Unassociated Document


    EXHIBIT
10.1

     

    SECURITIES
PURCHASE AGREEMENT

     

    This
Securities Purchase Agreement (this “Agreement”) is dated
as of February 16, 2011, between Rosetta Genomics Ltd., a company organized
under the laws of the State of Israel (the “Company”), and each
purchaser identified on the signature pages hereto (each, including its
successors and assigns, a “Purchaser” and
collectively, the “Purchasers”).

     

    WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to
Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and
Rule 506 promulgated thereunder, the Company desires to issue and sell to each
Purchaser, and each Purchaser, severally and not jointly, desires to purchase
from the Company, securities of the Company as more fully described in this
Agreement.

     

    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 agree 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 set forth in this Section
1.1:

     

    “Acquiring Person”
shall have the meaning ascribed to such term in Section 4.5.

     

    “Action” shall have
the meaning ascribed to such term in Section 3.1(j).

     

    “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 405 under the Securities Act.

     

    “Board of Directors”
means the board of directors of the Company.

     

    “Business Day” means
any day except any Saturday, any Sunday, any day which is a federal legal
holiday in the United States or any day on which banking institutions in the
State of New York are authorized or required by law or other governmental action
to close; provided, however, for
calculating Business Days with respect to any action to be taken by the Company
hereunder, Friday after 1:00 p.m. (New York City time) shall not be considered a
Business Day.

     

    “Closing” means the
closing of the purchase and sale of the Securities pursuant to Section
2.1.

     

    “Closing Date” means
the Trading Day on which all of the Transaction Documents have been executed and
delivered by the applicable parties thereto, and all conditions precedent to (i)
the Purchasers’ obligations to pay the Subscription Amount and (ii) the
Company’s obligations to deliver the Securities, in each case, have been
satisfied or waived, but in no event later than the third Trading Day following
the date hereof.

     

    
      
         


      

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

     

    “Company Israeli
Counsel” means Tulchinsky Stern Marciano Cohen Levitsky & Co., with
offices located at 4 Berkowitz St., Tel Aviv 64238, Israel.

     

    “Company U.S. Counsel”
means Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., with offices located
at One Financial Center, Boston, MA 02111.

     

    “Disclosure Schedules”
shall have the meaning ascribed to such term in Section 3.1.

     

    “Effective Date” means
the earliest of the date that (a) the initial Registration Statement has been
declared effective by the Commission, (b) all of the Registrable Securities have
been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without the
requirement for the Company to be in compliance with the current public
information required under Rule 144 and without volume or manner-of-sale
restrictions or (c) following the one year anniversary of the Closing Date,
provided that a holder of Registrable Securities is not an Affiliate of the
Company, all of the Registrable Securities may be sold pursuant to an exemption
from registration under Section 4(1) of the Securities Act without volume or
manner-of-sale restrictions and Company counsel has delivered to such holders a
standing written unqualified opinion that resales may then be made by such
holders of the Registrable Securities pursuant to such exemption which opinion
shall be in form and substance reasonably acceptable to such
holders.

     

    “Evaluation Date”
shall have the meaning ascribed to such term in Section 3.1(r).

     

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

    


    “Exempt Issuance”
means the issuance of (a) Ordinary Shares or options to employees, officers,
directors or consultants of the Company pursuant to any stock or option plan
duly adopted for such purpose, by a majority of the non-employee members of the
Board of Directors or a majority of the members of a committee of non-employee
directors established for such purpose, (b) securities upon the exercise or
exchange of or conversion of any Securities issued hereunder and/or other
securities exercisable or exchangeable for or convertible into Ordinary Shares
issued and outstanding on the date of this Agreement, provided that such
securities have not been amended since the date of this Agreement to increase
the number of such securities or to decrease the exercise price, exchange price
or conversion price of such securities (except as set forth on Schedule 3.1(g)), (c)
securities issued pursuant to stock splits, stock dividends or distributions,
recapitalizations and similar events affecting the Ordinary Shares, (d) ordinary
shares issued by the Company’s majority owned subsidiary, Rosetta Green Ltd., in
an initial public offering in Israel under the securities laws of the State of
Israel as described on Schedule 3.1(a), (e)
securities issued in connection with a concurrent registered offering as
described on Schedule
3.1(g) (“Concurrent Registered
Offering”) and (f) securities issued pursuant to mergers, acquisitions or
strategic transactions approved by a majority of the disinterested directors of
the Company, provided that any such issuance shall not include a transaction in
which the Company is issuing securities primarily for the purpose of raising
capital or to an entity whose primary business is investing in
securities.

     

    
      
         


      

      
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    “FCPA” means the
Foreign Corrupt Practices Act of 1977, as amended.

     

    “FDA” shall have the
meaning ascribed to such term in Section 3.1(hh).

     

    “GAAP” shall have the
meaning ascribed to such term in Section 3.1(h).

     

    “Intellectual Property
Rights” shall have the meaning ascribed to such term in Section
3.1(o).

     

    “Legend Removal Date”
shall have the meaning ascribed to such term in Section 4.1(c).

     

    “Liens” means a lien,
charge, pledge, security interest, encumbrance, right of first refusal,
preemptive right or other restriction, other than restrictions imposed by the
securities laws.

     

    “Material Adverse
Effect” shall have the meaning assigned to such term in Section
3.1(b).

     

    “Material Permits”
shall have the meaning ascribed to such term in Section 3.1(m).

     

    “Ordinary Shares”
means the ordinary shares of the Company, par value NIS 0.01 per share, and any
other class of securities into which such securities may hereafter be
reclassified or changed.

     

    “Ordinary Shares
Equivalents” means any securities of the Company or the Subsidiaries
which would entitle the holder thereof to acquire at any time Ordinary Shares,
including, without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into or exercisable
or exchangeable for, or otherwise entitles the holder thereof to receive,
Ordinary Shares.

     

    “Per Share Purchase
Price” equals $0.60, subject to adjustment for reverse and forward stock
splits, stock dividends, stock combinations and other similar transactions of
the Ordinary Shares that occur after the date of this Agreement.

     

    “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.

     

    
      
         


      

      
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    “Proceeding” means an
action, claim, suit, investigation or proceeding (including, without limitation,
an informal investigation or partial proceeding, such as a deposition), whether
commenced or threatened.

     

    “Public Information
Failure” shall have the meaning ascribed to such term in Section
4.2(b).

     

    “Public Information Failure
Payments” shall have the meaning ascribed to such term in Section
4.2(b).

     

    “Purchaser Party”
shall have the meaning ascribed to such term in Section 4.8.

     

    “Registration Rights
Agreement” means the Registration Rights Agreement, dated the date
hereof, among the Company and the Purchasers, in the form of Exhibit A attached
hereto.

     

    “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 and the Warrant Shares.

     

    “Required Approvals”
shall have the meaning ascribed to such term in Section 3.1(e).

     

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

     

    “Rule 424” means Rule
424 promulgated by the Commission pursuant to the Securities Act, as such Rule
may be amended or interpreted from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
purpose and effect as such Rule.

    


    “SEC Reports” shall
have the meaning ascribed to such term in Section 3.1(h).

     

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

     

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

     

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

     

    “Short Sales” means
all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange
Act (but shall not be deemed to include the location and/or reservation of
borrowable Ordinary Shares). 

     

    
      
         


      

      
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    “Subscription Amount”
means, as to each Purchaser, the aggregate amount to be paid for Shares and
Warrants purchased hereunder as specified below such Purchaser’s name on the
signature page of this Agreement and next to the heading “Subscription Amount,”
in United States dollars and in immediately available funds.

     

    “Subsidiary” means any
subsidiary of the Company as set forth on Schedule 3.1(a) and
shall, where applicable, also include any direct or indirect subsidiary of the
Company formed or acquired after the date hereof.

     

    “Trading Day” means a
day on which the principal Trading Market is open for trading.

     

    “Trading Market” means
any of the following markets or exchanges on which the Ordinary Shares are
listed or quoted for trading on the date in question: the NYSE AMEX, the Nasdaq
Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the
New York Stock Exchange or the OTC Bulletin Board (or any successors to any of
the foregoing).

     

    “Transaction
Documents” means this Agreement, the Warrants, the Registration Rights
Agreement, all exhibits and schedules thereto and hereto and any other documents
or agreements executed in connection with the transactions contemplated
hereunder.

     

    “Transfer Agent” means
American Stock Transfer & Trust Company, the current transfer agent of the
Company, with a mailing address of 59 Maiden Lane New York, New York 10038 and a
facsimile number of 718-236-4588, and any successor transfer agent of the
Company.

     

    “VWAP” means, for any
date, the price determined by the first of the following clauses that applies:
(a) if the Ordinary Shares are then listed or quoted on a Trading Market, the
daily volume weighted average price of the Ordinary Shares for such date (or the
nearest preceding date) on the Trading Market on which the Ordinary Shares are
then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from
9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  if
the OTC Bulletin Board is not a Trading Market, the volume weighted average
price of the Ordinary Shares for such date (or the nearest preceding date) on
the OTC Bulletin Board, (c) if the Ordinary Shares are not then listed or quoted
for trading on the OTC Bulletin Board and if prices for the Ordinary Shares are
then reported in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a
similar organization or agency succeeding to its functions of reporting prices),
the most recent bid price per share of the Ordinary Shares so reported, or
(d) in all other cases, the fair market value of an Ordinary Share as
determined by an independent appraiser selected in good faith by the Purchasers
of a majority in interest of the Shares then outstanding and reasonably
acceptable to the Company, the fees and expenses of which shall be paid by the
Company.

     

    “Warrants” means,
collectively, the Ordinary Shares Purchase Warrants delivered to the Purchasers
at the Closing in accordance with Section 2.2(a) hereof, which shall be
exercisable immediately and have a term of exercise equal to five years from the
Initial Exercise Date (as defined therein), in the form of Exhibit B attached
hereto.

     

    
      
         


      

      
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    “Warrant Shares” means
the Ordinary Shares issuable upon exercise of the Warrants.

     

    “WS” means Weinstein
Smith LLP with offices located at 420 Lexington Avenue, Suite 2620, New York,
New York 10170-0002.

     

    ARTICLE
II.

    PURCHASE
AND SALE

     

    2.1          Closing.  On
the Closing Date, upon the terms and subject to the conditions set forth herein,
substantially concurrent with the execution and delivery of this Agreement by
the parties hereto, the Company agrees to sell, and the Purchasers, severally
and not jointly,  agree to purchase, up to an aggregate of
$2,725,000,80 of Shares and Warrants.  Each Purchaser shall deliver to
the Company, via wire transfer, immediately available funds equal to such
Purchaser’s Subscription Amount as set forth on the signature page hereto
executed by such Purchaser, and the Company shall deliver to each Purchaser its
respective Shares and a Warrant, as determined pursuant to Section 2.2(a), and
the Company and each Purchaser shall deliver the other items set forth in
Section 2.2 deliverable at the Closing.  Upon satisfaction of the
covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall
occur at the offices of WS or such other location as the parties shall mutually
agree.

