Document:

SECURITIES PURCHASE
AGREEMENT

     

    THIS SECURITIES PURCHASE
AGREEMENT (this “Agreement”), dated as of March
__, 2010, by and among PROLOR Biotech, Inc., a Nevada corporation with
headquarters located at 3 Sapir Street, Weizmann Science Park, Nes-Ziona, Israel
74140 (the “Company”),
and each investor identified on the signature pages hereto (individually, an
“Investor” and
collectively, the “Investors”).

     

    BACKGROUND

     

    A.           The
Company and each Investor are executing and delivering this Agreement in
reliance upon the exemption from registration afforded by Section 4(2) of
the Securities Act of 1933, as amended (the “Securities Act”), and
Rule 506 of Regulation D (“Regulation D”) as promulgated
by the United States Securities and Exchange Commission (the “SEC”) under the Securities
Act.

     

    B.           Each
Investor, severally and not jointly, wishes to purchase, and the Company wishes
to sell, upon the terms and conditions stated in this Agreement, that aggregate
number of shares of the common stock, $0.00001 par value, of the Company (the
“Common Stock”), set
forth across from such Investor’s name on the Schedule of Investors (which
aggregate amount for all Investors together shall collectively be referred to
herein as the “Common
Shares”).

     

    C.           The
Company may elect at its sole discretion to offer and sell additional shares of
Common Stock in one or more closings shortly after the Closing Date on
substantially identical terms to those contained in this Agreement, subject to
then-current pricing of such shares and terms and conditions in respect of a
placement agent.

     

    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 the Investors agree as
follows:

     

    ARTICLE
I

    DEFINITIONS

     

    1.1           Definitions.  In
addition to the terms defined elsewhere in this Agreement, the following terms
have the meanings indicated:

     

    “Affiliate” means any Person
that, directly or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with a Person, as such terms are used
in and construed under Rule 144 under the Securities Act.

     

    “Agreement” has the meaning set
forth in the Preamble.

     

    “Best Efforts” means the
efforts that a prudent person desirous of achieving a result would use in
similar circumstances to ensure that such result is achieved as expeditiously as
practical; provided,
however, that an obligation to use Best Efforts under this Agreement does
not require the Company to dispose of or make any change to its business, expend
any material funds or incur any other material burden.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Business Day” means any day
other than Saturday, Sunday, any day which shall be 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.

     

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

     

    “Closing Date”
means the second (2nd)
Trading Day after the date on which this Agreement has been executed and
delivered by all parties hereto, unless on such date the conditions set forth in
Sections 2.1, 2.2, 5.1 and 5.2 (other than
those to be satisfied at the Closing) shall not have been satisfied or waived,
in which case the Closing Date shall be on the second (2nd)
Trading Day after the date on which the last to be satisfied or waived of the
conditions set forth in Sections 2.1, 2.2, 5.1 and
5.2 (other than those to be satisfied at the Closing)
shall have been satisfied or waived.

     

    “Common Shares”
has the meaning set forth in the Preamble.

     

    “Common Stock”
has the meaning set forth in the Preamble.

     

    “Company” has the
meaning set forth in the Preamble.

     

    “Company Counsel”
means Greenberg Traurig, P.A. and Greenberg Traurig, LLP.

     

    “Company Patent
Applications” has the meaning set forth in Section 3.1(t).

     

    “Contingent
Obligation” has the meaning set forth in Section
3.1(aa).

     

    “Convertible
Securities” means any stock or securities (other than Options)
convertible into or exercisable or exchangeable for Common Stock.

     

    “Disclosure
Materials” has the meaning set forth in Section 3.1(g).

     

    “8-K Filing” has
the meaning set forth in Section
4.4.

     

    “Environmental Laws” has the
meaning set forth in Section
3.1(dd).

     

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

     

    “FDA” has the meaning set forth
in Section
3.1(j).

     

    “GAAP” has the meaning set
forth in Section
3.1(g).

     

    “Hazardous Materials” has the
meaning set forth in Section
3.1(dd).

     

    “Indebtedness” has the meaning
set forth in Section
3.1(aa).

