Document:

INDEMNIFICATION
AND PLEDGE AGREEMENT

    

    Indemnification and Pledge Agreement
(this “Agreement”) dated as
of July 20, 2009, by and among Qnective, Inc., a Nevada corporation ("Qnective" or the
“Corporation”),
Capella IV LLC, a Nevis limited liability company with an address at P.O. Box
315 Daly Building, Prince William Street, Charleston, Nevis (“Capella”), Connwards
Management, Inc., a Belize corporation with an address c/o Michael Kang, 6925
Angus Drive, Vancouver, BC V6P-5J4 Canada (“Connwards”) and Kang
Young-Ho (a/k/a Michael Kang), an individual with an address at 6925 Angus
Drive, Vancouver, BC V6P-5J4 Canada(“Kang”).

    

    WHEREAS, the Corporation
entered into an Amended Shareholders Agreement dated as of October 1, 2008 (the
“Shareholders
Agreement”);

    

    WHEREAS, pursuant to the
Shareholders Agreement Capella made a capital contribution to the Corporation of
30,550,000 shares of common stock, $.001 par value per share of the Corporation
(the “Common
Stock”), however, Capella only delivered to the Corporation a share
certificate representing 2,000,000 shares of Common Stock;

    

    WHEREAS, Capella was
previously issued share certificate No. 502 representing 31,000,000 shares of
Common Stock (“Certificate No.
502”), but Capella has indicated that Certificate No. 502 has been lost,
misplaced or destroyed and cannot be located;

    

    WHEREAS, Capella has executed
and delivered to the Corporation’s transfer agent an Affidavit of Loss and
Agreement of Indemnity, but Capella has not posted a bond to indemnify
Continental Stock Transfer & Trust Co., the Corporation’s transfer agent and
registrar (the “Transfer Agent”)
against any claims resulting from Certificate No. 502 and has represented to the
Corporation that it is financially unable to post the bond;

    

    WHEREAS, Capella requested
that the Corporation, on behalf of Capella, indemnify and hold harmless the
Transfer Agent from all damages, claims, liabilities and attorneys’ fees
incurred by the Transfer Agent arising from the replacement of Certificate No.
502 (the “Transfer
Agent Indemnification”);

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    WHEREAS, the Corporation has
determined that it is in the best interests of the Corporation to undertake the
Transfer Agent Indemnification, if Capella, Connwards and Kang agree to
indemnify and hold harmless the Corporation from any and all damages, claims,
liabilities, fees and expenses incurred by the Corporation arising from the
Transfer Agent Indemnification and the ownership of Certificate No. 502, and
furthermore, each of Capella, Connwards and Kang agree to pledge their shares of
Common Stock to the Corporation as security for any payment of their obligations
under this Agreement.

    

    NOW, THEREFORE, in
consideration of the foregoing covenants and other good and valuable
consideration the receipt of which is hereby acknowledged, the parties agree as
follows:

     

    1. Indemnification of Transfer
Agent.  The Corporation agrees to indemnify and hold harmless
the Transfer Agent from all damages, claims, liabilities and attorneys’ fees
incurred by the Transfer Agent arising from the replacement of Certificate No.
502.

     

    2. Indemnification of
Corporation. Each of Capella, Connwards and Kang agrees to jointly and
severally indemnify and hold harmless the Corporation, its officers, directors,
employees and agents from any and all damages, claims, liabilities, fees and
expenses incurred by the Corporation arising from:(i) the Indemnification of the
Transfer Agent by the Corporation under Section 1 herein, and (ii) the
replacement or ownership of Certificate No. 502.

     

    3. Grant of Security
Interest.

     

    (a)  
To secure
the prompt payment and full and timely performance of all of the Obligations (as
defined below) to the Corporation, each of Capella, Connwards and Kang (each a
“Pledgor” and collectively, the “Pledgors”) hereby grants to the Corporation a
security interest in and to:

     

    (i) all of
the shares of Common Stock beneficially owned by such Pledgor on the date
hereof, including but not limited to those set forth on Schedule 1 attached
hereto, and any shares of Common Stock acquired by any Pledgor after the date
hereof (collectively, the “Shares”);

     

    
      
         

      

      
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    (ii) distributions,
dividends or return of capital upon or in respect of the Shares, all additional
interests or percentages resulting from a split-up, revision, reclassification
or other like change of the Shares and any subscription, warrants, rights, or
options issued to the holders of, or otherwise in respect of, the Shares and all
rights evidenced thereby which any Pledgor might receive during the term of this
Agreement;

     

    (iii) any newly
issued or newly acquired shares of stock of any subsidiary, affiliate, successor
or assign of the Corporation which any Pledgor might receive during the term of
this Agreement;

     

    (iv) any
shares or other equity or debt interests issued or issuable as a result of the
merger, reorganization, liquidation, consolidation or other structural change in
the Corporation which any Pledgor might receive during the term of this
Agreement; and

     

    (v) all
books, records, ledger sheets and other records relating to the foregoing, and
all of each Pledgor’s rights to all proceeds, products, offspring, rents and
profits of the foregoing, including, without limitation, proceeds of insurance
therefrom which any Pledgor might receive during the term of this Agreement
(collectively, the “Collateral”).

     

    (b)   As
used herein, “Obligations” shall
mean the joint and several obligations of each Pledgor to the Corporation
arising under or in connection with each Pledgor’s indemnification of the
Corporation under this Agreement.

     

    (c)   Each
Pledgor shall also execute the Collateral Assignment of the Shares in the form
of Exhibit A
attached hereto, and shall deliver to the Corporation on the date hereof stock
certificates representing the Shares to hold as Collateral.

     

    4. General Duties of each
Pledgor. Each Pledgor will:

     

    (a)   not
sell, assign, transfer any Shares or assets of the Corporation;

     

    (b) permit no
other Lien (as defined herein) to attach to the Collateral;

     

    
      
         

      

      
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    (c) pay all
costs necessary to obtain, preserve, and enforce this security interest and
preserve the Collateral, including (but not limited to) taxes, assessments,
insurance premiums, repairs, reasonable attorneys’ fees and legal expenses,
rent, storage costs, and expenses of sale;

     

    (d) furnish
the Corporation with any information on the Collateral, the Obligations, the
financial condition of each Pledgor and any information relating to the purchase
of the Shares reasonably requested by the Corporation;

     

    (e) allow the
Corporation to copy all records relating to the Collateral and the Obligations
at all reasonable times upon reasonable notice;

     

    (f) sign any
papers furnished by the Corporation which are necessary to obtain and maintain
this security interest and hereby appoints each of the President, the Chief
Executive Officer and the Secretary of the Corporation, individually, as
attorney-in-fact to sign such papers on behalf of such Pledgor;

     

    (g) promptly
deliver to the Corporation stock certificates representing:(1) the Shares not
previously delivered pursuant to Section 3(c),and (2) any securities of the
Corporation acquired by the Pledgor after the date of this Agreement;
and

     

    (h) promptly
notify the Corporation of any loss, damage or other such change in or to the
Collateral, or in any fact or circumstance warranted or represented by each
Pledgor in this Agreement or furnished to the Corporation, or if any Event of
Default (as defined herein) occurs.

     

    5. Pledgor’s Address.
Each Pledgor’s principal place of business and chief executive offices, its
financial books and records relating to the Collateral, are located at the
address set forth in the first paragraph of this Agreement. Each Pledgor will
not move its principal place of business, its chief executive offices, or its
financial books and records relating to the Collateral from said location
without prior written notice to the Corporation and shall do all things
reasonably requested to maintain a fully perfected security interest in favor of
the Corporation.