     

    2.2          Deliveries.

     

    (a)           On
or prior to the Closing Date, the Company shall deliver or cause to be delivered
to each Purchaser the following:

     

    (i)           this
Agreement duly executed by the Company;

     

    (ii)          a
legal opinion of Company U.S. Counsel, in form and substance reasonably
satisfactory to WS;

     

    (iii)         a
legal opinion of Company Israeli Counsel, in form and substance reasonably
satisfactory to WS;

     

    (iv)        a
copy of the irrevocable instructions to the Transfer Agent instructing the
Transfer Agent to deliver, on an expedited basis, a certificate evidencing 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;

     

    (v)         a
Warrant registered in the name of such Purchaser to purchase up to a number of
Ordinary Shares equal to 75% of the Shares issuable to the Purchaser on the
Closing Date, with an exercise price equal to $0.80, subject to adjustment
therein (such Warrant certificate may be delivered within three Trading Days of
the Closing Date); and

     

    
      
         


      

      
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    (vi)         the
Registration Rights Agreement duly executed by the Company.

     

    (b)           On
or prior to the Closing Date, each Purchaser shall deliver or cause to be
delivered to the Company the following:

     

    (i)           this
Agreement duly executed by such Purchaser;

     

    (ii)          such
Purchaser’s Subscription Amount by wire transfer to the account specified by the
Company; and

     

    (iii)         the
Registration Rights Agreement duly executed by such Purchaser.

     

    2.3          Closing
Conditions.

     

    (a)           The
obligations of the Company hereunder in connection with the Closing are subject
to the following conditions being met:

     

    (i)           the
accuracy in all material respects when made and on the Closing Date of the
representations and warranties of the Purchasers contained herein (unless as of
a specific date therein in which case they shall be accurate as of such
date);

     

    (ii)          all
obligations, covenants and agreements of each Purchaser required to be performed
at or prior to the Closing Date shall have been performed in all material
respects; and

     

    (iii)         the
delivery by each Purchaser of the items set forth in Section 2.2(b) of this
Agreement.

     

    (b)           The
respective obligations of the Purchasers hereunder in connection with the
Closing are subject to the following conditions being met:

     

    (i)           the
accuracy in all material respects when made and on the Closing Date of the
representations and warranties of the Company contained herein (unless as of a
specific date therein);

     

    (ii)          all
obligations, covenants and agreements of the Company required to be performed at
or prior to the Closing Date shall have been performed in all material
respects;

     

    (iii)         the
delivery by the Company of the items set forth in Section 2.2(a) of this
Agreement;

     

    (iv)         there
shall have been no Material Adverse Effect with respect to the Company since the
date hereof; and

     

    
      
         


      

      
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    (v)          from
the date hereof to the Closing Date, trading in the Ordinary Shares shall not
have been suspended by the Commission or the Company’s principal Trading Market
(except for any suspension of trading of limited duration agreed to by the
Company, which suspension shall be terminated prior to the Closing), and, at any
time prior to the Closing Date, trading in securities generally as reported by
Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall
not have been established on securities whose trades are reported by such
service, or on any Trading Market, nor shall a banking moratorium have been
declared either by the United States or New York State authorities nor shall
there have occurred any material outbreak or escalation of hostilities or other
national or international calamity of such magnitude in its effect on, or any
material adverse change in, any financial market which, in each case, in the
reasonable judgment of such Purchaser, makes it impracticable or inadvisable to
purchase the Securities at the Closing.

     

    ARTICLE
III.

    REPRESENTATIONS
AND WARRANTIES

     

    3.1          Representations and
Warranties of the Company. Except as disclosed in the SEC Reports or as
set forth in the Disclosure Schedules, which Disclosure Schedules shall be
deemed a part hereof and shall qualify any representation or otherwise made
herein to the extent of the disclosure contained in the corresponding section of
the Disclosure Schedules, the Company hereby makes the following representations
and warranties to each Purchaser:

     

    (a)           Subsidiaries.  All
of the direct and indirect subsidiaries of the Company are set forth on Schedule
3.1(a).  Except as set forth in Schedule 3.1(a), the
Company owns, directly or indirectly, all of the capital stock or other equity
interests of each Subsidiary free and clear of any Liens, and all of the issued
and outstanding shares of capital stock of each Subsidiary are validly issued
and are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.

     

    (b)           Organization and
Qualification.  The Company and each of the Subsidiaries is an
entity duly incorporated or otherwise organized, validly existing and in good
standing (where such concept is recognized) under the laws of the jurisdiction
of its incorporation or organization, with the requisite power and authority to
own and use its properties and assets and to carry on its business as currently
conducted.  Neither the Company nor any Subsidiary is in violation nor
default of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter
documents.  Each of the Company and 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, business,
prospects or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, 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”) and no Proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such
power and authority or qualification.

     

    
      
         


      

      
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    (c)           Authorization;
Enforcement.  The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by this
Agreement and each of the other Transaction Documents and otherwise to carry out
its obligations hereunder and thereunder.  The execution and delivery
of each of this Agreement and the other Transaction Documents by the Company and
the consummation by it of the transactions contemplated hereby and thereby have
been duly authorized by all necessary action on the part of the Company and no
further action is required by the Company, the Board of Directors or the
Company’s stockholders in connection herewith or therewith other than in
connection with the Required Approvals.  This Agreement and each other
Transaction Document to which it is a party has been (or upon delivery will have
been) duly executed by the Company and, when delivered in accordance with the
terms hereof and thereof, assuming due authorization, execution and delivery by
the applicable Purchaser thereof, will constitute the valid and binding
obligation of the Company enforceable against the Company in respect of such
Purchaser in accordance with its terms, except: (i) as limited by general
equitable principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors’ rights generally, (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law or public policy.

     

    (d)           No
Conflicts.  The execution, delivery and performance by the
Company of this Agreement and the other Transaction Documents to which it is a
party, the issuance and sale of the Securities and the consummation by it of the
transactions contemplated hereby and thereby do not and will not: (i) conflict
with or violate any provision of the Company’s or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter
documents, (ii) conflict with, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, result in the
creation of any Lien upon any of the properties or assets of the Company or any
Subsidiary, 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 Company or
Subsidiary debt or otherwise) or other understanding to which the Company or any
Subsidiary is a party or by which any property or asset of the Company or any
Subsidiary is bound or affected, or (iii) subject to the Required Approvals,
conflict with or result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal and
state securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary 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.

     

    
      
         


      

      
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    (e)           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 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 filings required pursuant to Section 4.4 of this Agreement, (ii)
the filing with the Commission pursuant to the Registration
Rights  Agreement, (iii) the notice and/or application(s) to each
applicable Trading Market for the issuance and sale of the Securities and the
listing of the Shares and Warrant Shares for trading thereon in the time and
manner required thereby, (iv) the filing of Form D with the Commission and such
filings as are required to be made under applicable state securities laws, (v)
filings required by the Israeli Registrar of Companies and (vi) filings required
by the Office of the Chief Scientist of the Israeli Ministry of Industry, Trade
and Employment (“OCS”) (collectively,
the “Required
Approvals”).

     

    (f)           Issuance of the
Securities.  The Securities are duly authorized and, when
issued and paid for in accordance with the applicable Transaction Documents,
will be duly and validly issued, fully paid and nonassessable, free and clear of
all Liens imposed by the Company other than restrictions on transfer provided
for in the Transaction Documents.  The Warrant Shares, when issued and
paid for in accordance with the terms of the Warrants, will be validly issued,
fully paid and nonassessable, free and clear of all Liens imposed by the Company
other than restrictions on transfer provided for in the Transaction
Documents.  The Company has reserved from its duly authorized capital
stock the maximum number of Ordinary Shares issuable pursuant to this Agreement
and the Warrants.

     

    (g)           Capitalization.  The
authorized capitalization of the Company is as set forth in the SEC Reports.
Except as set forth on Schedule 3.1(g), the
Company has not issued any capital stock since its most recently filed periodic
report under the Exchange Act, other than pursuant to the exercise of employee
stock options under the Company’s stock option plans, the issuance of Ordinary
Shares to employees pursuant to the Company’s employee stock purchase plans and
pursuant to the conversion and/or exercise of Ordinary Shares Equivalents
outstanding as of the date of the most recently filed periodic report under the
Exchange Act.  No Person has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the
transactions contemplated by the Transaction Documents.  Except as set
forth in the SEC Reports, pursuant to the Company’s stock plans, as a result of
the Concurrent Registered Offering and as a result of the purchase and sale of
the Securities, there are no outstanding options, warrants, scrip rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities, rights or obligations convertible into or exercisable or
exchangeable for, or giving any Person any right to subscribe for or acquire any
Ordinary Shares, or contracts, commitments, understandings or arrangements by
which the Company or any Subsidiary is or may become bound to issue additional
Ordinary Shares or Ordinary Shares Equivalents.  Except as set forth
on Schedule
3.1(g), the issuance
and sale of the Securities will not obligate the Company to issue Ordinary
Shares or other securities to any Person (other than the Purchasers) and will
not result in a right of any holder of Company securities to adjust the
exercise, conversion, exchange or reset price under any of such securities. All
of the outstanding shares of capital stock of the Company are duly authorized,
validly issued, fully paid and nonassessable, have been issued in compliance
with all applicable federal and state securities laws, and none of such
outstanding shares was issued in violation of any preemptive rights or similar
rights to subscribe for or purchase securities.  No further approval
or authorization of any stockholder, the Board of Directors or others is
required for the issuance and sale of the Securities.  There are no
stockholders agreements, voting agreements or other similar agreements with
respect to the Company’s capital stock to which the Company is a party or, to
the knowledge of the Company, between or among any of the Company’s
stockholders.

     

    
      
         


      

      
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    (h)          SEC Reports; Financial
Statements.  The Company has filed all reports, schedules,
forms, statements and other documents required to be filed by the Company under
the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the
two years preceding the date hereof (or such shorter period as the Company was
required by law or regulation to file such material) (the foregoing materials,
including the exhibits thereto and documents incorporated by reference therein,
being collectively referred to herein as the “SEC Reports”) on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such
extension.  Except as set forth on Schedule 3.1(h), as
of their respective dates, the SEC Reports complied in all material respects
with the requirements of the Exchange Act and none of the SEC Reports, when
filed, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.  The Company has never been an issuer subject to
the disqualification provisions of Rule 144(i) under the Securities Act. Except
as set forth on Schedule 3.1(h), the
financial statements of the Company included in the SEC Reports comply in all
material respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at the time of
filing.  Except as set forth on Schedule 3.1(h), such
financial statements have been prepared in accordance with United States
generally accepted accounting principles applied on a consistent basis during
the periods involved (“GAAP”), except as may
be otherwise specified in such financial statements or the notes thereto and
except that unaudited financial statements may not contain all footnotes
required by GAAP, and fairly present in all material respects the financial
position of the Company and its consolidated 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, immaterial,
year-end audit adjustments.

