and has
      the
      corporate power and authority to carry on its business and to own, lease and
      operate its properties and assets as described in the Disclosure Documents.
      Except for the Subsidiaries, the Company does not have any subsidiaries and
      does
      not own more than fifty percent (50%) of the outstanding capital stock of or
      control any other business entity.




2.  The
      Company has the corporate power and authority to enter into and perform its
      obligations under the Transaction Documents and to issue the Shares. The
      execution and delivery of the Transaction Documents by the Company and the
      consummation by it of the transactions contemplated thereby have been duly
      authorized by all necessary corporate action of the Company.




3.  The
      Transaction Documents have been duly executed and delivered by the
      Company.




4.  The
      execution, delivery and performance of the Transaction Documents by the Company
      and the consummation by the Company of the transactions contemplated thereby,
      including, without limitation, the issuance of the Shares, do not and will
      not
      result in a violation of the Company’s Memorandum and Articles of Organization
      or bylaws.




5.  The
      Company has the authorized capitalization as set forth in the Disclosure
      Documents. The issuance of the Shares by the Company in accordance with the
      Agreement is exempt from registration under the Securities Act of 1933, as
      amended. When so issued, when certificates representing such Shares have been
      duly executed, countersigned, registered and delivered in accordance with the
      Agreement, upon payment of the consideration therefor provided therein, the
      Shares will be duly and validly authorized and issued, fully paid and
      nonassessable, free of any liens or encumbrances, or preemptive or similar
      rights, contained in the Company’s Memorandum and Articles of Organization or
      bylaws or any other instrument known to us and will conform to the description
      thereof contained in the Disclosure Documents.




*Form
      of Opinion of Alston & Bird LLP*




1.  The
      Company is
      duly
      qualified to do business and is in good standing as a foreign corporation in
      all
      U.S. jurisdictions in which the character of the property owned or leased or
      the
      nature of the business transacted by it makes qualification necessary, except
      where the failure to be so qualified or in good standing, as the case may be,
      would not have or reasonably be expected to result in Material Adverse Effect.




2.  The
      Subsidiaries are corporations, validly existing and in good standing under
      the
      laws of the State of Delaware, are duly
      qualified to do business and are in good standing as a foreign corporation
      in
      all jurisdictions in which the character of the property owned or leased or
      the
      nature of the business transacted by them makes qualification necessary, except
      where the failure to be so qualified or in good standing, as the case may be,
      would not have or reasonably be expected to result in Material Adverse Effect,
      and has
      the
      corporate power and authority to carry on their business and to own, lease
      and
      operate their properties and assets as described in the Disclosure
      Documents.









3.  The
      execution, delivery and performance of the Transaction Documents by the Company
      and the consummation by the Company of the transactions contemplated thereby,
      including, without limitation, the issuance of the Shares, do not and will
      not
      (i) result in a violation of the Certificate of Incorporation or bylaws of
      the
      Subsidiaries; (ii) conflict with, or constitute a material default (or an event
      that with notice or lapse of time or both would become a default) under, require
      a consent under, or give to others any rights of termination, amendment,
      acceleration or cancellation of, any Material Agreement; (iii) result in a
      violation of any law, rule or regulation of the United States or the State
      of
      New York; or (iv) to our knowledge, violate any judgment, order or decree of
      any
      court or governmental agency or body having jurisdiction over the Company or
      any
      of its properties or assets.




4.  Except
      for the registration of the Securities under the Securities Act and such
      consents, approvals, authorizations, registrations or qualifications as may
      be
      required under applicable state securities laws in connection with the purchase
      and distribution of the Securities, no consent, approval, authorization or
      order
      of, or filing or registration with, any court, governmental agency or
      governmental body is required for the execution, delivery and performance of
      the
      Transaction Documents by the Company and the consummation by the Company of
      the
      transactions contemplated thereby.




5.  To
      our
      knowledge, no person or entity has the right to require registration of Ordinary
      Shares or other securities of the Company because of the filing or effectiveness
      of the Registration Statement, the consummation of the transactions contemplated
      in the Transaction Documents or otherwise, except for persons and entities
      who
      have expressly waived such right or who have been given proper notice and have
      failed to exercise such right within the time or times required under the terms
      and conditions of s uch
      right.