     

    
      
         

      

      
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    6. Representations and
Warranties of each Pledgor.  Each Pledgor jointly and severally
represents and warrants to the Corporation as follows:

     

    (a) Authority. The
execution, performance and delivery of this Agreement and all other agreements
and transactions contemplated hereby have been duly authorized by each
Pledgor.

     

    (b) Enforceability. This
Agreement constitutes the legal, valid and binding obligations of each Pledgor,
enforceable in accordance with its terms.

     

    (c) No Breach. The
execution, performance and delivery of this Agreement will not constitute a
breach of, or default under, any provision of any certificate of incorporation
or by-law, contract, agreement, mortgage, trust or other indenture to which a
Pledgor is bound by any order, rule, regulation or law of any jurisdiction
binding on such party.

     

    (d) No Liens. There are
no other Liens attached to the Shares. Each Pledgor has retained all voting
rights to the Shares. There are no options, warrants, subscriptions or other
rights to the Shares held by any other person. The Shares are fully paid and
non-assessable.

     

    (e) Information. All
information, agreements, and certificates, including without limitation, all
financial information, provided by each Pledgor to the Corporation is true and
correct, and each Pledgor has disclosed all material information, and not failed
to disclose any material information.

     

    7. No Sales of
Collateral. Each Pledgor will not, without the prior written consent of
the Corporation, sell, exchange, lease or otherwise dispose of Collateral or any
interest therein, and will not permit any Lien to attach to the
Collateral.

     

    8. Rights of the
Corporation. The Corporation may, in its discretion after an Event of
Default, take any action a Pledgor is required to take or is otherwise necessary
to obtain, preserve, and enforce this security interest, and maintain and
preserve the Collateral, without notice to each Pledgor, and add the costs of
same to the Obligations (but the Corporation is under no duty to take any such
action); take control of funds generated by the Collateral, such as dividends,
interest, proceeds, or refunds from insurance, and use same to reduce any part
of the Obligations; waive any of its rights hereunder without such waiver
prohibiting the later exercise of the same or similar rights; revoke any
permission or waiver previously granted to each Pledgor.

     

    
      
         

      

      
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    9. Event of Default. The
occurrence of any of the following events shall constitute an “Event of Default”, as
such term is used herein:

     

    (a) Any
statement, representation or warranty made herein or any information furnished
pursuant hereto shall be false or breached and which is not cured within ten
(10) days after written notice thereof and opportunity to cure; or

     

    (b) Failure
to observe or perform any other covenant or agreement herein and which is not
cured within ten (10) days after written notice and opportunity to cure (except
for the provisions of Sections 4(a) or (b) for which there shall be no cure
period).

     

    10. Rights and Remedies Upon
Default. Upon an Event of Default, the Obligations shall become
immediately due and payable and the Corporation may:

     

    (a) Exercise
any one or more of the remedies and shall have all the rights of a Secured Party
under the Code (as defined herein). Any requirement of the Code for reasonable
notice shall be met if such notice is mailed, postage prepaid, to each Pledgor
at its address as shown above, or as set forth on the books and records of the
Corporation, at least thirty (30) days prior to the time of the sale,
disposition or other event or thing giving rise to the requirement of
notice;

     

    (b) Notwithstanding
anything to the contrary appearing in this Agreement, the interest hereinabove
described is granted and assigned to the Corporation by way of collateral
security only and, accordingly, the Corporation by its acceptance hereof shall
not be deemed to have assumed or become liable for any of the obligations or
liabilities of each Pledgor under the Obligations, whether provided for by the
terms thereof, arising by operation of law, or otherwise; each Pledgor hereby
acknowledging that each Pledgor remains liable thereunder to the same extent as
though this Agreement had not been made;

     

    
      
         

      

      
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    (c) The
acceptance by the Corporation at any time and from time to time of part payment
on the Obligations shall not be deemed to be a waiver of any default then
existing under this Agreement or the Obligations. No waiver by the Corporation
of any default shall be deemed to be a waiver of any other then existing or
subsequent default or Event of Default, nor shall any such waiver by the
Corporation be deemed to be a continuing waiver under this Agreement or the
Obligations. No delay or omission by the Corporation exercising any right,
remedy, or privilege hereunder shall impair any such right, remedy, or
privilege, nor shall any single or partial exercise thereof, or the exercise of
any other right, remedy, or privilege of the Corporation hereunder be construed
as a waiver thereof or any acquiescence in the default or Event of Default
giving rise thereto;

     

    (d) The
Corporation may proceed to protect and enforce this Agreement by suits or
proceedings in equity, at law or otherwise, whether for the foreclosure hereof
or for the appointment of a receiver of the property covered by this Agreement
and the Obligations or any part thereof, or for the enforcement of any other
proper, legal, or equitable remedy available under applicable law;
and

     

    (e) Any and
all net proceeds received by the Corporation by reason of the foregoing clauses
(a) and (b) of this Section, after first deducting all legal or other costs and
expenses in affecting such realization, shall be applied to pay any or all of
the indebtedness hereby secured as the Corporation shall deem proper, any excess
to be returned to such Pledgor.

     

    11. Successors and
Assigns. The rights and privileges of the Corporation shall inure to its
successors and assigns. All representations, warranties and agreements of each
Pledgor shall bind each Pledgor’s successors, assigns, heirs and legal
representatives, as the case may be. Upon any merger, consolidation or
reorganization, the successor shall execute an assumption agreement in form
acceptable to the Corporation. Nothing in this Section shall relieve any Pledgor
of any Obligation to the Corporation in the event of an assignment by such
Pledgor, whether or not permitted hereunder, which liability will continue until
released by the Corporation.

     

    
      
         

      

      
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    12. Notice and Demand.
Each Pledgor waives presentment, demand, notice of nonpayment and protest and
all other demands or notices in connection with this Agreement. Notice mailed to
each Pledgor’s address in the first paragraph hereof or to each Pledgor’s most
recent changed address on file with the Corporation, at least fifteen (15) days
prior to the related action (or, if the Uniform Commercial Code specifies a
longer period, such longer period prior to the related action), shall be deemed
reasonable.

     

    13. Miscellaneous. This
Agreement is in addition to and not in limitation of any other rights and
remedies the Corporation may have by virtue of any other instrument or agreement
heretofore, contemporaneously herewith, or hereafter executed by each Pledgor or
by law or otherwise. If any provision of this Agreement is contrary to
applicable law, such provision shall be deemed ineffective without invalidating
the remaining provisions hereof. If and to the extent that applicable law
confers any rights or imposes any duties inconsistent with, or in addition to,
any of the provisions of this Agreement, the affected provision shall be
considered amended to conform thereto. No provision of this Agreement may be
waived, altered or modified except in writing duly signed by the Corporation;
and the Corporation shall not by any act, delay, omission, or otherwise be
deemed to have waived any of its rights or remedies hereunder. A waiver by the
Corporation of any right or remedy hereunder on any one occasion, shall not be
construed as a bar to, or waiver of, any such right or remedy which the
Corporation would have on any future occasion nor shall the Corporation be
liable for exercising or failing to exercise any such right or
remedy.

     

    14. Definitions.

     

    (a) “Lien” shall mean any
mortgage, deed of trust, lien, charge, security interest or encumbrance of any
kind upon, or pledge of, any property or asset, whether now owned or hereafter
acquired, and includes the acquisition of, or agreement to acquire any property
or asset subject to any conditional sale agreement or other title retention
agreement, including a lease on terms tantamount thereto or on terms otherwise
substantially equivalent to a purchase.

     

    (b) “Person” shall mean
and include an individual, partnership, corporation, trust, joint ventures,
associations, joint stock company, limited liability company, unincorporated
organization and a Government or any department or agency thereof.