     

    
      
         


      

      
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    (i)           Material Changes;
Undisclosed Events, Liabilities or Developments.  Since the
date of the latest audited financial statements included within the SEC Reports,
except as disclosed in a subsequent SEC Report filed prior to the date hereof:
(i) there has been no event, occurrence or development that has had or that
could reasonably be expected to result in a Material Adverse Effect, (ii) the
Company has not incurred any material liabilities (contingent or otherwise)
other than (A) trade payables and accrued expenses incurred in the ordinary
course of business consistent with past practice and (B) liabilities not
required to be reflected in the Company’s financial statements pursuant to GAAP
or disclosed in filings made with the Commission, (iii) the Company has not
altered its method of accounting, (iv) the Company has not declared or made any
dividend or distribution of cash or other property to its stockholders or
purchased, redeemed or made any agreements to purchase or redeem any shares of
its capital stock and (v) the Company has not issued any equity securities to
any officer, director or Affiliate, except pursuant to existing Company stock
option plans.  The Company does not have pending before the Commission
any request for confidential treatment of information.  Except for the
Concurrent Registered Offering and for the issuance of the Securities
contemplated by this Agreement, no event, liability, fact, circumstance,
occurrence or development has occurred or exists, or is reasonably expected to
occur or exist, with respect to the Company or its Subsidiaries or their
respective businesses, properties, operations, assets or financial condition,
that would be required to be disclosed by the Company under applicable
securities laws at the time this representation is made or deemed made that has
not been publicly disclosed at least 1 Trading Day prior to the date that this
representation is made.

     

    (j)           Litigation.  There
is no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or affecting the
Company, any Subsidiary or any of their respective properties before or by any
court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”) which (i)
adversely affects or challenges the legality, validity or enforceability of any
of the Transaction Documents or the Securities or (ii) could, if there were an
unfavorable decision, have or reasonably be expected to result in a Material
Adverse Effect.  Except as set forth in Schedule 3.1(j),
neither the Company nor any Subsidiary, nor, to the Company’s knowledge, any
director or officer thereof, is or has been the subject of any Action involving
a claim of violation of or liability under federal or state securities laws or a
claim of breach of fiduciary duty.  There has not been, and to the
knowledge of the Company, there is not pending or contemplated, any
investigation by the Commission involving the Company or, to the Company’s
knowledge, any current director or officer of the Company.  The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act.

     

    (k)           Labor
Relations.  No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company, which could reasonably be expected to result in a Material Adverse
Effect.  None of the Company’s or its Subsidiaries’ employees is a
member of a union that relates to such employee’s relationship with the Company
or such Subsidiary, and neither the Company nor any of its Subsidiaries is a
party to a collective bargaining agreement, and the Company and its Subsidiaries
believe that their relationships with their employees are good.  To
the knowledge of the Company, no executive officer of the Company or any
Subsidiary is, or is now expected to be, in violation of any material term of
any employment contract, confidentiality, disclosure or proprietary information
agreement or non-competition agreement, or any other contract or agreement or
any restrictive covenant in favor of any third party, and the continued
employment of each such executive officer does not subject the Company or any of
its Subsidiaries to any liability with respect to any of the foregoing
matters.  The Company and its Subsidiaries are in compliance with all
applicable U.S. federal, state, local and foreign laws and regulations relating
to employment and employment practices, terms and conditions of employment and
wages and hours, except where the failure to be in compliance could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

     

    
      
         


      

      
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    (l)       
    Compliance.  Neither
the Company nor any Subsidiary: (i) is in default under or in violation of (and
no event has occurred that has not been waived that, with notice or lapse of
time or both, would result in a default by the Company or any Subsidiary under),
nor has the Company or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound (whether or not such default or
violation has been waived), (ii) is in violation of any judgment, decree, or
order of any court, arbitrator or other governmental authority or (iii) is or
has been in violation of any statute, rule, ordinance or regulation of any
governmental authority, including without limitation all foreign, federal, state
and local laws applicable to its business, except in each case as would not have
or reasonably be expected to result in a Material Adverse Effect.

     

    (m)          Regulatory
Permits.  The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits would not reasonably be expected to result in a Material
Adverse Effect (“Material Permits”),
and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any Material Permit,
except for such revocation or modification as would not have or reasonably be
expected to result in a Material Adverse Effect.

     

    (n)           Title to
Assets.  The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them and good and
marketable title in all personal property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and clear of all
Liens, except for (i) Liens created under license or collaboration agreements
relating to the Company’s products or Intellectual Property Rights, (ii)Liens as
do not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by the
Company and the Subsidiaries and (iii) Liens for the payment of federal, state
or other taxes, for which appropriate reserves have been made therefor in
accordance with GAAP and the payment of which is neither delinquent nor subject
to penalties.  Any real property and facilities held under lease by
the Company and the Subsidiaries are held by them under valid, subsisting and
enforceable leases with which the Company and the Subsidiaries are in
compliance, except where such non-compliance would not have or reasonably be
expected to result in a Material Adverse Effect.

     

    
      
         


      

      
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    (o)           Intellectual
Property.  The Company and the Subsidiaries have, or have
rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights,
licenses and other intellectual property rights and similar rights necessary or
material for use in connection with their respective businesses as described in
the SEC Reports and which the failure to so have could have a Material Adverse
Effect (collectively, the “Intellectual Property
Rights”).  None of, and neither the Company nor any Subsidiary
has received a notice (written or otherwise) that any of, the Intellectual
Property Rights has expired, terminated or been abandoned, or is expected to
expire or terminate or be abandoned, within two (2) years from the date of this
Agreement.  Neither the Company nor any Subsidiary has received, since
the date of the latest audited financial statements included within the SEC
Reports, a written notice of a claim or otherwise has any knowledge that the
Intellectual Property Rights violate or infringe upon the rights of any Person,
except as would not have a Material Adverse Effect.  To the knowledge
of the Company, all such Intellectual Property Rights are
enforceable.  The Company and its Subsidiaries have taken reasonable
security measures to protect the secrecy, confidentiality and value of all of
their intellectual properties, except where failure to do so would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Notwithstanding the above, the Company participates in a
consortium which is supported by the OCS. The consent of the OCS will be
required for the transfer of know how developed in the framework of the
consortium or rights to manufacture based on and/or incorporating such know how
to third parties who are not members of the consortium.

     

    (p)           Insurance.  The
Company and the Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which the Company and the Subsidiaries are
engaged.  Neither the Company nor any Subsidiary has been notified
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not have or
reasonably be expected to result in a Material Adverse Effect.

     

    (q)           Transactions With Affiliates
and Employees.  Except as set forth in the SEC Reports, none of
the officers or directors of the Company or any Subsidiary and, to the knowledge
of the Company, none of the employees of the Company or any Subsidiary is
presently a party to any transaction with the Company or any Subsidiary (other
than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, providing for
the borrowing of money from or lending of money to or otherwise requiring
payments to or from any officer, director or such employee or, to the knowledge
of the Company, any entity in which any officer, director, or any such employee
has a substantial interest or is an officer, director, trustee, stockholder,
member or partner, in each case in excess of $120,000 other than for: (i)
payment of salary or consulting fees for services rendered, (ii) reimbursement
for expenses incurred on behalf of the Company and (iii) other employee
benefits, including stock option agreements under any stock option plan of the
Company.

     

    
      
         


      

      
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    (r)           Sarbanes-Oxley; Internal
Accounting Controls.  The Company is in material compliance
with any and all requirements of the Sarbanes-Oxley Act of 2002 that are
applicable to the Company and effective as of the date hereof, and any and all
rules and regulations promulgated by the Commission thereunder that are
applicable to the Company and effective as of the date hereof and as of the
Closing Date. The Company and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that: (i)
transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company has established disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such
disclosure controls and procedures to provide reasonable assurance that
information required to be disclosed by the Company in the reports it files or
submits under the Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the Commission’s rules and
forms.  The Company’s certifying officers have evaluated the
effectiveness of the disclosure controls and procedures of the Company as of the
end of December 31, 2009 (such date, the “Evaluation
Date”).  The Company presented in its Annual Report on Form
20-F for the year ended December 31, 2009 the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date.  Since the Evaluation
Date, there have been no changes in the internal control over financial
reporting (as such term is defined in the Exchange Act) of the Company and its
Subsidiaries that have materially affected, or is reasonably likely to
materially affect, the internal control over financial reporting of the
Company.

     

    (s)           Certain
Fees.  Except for the fee to be paid to Rodman & Renshaw,
LLC, no brokerage or finder’s fees or commissions are or will be payable by the
Company or  any Subsidiary to any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank or other Person
with respect to the transactions contemplated by the Transaction
Documents.  The Purchasers shall have no obligation with respect to
any fees or with respect to any claims made by or on behalf of other Persons for
fees of a type contemplated in this Section that may be due from the Company in
connection with the transactions contemplated by the Transaction
Documents.

     

    (t)           Private Placement.
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 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 the Trading Market.

     

    (u)           Investment Company.
The Company is not, and is not an Affiliate of, and immediately after receipt of
payment for the Securities, will not be or be an Affiliate of, an “investment
company” within the meaning of the Investment Company Act of 1940, as
amended.  The Company shall conduct its business in a manner so that
it will not become an “investment company” subject to registration under the
Investment Company Act of 1940, as amended.

     

    
      
         


      

      
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    (v)           Registration
Rights.  Other than each of the Purchasers and except as set
forth on Schedule
3.1(v), no Person has any right to cause the Company to effect the
registration under the Securities Act of any securities of the Company or any
Subsidiary.

     

    (w)           Listing and Maintenance
Requirements.  The Ordinary Shares are registered pursuant to
Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action
designed to, or which to its knowledge is likely to have the effect of,
terminating the registration of the Ordinary Shares under the Exchange Act nor
has the Company received any notification that the Commission is contemplating
terminating such registration.  Except as set forth on Schedule 3.1(w), the
Company has not, in the 12 months preceding the date hereof, received notice
from any Trading Market on which the Ordinary Shares are or have been listed or
quoted to the effect that the Company is not in compliance with the listing or
maintenance requirements of such Trading Market. Except as set forth on Schedule 3.1(w), the
Company is in compliance with all such listing and maintenance
requirements.