     

    “Indemnified Party” has the
meaning set forth in Section 6.2.

     

    “Insolvent” has the meaning set
forth in Section
3.1(h).

     

    
      
        
        

      

      
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    “Intellectual Property Rights”
has the meaning set forth in Section 3.1(t).

     

    “Investor” has the meaning set
forth in the Preamble.

     

    “Investor Party” has the
meaning set forth in Section 6.1.

     

    “Lien” means any lien, charge,
claim, security interest, encumbrance, right of first refusal or other
restriction.

     

    “Losses” means any and all
losses, claims, damages, liabilities, settlement costs and expenses, including,
without limitation, reasonable attorneys’ fees.

     

    “Material Adverse Effect” means
(i) a material adverse effect on the results of operations, assets, business or
financial condition or prospects of the Company and the Subsidiaries taken as a
whole on a consolidated basis or (ii) material and adverse impairment of
the Company’s ability to perform its obligations under any of the Transaction
Documents, provided, that the following alone shall not be deemed, in and of
itself, to constitute a Material Adverse Effect:  changes in general
economic conditions or changes affecting the industry in which the Company
operates generally (as opposed to Company-specific changes).

     

    “Material Contract” means any
contract of the Company that has been filed or was required to have been filed
as an exhibit to the SEC Reports pursuant to Item 601(b)(4) or
Item 601(b)(10) of Regulation S-K.

     

    “Material Permits” has the
meaning set forth in Section 3.1(v).

     

    “Options” means any outstanding
rights, warrants or options to subscribe for or purchase Common Stock or
Convertible Securities.

     

    “Person” means an individual, a
limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization, a government or any department or agency
thereof and any other legal entity.

     

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

     

    “PTO” has the meaning set forth
in Section 3.1(t).

     

    “Regulation D” has the meaning
set forth in the Preamble.

     

    “Required Approvals” has the
meaning set forth in Section 3.1(gg).

     

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

     

    “Schedule of Investors” means
the list of Investors attached hereto as Annex A.

     

    
      
        
        

      

      
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    “SEC” has the meaning set forth
in the Preamble.

     

    “SEC Reports” has the meaning
set forth in Section 3.1(g).

     

    “Securities Act” has the
meaning set forth in the Preamble.

     

    “Shares” means shares of the
Company’s Common Stock.

     

    “Short Sales” has the meaning
set forth in Section
3.2(i).

     

    “Subsidiary” means the
following subsidiaries of the Company: (i) Modigene Inc., a Delaware
corporation, and (ii) ModigeneTech Ltd., an Israeli company.

     

    “Trading Day” means (i) a day
on which the Common Stock is traded on a Trading Market (other than the OTC
Bulletin Board), or (ii) if the Common Stock is not listed or quoted on a
Trading Market (other than the OTC Bulletin Board), a day on which the Common
Stock is traded in the over-the-counter market, as reported by the OTC Bulletin
Board, or (iii) if the Common Stock is not listed or quoted on any Trading
Market, a day on which the Common Stock is quoted in the over-the-counter market
as reported by the Pink Sheets LLC (or any similar organization or agency
succeeding to its functions of reporting prices); provided, that in the event
that the Common Stock is not listed or quoted as set forth in (i), (ii) and
(iii) hereof, then Trading Day shall mean a Business Day.

     

    “Trading Market” means
whichever of the New York Stock Exchange, the American Stock Exchange, the
NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market
or OTC Bulletin Board on which the Common Stock is listed or quoted for trading
on the date in question.

     

    “Transaction” has the meaning
set forth in Section
3.2(i).

     

    “Transaction Documents” means
this Agreement, including the schedules, annexes and exhibits attached hereto,
and the Transfer Agent Instructions and each of the other agreements or
instruments entered into or executed by the parties hereto in connection with
the transactions contemplated by this Agreement.

     

    “Transfer Agent” means American
Stock Transfer & Trust Company, or any successor transfer agent for the
Company.

     

    “Transfer Agent Instructions”
means, with respect to the Company, the Company Transfer Agent Instructions, in
substantially the form of Exhibit B,
executed by the Company and delivered to the Transfer Agent.