     

    
      
         

      

      
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    (c) “Code” shall mean the
Uniform Commercial Code of New York as the same may be in effect from time to
time, or any comparable law in the relevant jurisdiction regarding secured
transactions, and the granting of security interests.

     

    15. Financing Statements.
Each Pledgor hereby authorizes the Corporation to file a financing statement
pursuant to the Uniform Commercial Code in form satisfactory to the Corporation
in all places where necessary to perfect the Corporation’s security interest in
the Collateral and in all jurisdictions where such filing is required by the
Code. Without limiting the foregoing each Pledgor agrees that whenever the Code
requires a Pledgor to sign a financing statement for filing purposes, such
Pledgor hereby appoints the Corporation or any of the Corporation’s
representatives as such Pledgor’s attorney and agent, with full power of
substitution, to sign or endorse such Pledgor’s name on any such financing
statement or other document and authorizes the Corporation to file such a
financing statement in all places where necessary to perfect the Corporation’s
security interest in the Collateral; and each Pledgor ratifies all acts of the
Corporation and said representatives and agrees to hold the Corporation and said
representatives harmless from all acts of commission or omission or any error of
judgment or mistake of fact or law pertaining thereto. A photographic or other
reproduction of this Agreement or of a financing statement is sufficient as a
financing statement. Upon full payment of all Obligations, this Agreement and
the Lien or charge created hereby or resulting herefrom shall cease to exist and
the Corporation shall file all termination statements requested by a Pledgor
necessary to accomplish this purpose.

     

    16. Term.  This
Agreement shall remain in full force and effect for a period of six(6) years
after the date of this Agreement, provided, however, the
Corporation may at any time, in its sole discretion, release some or all of the
Shares from the pledge hereunder and/or terminate this Agreement.

     

    17. General
Provisions.

     

    (a) This
Agreement constitutes the entire agreement among the parties and supersedes any
and all other Agreements, whether written or oral, among the
parties.

     

    (b) This
Agreement shall be binding upon and shall inure solely to the benefit of the
parties and their respective successors, assigns, heirs, or legal
representatives, as the case may be.

     

    
      
         

      

      
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    (c) This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York applicable to agreements to be performed solely within such
State without reference to applicable rules of conflict of laws or choice of
laws.

     

    (d) This
Agreement may be executed in any number of counterparts and each such
counterpart shall for all purposes deemed to be an original; and all such
counterparts shall together constitute but one and the same
Agreement.  This Agreement may be executed by facsimile or other
electronic transmission.

     

    (e) Any
dispute, controversy, or claim between the parties arising out of or relating to
this Agreement, including the validity, invalidity, breach, or termination
thereof, shall be resolved by arbitration before one (1) arbitrator in
accordance with the Swiss Rules of International Arbitration of the Swiss
Chamber of Commerce (the "Rules") in force on the date when the Notice of
Arbitration is submitted in accordance with the Rules.  The arbitrator
will be a recognized expert in secured transactions in general, with a
particular expertise in the United States Uniform Commercial
Code.  Judgment upon any award rendered by the arbitrator may be
entered in any court of competent jurisdiction and the arbitrator shall have
authority to award reasonable costs, legal fees, and disbursements to the
prevailing party.  The seat of the arbitration shall be Zurich,
Switzerland. The right to fees, costs, and expenses may be enforced by a
separate plenary action. Notwithstanding the foregoing, application may be made
to any court of competent jurisdiction with respect to the enforcement of any
judgment or award. Any award rendered by the arbitrator shall be final and
binding on the parties and each party hereby waives to the fullest extent
permitted by law any right it might have otherwise under the laws of any
jurisdiction to any form of appeal or collateral attack. Any award shall be
rendered and payable in U.S. Dollars.

     

     

      [signatures
appear on the following page]

     

     

    
      
         

      

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

     

    

    

     

    
      	 
      	
              QNECTIVE,
      INC.

            
	 
      	 
      
	 
      	
              By:
       /s/ Oswald
      Ortiz

            
	 
      	
              Oswald
      Ortiz

            
	 
      	
              Chief
      Executive Office

            
	 
      	 
      
	 
      	 
      
	 
      	
              CONNWARDS
      MANAGEMENT, INC.

            
	 
      	 
      
	 
      	
              By: 
      /s/ Michael
      Kang

            
	 
      	
              Michael
      Kang

            
	 
      	
              President

            
	 
      	 
      
	 
      	
              By: 
      /s/ Michael
      Kang

            
	 
      	
              Michael
      Kang

            
	 
      	
              Sole
      Shareholder

            
	 
      	 
      
	 
      	 
      
	 
      	
              CAPELLA
      IV LLC

            
	 
      	 
      
	 
      	
              By: 
      /s/ Michael
      Kang

            
	 
      	
              Michael
      Kang

            
	 
      	
              Manager

            
	 
      	 
      
	 
      	
              By: 
      /s/ Michael
      Kang

            
	 
      	
              Michael
      Kang

            
	 
      	
              Sole
      Member, Capella IV LLC

            
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	
              /s/
      Kang Young-Ho

            
	 
      	
              KANG
      YOUNG-HO

            

    

     

    
      
         

      

      
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    Schedule
1

     

     

    
      	
              Owner

            	
              Certificate
      Number

            	 	
              No.# of
      Shares

            	 
	 	 	 	 	 
	
              Capella
      IV LLC

            	
              QN
      0035

            	 	 	2,000,000	 
	
              Capella
      IV LLC

            	
              QN
      0033

            	 	 	450,000	 
	
              Connwards
      Management, Inc.

            	
              QN
      0037

            	 	 	900,000	 
	
              Connwards
      Management, Inc.

            	
              QN
      0036

            	 	 	625,000	 
	
              Connwards
      Management, Inc.

            	
              QN
      0034

            	 	 	625,000	 
	
              Kang
      Young-Ho

            	
              QN
      0039

            	 	 	6,807,250	 
	
              Total

            	 
      	 	 	11,407,250	 

    

    

     

    
      
         

      

      
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    EXHIBIT
A

     

     

    COLLATERAL ASSIGNMENT OF
CERTIFICATE

     

     

    The undersigned,__________, hereby
sells, assigns, sets over and delivers to Qnective, Inc., a Nevada corporation
(the “Transferee”),[ _____]
shares of common stock, $.001 par value per share (the “Shares”) of the
Transferee registered in its name, free and clear of all liens, claims, security
interests and encumbrances. The Shares are being transferred for collateral
purposes only and the transfer to the Transferee shall only occur, if at all,
upon transfer of the Shares pursuant to the terms of the Agreement (the “Agreement”) dated as
of July 20, 2009 by and among the Transferee, Capella IV LLC, Connwards
Management, Inc. and Kang Young-Ho.

     

     

    The Shares are identified as
follows:

     

    
      	
              Owner

            	
              Certificate
      Number

            	
              Number of
      Shares

            
	
              [___]

            	
              [___]

            	
              [____]

            

    

     

    

    This
Assignment may also be updated from time to time based upon the delivery of
additional Shares as contemplated by the Agreement.

     

    
      	
              DATED:__________

            	 
	
            	      
              [____________________]

            
	 
      	 
	
            	      
              By:
      __________________

            
	
            	      
              Name:

            
	
            	      
              Title:

            

    

     

    
      
         

      

      
        13SECURITIES
PURCHASE AGREEMENT

      

      dated
as of July 22, 2009

      

      by
and among

      

      PROLOR
BIOTECH, INC.