     

    (x)           Application of Takeover
Protections.  The Company and the 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
certificate of incorporation (or similar charter documents) or the laws of its
state of incorporation 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 as a result of the Company’s issuance of the Securities and the
Purchasers’ ownership of the Securities.

     

    (y)           Disclosure.  Except
with respect to the material terms and conditions of (i) the transactions
contemplated by the Transaction Documents and (ii) the Concurrent Registered
Offering, the Company confirms that neither it nor any other Person acting on
its behalf has provided any of the Purchasers or their agents or counsel with
any information that it believes constitutes or might constitute material,
non-public information.   The Company understands and confirms
that the Purchasers will rely on the foregoing representation in effecting
transactions in securities of the Company.  All of the disclosure
furnished by or on behalf of the Company to the Purchasers regarding the Company
and its Subsidiaries, their respective businesses and the transactions
contemplated hereby, including the Disclosure Schedules to this Agreement, is
true and correct and does 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 transactions
contemplated hereby other than those specifically set forth in Section 3.2
hereof.

     

    
      
         


      

      
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    (z)           No Integrated
Offering. Assuming the accuracy of the Purchasers’ representations and
warranties set forth in Section 3.2, 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
Securities to be integrated with prior offerings by the Company for purposes of
(i) the Securities Act which would require the registration of any such
securities under the Securities Act, or (ii) any applicable shareholder approval
provisions of any Trading Market on which any of the securities of the Company
are listed or designated.

     

    (aa)         Solvency.  Based
on the financial condition of the Company as of the Closing Date, after giving
effect to the receipt by the Company of the proceeds from the sale of the
Securities hereunder and the proceeds, if any, from the Concurrent Registered
Offering, the Company has no knowledge of any facts or circumstances which lead
it to believe that it will file for reorganization or liquidation under the
bankruptcy or reorganization laws of any jurisdiction within 3 months from the
Closing Date.

     

    (bb)        Tax
Status.  Except for matters that would not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company and each Subsidiary has filed all necessary United States
federal and state income and all foreign income and franchise tax returns and
has paid or accrued all taxes shown as due thereon.  There are no
unpaid taxes in any material amount claimed to be overdue by the Company by the
taxing authority of any jurisdiction, and the officers of the Company or of any
Subsidiary know of no basis for any such claim.

     

    (cc)        
No General
Solicitation.  Neither the Company nor any person acting on
behalf of the Company has offered or sold any of the Securities by any form of
general solicitation or general advertising.  The Company has offered
the Securities for sale only to the Purchasers and other “accredited investors”
within the meaning of Rule 501 under the Securities Act.

     

    (dd) 
       Foreign Corrupt
Practices.  Neither the Company nor any Subsidiary, to the
knowledge of the Company or any Subsidiary, any agent or other person acting on
behalf of the Company or any Subsidiary, has: (i) directly or indirectly, used
any funds for unlawful contributions, gifts, entertainment or other unlawful
expenses related to foreign or domestic political activity, (ii) made any
unlawful payment to foreign or domestic government officials or employees or to
any foreign or domestic political parties or campaigns from corporate funds,
(iii) failed to disclose fully any contribution made by the Company or any
Subsidiary (or made by any person acting on its behalf of which the Company is
aware) which is in violation of law or (iv) violated in any material respect any
provision of the Foreign Corrupt Practices Act of 1977, as amended.

     

    (ee)
        Accountants.  To
the knowledge of the Company, the Company’s independent registered public
accounting firm, Kost, Forer, Gabbay & Kasierer, a member of Ernst &
Young Global: (i) is a registered public accounting firm as required by the
Exchange Act and (ii) shall express its opinion with respect to the financial
statements to be included in the Company’s Annual Report on Form 20-F for the
fiscal year ending December 31, 2010.

     

    (ff)          No Disagreements with
Accountants and Lawyers.      There are no
disagreements of any kind presently existing, or reasonably anticipated by the
Company to arise, between the Company and the accountants and lawyers formerly
or presently employed by the Company.


    
      
         


      

      
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    (gg)        Acknowledgment Regarding
Purchasers’ Purchase of Securities.  The Company acknowledges
and agrees that each of the Purchasers is acting solely in the capacity of an
arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated thereby. The Company further acknowledges that no
Purchaser is acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to the Transaction Documents and the
transactions contemplated thereby and any advice given by any Purchaser or any
of their respective representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely incidental to the
Purchasers’ purchase of the Securities.  The Company further
represents to each Purchaser that the Company’s decision to enter into this
Agreement and the other Transaction Documents has been based solely on the
independent evaluation of the transactions contemplated hereby by the Company
and its representatives.

     

    (hh)        Acknowledgment Regarding
Purchaser’s Trading Activity. Anything in this
Agreement or elsewhere herein to the contrary notwithstanding (except for Sections 3.2(f) and 4.13 hereof), it is
understood and acknowledged by the Company that: (i) none of the Purchasers
has been asked by the Company to
agree, nor has any Purchaser agreed, to
desist from purchasing or selling, long and/or short, securities of the Company,
or “derivative” securities based on securities issued by the Company or to hold
the Securities for any specified term, (ii) past or
future open market or other transactions by any Purchaser, specifically
including, without limitation, Short Sales or “derivative” transactions, before
or after the closing of this or future private placement transactions, may
negatively impact the market price of the Company’s publicly-traded securities, (iii) any Purchaser, and counter-parties in
“derivative” transactions to which any such Purchaser is a party, directly or
indirectly, may presently have a “short” position in the Ordinary Shares and
(iv) each Purchaser shall not be deemed to have any affiliation with or control
over any arm’s length counter-party in any “derivative”
transaction.  The Company further understands and acknowledges
that (y) one or more Purchasers may engage in hedging activities at various
times during the period that the Securities are outstanding, including, without
limitation, during the periods that the value of the Warrant Shares deliverable
with respect to Securities are being determined, and (z) such hedging activities
(if any) could reduce the value of the existing stockholders' equity interests
in the Company at and after the time that the hedging activities are being
conducted.  The Company acknowledges that such aforementioned hedging
activities do not constitute a breach of any of the Transaction
Documents.

     

    (ii)          Regulation M
Compliance.  The Company has not, and to its knowledge no one acting
on its behalf has, (i) taken, directly or indirectly, any action designed to
cause or to result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of any of the
Securities, (ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay
to any Person any compensation for soliciting another to purchase any other
securities of the Company, other than, in the case of clauses (ii) and (iii),
compensation paid to the Company’s placement agent in connection with the
placement of the Securities.


    
      
         


      

      
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    (jj)          FDA.  No
test conducted in the Company’s laboratory is currently being promoted or sold
in a manner that would require the Company to submit a premarket notice or
premarket approval application to the U.S. Food and Drug Administration (“FDA”).  There
is no pending, completed or, to the Company's knowledge, threatened, action
(including any lawsuit, arbitration, or legal or administrative or regulatory
proceeding, charge, complaint, or investigation) against the Company or any of
its Subsidiaries, and none of the Company or any of its Subsidiaries has
received any notice, warning letter or other communication from the FDA or any
other governmental entity, which alleges that any Company test is being offered
in violation of any laws, rules or regulations.  The Company has not been
informed by the FDA that the FDA will prohibit the marketing, sale, license or
use in the United States of any product proposed to be developed, produced or
marketed by the Company.

     

    (kk)       
 Form F-3
Eligibility.  The Company is eligible to register the resale of
the Securities for resale by the Purchaser on Form F-3 promulgated under the
Securities Act.

     

    (ll)           Office of Foreign Assets
Control.  Neither the Company nor any
Subsidiary  nor, to the Company's knowledge, any director, officer,
agent, employee or affiliate of the Company or any Subsidiary is currently
subject to any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department (“OFAC”).

     

    (mm)   
   U.S.
Real Property Holding Corporation.  The Company is not and has
never been a U.S. real property holding corporation within the meaning of
Section 897 of the Internal Revenue Code of 1986, as amended, and the Company
shall so certify upon Purchaser’s request.

     

    (nn)        Bank Holding Company
Act.  Neither the Company nor any of its Subsidiaries or
Affiliates is subject to the Bank Holding Company Act of 1956, as amended (the
“BHCA”) and to
regulation by the Board of Governors of the Federal Reserve System (the “Federal
Reserve”).  Neither the Company nor any of its Subsidiaries or
Affiliates owns or controls, directly or indirectly, five percent (5%) or more
of the outstanding shares of any class of voting securities or twenty-five
percent or more of the total equity of a bank or any entity that is subject to
the BHCA and to regulation by the Federal Reserve.  Neither the
Company nor any of its Subsidiaries or Affiliates exercises a controlling
influence over the management or policies of a bank or any entity that is
subject to the BHCA and to regulation by the Federal Reserve.

     

    (oo)        Money
Laundering.  The operations of the Company and its Subsidiaries
are and have been conducted at all times in compliance with applicable financial
record-keeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, applicable money laundering
statutes and applicable rules and regulations thereunder (collectively, the
“Money Laundering
Laws”), and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company
or any Subsidiary with respect to the Money Laundering Laws is pending or, to
the knowledge of the Company or any Subsidiary, threatened.


    
      
         


      

      
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    3.2          Representations and
Warranties of the Purchasers.  Each Purchaser, for itself and
for no other Purchaser, hereby represents and warrants as of the date hereof and
as of the Closing Date to the Company as follows (unless as of a specific
date therein):

     

    (a)           Organization;
Authority.  Such Purchaser is either an individual or an entity
duly organized, validly existing and in good standing (where such concept is
recognized) under the laws of the jurisdiction of its organization with full
right, corporate, partnership, limited liability company or similar power and
authority to enter into and to consummate the transactions contemplated by the
Transaction Documents and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of the Transaction Documents and
performance by such Purchaser of the transactions contemplated by the
Transaction Documents have been duly authorized by all necessary corporate,
partnership, limited liability company or similar action, as applicable, 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 general equitable
principles and applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors’ rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable
law.

     

    (b)          No
Conflicts.  The execution, delivery and performance by such
Purchaser of the Transaction Documents and the consummation by it of the
transactions contemplated hereby and thereby to which it is a party do not and
will not (i) conflict with or violate any provision of such Purchaser’s
certificate or articles of incorporation, bylaws or other organizational or
charter 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, result
in the creation of any Lien upon any of the properties or assets of such
Purchaser, 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 Purchaser
debt or otherwise) or other understanding to which such Purchaser is a party or
by which any property or asset of such Purchaser is bound or affected, or (iii)
conflict with or result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which such Purchaser is subject (including federal and state
securities laws and regulations), or by which any property or asset of such
Purchaser is bound or affected except in the case of each of clauses (ii) and
(iii), such as would not reasonably be expected to have a material adverse
effect on such Purchaser’s ability to perform in any material respect its
obligations under any Transaction Documents.