     

    ARTICLE
II

    PURCHASE
AND SALE

     

    2.1           Closing.  Subject
to the terms and conditions set forth in this Agreement, at the Closing the
Company shall issue and sell to each Investor, and each Investor shall,
severally and not jointly, purchase from the Company, such number of Common
Shares set forth across from such Investor’s name on the Schedule of Investors,
at a purchase price equal to $2.35 per Common Share.  The date and
time of the Closing and shall be 11:00 a.m., New York City Time, on the Closing
Date.  The Closing shall take place at the offices of the Company
Counsel.

     

    
      
        
        

      

      
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    2.2           Closing
Deliveries.

     

    (a)           At
the Closing, the Company shall deliver or cause to be delivered to each Investor
the following:

     

    (i)           a
copy of the Company’s irrevocable instructions to the Transfer Agent instructing
the Transfer Agent to deliver one or more stock certificates, inclusive of such
restrictive and other legends as set forth in Section 4.1(b) hereof,
evidencing such number of Common Shares set forth on such Investor’s signature
page to this Agreement, registered in the name of such Investor;

     

    (ii)           duly
executed Transfer Agent Instructions acknowledged by the Transfer
Agent;

     

    (iii)           a
certificate of the Secretary of the Company, dated as of the Closing Date,
(a) certifying the resolutions adopted by the Board of Directors of the
Company and/or any committee thereof approving the transactions contemplated by
this Agreement and the other Transaction Documents and the issuance of the
Common Shares, (b) certifying the current versions of the articles of
incorporation, as amended and by-laws of the Company and (c) certifying as
to the signatures and authority of persons signing the Transaction Documents and
related documents on behalf of the Company;

     

    (iv)           a
certificate of the Chief Executive Officer, Chief Operating Officer or Chief
Financial Officer of the Company, dated as of the Closing Date, certifying to
the fulfillment of the conditions specified in Section 5.1(a) and
(b);
and

     

    (v)           a
certificate evidencing the formation and good standing of the Company issued by
the Secretary of State of the State of Nevada, as of a date within five
(5) days of the Closing Date.

     

    (b)           At
the Closing, each Investor shall deliver or cause to be delivered to the Company
the following:

     

    (i)           the
purchase price set forth across from such Investor’s name on the Schedule of
Investors in United States dollars and in immediately available funds, by wire
transfer to an account designated in writing to such Investor by the Company for
such purpose;

     

    (ii)           a
completed and executed Investor Signature Page to this Agreement;

     

    (iii)           a
completed version of the Stock Certificate Questionnaire attached hereto as
Exhibit
A-1;

     

    
      
        
        

      

      
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    (iv)           a
completed and executed version of the Investor Certificate attached hereto as
Exhibit A-2;
and

     

    (v)           an
executed lock-up agreement in the form attached hereto as Exhibit
C.

     

    ARTICLE
III

    REPRESENTATIONS
AND WARRANTIES

     

    3.1           Representations and
Warranties of the Company.  The
Company hereby represents and warrants to the Investors as follows (which
representations and warranties shall be deemed to apply, where appropriate, to
each Subsidiary of the Company):

     

    (a)           Subsidiaries.  The
Company owns or controls, directly or indirectly, all of the capital stock or
comparable equity interests of each Subsidiary free and clear of any Lien, and
all issued and outstanding shares of capital stock or comparable equity interest
of each Subsidiary are validly issued and are fully paid, non-assessable and
free of preemptive and similar rights.

     

    (b)           Organization and
Qualification.  The Company and each Subsidiary is an entity
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, as applicable, with the
requisite legal 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 of any of the provisions of its certificate or
articles of incorporation, bylaws or other organizational or charter documents,
as applicable.  The Company and each Subsidiary is duly qualified to
do 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, individually or
in the aggregate, have or reasonably be expected to result in a Material Adverse
Effect.