      

      and

      

      THE
PURCHASERS SET FORTH ON

      THE
SIGNATURE PAGES HERETO

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      SECURITIES
PURCHASE AGREEMENT

       

      THIS
SECURITIES PURCHASE AGREEMENT (this “Agreement”) is dated
as of July 22, 2009, by and between PROLOR Biotech, Inc. (the “Company”), a
corporation organized under the laws of the State of Nevada, with its principal
offices at 3 Sapir Street, Weizmann Science Park, Nes-Ziona, Israel, and the
purchasers whose names and addresses are set forth on the signature pages hereto
(the “Purchasers”).  Certain
capitalized terms used but not defined herein shall have the respective meanings
set forth on Schedule
1 attached hereto.

       

      IN
CONSIDERATION of the mutual covenants contained in this Agreement, and intending
to be legally bound hereby, the Company and the Purchasers agree as
follows:

       

      SECTION
1.          
    Authorization of Sale of the
Shares.  Subject
to the terms and conditions of this Agreement, and the filing with the Secretary
of State of the State of Nevada of the Certificate of Designation of the Powers,
Preferences and Relative, Participating, Optional and Other Special Rights of
the 10.0% Series B Cumulative Convertible Preferred Stock, and Qualifications,
Limitations and Restrictions Thereof, substantially in the form attached hereto
as Exhibit A
(the “Certificate of
Designation”), the Company has authorized the issuance and sale to the
Purchasers in a private placement of up to an aggregate of $10,000,000 of 10.0% Series B
Cumulative Convertible Preferred Stock, par value $0.00001 per share, of the
Company (each, a “Share”).

       

      SECTION
2.             
Agreement to Sell and
Purchase the Shares.
 Subject to the terms and conditions of this Agreement, at the Initial
Closing and at each Subsequent Closing (as such terms are defined in Section 3),
as applicable, the Company shall issue and sell to each Purchaser, and such
Purchaser shall buy from the Company, the number of Shares set forth on such
Purchaser’s signature page hereto for an aggregate purchase price equal to the
number of such Shares purchased by such Purchaser multiplied
by the per-Share purchase price of $2.00 (the “Purchase Price”),
which is the average closing price per share of the Company’s common stock, par
value $0.00001 per share (“Common Stock”), as
reported on the OTCBB for the thirty (30) trading days immediately preceding the
date hereof (rounded up to $1.00) multiplied by two.  The
aggregate Purchase Price paid by all Purchasers at the Initial Closing shall be
Two Million Dollars ($2,000,000).  The aggregate Purchase Price paid
by the Purchasers at each Subsequent Closing shall be determined by the
Company’s Board of Directors (the “Board”), acting in
its sole discretion; provided that the
aggregate Purchase Price paid by the Purchasers at each Subsequent Closing shall
not be less than Two Million Dollars ($2,000,000), and the aggregate Purchase
Price paid by the Purchasers at all Subsequent Closings, taken together, shall
not exceed Eight Million Dollars ($8,000,000).  Each Subsequent
Closing shall be subject to prior approval by the Board.

       

      SECTION
3.              
 Closings

       

      3.1          Delivery of the Shares at
the Initial Closing.  The
completion of the purchase and sale of
One Million (1,000,000) Shares (the “Initial Closing”)
shall occur at the offices of Greenberg Traurig, P.A., 1221 Brickell Avenue,
Miami, Florida 33131 (the “Closing Office”) as
soon as practicable and as agreed to by the parties hereto, on the date of and
concurrently with the execution of this Agreement, or on such later date or at
such different location as the parties hereto shall mutually agree, but not
prior to the date on which the Closing Conditions (as defined below) have been
satisfied or waived (the “Initial Closing
Date”).

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      3.2          Delivery of the Shares at
each Subsequent Closing.  The
completion of the purchase and sale of Shares at any closings subsequent to the
Initial Closing (each, a “Subsequent Closing”
and all such Subsequent Closings, together with the Initial Closing, the “Closings”) shall
occur, at the Company’s sole election and in its sole discretion, at the Closing
Office on any date on or prior to March 25, 2013, provided that, in respect of
each Subsequent Closing:  (i) the Company shall have provided to each
Purchaser written notice (each, a “Notice”) of such
Subsequent Closing, together with a copy of the resolutions of the Board
approving the consummation of such Subsequent Closing (certified by a duly
authorized officer of the Company) on or prior to the thirtieth (30th)
calendar day preceding the date of such Subsequent Closing (the “Subsequent Closing
Date” and, together with the Initial Closing Date, the “Closing Dates”); (ii)
the Notice shall specify the number of Shares subject of such closing (on a
per-Purchaser basis in accordance with Section 3.3), provided that
aggregate number of such Shares shall be no fewer than One Million (1,000,000);
and (iii) the Closing Conditions (as defined below) shall have been
satisfied or waived on or prior to such Subsequent Closing Date.

       

      3.3          Pro Rata Allocation of
Shares at each Subsequent Closing.  For
each Subsequent Closing, the Company shall allocate among the Purchasers, and
the Purchaser shall purchase, the number of Shares subject of such Subsequent
Closing pro rata based upon the number of Shares acquired by the Purchasers at
the Initial Closing, unless otherwise determined by the Purchasers.

       

      3.4          Closing
Deliverables.  At
each Closing:

       

      (a)           the
Company shall deliver to each Purchaser one or more stock certificates
registered in the name of such Purchaser, or, if so indicated on such
Purchaser’s Stock Certificate Questionnaire, the form of which is attached
hereto as Appendix I (the “Stock Certificate
Questionnaire”), in such other name(s) as designated by such Purchaser,
evidencing the number of Shares set forth on such Purchaser’s signature page
attached hereto, each bearing a restrictive legend, substantially in the form
set forth in Section 6.2; and

       

      (b)           each
Purchaser shall deliver to the Company (i) immediately available funds in the
full amount of the aggregate Purchase Price for all Shares acquired by such
Purchaser at such Closing and (ii) a lockup agreement in respect of such Shares,
substantially in the form of Exhibit B hereto (the
“Lockup
Agreement”).

       

      3.5          Conditions to the Company’s
Obligations.  The
Company’s obligation to complete the sale of the Shares at a Closing is subject
to the fulfillment, at or prior to such Closing, of each of the following
conditions, unless otherwise waived (“Company Closing
Conditions”):

       

      (a)           receipt
by the Company of immediately available funds in the full amount of the
aggregate Purchase Price for all Shares being purchased at such
Closing;

       

      (b)           receipt
by the Company of each Purchaser’s duly executed and delivered Lockup
Agreement;

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

       

      (c)           each
of the representations and warranties of each Purchaser set forth in Section 5
shall be true and correct on the date of such Closing;

       

      (d)           each
Purchaser shall have performed and complied with all covenants, agreements and
obligations contained in this Agreement that are required to be performed or
complied with by such Purchaser on or prior to such Closing; and

       

      (e)           solely
in respect of each Subsequent Closing, the Board shall have approved the
consummation of such Subsequent Closing.

       

      3.6          Conditions to Purchasers’
Obligations.  Each
Purchaser’s obligation to purchase the Shares at a Closing is subject to the
fulfillment, at or prior to such Closing, of each of the following conditions,
unless otherwise waived (“Purchaser Closing
Conditions” and, together with the Company Closing Conditions, the “Closing
Conditions”):

       

      (a)           each
of the representations and warranties of the Company set forth in Section 4
that is qualified by materiality or material adverse effect or words of similar
effect shall be accurate in all respects on such Closing Date (except to the
extent any such representations and warranties expressly relate to a specific
date, in which case such representations and warranties shall be accurate as of
such date), and each of the representations and warranties of the Company set
forth in Section 4 that is not so qualified shall be accurate in all
material respects as of such Closing Date (except to the extent such
representations and warranties expressly relate to a specific date, in which
case such representations and warranties shall be accurate in all material
respects as of such date);

       

      (b)           the
Company shall have performed and complied with all covenants, agreements and
obligations contained in this Agreement that are required to be performed or
complied with by the Company on or before such Closing;

       

      (c)           the
Certificate of Designation shall have been filed with, and accepted for filing
by, the Secretary of State of the State of Nevada; and

       

      (d)           solely
in respect of each Subsequent Closing, the Board shall have approved the
consummation of such Subsequent Closing.