    
      
         


      

      
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    (c)           Own
Account.  Such Purchaser understands that the Securities are
“restricted securities” and have not been registered under the Securities Act,
the Israel Securities Law 1968,  or any applicable state securities
law and is acquiring the Securities as principal for its own account and not
with a view to or for distributing or reselling such Securities or any part
thereof in violation of the Securities Act, the Israel Securities Law
1968,  or any applicable state securities law, has no present
intention of distributing any of such Securities in violation of the Securities
Act or any applicable state securities law and has no direct or indirect
arrangement or understandings with any other persons to distribute or regarding
the distribution of such Securities in violation of the Securities Act, the
Israel Securities Law 1968,   or any applicable state securities
law (this representation and warranty not limiting such Purchaser’s right to
sell the Securities pursuant to the Registration Statement or otherwise in
compliance with applicable federal and state securities laws).  Such
Purchaser is acquiring the Securities hereunder in the ordinary course of its
business.

     

    (d)          Purchaser
Status.  At the time such Purchaser was offered the Securities,
it was, and as of the date hereof it is, and on the Closing date and on each
date on which it exercises any Warrants, it will (i) be an “accredited investor”
as defined in Rule 501 under the Securities Act, (ii) not be in Israel or an
Israeli citizen, corporation or resident, or controlled by an Israeli citizen,
corporation or resident, (iii) not be related to any officer or director of the
Company and (iv) not hold 5% or more of the Company's issued share capital or of
the voting rights in the Company.  Such Purchaser is not required to
be registered as a broker-dealer under Section 15 of the Exchange Act. In the
event that, upon the issuance of the Shares and/or the Warrant Shares to a
Purchaser, such Purchaser holds 5% or more of the Company's issued share capital
or of the voting rights in the Company, then, upon such issuance, such Purchaser
shall deliver to the Company an executed copy of an Undertaking towards the OCS
substantially in the form attached hereto as Annex A or in any
other form required by the OCS.

     

    (e)          Experience of Such
Purchaser; Information.  Such Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters 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. Such
Purchaser and its advisors, if any, have been furnished with all materials
relating to the business, financial condition and results of operations of the
Company, and materials relating to the offer and sale of the Securities, that
have been requested by such Purchaser or its advisors, if any.  Such
Purchaser acknowledges and understands that its investment in the Securities
involves a significant degree of risk. Such Purchaser acknowledges that the
Company participates in a consortium supported by the OCS and therefore the
consent of the OCS will be required for the transfer of know how developed in
the framework of the consortium or rights to manufacture based on and/or
incorporating such know how to third parties who are not members of the
consortium.


    
      
         


      

      
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    (f)           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.

     

    (g)           Certain
Transactions
and Confidentiality.  Other than consummating the transactions
contemplated hereunder, such Purchaser has not directly or indirectly, nor
has any Person acting on behalf of or pursuant to any understanding with such
Purchaser, executed any purchases or sales, including Short Sales, of the
securities of the Company during the period commencing as of the time that such
Purchaser first became aware of the transactions contemplated hereunder and
ending immediately prior to the execution hereof.  Notwithstanding the
foregoing, in the case of a Purchaser that is a multi-managed investment vehicle
whereby separate portfolio managers manage separate portions of such Purchaser’s
assets and the portfolio managers have no direct knowledge of the investment
decisions made by the portfolio managers managing other portions of such
Purchaser’s assets, the representation set forth above shall only apply with
respect to the portion of assets managed by the portfolio manager that made the
investment decision to purchase the Securities covered by this
Agreement.  Other than to other Persons party to this Agreement, such
Purchaser has maintained the confidentiality of all disclosures made to it in
connection with this transaction (including the existence and terms of this
transaction). Notwithstanding the foregoing, for avoidance of doubt, nothing
contained herein shall constitute a representation or warranty, or preclude any
actions, with respect to the identification of the availability of, or securing
of, available shares to borrow in order to effect Short Sales or similar
transactions in the future.

     

    The
Company acknowledges and agrees that the representations contained in Section
3.2 shall not modify, amend or affect such Purchaser’s right to rely on the
Company’s representations and warranties contained in this Agreement or any
representations and warranties contained in any other Transaction
Document.

     

    ARTICLE
IV.

    OTHER
AGREEMENTS OF THE PARTIES

     

    4.1          Transfer
Restrictions.

     

    (a)           The
Securities may only be disposed of in compliance with state and federal
securities laws.  In connection with any transfer of Securities other
than pursuant to an effective registration statement or Rule 144, to the Company
or to an Affiliate of a Purchaser or in connection with a pledge as contemplated
in Section 4.1(b), the Company may require the transferor thereof to provide to
the Company an opinion of counsel selected by the transferor and reasonably
acceptable to the Company, 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 the Registration Rights
Agreement and shall have the rights and obligations of a Purchaser under this
Agreement and the Registration Rights Agreement.


    
      
         


      

      
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    (b)           The
Purchasers agree to the imprinting, so long as is required by this Section 4.1,
of a legend on any of the Securities in substantially the following
form:

     

    THIS
SECURITY HAS NOT BEEN  REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY.  THIS SECURITY MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN
WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE
501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH
SECURITIES.

     

    The
Company acknowledges and agrees that a Purchaser may from time to time pledge
pursuant to a bona fide margin agreement with a registered broker-dealer or
grant a security interest in some or all of the Securities to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and who agrees to be bound by the provisions of this Agreement
and the Registration Rights Agreement and, if required under the terms of such
arrangement, such Purchaser may transfer pledged or secured Securities to the
pledgees or secured parties.  Such a pledge or transfer would not be
subject to approval of the Company and no legal opinion of legal counsel of the
pledgee, secured party or pledgor shall be required in connection
therewith.  Further, no notice shall be required of such
pledge.  At the appropriate Purchaser’s expense, the Company will
execute and deliver such reasonable documentation as a pledgee or secured party
of Securities may reasonably request in connection with a pledge or transfer of
the Securities, including, if the Securities are subject to registration
pursuant to the Registration Rights Agreement, the preparation and filing of any
required prospectus supplement under Rule 424(b)(3) under the Securities Act or
other applicable provision of the Securities Act to appropriately amend the list
of Selling Stockholders (as defined in the Registration Rights Agreement)
thereunder.


    
      
         


      

      
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    (c)           Certificates
evidencing the Shares and Warrant Shares shall not contain any legend (including
the legend set forth in Section 4.1(b) hereof), (i) while a registration
statement (including the Registration Statement) covering the resale of such
security is effective under the Securities Act, (ii) following any sale of such
Shares or Warrant Shares pursuant to Rule 144, (iii) if such Shares or Warrant
Shares are eligible for sale under Rule 144, without the requirement for the
Company to be in compliance with the current public information required under
Rule 144 as to such Shares and Warrant Shares and without volume or
manner-of-sale restrictions, or (iv) if such legend is not required under
applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the
Commission).  The Company shall cause its counsel to issue a legal
opinion to the Transfer Agent promptly after the Effective Date if required by
the Transfer Agent to effect the removal of the legend hereunder.  If
all or any portion of a Warrant is exercised at a time when there is an
effective registration statement to cover the resale of the Warrant Shares, or
if such Shares or Warrant Shares may be sold under Rule 144 and the Company is
then in compliance with the current public information required under Rule 144,
or if the Shares or Warrant Shares may be sold under Rule 144 without the
requirement for the Company to be in compliance with the current public
information required under Rule 144 as to such Shares or Warrant Shares or if
such legend is not otherwise required under applicable requirements of the
Securities Act (including judicial interpretations and pronouncements issued by
the staff of the Commission) then such Warrant Shares shall be issued free of
all legends. The Company agrees that following the Effective Date or at such
time as such legend is no longer required under this Section 4.1(c), it will, no
later than three Trading Days following the delivery by a Purchaser to the
Transfer Agent of a certificate representing Shares or Warrant Shares, as the
case may be, issued with a restrictive legend (such third Trading Day, the
“Legend Removal
Date”), deliver or cause to be delivered to such Purchaser a certificate
representing such shares that is free from all restrictive and other
legends.  The Company may not make any notation on its records or give
instructions to the Transfer Agent that enlarge the restrictions on transfer set
forth in this Section 4.  Certificates for Securities subject to
legend removal hereunder shall be transmitted by the Transfer Agent to the
Purchaser by crediting the account of the Purchaser’s prime broker with the
Depository Trust Company System as directed by such Purchaser.

    


    (d)          In
addition to such Purchaser’s other available remedies, the Company shall pay to
a Purchaser, in cash, as partial liquidated damages and not as a penalty, for
each $1,000 of Shares or Warrant Shares (based on the VWAP of the Ordinary
Shares on the date such Securities are submitted to the Transfer Agent)
delivered for removal of the restrictive legend and subject to Section 4.1(c),
$5 per Trading Day (increasing to $10 per Trading Day five (5) Trading Days
after such damages have begun to accrue) for each Trading Day after the Legend
Removal Date until such certificate is delivered without a legend. Nothing
herein shall limit such Purchaser’s right to pursue actual damages for the
Company’s failure to deliver certificates representing any Securities as
required by the Transaction Documents, and such Purchaser shall have the right
to pursue all remedies available to it at law or in equity including, without
limitation, a decree of specific performance and/or injunctive
relief.


    
      
         


      

      
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    (e)          If
the Company fails to cause the Transfer Agent to transmit to the Purchaser a
certificate or the certificates representing the Shares or the Warrant Shares
without a restrictive legend on or before the Legend Removal Date, and if after
such date the Purchaser is required by its broker to purchase (in an open market
transaction or otherwise), or the Purchaser’s brokerage firm otherwise
purchases, Ordinary Shares to deliver in satisfaction of a sale by the Purchaser
of the Shares or the Warrant Shares which the Purchaser anticipated receiving on
or before the Legend Removal Date (a “Delegended Shares
Buy-In”), then the Company shall (A) pay in cash to the Purchaser the
amount, if any, by which (x) the Purchaser’s total purchase price (including
brokerage commissions, if any) for the Ordinary Shares so purchased exceeds (y)
the amount obtained by multiplying (1) the number of Shares or Warrant Shares
that the Company was required to deliver to the Purchaser times (2) the price at
which the sell order giving rise to such purchase obligation was executed, and
(B) deliver to the Purchaser the number of Ordinary Shares that would have been
delivered had the Company timely complied with its delivery obligations
hereunder.  The Purchaser shall provide the Company written notice
indicating the amounts payable to the Purchaser in respect of the Delegended
Shares Buy-In and, upon request of the Company, evidence of the amount of such
loss.  Nothing herein shall limit a Purchaser’s right to pursue any
other remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Company’s failure to timely deliver certificates representing
Ordinary Shares as required pursuant to the terms
hereof.  Notwithstanding anything herein to the contrary, in
connection with a particular delivery by the Company of Shares or Warrant Shares
after the Legend Removal Date, the Purchaser shall be entitled to receive the
greater of (i) the amount of damages as calculated under Section 4.1(d) and (ii)
the amount of damages as calculated under this Section 4.1(e).