     

    (c)           Authorization;
Enforcement.  The Company has the requisite corporate authority
to enter into and to consummate the transactions contemplated by each of the
Transaction Documents to which it is a party and otherwise to carry out its
obligations hereunder and thereunder.  The execution and delivery by
the Company of each of the Transaction Documents to which it is a party and the
consummation by it of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action on the part of the Company,
and no further consent or action is required by the Company, its Board of
Directors or its stockholders.  Each of the Transaction Documents to
which it is a party has been (or upon delivery will be) duly executed by the
Company and is, or when delivered in accordance with the terms hereof, will
constitute, the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except (i) as limited by 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.

     

    
      
        
        

      

      
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    (d)           No
Conflicts.  The execution, delivery and performance by the
Company of the Transaction Documents to which it is a party and the consummation
by the Company 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, as applicable, (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement (including any Material Contract), 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, except to the extent that such conflict, default, termination,
amendment, acceleration or cancellation right would not reasonably be expected
to have a Material Adverse Effect, or (iii) result in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other restriction of
any court or governmental authority to which the Company or any Subsidiary is
subject (including, assuming the accuracy of the representations and warranties
of the Investors set forth in Section 3.2 hereof,
federal and state securities laws and regulations and the rules and regulations
of any self-regulatory organization to which the Company or its securities are
subject, including all applicable Trading Markets), or by which any property or
asset of the Company or any Subsidiary is bound or affected, except to the
extent that such violation would not have or reasonably be expected to result in
a Material Adverse Effect.

     

    (e)           The Common
Shares.  The Common Shares 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, except for customary and required restrictions on transfer, and will not
be subject to preemptive or similar rights of stockholders (other than those
imposed by the Investors).

     

    (f)           Capitalization.  The
aggregate number of shares and type of all authorized, issued and outstanding
classes of capital stock, options and other securities of the Company (whether
or not presently convertible into or exercisable or exchangeable for shares of
capital stock of the Company) is set forth in Schedule 3.1(f)
hereto.  All outstanding shares of capital stock are duly authorized,
validly issued, fully paid and nonassessable and have been issued in compliance
in all material respects with all applicable securities laws, and none of such
outstanding shares was issued in violation of any preemptive rights or similar
rights to subscribe for or purchase any capital stock of the Company. Except as
disclosed in Schedule 3.1(f)
hereto, the Company did not have outstanding at March 4, 2010 any other Options,
script 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 entered into any agreement giving any Person
any right to subscribe for or acquire, any shares of Common Stock, or securities
or rights convertible or exchangeable into shares of Common
Stock.  Except as set forth on Schedule 3.1(f)
hereto, and except for customary adjustments as a result of stock dividends,
stock splits, combinations of shares, reorganizations, recapitalizations,
reclassifications or other similar events, there are no anti-dilution or price
adjustment provisions contained in any security issued by the Company (or in any
agreement providing rights to security holders) and the issuance and sale of the
Common Shares will not obligate the Company to issue shares of Common Stock or
other securities to any Person (other than the Investors) and will not result in
a right of any holder of securities to adjust the exercise, conversion, exchange
or reset price under such securities.  To the knowledge of the
Company, except as disclosed in the SEC Reports and any Schedules 13D or 13G
filed with the SEC pursuant to Rule 13d-1 of the Exchange Act by reporting
persons or in Schedule
3.1(f) hereto, no Person or group of related Persons beneficially owns
(as determined pursuant to Rule 13d-3 under the Exchange Act), or has the right
to acquire, by agreement with or by obligation binding upon the Company,
beneficial ownership of in excess of 5% of the outstanding Common
Stock.  The Company does not have any stock appreciation rights or
“phantom stock” plans or agreements or any similar plan or
agreement.