       

      SECTION
4.           
    Representations, Warranties
and Covenants of the Company.  The
Company hereby represents and warrants to the Purchasers as
follows:

       

      4.1          Issuance of
Shares.  The
Company has taken all necessary corporate action to authorize the execution,
delivery and performance of this Agreement and the Company’s issuance and sale
of the Shares.  The Shares, when issued and delivered and paid for as
provided herein, will be duly authorized, validly issued, fully paid and
nonassessable and will be issued free and clear of any Encumbrances (other than
as arising under applicable securities laws or this
Agreement).  Assuming the accuracy of the representations and
warranties of the Purchasers set forth in Section 5 of this Agreement, the
Shares will be issued in compliance with all applicable federal and state
securities laws.

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

       

      4.2          Organization and
Qualification.  The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada and has the requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted and is duly qualified to do business in any other
jurisdiction by virtue of the nature of the businesses conducted by it or the
ownership or leasing of its properties, except where the failure to be so
qualified will not, when taken together with all other such failures, have a
Material Adverse Effect on the Company.

       

      4.3          Charter and
Bylaws.  The
Company’s Charter and Bylaws, as amended or restated to date, as filed with the
SEC, are a complete and correct copy of such documents as in effect on the date
hereof.

       

      4.4          Capitalization.  As
of the date hereof, the Company is authorized to issue 310,000,000 shares of
capital stock, consisting of 300,000,000 shares of Common Stock and 10,000,000
shares of preferred stock, par value $0.00001 per share, of which 800,000 shares
have been designated as Series A Convertible Preferred Stock (“Series A Preferred
Stock”).  As of July 21, 2009, there were (i) 35,549,017
shares of Common Stock issued and outstanding, and (ii) 800,000 shares of Series
A Preferred Stock issued and outstanding.  All such outstanding shares
of Common Stock and Series A Preferred Stock have been duly authorized and are
validly issued, fully paid and nonassessable.  Except as disclosed in
the SEC Documents, as of the date hereof, there are no outstanding options,
warrants, rights to subscribe for, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, shares of any class of capital stock of the Company, or agreements,
understandings or arrangements to which the Company is a party, or by which the
Company is or may be bound, to issue additional shares of its capital stock or
options, warrants or rights to subscribe for, calls or commitment of any
character whatsoever relating to, or securities or rights convertible into or
exchangeable for, any shares of any class of its capital stock.

       

      4.5          Authorization,
Enforceability and Related Matters.  (i)
The Company has full right,
power, authority and capacity to enter into this Agreement and to consummate the
transactions contemplated hereby and has taken all necessary corporate action to
authorize the execution, delivery and performance of this Agreement; (ii) the
making and performance of this Agreement by the Company and the consummation by
the Company of the transactions contemplated herein will not violate any
provision of the Company’s Charter or Bylaws or, except to the extent that it
would not have a Material Adverse Effect on the Company or adversely affect the
Company’s ability to consummate the transactions contemplated hereby, conflict
with, result in the breach or violation of, or constitute, either by itself or
upon notice or the passage of time or both, a default under any material
agreement, mortgage, deed of trust, lease, franchise, license, indenture, permit
or other instrument to which the Company is a party, or any statute or any
authorization, judgment, decree, order, rule or regulation of any court or any
regulatory body, administrative agency or other governmental agency or body
applicable to the Company; (iii) no consent, approval, authorization or other
order of any court, regulatory body, administrative agency or other governmental
agency or body is required in respect of the Company’s execution and delivery of
this Agreement or the consummation by the Company of the transactions
contemplated by this Agreement; (iv) upon the execution and mutual delivery of
this Agreement by the parties hereto, this Agreement shall constitute a legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application relating to the enforcement of creditor’s rights and the application
of equitable principles relating to the availability of remedies, and except as
rights to indemnity or contribution may be limited by federal or state
securities laws or the public policy underlying such laws; and (v) there is not
in effect any order enjoining or restraining the Company from entering into or
engaging in any of the transactions contemplated by this Agreement.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      4.6          Brokers or
Finders.  No
broker, investment banker, financial advisor or other individual, corporation,
general or limited partnership, limited liability company, firm, joint venture,
association, enterprise, joint securities company, trust, unincorporated
organization or other person or entity is entitled to any broker’s, finder’s,
financial advisor’s or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company or any of its Affiliate.

       

      4.7          SEC
Documents.  The
Company has made available to the Purchasers true and complete copies of all SEC
Documents.  As of their respective dates (or if amended, as of the
date of the last amendment filed prior to the date hereof), the SEC Documents
complied in all material respects with the requirements of the 1934 Act, and
rules and regulations of the SEC promulgated thereunder, and the SEC Documents
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

       

      4.8          Company Financial
Statements.  The
financial statements, together with any notes thereto, included in the Company’s
Annual Report on Form 10-K as filed with the SEC on March 16, 2009 and the
Company’s Quarterly Report on Form 10-Q as filed with the SEC on May 14, 2009
fairly present in all material respects, on the basis stated therein and on the
date thereof, the financial position of the Company at the respective dates
therein specified and its results of operations and cash flows for the periods
then ended.  Such statements and related notes have been prepared in
accordance with generally accepted accounting principles in the United States
(“GAAP”)
applied on a consistent basis except as expressly noted therein and subject in
the case of the unaudited financial statements to year-end
adjustments.

       

      4.9          Material Changes;
Undisclosed Events, Liabilities or Developments. Since
March 31, 2009,
except as specifically disclosed in any SEC Document filed subsequent to March
31, 2009 and 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; (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 of its officers, directors or Affiliates.  As of the date hereof,
except for the issuance of the Shares contemplated by this Agreement, no event,
liability or development has occurred or exists with respect to the Company or
its subsidiaries or their respective business, properties, operations or
financial condition that is required to be disclosed by the Company under
applicable securities laws.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      4.10        Full
Disclosure.  No
representation or warranty made by the Company in this Agreement contains any
untrue statement of a material fact, or omits to state a material fact necessary
to make the statements contained herein not misleading.

       

      SECTION
5.       
        Representations, Warranties
and Covenants of the Purchasers.  Each
Purchaser severally, and not jointly with any other Purchaser, represents and
warrants to the Company that:

       

      5.1          Experience.  (i)
Such Purchaser is knowledgeable, sophisticated and experienced in financial and
business matters, and is making, and is qualified to make, decisions with
respect to investments in shares representing an investment decision like that
involved in the purchase of the Shares, including investments in securities
issued by the Company and/or comparable entities, has the ability to bear the
economic risks of an investment in the Shares and has had the opportunity to
request, receive, review and consider all information it deems relevant in
making an informed decision to purchase the Shares; (ii) such Purchaser is
acquiring the number of Shares set forth on such Purchaser’s signature page
attached hereto for its own account, solely for investment and with no present
intention to distribute any of such Shares and is subject to no arrangement or
understanding with any other persons regarding the distribution of such Shares;
(iii) such Purchaser will not, directly or indirectly, offer, sell, pledge,
transfer or otherwise dispose of (or solicit any offers to buy, purchase or
otherwise acquire or take a pledge of) any of the Shares, except in compliance
with the Securities Act of 1933, as amended (the “Securities Act”), and
the rules and regulations promulgated thereunder (the “Rules and
Regulations”) and any applicable state securities laws; (iv) such
Purchaser has, in connection with its decision to purchase the number of Shares
set forth on such Purchaser’s signature page attached hereto, relied solely upon
the representations and warranties of the Company contained in this Agreement;
(v) such Purchaser has had an opportunity to discuss this investment with
representatives of the Company and ask questions of them; and (vi) such
Purchaser is either a “qualified institutional buyer” as defined by Rule 144A
promulgated under the Securities Act or an “accredited investor” as defined by
Rule 501(a) of Regulation D promulgated under the Securities Act.