     

    (f)           Each
Purchaser, severally and not jointly with the other Purchasers, agrees with the
Company that such Purchaser will sell any Securities pursuant to either the
registration requirements of the Securities Act, including any applicable
prospectus delivery requirements, or an exemption therefrom, and that if
Securities are sold pursuant to a Registration Statement, they will be sold in
compliance with the plan of distribution set forth therein, and acknowledges
that the removal of the restrictive legend from certificates representing
Securities as set forth in this Section 4.1 is predicated upon the Company’s
reliance upon this understanding.

     

    4.2          Furnishing of
Information;
Public Information.

     

    (a)           Until
the earliest of the time that (i) no Purchaser owns Securities or (ii) the
Warrants have expired, the Company covenants to use commercially reasonable
efforts to 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 even if the Company
is not then subject to the reporting requirements of the Exchange
Act.


    
      
         


      

      
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    (b)          At
any time during the period commencing from the six (6) month anniversary of the
date hereof and ending at such time that all of the Securities may be sold
without the requirement for the Company to be in compliance with Rule 144(c)(1)
and otherwise without restriction or limitation pursuant to Rule 144, if the
Company shall fail for any reason to satisfy the current public information
requirement under Rule 144(c) (a “Public Information
Failure”) then, in addition to such Purchaser’s other available remedies,
the Company shall pay to a Purchaser, in cash, as partial liquidated damages and
not as a penalty, by reason of any such delay in or reduction of its ability to
sell the Securities, an amount in cash equal to two percent (2.0%) of the
aggregate Subscription Amount of such Purchaser’s Securities on the day of a
Public Information Failure and on every thirtieth (30th) day
(pro rated for periods totaling less than thirty days) thereafter until the
earlier of (a) the date such Public Information Failure is cured and (b) such
time that such public information is no longer required  for the Purchasers
to transfer the Shares and Warrant Shares pursuant to Rule 144.  The
payments to which a Purchaser shall be entitled pursuant to this Section 4.2(b)
are referred to herein as “Public Information Failure
Payments.”  Public Information Failure Payments shall be paid
on the earlier of (i) the last day of the calendar month during which such
Public Information Failure Payments are incurred
and (ii) the third (3rd)
Business Day after the event or failure giving rise to the Public Information
Failure Payments is
cured.  In the event the Company fails to make Public Information
Failure Payments in
a timely manner, such Public Information Failure Payments shall bear
interest at the rate of 1.5% per month (prorated for partial months) until paid
in full. Nothing herein shall limit such Purchaser’s right to pursue actual
damages for the Public Information Failure, and such Purchaser shall have the
right to pursue all remedies available to it at law or in equity including,
without limitation, a decree of specific performance and/or injunctive
relief.

     

    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 or that would be integrated with the offer or sale of the
Securities for purposes of the rules and regulations of any Trading Market such
that it would require shareholder approval prior to the closing of such other
transaction unless shareholder approval is obtained before the closing of such
subsequent transaction.

     

    4.4           Securities Laws Disclosure;
Publicity.  The Company shall, by 9:00 a.m. (New York City
time) on the Trading Day immediately following the date hereof, issue a press
release disclosing the material terms of the transactions contemplated hereby
and of the Concurrent Registered Offering.  The Company shall, within
four Business Days following the date hereof, file a Report on Form 6-K
disclosing the material terms of the transactions contemplated hereby and of the
Concurrent Registered Offering, which Form 6-K shall include the Transaction
Documents as exhibits thereto. From and after the issuance of such press
release, the Company represents to the Purchasers that it shall have publicly
disclosed all material, non-public information delivered to any of the
Purchasers by the Company or any of its Subsidiaries, or any of their respective
officers, directors, employees or agents in connection with the transactions
contemplated by the Transaction Documents.  The Company and each
Purchaser shall consult with each other in issuing any other press releases with
respect to the transactions contemplated hereby, and neither the Company nor any
Purchaser shall issue any such press release nor otherwise make any such public
statement without the prior consent of the Company, with respect to any press
release of any Purchaser, or without the prior consent of each Purchaser, with
respect to any press release of the Company, which consent shall not
unreasonably be withheld or delayed, except if such disclosure is required by
law, in which case the disclosing party shall promptly provide the other party
with prior notice of such public statement or
communication.  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: (a) as
required by federal securities law in connection with (i) any registration
statement contemplated by the Registration Rights Agreement and (ii) the filing
of final Transaction Documents (including signature pages thereto) with the
Commission and (b) 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 this clause
(b).


    
      
         


      

      
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    4.5          Shareholder Rights
Plan.  No claim will be made or enforced by the Company or,
with the consent of the Company, any other Person, that any Purchaser is an
“Acquiring Person” under any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or similar
anti-takeover 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, solely by virtue of receiving Securities under the Transaction
Documents or under any other agreement between the Company and the
Purchasers.

     

    4.6          Non-Public
Information.  Except with respect to the material terms and
conditions of (i) the transactions contemplated by the Transaction Documents and
(ii) the Concurrent Registered Offering, 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 entered into a written agreement with the Company regarding
the confidentiality and use of such information.  The Company
understands and confirms that each Purchaser shall be relying on the foregoing
covenant in effecting transactions in securities of the Company.

     

    4.7          Use of
Proceeds.  Except as set forth on Schedule 4.7 attached
hereto, the Company shall use the net proceeds from the sale of the Securities
hereunder for working capital purposes and shall not use such proceeds: (a) for
the satisfaction of any portion of the Company’s debt (other than payment of
trade payables in the ordinary course of the Company’s business and prior
practices), (b) for the redemption of any Ordinary Shares or Ordinary Shares
Equivalents, (c) for the settlement of any outstanding litigation or (d) in
violation of FCPA or OFAC regulations.


    
      
         


      

      
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    4.8          Indemnification of
Purchasers.   Subject to the provisions of this Section
4.8, the Company will indemnify and hold each Purchaser and its directors,
officers, shareholders, members, partners, employees and agents (and any other
Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who
controls such Purchaser (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling persons (each, a
“Purchaser
Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation that any such Purchaser Party may suffer or incur due to
a claim by a third party as a result of or relating to any action instituted
against the Purchaser Parties in any capacity, or any of them or their
respective Affiliates, by any stockholder of the Company who is not an Affiliate
of such Purchaser Parties, with respect to any of the transactions contemplated
by the Transaction Documents (unless such action is based upon a breach of such
Purchaser Party’s representations, warranties or covenants under the Transaction
Documents or any agreements or understandings such Purchaser Parties may have
with any such stockholder or any violations by such Purchaser Parties of state
or federal securities laws or any conduct by such Purchaser Parties which
constitutes fraud, gross negligence, willful misconduct or
malfeasance).  If any action shall be brought against any Purchaser
Party in respect of which indemnity may be sought pursuant to this Agreement,
such Purchaser Party shall promptly notify the Company in writing, and the
Company shall have the right to assume the defense thereof with counsel of its
own choosing reasonably acceptable to the Purchaser Party.  Any
Purchaser Party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Purchaser Party except to the extent
that (i) the employment thereof has been specifically authorized by the Company
in writing, (ii) the Company has failed after a reasonable period of time to
assume such defense and to employ counsel or (iii) in such action there is, in
the reasonable opinion of counsel, a material conflict on any material issue
between the position of the Company and the position of such Purchaser Party, in
which case the Company shall be responsible for the reasonable fees and expenses
of no more than one such separate counsel for all Purchaser Parties entitled to
indemnification hereunder.  The Company will not be liable to any
Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party
effected without the Company’s prior written consent, which shall not be
unreasonably withheld or delayed; or (z) to the extent, but only to the extent
that a loss, claim, damage or liability is attributable to any Purchaser Party’s
breach of any of the representations, warranties, covenants or agreements made
by such Purchaser Party in this Agreement or in the other Transaction
Documents.  The indemnity agreements contained herein shall be in
addition to any cause of action or similar right of any Purchaser Party against
the Company and any liabilities that the Company may be subject to pursuant to
law.  The Company will have the exclusive right to settle any claim or
proceeding, provided that the Company will not settle any such claim, action or
proceeding without the prior written consent of the Purchaser Party, which will
not be unreasonably withheld or delayed; provided, however, that such consent
shall not be required if the settlement includes a full and unconditional
release satisfactory to the Purchaser Party from all liability arising or that
may arise out of such claim or proceeding and does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
Purchaser Party.

     

    4.9          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 and Warrant Shares pursuant to any exercise of
the Warrants.

     

    4.10        Listing of Ordinary Shares. The
Company hereby agrees to use commercially reasonable efforts to maintain the
listing or quotation of the Ordinary Shares on the Trading Market on which
it is currently listed, and concurrently with the Closing, the Company shall
apply to list or quote all of the Shares and Warrant Shares on such Trading
Market and promptly secure the listing of all of the Shares and Warrant Shares
on such Trading Market. The Company further agrees, if the Company applies to
have the Ordinary Shares traded on any other Trading Market, it will then
include in such application all of the Shares and Warrant Shares, and will take
such other action as is necessary to cause all of the Shares and Warrant Shares
to be listed or quoted on such other Trading Market as promptly as
possible.  The Company will then take all action reasonably necessary
to continue the listing or quotation and trading of 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.


    
      
         


      

      
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    4.11        Subsequent Equity
Sales.

     

    (a)           From
the date hereof until thirty (30) days after the Effective Date, neither the
Company nor any Subsidiary shall issue, enter into any agreement to issue or
announce the issuance or proposed issuance of any Ordinary Shares or Ordinary
Shares Equivalents.

     

    (b)          Notwithstanding
the foregoing, this Section 4.11 shall not apply in respect of an Exempt
Issuance.

     

    4.12        Equal Treatment of
Purchasers.  No consideration (including any modification of
any Transaction Document) shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of any of the Transaction
Documents unless the same consideration is also offered to all of the parties to
the Transaction Documents.  For clarification purposes, this provision
constitutes a separate right granted to each Purchaser by the Company and
negotiated separately by each Purchaser, and is intended for the Company to
treat the Purchasers as a class and shall not in any way be construed as the
Purchasers acting in concert or as a group with respect to the purchase,
disposition or voting of Securities or otherwise.