6.  The
      statements in the Disclosure Documents (other than the financial statements
      and
      related schedules and other financial and statistical data contained therein,
      as
      to which we express no opinion) under the headings "Risk Factors,"
      "Business—Intellectual Property and Patents," "Business—Government and Industry
      Regulation," and "Business—Material Contracts" to the extent that they
      constitute summaries of matters of law or regulation or legal conclusions,
      have
      been reviewed by us and fairly summarize the matters described therein in all
      material respects.




7.  To
      our
      knowledge and other than as set forth in the Disclosure Documents , there
      are no legal or governmental proceedings pending to which the Company is a
      party
      or of which any property or asset of the Company is the subject which,
      singularly or in the aggregate, if determined adversely to the Company, would
      prevent or adversely affect the ability of the Company to perform its
      obligations under the Transaction Documents; and, to our knowledge, no such
      proceedings are threatened or contemplated by governmental authorities or
      threatened by others.









*Alston
      & Bird to also confirm:*





We
      have
      reviewed certain corporate records and other documents of the Company and its
      subsidiaries and have participated in conferences with officers and other
      representatives of the Company, its subsidiaries, your representatives, your
      counsel and the Company’s independent public accountants at which the contents
      of the Transaction Documents and related matters were discussed. Because of
      the
      inherent limitations in the independent verification of factual matters and
      because of the inherent limitations involved in the preparation of registration
      statements under the Securities Act, we are not passing upon and do not assume
      any responsibility for, and make no representation that we have independently
      verified, the accuracy, completeness or fairness of the information and
      statements contained in the Transaction Documents. We have no reason to believe
      that on the date hereof, the Transaction Documents contained an untrue statement
      of a material fact or omitted to state any material fact required to be stated
      therein or necessary to make the statements therein not misleading or that
      the
      Transaction Documents on the date hereof included or includes any untrue
      statement of a material fact or omitted or omits to state a material fact
      necessary to make the statements therein, in the light of the circumstances
      under which they were made, not misleading (in each case, other than the
      financial statements and other financial information contained therein, as
      to
      which we express no opinion).








**Schedule
      3.1(e)**





·
            As
                of September 30, 2007, there are 55,516,243 Ordinary Shares that
                may be
                issued in the future subject to the exercise of all options and warrants
                (at exercise prices per Ordinary Share of $0.106 to $2.110) outstanding.





·
            At
                September 30, 2007, the remaining number of options to purchase Ordinary
                Shares available for future grants under the 2001 Share Option Plan
                is
                4,917,756.





·
            In
                March 2006, the Board of Directors of the Company approved the grant
                to
                the Chairman and to a non-executive director, of options to purchase
                9,898,719 and 750,000 ordinary shares, respectively. All of such
                options
                are subject to vesting of which one third is based on service period,
                and
                the remainder is based on achievement of certain milestones linked
                to the
                Company’s valuation on the public markets. These grants are subject to
                shareholder approval. As of September 30, 2007, the Company did not
                seek
                shareholder approval, so the options had not been
                granted.





·
            In
                addition, the Company may issue additional Ordinary Shares for the
                potential settlement in cash or Ordinary Shares, at the Company's
                sole
                discretion, of certain potential milestones related to the Company's
                in-licensed products:




·
            In
                August 2005, the Company entered into a license agreement with VivoQuest
                Inc. (“VivoQuest”) pursuant to which it acquired exclusive worldwide
                rights to VivoQuest's intellectual property and technology. The license
                covers a proprietary compound library, including VivoQuest's lead
                HCV
                compounds, that was developed through the use of Diversity Oriented
                Synthesis, or DOS, technology. The terms of the license agreement
                include
                an initial upfront license fee of approximately $941,000 that was
                paid in
                the Company's Ordinary Shares. The license agreement also provides
                for
                additional milestone payments triggered by certain regulatory and
                sales
                targets. These milestone payments total $34.6 million, $25.0 million
                of
                which will be due upon or following regulatory approval or actual
                product
                sales, and are payable in cash or Ordinary Shares at the Company's
                election. In addition, the license agreement requires that the Company
                make royalty payments on product sales. The actual number of Ordinary
                Shares that may be issued in the future at the Company's election
                is
                dependent upon the actual price of the Ordinary Shares on settlement
                date.
                Currently, as no milestones have been met and no milestone payments
                are
                payable, the actual number of Ordinary Shares to be issued, if at
                all,
                cannot be ascertained at this time.