       

      5.2          Reliance on
Exemptions.  Such
Purchaser understands that the Shares and the Common Stock issuable upon
conversion of the Shares (the “Conversion Shares”
and, together with the Shares, the “Securities”) are
being offered and sold to in reliance upon specific exemptions from the
registration requirements of the Securities Act and state securities laws and
that the Company is relying upon the truth and accuracy of, and the Purchaser’s
compliance with, the representations, warranties, covenants, agreements,
acknowledgments and understandings of such Purchaser contained in this Agreement
in order to determine the availability of such exemptions and the eligibility of
the Purchaser to acquire the Securities.

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      5.3          Confidentiality.  Such
Purchaser understands that this Agreement, the information contained in all
materials provided to the Purchaser by the Company and its representatives,
including any information conveyed orally, in connection with the transactions
contemplated hereunder (“Confidential
Information”), is strictly confidential and proprietary to the Company
and is being provided to such Purchaser solely for such Purchaser’s confidential
use in connection with the transactions contemplated hereunder.  Such
Purchaser agrees to use the Confidential Information solely for the purpose of
evaluating a possible investment in the Shares, and such Purchaser acknowledges
that it is prohibited from distributing, divulging or discussing any
Confidential Information, in whole or in part, with any Person, except to such
Purchaser’s financial, investment or legal advisors (such Persons, “Authorized
Advisors”), solely to the extent necessary for such Authorized Advisors
to assist such Purchaser with its proposed investment in the Shares. To the
extent that such Purchaser provides, directly or indirectly, any Confidential
Information to any Authorized Advisor, such Purchaser shall ensure that such
Authorized Advisor maintain the confidentiality of the Confidential Information
to the same extent applicable to such Purchaser as set forth in this Section
5.3.  Confidential Information does not include any information that
is or becomes publicly available through no fault of such Purchaser, or that
such Purchaser is required to disclose pursuant to applicable law, regulation or
legal process; provided, however, that if such
Purchaser is requested or ordered to disclose any Confidential Information
pursuant to any court or other government order or any other applicable legal
procedure, it shall provide the Company with prompt notice of any such request
or order so that the Company may seek an appropriate protective
order.

       

      5.4          Investment
Decision.  Such
Purchaser understands that nothing in this Agreement or any other materials
presented to the Purchaser in connection with the purchase and sale of the
Shares constitutes legal, tax or investment advice.  Such Purchaser
has consulted such legal, tax and investment advisors as it, in its sole
discretion, has deemed necessary or appropriate in connection with its purchase
of the Shares.

       

      5.5          Risk of
Loss.  Such
Purchaser understands that its investment in the Shares involves a significant
degree of risk, including a risk of total loss of such Purchaser’s investment,
and such Purchaser has full cognizance of and understands all of the risk
factors related to its purchase of the Shares, including, but not limited to,
those set forth in the SEC Documents.  The Purchaser understands that
no representation is being made as to the future value of the
Securities.

       

      5.6          Residency.  Such
Purchaser’s principal executive offices, or primary residence, as applicable,
are in the jurisdiction set forth on such Purchaser’s signature page attached
hereto.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      5.7          Authorization,
Enforceability and Related Matters.  (i)
Such Purchaser has full right,
power, authority and capacity to enter into this Agreement and to consummate the
transactions contemplated hereby and has taken all necessary action to authorize
the execution, delivery and performance of this Agreement; (ii) the making and
performance of this Agreement by such Purchaser and the consummation by such
Purchaser of the transactions contemplated herein will not violate any provision
of the organizational documents of such Purchaser (if not a natural person) or,
except to the extent that it would not have a Material Adverse Effect on such
Purchaser’s ability to consummate the transactions contemplated hereby, conflict
with, result in the breach or violation of, or constitute, either by itself or
upon notice or the passage of time or both, a default under any material
agreement, mortgage, deed of trust, lease, franchise, license, indenture, permit
or other instrument to which such Purchaser is a party, or any statute or any
authorization, judgment, decree, order, rule or regulation of any court or any
regulatory body; administrative agency or other governmental agency or body
applicable to such Purchaser, (iii) no consent, approval, authorization or
other order of any court, regulatory body, administrative agency or other
governmental agency or body is required in respect of such Purchaser’s execution
and delivery of this Agreement or the consummation by such Purchaser of the
transactions contemplated by this Agreement; (iv) upon the execution and mutual
delivery of this Agreement by the parties hereto, this Agreement shall
constitute a legal, valid and binding obligation of such Purchaser, enforceable
against such Purchaser in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws of general application relating to the enforcement of creditor’s
rights and the application of equitable principles relating to the availability
of remedies, and except as rights to indemnity or contribution may be limited by
federal or state securities laws or the public policy underlying such laws; and
(v) there is not in effect any order enjoining or restraining the Purchaser from
entering into or engaging in any of the transactions contemplated by this
Agreement.

       

      5.8          Brokers or
Finders.  No
broker, investment banker, financial advisor or other individual, corporation,
general or limited partnership, limited liability company, firm, joint venture,
association, enterprise, joint securities company, trust, unincorporated
organization or other person or entity is entitled to any broker’s, finder’s,
financial advisor’s or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of such Purchaser or of its Affiliates.

       

      SECTION
6.           
   Restrictions on
Transfer.

       

      6.1          Restrictions on
Transfer.  The
Securities may be disposed of only in compliance with state and federal
securities laws.  In connection with any transfer of any Securities
other than pursuant to an effective registration statement or Rule 144 under the
Securities Act, 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.

       

      6.2          General
Legend.  Each
Purchaser agrees that a restrictive legend, in substantially the following form,
shall be imprinted on the Securities:

       

      THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES
ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO PROLOR BIOTECH, INC., A NEVADA CORPORATION,
AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

      SECTION
7.         
     Survival of Representations,
Warranties and Agreements.  All
covenants, representations and warranties made by the Company and the Purchasers
herein and in any documents delivered pursuant hereto shall survive for a period
of one (1) year following the later of the execution of this Agreement, the
Initial Closing or the most recent Subsequent Closing.

       

      SECTION
8.             
 Independent
Nature of Purchasers’ Obligations and Rights.  The
obligations of each Purchaser under this Agreement are several and not joint (or
joint and several) with the obligations of any other Purchaser hereunder, and no
Purchaser shall be responsible in any way for the performance of the obligations
of any other Purchaser under this Agreement.  The decision of a
Purchaser to purchase Shares pursuant to this Agreement has been made by such
Purchaser independently of any other Purchaser.  Nothing contained in
this Agreement, and no action taken by any Purchaser pursuant thereto, shall be
deemed to constitute the Purchasers as a partnership, an association, a joint
venture or any 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 this Agreement.  Each Purchaser
acknowledges that no other Purchaser has acted as agent for such Purchaser in
connection with making its investment hereunder and that no other Purchaser will
be acting as agent of such Purchaser in connection with monitoring its
investment in the Securities or enforcing its rights under this
Agreement.