     

    4.13        Certain
Transactions
and Confidentiality. Each Purchaser, severally and not jointly with the
other Purchasers, covenants that neither it, nor any Affiliate acting on its
behalf or pursuant to any understanding with it will execute any purchases or
sales, including Short Sales, of any of the Company’s securities during the
period commencing with the execution of this Agreement and ending at such time
that the transactions contemplated by this Agreement are first publicly
announced pursuant to the initial press release as described in Section
4.4.  Each Purchaser, severally and not jointly with the other Purchasers,
covenants that until such time as the transactions contemplated by this
Agreement are publicly disclosed by the Company pursuant to the initial press
release as described in Section 4.4, such Purchaser will maintain the
confidentiality of the existence and terms of this transaction and the
information included in the Transaction Documents and the Disclosure
Schedules.  Notwithstanding the foregoing, and notwithstanding anything
contained in this Agreement to the contrary, the Company expressly acknowledges
and agrees that (i) no Purchaser makes any representation, warranty or covenant
hereby that it will not engage in effecting transactions in any securities of
the Company after the time that the transactions contemplated by this Agreement
are first publicly announced pursuant to the initial press release as described
in Section 4.4, (ii) no Purchaser shall be restricted or prohibited from
effecting any transactions in any securities of the Company in accordance with
applicable securities laws from and after the time that the transactions
contemplated by this Agreement are first publicly announced pursuant to the
initial press release as described in Section 4.4 and (iii) no Purchaser shall
have any duty of confidentiality to the Company or its Subsidiaries after the
issuance of the initial press release as described in Section 4.4. 
Notwithstanding the foregoing, in the case of a Purchaser that is a
multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser’s assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser’s assets, the covenant set forth above
shall only apply with respect to the portion of assets managed by the portfolio
manager that made the investment decision to purchase the Securities covered by
this Agreement.


    
      
         


      

      
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    4.14        Form D; Blue Sky
Filings.  The Company agrees to timely file a Form D with
respect to the Securities as required under Regulation D and to provide a copy
thereof, promptly upon request of any Purchaser. The Company shall take such
action as the Company shall reasonably determine is necessary in order to obtain
an exemption for, or to qualify the Securities for, sale to the Purchasers at
the Closing under applicable securities or “Blue Sky” laws of the states of the
United States, and shall provide evidence of such actions promptly upon request
of any Purchaser.

     

    4.15        Capital
Changes.  Until the one year anniversary of the Effective Date,
the Company shall not undertake a reverse or forward stock split or
reclassification of the Ordinary Shares without the prior written consent of the
Purchasers holding a majority in interest of the Shares; provided, however, that this
Section 4.15 shall not apply solely in connection with any reverse stock
split conducted to meet or maintain compliance with the listing standards of any
Trading Market.

     

    4.16        Acknowledgment of
Dilution.  The Company acknowledges that the issuance of the
Securities may result in dilution of the outstanding Ordinary Shares, which
dilution may be substantial under certain market conditions.  The
Company further acknowledges that its obligations under the Transaction
Documents, including, without limitation, its obligation to issue the Shares and
Warrant Shares pursuant to the Transaction Documents, are unconditional and
absolute and not subject to any right of set off, counterclaim, delay or
reduction, regardless of the effect of any such dilution or any claim the
Company may have against any Purchaser and regardless of the dilutive effect
that such issuance may have on the ownership of the other stockholders of the
Company.

     

    ARTICLE
V.

    MISCELLANEOUS

     

    5.1          Termination. 
This Agreement may be terminated by any Purchaser, as to such Purchaser’s
obligations hereunder only and without any effect whatsoever on the obligations
between the Company and the other Purchasers, by written notice to the other
parties, if the Closing has not been consummated on or before February 25, 2011;
provided, however, that such
termination will not affect the right of any party to sue for any breach by any
other party (or parties).

     

    5.2    
      Fees and
Expenses.  Except as expressly set forth in the Transaction
Documents to the contrary, 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
Transfer Agent fees, stamp taxes and other taxes and duties levied in connection
with the delivery of any Securities to the Purchasers.

     

    5.3  
        Entire
Agreement.  The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and thereof 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.


    
      
         


      

      
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    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 set forth on
the signature pages attached hereto at or prior to 5:30 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 set forth on the signature pages attached hereto on a day that is not a
Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c)
the second (2nd)
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,
modified, supplemented or amended except in a written instrument signed, in the
case of an amendment, by the Company and the Purchasers holding at least a
majority in interest of the Shares then outstanding (which amendment shall
be binding on all Purchasers) or, in the case of a waiver, by the party against
whom enforcement of any such waived provision 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 any party to exercise any
right hereunder in any manner impair the exercise of any such
right.

     

    5.6          Headings.  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.

     

    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 (other
than by merger, consolidation or sale of all or substantially all of the
Company’s assets).  Any Purchaser may assign any or all of its rights
under this Agreement to any Person to whom such Purchaser assigns or transfers
any Securities, provided that such transferee agrees in writing to be bound,
with respect to the transferred Securities, by the provisions of the Transaction
Documents 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 4.8.


    
      
         


      

      
        31

        
          

        

      

      
         


      

    


    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,
partners, members, employees or agents) shall be commenced exclusively in the
state and federal courts sitting in the City of New York. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, Borough of Manhattan 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 or is an inconvenient venue for such
proceeding.  Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way
any right to serve process in any other manner permitted by law.  If
either party shall commence an action or proceeding to enforce any provisions of
the Transaction Documents, then in addition to the obligations of the Company
under Section 4.8, the prevailing party in such action, suit or proceeding shall
be reimbursed by the other party for its reasonable attorneys’ fees and other
costs and expenses incurred with the investigation, preparation and prosecution
of such action or proceeding.

     

    5.10        Survival.  The
representations and warranties contained herein shall survive the Closing and
the delivery of the Securities.

     

    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 each
other party, it being understood that the parties need not sign the same
counterpart.  In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file, 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 or “.pdf” signature page were an original thereof.

     

    5.12        Severability.  If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

     

    5.13        Rescission and Withdrawal
Right.  Notwithstanding anything to the contrary contained in
(and without limiting any similar provisions of) any of the other Transaction
Documents, whenever any Purchaser exercises a right, election, demand or option
under a Transaction Document and the Company does not timely perform its related
obligations within the periods therein provided, then such Purchaser may rescind
or withdraw, in its sole discretion from time to time upon written notice to the
Company, any relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights; provided, however, that in the
case of a rescission of an exercise of a Warrant, the applicable Purchaser shall
be required to return any Ordinary Shares subject to any such rescinded exercise
notice concurrently with the return to such Purchaser of the aggregate exercise
price paid to the Company for such shares and the restoration of such
Purchaser’s right to acquire such shares pursuant to such Purchaser’s Warrant
(including, issuance of a replacement warrant certificate evidencing such
restored right).

     

    
      
         


      

      
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    5.14           Replacement of
Securities.  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 (in the case of mutilation), 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.  The
applicant for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs (including customary indemnity)
associated with the issuance of such replacement Securities.

     

    5.15           Remedies.  In
addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, each of the Purchasers and the Company will
be entitled to specific performance under the Transaction
Documents.  The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations contained in the Transaction Documents and hereby agree to waive and
not to assert in any action for specific performance of any such obligation the
defense that a remedy at law would be adequate.

     

    5.16           Payment Set
Aside.  To the extent that the Company makes a payment or
payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

     

    5.17           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 or non-performance of the obligations of any other
Purchaser under any Transaction Document.  Nothing contained herein or
in any other Transaction Document, and no action taken by any Purchaser pursuant
hereof or 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 Documents.  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 its review and
negotiation of the Transaction Documents.  For reasons of
administrative convenience only, each Purchaser and its respective counsel have
chosen to communicate with the Company through WS.  WS does not
represent any of the Purchasers and only represents Rodman & Renshaw
LLC.  The Company has elected to provide all Purchasers with the same
terms and Transaction Documents for the convenience of the Company and not
because it was required or requested to do so by any of the
Purchasers.
 

    
      
         


      

      
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    5.18           Liquidated
Damages.  The Company’s obligations to pay any partial
liquidated damages or other amounts owing under the Transaction Documents is a
continuing obligation of the Company and shall not terminate until all unpaid
partial liquidated damages and other amounts have been paid notwithstanding the
fact that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been
canceled.

     

    5.19           Saturdays, Sundays,
Holidays, etc.  If the last or appointed day for the taking of any
action or the expiration of any right required or granted herein shall not be a
Business Day, then such action may be taken or such right may be exercised on
the next succeeding Business Day.

     

    5.20           Construction. The
parties agree that each of them and/or their respective counsel have reviewed
and had an opportunity to revise the Transaction Documents and, therefore, the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of the Transaction Documents or any amendments thereto. In addition, each
and every reference to share prices and Ordinary Shares in any Transaction
Document shall be subject to adjustment for reverse and forward stock splits,
stock dividends, stock combinations and other similar transactions of the
Ordinary Shares that occur after the date of this Agreement.

     

    5.21           WAIVER OF
JURY TRIAL.  IN ANY
ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY
OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST
EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY,
IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

     

    (Signature
Pages Follow)
 

    
      
         


      

      
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    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.

     

    
      
        
          
            	
                    ROSETTA
      GENOMICS LTD.

                  	 	
                    Address for Notice:

                  
	 
      	 
      	 	 
      
	
                    By:

                  	
                    /s/ Kenneth A. Berlin

                  	 	
                    Rosetta
      Genomics Ltd.

                  
	 
      	
                    Name:  Kenneth
      A. Berlin

                  	 	
                    10
      Plaut St.

                  
	 
      	
                    Title:
      President and CEO

                  	 	
                    Rehovot,
      Israel 76706

                  
	 
      	 
      	 	
                    Attn:
      Tami Fishman Jutowitz

                  
	 
      	 
      	 	
                      General
      Counsel

                  
	 
      	 
      	 	
                    Fax:
      +972-73-222-0701

                  


          

        

      

    

    


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

            	 
      	
              Mintz,
      Levin, Cohn, Ferris

            
	 
      	 
      	
              Glovsky
      and Popeo, P.C.

            
	 
      	 
      	
              One
      Financial Center

            
	 
      	 
      	
              Boston,
      MA 02111

            
	 
      	 
      	
              Attn:
      Brian P. Keane

            
	 
      	 
      	
              Fax:
      617-542-2241

            
	 
      	 
      	 
      
	
              and
      to:

            	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	
              Tulchinsky
      Stern Marciano

            
	 
      	 
      	
              Cohen
      Levitski & Co.