·
            In
                addition, in January 2007, XTL Development, Inc. (“XTL Development”), a
                wholly-owned subsidiary, of the Company, signed an agreement with
                DOV
                Pharmaceutical, Inc. (hereinafter “DOV”) to in-license the worldwide
                rights for Bicifadine, a serotonin and norepinephrine reuptake inhibitor
                (hereinafter the “DOV Transaction”). XTL Development intends to develop
                Bicifadine for the treatment of neuropathic pain - a chronic condition
                resulting from damage to peripheral nerves. In accordance with the
                terms
                of the license agreement, XTL Development made an initial up-front
                payment
                of $7.5 million in cash. In addition, XTL Development will make milestone
                payments of up to $126.5 million, in cash and/or Ordinary Shares
                of the
                Company over the life of the license, of which up to $115 million
                will be
                due upon or after regulatory approval of the product and the remaining
                $11.5 million will be due prior to regulatory approval of the product.
                XTL
                Development is also obligated to pay royalties to DOV on net sales
                of the
                product to DOV. The actual number of Ordinary Shares that may be
                issued in
                the future at the Company's election is dependent upon the actual
                price of
                the Ordinary Shares on settlement date. Currently, as no milestones
                have
                been met and no milestone payments are payable, the actual number
                of
                Ordinary Shares to be issued, if at all, cannot be ascertained at
                this
                time.









·
            Also,
                the Company may issue Ordinary Shares for the potential settlement
                in cash
                or in Ordinary Shares, at the Company's sole discretion, of the
                transaction advisory fee in the form of the Stock Appreciation Rights
                that
                were issued to the intermediary in the transaction with DOV
                Pharmaceutical, Inc.:




·
            In
                January 2007, XTL Development committed to pay a transaction advisory
                fee
                to third party intermediaries in regards to the DOV Transaction.
                The
                transaction advisory fee was structured in the form of Stock Appreciation
                Rights (“SARs”) in the amount equivalent to (i) 3% of the Company's fully
                diluted Ordinary Shares at the close of the transaction (representing
                8,299,723 Ordinary Shares), vesting one year after the close of the
                transaction, and (ii) 7% of the Company's fully diluted Ordinary
                Shares at
                the close of the transaction (representing 19,366,019 Ordinary Shares),
                vesting following successful Phase III clinical trial results for
                Bicifadine or the acquisition of the Company. Payment of the SARs
                by XTL
                Development can be satisfied, at the Company's discretion, in cash
                and/or
                by issuance of the Company's registered Ordinary Shares. Currently,
                as the
                amount payable under the SAR is unknown (as this amount is based
                on the
                calculation of the stock appreciation on the date of exercise), the
                fact
                whether Ordinary Shares will be issued and the amounts that may be
                issued
                cannot be ascertained at this
                time.


**Schedule
      3.1(v)**





·
            On
                August 28, 2007, the Company announced the receipt on August 23,
                2007, of
                a NASDAQ Staff Deficiency Letter indicating that, according to the
                Company's financial statements for the six months ended June 30,
                2007, the
                Company no longer complied with the minimum $10 million shareholders'
                equity requirement for continued listing on The NASDAQ Global Market
                as
                set forth in Marketplace Rule 4450(a)(3). The Company was asked to
                respond.





·
            On
                September 26, 2007**,**the
                Company announced that on September 24, 2007, the Company received
                a
                NASDAQ Staff Determination indicating that the Company failed to
                comply
                with the minimum $10 million shareholders’ equity requirement for
                continued listing on the NASDAQ Global Market as set forth in Marketplace
                Rule 4450(a)(3), and that its ADRs are, therefore, subject to delisting
                from the NASDAQ Global Market.





·
            On
                September 25, 2007, the Company requested a hearing before a NASDAQ
                Listing Qualifications Panel to review the Staff Determination. A
                hearing
                request will stay the suspension of the Company's ADRs from the NASDAQ
                Global Market pending the Panel's decision. There can be no assurance
                that
                the Panel will grant the Company's request for continued listing.
                If the
                Panel does not grant the Company’s request for continued listing, the
                Company has the option to transfer its ADR listing to the NASDAQ
                Capital
                Market, previously called the NASDAQ SmallCap Market.