       

      SECTION
9.              
 Notices.  All
notices required or permitted hereunder shall be in writing and shall be deemed
effectively given:  (i) upon delivery to the party to be notified;
(ii) when received by confirmed facsimile or (iii) one (1) business day
after deposit with a nationally recognized overnight carrier, specifying next
business day delivery, with written verification of receipt.  All
communications shall be sent to the Company and the Purchasers as follows or at
such other addresses as the Company or any Purchaser may designate upon ten (10)
days’ advance written notice to the other party:

       

      (a)          if
to the Company, to:

       

      
        	
                 
      

              	
                PROLOR
      Biotech, Inc.

              

      

      
        	
                 
      

              	
                3
      Sapir Street

              

      

      
        	
                 
      

              	
                Weizmann
      Science Park

              

      

      
        	
                 
      

              	
                Nes-Ziona,
      Israel 74140

              

      

      
        	
                 
      

              	
                Attn.:
      Shai Novik

              

      

       

      (b)          if
to a Purchaser, at its address as set forth on such Purchaser’s signature page
attached hereto.

       

      SECTION
10.          
  Amendments.  This
Agreement may not be modified or amended except pursuant to an instrument in
writing signed by the Company and each of the Purchasers.  No waiver
of any provision this Agreement shall be binding unless executed in writing by
the party to be bound thereby.  No waiver of any provision of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (regardless of whether similar), nor shall any such waiver constitute a
continuing waiver unless otherwise expressly provided.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      SECTION
11.       
     Headings.  The
headings of the various sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be part of this
Agreement.

       

      SECTION
12.         
   Severability.  In
case any provision contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.

       

      SECTION
13.        
    Governing
Law.  This
Agreement and any disputes or claims arising out of or in connection with its
subject matter shall be governed by and construed in accordance with the laws of
the State of Florida without regard to the rules of conflict of laws of such
state that would cause the laws of another jurisdiction to apply. The parties
hereto acknowledge and agree that venue and jurisdiction for any claim, suit or
controversy related to or arising out of this Agreement shall lie in the state
or federal courts located in Miami-Dade County, Florida.  THE PARTIES
HEREBY WAIVE THE RIGHT TO JURY TRIAL OF ANY MATTERS ARISING OUT OF THIS
AGREEMENT OR THE CONDUCT OF THE RELATIONSHIP BETWEEN THEM.

       

      SECTION
14.        
    Counterparts; Facsimile
Signatures.  This
Agreement may be executed in one or more counterparts, each of which shall
constitute an original, but all of which, when taken together, shall constitute
but one instrument, and shall become effective when one or more counterparts
have been signed by each party hereto and delivered to the other parties.
Facsimile or other electronically scanned and transmitted signatures shall be
deemed originals for all purposes of this Agreement.

       

      SECTION
15.     
       Entire
Agreement.  This
Agreement (including the Exhibits, Schedules and Appendices attached hereto) and
the instruments referenced herein contain the entire understanding of the
parties with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor any Purchaser
makes any representation, warranty, covenant or undertaking with respect to such
matters.

       

      SECTION
16.       
     Fees and
Expenses.  Except
as expressly set forth herein, the Company, on the one hand, and each Purchaser,
on the other hand, shall pay their respective fees and expenses related to the
transactions contemplated by this Agreement.

       

      SECTION
17.         
    Parties.  This
Agreement is made solely for the benefit of and is binding upon the Purchasers
and the Company, and no other person shall acquire or have any right under or by
virtue of this Agreement.

       

      SECTION
18.         
   Assignment.  Except
as otherwise expressly provided herein, the provisions hereof shall inure to the
benefit of, and be binding upon, the parties hereto and their respective
successors and assigns.  This Agreement and the rights of each
Purchaser hereunder may be assigned by said Purchaser only with the prior
written consent of the Company.  The Company may not assign this
Agreement without the written consent of each of the Purchasers.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      SECTION
19.        Further
Assurances.  Each
party agrees to cooperate fully with the other parties hereto and to execute
such further instruments, documents and agreements and to give such further
written assurance as may be reasonably requested by any other party to evidence
and reflect the transactions described herein and contemplated hereby and to
carry into effect the intents and purposes of this Agreement.

       

      SECTION
20.        Liability Not Affected by
Knowledge or Waiver.  The
right to recovery of losses or other remedy based upon breach of
representations, warranties or covenants will not be affected by any
investigation conducted, or knowledge acquired (or capable of being acquired) at
any time, whether before or after the execution and delivery of this Agreement,
with respect to the accuracy or inaccuracy of or compliance or noncompliance
with any such representation, warranty, or covenant.

       

      [Signature
pages follow]

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

    

     

    IN WITNESS WHEREOF, the
undersigned have caused this Agreement to be executed by their duly authorized
representatives as of the day and year first above written.

     

    
      
        
          
            	 
      	
                    COMPANY:

                  
	 
      	 
      
	 
      	
                    PROLOR
      BIOTECH, INC.

                  
	 
      	 
      
	 
      	By:	
                      /s/ Shai
  Novik

                  

          

        

      

    

    
      
        
          	 
      	
                  Name:

                	
                  Shai
      Novik

                
	 
      	
                  Title:

                	
                  President

                

        

      

    

     

    Company
Signature Page to Securities Purchase Agreement

    
      
        
        

         

      

      
         

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the
undersigned have caused this Agreement to be executed by their duly authorized
representatives as of the day and year first above written.

    

    
      
        
          
            
              
                	 
      	
                        PURCHASER(S):

                      
	 
      	 
      
	
                        If
      a corporation or other entity:

                      	
                        Frost Gamma Investments
    Trust

                      
	 
      	
                        (name
      of corporation or entity)

                      
	 
      	 
      
	 
      	
                        By:

                      	
                            /s/ Dr. Phillip Frost,
      M.D.

                      
	 
      	
                        Name:    
       Dr. Phillip Frost, M.D.

                      
	 
      	
                        Title:
             Trustee

                      
	 
      	 
      
	
                        If
      an individual:

                      	 
      
	 
      	
                        Name:

                      
	 
      	 
      
	 
      	 
      
	 
      	
                        Name
      (co-purchaser, if any):

                      
	 
      	 
      
	
                        Number
      of Shares Purchased at Initial Closing:

                      	
                        825,000

                      
	 
      	 
      
	
                        Number
      of Shares subscribed to and subject to one or more Subsequent
      Closings:

                      	
                        3,300,000

                      
	 
      	 
      
	
                        Contact
      Information:

                      	
                        Address:

                      
	 
      	 
      
	 
      	
                        Telephone:

                      
	 
      	
                        Facsimile:

                      
	 
      	
                        E-mail:

                      

              

            

          

        

      

    

     

    Purchaser
Signature Page to Securities Purchase Agreement

     

    
      
        
        

         

      

      
         

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the
undersigned have caused this Agreement to be executed by their duly authorized
representatives as of the day and year first above written.

    

    
      
        
          
            	 
      	
                    PURCHASER(S):

                  
	 
      	 
      
	
                    If
      a corporation or other entity:

                  	
                    Hsu Gamma Investment,
  L.P.