            
	 
      	 
      	
              4
      Berkowitz St.

            
	 
      	 
      	
              Tel
      Aviv, Israel 64238

            
	 
      	 
      	
              Fax:
      +972-3-607-5050

            


    

    


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    SIGNATURE
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    [PURCHASER
SIGNATURE PAGES TO ROSG SECURITIES PURCHASE AGREEMENT]

     

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

     

    Name of
Purchaser: DAFNA LifeScience Ltd.

     

    Signature of Authorized Signatory of
Purchaser: /s/ Nathan Fischel

     

    Name of
Authorized Signatory: Nathan Fischel

     

    Title of
Authorized Signatory: Managing Member

     

    Address
for Delivery of Securities to Purchaser (if not same as address for
notice):

    


    Subscription
Amount: $37,500

    


    Shares:
62,500

    


    Warrant
Shares: 46,875

     

    [SIGNATURE
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    [PURCHASER
SIGNATURE PAGES TO ROSG SECURITIES PURCHASE AGREEMENT]

    


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

     

    Name of
Purchaser: DAFNA LifeScience Market Neutral Ltd.

     

    Signature of Authorized Signatory of
Purchaser: /s/ Nathan Fischel

     

    Name of
Authorized Signatory: Nathan Fischel

     

    Title of
Authorized Signatory: Managing Member

     

    Address
for Delivery of Securities to Purchaser (if not same as address for
notice):

    


    Subscription
Amount: $31,500

    


    Shares:
52,500

    


    Warrant
Shares: 39,375

     

    [SIGNATURE
PAGES CONTINUE]


    
      
         


      

      
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    [PURCHASER
SIGNATURE PAGES TO ROSG SECURITIES PURCHASE AGREEMENT]

    


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

     

    Name of
Purchaser: DAFNA LifeScience Select Ltd.

     

    Signature of Authorized Signatory of
Purchaser: /s/ Nathan Fischel

     

    Name of
Authorized Signatory: Nathan Fischel

     

    Title of
Authorized Signatory: Managing Member

    


    Address
for Delivery of Securities to Purchaser (if not same as address for
notice):

    


    Subscription
Amount: $81,000

    


    Shares:
135,000

    


    Warrant
Shares: 101,250

     

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PAGES CONTINUE]


    
      
         


      

      
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    [PURCHASER
SIGNATURE PAGES TO ROSG SECURITIES PURCHASE AGREEMENT]

    


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

     

    Name of
Purchaser: Highbridge International, LLC by Highbridge Capital Mgmt as Trading
Advisor

     

    Signature of Authorized Signatory of
Purchaser: /s/ Mark Vanacore

     

    Name of
Authorized Signatory: Mark Vanacore

     

    Title of
Authorized Signatory: Managing Director

    
    

    Address
for Delivery of Securities to Purchaser (if not same as address for
notice):

    


    Subscription
Amount: $500,000

    


    Shares:
833,333

    


    Warrant
Shares: 625,000

    
 

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    [PURCHASER
SIGNATURE PAGES TO ROSG SECURITIES PURCHASE AGREEMENT]

    


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

     

    Name of
Purchaser: Becker Drapkin Partners, LP

     

    Signature of Authorized Signatory of
Purchaser: /s/ Steven R. Becker

     

    Name of
Authorized Signatory: Steven R. Becker

     

    Title of
Authorized Signatory: Managing Partner

     

    Address
for Delivery of Securities to Purchaser (if not same as address for
notice):

    


    Subscription
Amount: $130,000

    


    Shares:
216,667

    


    Warrant
Shares: 162,500

    
 

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    [PURCHASER
SIGNATURE PAGES TO ROSG SECURITIES PURCHASE AGREEMENT]

    


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

     

    Name of
Purchaser: Becker Drapkin Partners (QP), LP 

     

    Signature of Authorized Signatory of
Purchaser: /s/ Steven R. Becker

     

    Name of
Authorized Signatory: Steven R. Becker

     

    Title of
Authorized Signatory: Managing Partner

     

    Address
for Delivery of Securities to Purchaser (if not same as address for
notice):

    


    Subscription
Amount: $870,000

    


    Shares:
1,450,000

    


    Warrant
Shares: 1,087,500

     

    [SIGNATURE
PAGES CONTINUE]


    
      
         


      

      
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    [PURCHASER
SIGNATURE PAGES TO ROSG SECURITIES PURCHASE AGREEMENT]

    


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

     

    Name of
Purchaser: CNH Diversified Opportunities Master Account, L.P.

     

    Signature of Authorized Signatory of
Purchaser: /s/ Brendan R. Kalb

     

    Name of
Authorized Signatory: Brendan R. Kalb

     

    Title of
Authorized Signatory: General Counsel of CNH Partners, LLC, as Investment
Manager of the Purchaser

     

    Address
for Delivery of Securities to Purchaser (if not same as address for
notice):

    


    Subscription
Amount: $23,579.40

    


    Shares:
39,299

    


    Warrant
Shares: 29,474

     

    [SIGNATURE
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    [PURCHASER
SIGNATURE PAGES TO ROSG SECURITIES PURCHASE AGREEMENT]

    


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

     

    Name of
Purchaser: AQR Opportunistic Premium Offshore Fund, L.P.

     

    Signature of Authorized Signatory of
Purchaser: /s/ Brendan R. Kalb

     

    Name of
Authorized Signatory: Brendan R. Kalb

     

    Title of
Authorized Signatory: General Counsel of AQR Capital Management, LLC, as
Investment Manager of the Purchaser

     

    Address
for Delivery of Securities to Purchaser (if not same as address for
notice):

    


    Subscription
Amount: $39,642

    


    Shares:
66,070

    


    Warrant
Shares: 49,553

     

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    [PURCHASER
SIGNATURE PAGES TO ROSG SECURITIES PURCHASE AGREEMENT]

    


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

     

    Name of
Purchaser: AQR Funds – AQR Diversified Arbitrage Fund

     

    Signature of Authorized Signatory of
Purchaser: /s/ Brendan R. Kalb

     

    Name of
Authorized Signatory: Brendan R. Kalb

     

    Title of
Authorized Signatory: Executive Vice President & Secretary of AQR
Funds

     

    Address
for Delivery of Securities to Purchaser (if not same as address for
notice):

    


    Subscription
Amount: $397,569

    


    Shares:
662,615

    


    Warrant
Shares: 496,961

    
    

    [SIGNATURE
PAGES CONTINUE]

     

    
      
         


      

      
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    [PURCHASER
SIGNATURE PAGES TO ROSG SECURITIES PURCHASE AGREEMENT]

    


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

     

    Name of
Purchaser: Advanced Series Trust, solely on behalf of AST Academic Strategies
Asset Allocation Portfolio

     

    Signature of Authorized Signatory of
Purchaser: /s/ Brendan R. Kalb

     

    Name of
Authorized Signatory: Brendan R. Kalb

     

    Title of
Authorized Signatory: General Counsel of AQR Capital Management, LLC, as
Investment Manager of the Purchaser

     

    Address
for Delivery of Securities to Purchaser (if not same as address for
notice):

    


    Subscription
Amount: $39,209.40

    


    Shares:
65,349

    


    Warrant
Shares: 49,012

     

    [SIGNATURE
PAGES CONTINUE]


    
      
         


      

      
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    [PURCHASER
SIGNATURE PAGES TO ROSG SECURITIES PURCHASE AGREEMENT]

    


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

     

    Name of
Purchaser: RRC Bio Fund, L.P. 

     

    Signature of Authorized Signatory of
Purchaser: /s/ James S. Silverman

     

    Name of
Authorized Signatory: James S. Silverman

     

    Title of
Authorized Signatory: President

     

    Address
for Delivery of Securities to Purchaser (if not same as address for
notice):

    


    Subscription
Amount: $120,000

    


    Shares:
200,000

    


    Warrant
Shares: 150,000

     

    [SIGNATURE
PAGES CONTINUE]
 

    
      
         


      

      
        46

        
          

        

      

      
         


      

    


    [PURCHASER
SIGNATURE PAGES TO ROSG SECURITIES PURCHASE AGREEMENT]

    


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

     

    Name of
Purchaser: Iroquois Master Fund, L.P.

     

    Signature of Authorized Signatory of
Purchaser: /s/ Joshua Silverman

     

    Name of
Authorized Signatory: Joshua Silverman

     

    Title of
Authorized Signatory: Authorized Signatory

     

    Address
for Delivery of Securities to Purchaser (if not same as address for
notice):

    


    Subscription
Amount: $100,000

    


    Shares:
166,666

    


    Warrant
Shares: 125,000

     

    [SIGNATURE
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        47

        
          

        

      

      
         


      

    


    [PURCHASER
SIGNATURE PAGES TO ROSG SECURITIES PURCHASE AGREEMENT]

    


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

     

    Name of
Purchaser: Rodman & Renshaw, LLC

     

    Signature of Authorized Signatory of
Purchaser: /s/ John Borer

     

    Name of
Authorized Signatory: John Borer

     

    Title of
Authorized Signatory: Senior Managing Director

     

    Address
for Delivery of Securities to Purchaser (if not same as address for
notice):

    


    Subscription
Amount: $355,000.80

    


    Shares:
591,668

    


    Warrant
Shares: 443,751

    
 

    [SIGNATURE
PAGES CONTINUE]


    
      
         


      

      
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    ANNEX
A

     

    
      	
              To: 

            	
              The
      Research Committee

            


    

    The
Office of the Chief Scientist

    Jerusalem

     

    Relating
to projects that have been financed by or are currently being financed by the
Office of the Chief Scientist of the Ministry of Industry, Trade and Labor (the
"OCS") _______________
[Please specify project title and OCS' file number] and to projects of the
Company (as this term is defined below) that may be financed by the OCS in the
future (the "Projects").

    


    Undertaking

     

    We, the
undersigned, of ____________________________________ [Foreign investor's
name] a company incorporated, organized and existing under the laws of
_______________ and whose registered office is at _________________ ("______"),
having, by an agreement dated , committed to invest in ________________________________ Ltd.
(the "Company"), in
exchange for [number and type of shares] ________ shares of the
Company;

    


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

    


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

    


    Hereby
declare and undertake:

    


    
      	
              1.

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

            


    

    


    
      	
              2.

            	
              As
      a shareholder of the Company, to make all reasonable efforts that the
      Company shall observe strictly all the requirements of the R&D Law and
      the regulations, rules and procedures promulgated there under, as applied
      to the Company and as directed by the Research Committee, in particular
      those requirements stipulated under Sections 19, 19A and 19B of the
      R&D Law relating to the prohibitions on the transfer of know-how
      and/or production rights.

            


    

     

    
      
        
          
            	
                     

                  	 
      	 
      


          

        

      

    

                  Date                              Name
(block letters) and signature of Authorized Company Representative and Company
Seal


    
      
         


      

      
        49