                  
	 
      	
                    (name
      of corporation or entity)

                  
	 
      	 
      
	 
      	
                    By:

                  	
                        /s/ Dr. Jane H. Hsiao, Ph.D,
      MBA

                  
	 
      	
                    Name:     
      Dr. Jane H. Hsiao, Ph.D., MBA

                  
	 
      	
                    Title:
             General Partner

                  
	 
      	 
      
	
                    If
      an individual:

                  	 
      
	 
      	
                    Name:

                  
	 
      	 
      
	 
      	 
      
	 
      	
                    Name
      (co-purchaser, if any):

                  
	 
      	 
      
	
                    Number
      of Shares Purchased at Initial Closing:

                  	
                    170,000

                  
	 
      	 
      
	
                    Number
      of Shares subscribed to and subject to one or more Subsequent
      Closings:

                  	
                    680,000

                  
	 
      	 
      
	
                    Contact
      Information:

                  	
                    Address:

                  
	 
      	 
      
	 
      	
                    Telephone:

                  
	 
      	
                    Facsimile:

                  
	 
      	
                    E-mail:

                  

          

        

      

    

     

    Purchaser
Signature Page to Securities Purchase Agreement

    
      
        
        

         

      

      
         

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the
undersigned have caused this Agreement to be executed by their duly authorized
representatives as of the day and year first above written.

    

    
      
        
          	 
      	
                  PURCHASER(S):

                
	 
      	 
      
	
                  If
      a corporation or other entity:

                	 
      
	 
      	
                  (name
      of corporation or entity)

                
	 
      	 
      
	 
      	
                  By:

                	 
      
	 
      	
                  Name:                                                            

                
	 
      	
                  Title:

                
	 
      	 
      
	
                  If
      an individual:

                	
                  /s/ Subbarao Uppaluri

                
	 
      	
                  Name: Subbarao
      Uppaluri

                
	 
      	 
      
	 
      	 
      
	 
      	
                  Name
      (co-purchaser, if any):

                
	 
      	 
      
	
                  Number
      of Shares Purchased at Initial Closing:

                	
                  2,500

                
	 
      	 
      
	
                  Number
      of Shares subscribed to and subject to one or more Subsequent
      Closings:

                	
                  10,000

                
	 
      	 
      
	
                  Contact
      Information:

                	
                  Address:

                
	 
      	 
      
	 
      	
                  Telephone:

                
	 
      	
                  Facsimile:

                
	 
      	
                  E-mail:

                

        

      

    

     

    Purchaser
Signature Page to Securities Purchase Agreement

    
      
        
        

         

      

      
         

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the
undersigned have caused this Agreement to be executed by their duly authorized
representatives as of the day and year first above written.

    

    
      
        
          	 
      	
                  PURCHASER(S):

                
	 
      	 
      
	
                  If
      a corporation or other entity:

                	 
      
	 
      	
                  (name
      of corporation or entity)

                
	 
      	 
      
	 
      	
                  By:

                	 
      
	 
      	
                  Name:                                                            

                
	 
      	
                  Title:

                
	 
      	 
      
	
                  If
      an individual:

                	
                  /s/ Steven D. Rubin

                
	 
      	
                  Name: Steven D.
      Rubin

                
	 
      	 
      
	 
      	 
      
	 
      	
                  Name
      (co-purchaser, if any):

                
	 
      	 
      
	
                  Number
      of Shares Purchased at Initial Closing:

                	
                  2,500

                
	 
      	 
      
	
                  Number
      of Shares subscribed to and subject to one or more Subsequent
      Closings:

                	
                  10,000

                
	 
      	 
      
	
                  Contact
      Information:

                	
                  Address:

                
	 
      	 
      
	 
      	
                  Telephone:

                
	 
      	
                  Facsimile:

                
	 
      	
                  E-mail:

                

        

      

    

     

    Purchaser
Signature Page to Securities Purchase Agreement

    
      
        
        

         

      

      
         

        
          

        

      

      
         

      

    

    Appendix
I

     

    STOCK CERTIFICATE
QUESTIONNAIRE

     

    Pursuant
to Section 3 of the Agreement, please provide us with the following
information:

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    	
                                            1.

                                          	
                                            The
      exact name that your Shares are to be registered in (this is the name that
      will appear on your stock certificate(s)).  You may use a
      nominee name if appropriate:

                                          	
                                             

                                             

                                          
	 	 	 
	
                                            2.

                                          	
                                            The
      relationship between the Purchaser of the Shares and the Registered Holder
      listed in response to item 1 above:

                                             

                                          	
                                             

                                          
	 	 	 
	
                                            3.

                                          	
                                            The
      mailing address of the Registered Holder listed in response to item 1
      above:

                                          	
                                             

                                          
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	
                                            4.

                                          	
                                            The
      Social Security Number or Tax Identification Number of the Registered
      Holder listed in response to item 1 above:

                                             

                                          	
                                             

                                          

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	
                                    PURCHASER

                                  
	 	 
	
                                    By:

                                  	 
      
	 	 
	
                                    Its:

                                  	 
      

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
1

     

    CERTAIN DEFINED
TERMS

     

    Definitions.  The
following terms, whenever used herein, shall have the following respective
meanings for all purposes of this Agreement.

     

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

     

    “Affiliate” means as
to any Person (a) any Person which directly or indirectly controls, is
controlled by, or is under common control with such Person, and (b) any
Person who is a director, officer, partner or principal of such Person or of any
Person which directly or indirectly controls, is controlled by, or is under
common control with such Person.  For purposes of this definition,
“control” of a
Person shall mean the power, direct or indirect, to direct or cause the
direction of the management and policies of such Person whether by ownership of
voting stock, by contract or otherwise.

     

    “Bylaws” means the
Amended and Restated Bylaws of the Company, as may be amended from time to
time.

     

    “Charter” means the
Amended and Restated Articles of Incorporation of the Company, as may be amended
from time to time.

     

    “Encumbrances” means
any and all liens, encumbrances, charges, mortgages, deeds of trust, options,
pledges, restrictions on transfer, preemptive rights, rights of first refusal or
offer, security interests, hypothecations, easements, rights-of-way or
encroachments of any nature whatsoever, whether voluntarily incurred or arising
by operation of law.

     

    “Governmental
Authority” means any nation or country (including but not limited to the
United States) and any state, commonwealth, territory or possession thereof and
any political subdivision of any of the foregoing, including but not limited to
courts, departments, commissions, boards, bureaus, agencies, ministries or other
instrumentalities.

     

    “Material Adverse
Effect” means a material adverse effect on the business, results of
operations, properties or assets of a Person; provided, however, that “Material Adverse
Effect” shall not include the impact on such business, results of
operations, properties or assets of a Person arising out of or attributable to
(i) economic conditions affecting the United States generally,
(ii) conditions or effects affecting the capital markets in the United
States generally or (iii) effects relating to the announcement of the
execution of this Agreement or otherwise to the pendency of the transactions
contemplated hereby, except to the extent that the impact of any of the
conditions or events described in the foregoing clauses (i), (ii) or (iii)
disproportionally affects such Person.

     

    “Person” means any
individual, corporation (including any not-for-profit corporation), general or
limited partnership, limited liability partnership, joint venture, estate,
trust, firm, company (including any limited liability company or joint stock
company), association, organization, entity or Governmental
Authority.

    
      
         

      

      
        S-1-1

        
          

        

      

      
         

      

    

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

     

    “SEC Documents” means
each form, report, schedule, statement and other document filed or required to
be filed by the Company with the SEC pursuant to the 1934 Act through the date
hereof, including any filed amendment to such document, whether or not such
amendment is required to be so filed.  “SEC Documents” does not
include any information furnished to the SEC, including, but not limited to,
information under Items 2.02, 7.01 or 9.01 of Form 8-K.

    
      
         

      

      
        S-1-2

        
          

        

      

      
         

      

    

    Exhibit
A

     

    [Certificate
of Designation - Attached]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
B

     

    [Form of
Lockup Agreement]

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