     

    
      
        
        

      

      
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    (g)           SEC Reports; Financial
Statements.  The Company has filed all reports, schedules,
forms, statements and other documents required to be filed by it under the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the
12 months preceding the date hereof 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 and has filed all reports required to be filed
by it under the Exchange Act with respect to the twelve (12) months preceding
the date of this Agreement.  Such reports required to be filed by the
Company under the Exchange Act, including pursuant to Section 13(a) or 15(d)
thereof, together with any materials filed by the Company under the Exchange Act
during the twelve (12) months preceding the date of this Agreement, whether or
not any such reports were required being collectively referred to herein as the
“SEC Reports” and,
together with this Agreement and the Schedules to this Agreement, the “Disclosure
Materials”.  As of the date hereof, the Company is not aware of
any event occurring on or prior to the Closing Date (other than the transactions
contemplated by the Transaction Documents) that requires the filing of a Form
8-K after the Closing.  As of their respective dates (or, if amended
or superseded by a filing prior to the Closing Date, then on the date of such
filing), the SEC Reports filed by the Company complied in all material respects
with the requirements of the Exchange Act and the rules and regulations of the
SEC promulgated thereunder, and none of the SEC Reports, when filed (or, if
amended or superseded by a filing prior to the Closing Date, then on the date of
such filing) by the Company, 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 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 SEC with
respect thereto as in effect at the time of filing (or, if amended or superseded
by a filing prior to the Closing Date, then on the date of such
filing).  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, the notes thereto and except
that unaudited financial statements may not contain all footnotes required by
GAAP or may be condensed or summary statements, and fairly present in all
material respects the consolidated 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, year-end audit adjustments.  All
Material Contracts to which the Company or any Subsidiary is a party or to which
the property or assets of the Company or any Subsidiary are subject are included
as part of or identified in the SEC Reports.

     

    
      
        
        

      

      
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    (h)           Material Changes;
Undisclosed Events, Liabilities or Developments;
Solvency.  Since the date of the latest audited financial
statements included within the SEC Reports, except as disclosed in the SEC
Reports or in Schedule
3.1(h) hereto, (i) there has been no event, occurrence or
development that, individually or in the aggregate, has had or that would
reasonably be expected to result in a Material Adverse Effect, (ii) the
Company has not incurred any material liabilities 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 required to
be disclosed in filings made with the SEC, (iii) the Company has not
altered its method of accounting or changed its auditors, except as disclosed in
its SEC Reports, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders, in their capacities
as such, or purchased, redeemed or made any agreements to purchase or redeem any
shares of its capital stock, (v) the Company has not issued any equity
securities to any officer, director or Affiliate, except pursuant to existing
Company stock-based plans and (vi) there has not been any material change
or amendment to, or any waiver of any material right under, any Material
Contract under which the Company or any of its assets is bound or
subject.  Except for the issuance of the Common Shares contemplated by
this Agreement, no event, liability or development has occurred or exists with
respect to the Company or its business, properties, operations or financial
condition that would be required to be disclosed by the Company under applicable
securities laws at the time this representation is made that has not been
publicly disclosed at least one Trading Day prior to the date that this
representation is made.  The Company has not taken any steps to seek
protection pursuant to any bankruptcy law nor does the Company have any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy proceedings or any actual knowledge of any fact which would
reasonably lead a creditor to do so.  The Company is not as of the
date hereof, and after giving effect to the transactions contemplated hereby to
occur on the Closing Date, will not be Insolvent (as defined
below).  For purposes of this Section 3.1(h), “Insolvent” means (i) the
present fair saleable value of the Company’s assets is less than the amount
required to pay the Company’s total Indebtedness (as defined in Section 3.1(aa)),
(ii) the Company is unable to pay its debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured, (iii) the Company intends to incur or believes that it will incur debts
that would be beyond its ability to pay as such debts mature or (iv) the Company
has unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be
conducted.

     

    (i)           Absence of
Litigation.  Except as disclosed in the SEC Reports, there is
no action, suit, claim, or Proceeding, or, to the Company’s knowledge, inquiry
or investigation, before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the
Company, threatened against or affecting the Company or any Subsidiary that (i)
would, individually or in the aggregate, have or be reasonably likely to result
in a Material Adverse Effect, (ii) adversely affects or challenges the
legality, validity or enforceability of any of the Transaction Documents or the
Common Shares, (iii) involves a claim of violation of or liability under
any federal, state, local or foreign laws governing the Company’s operations,
including without limiting the generality of the foregoing, laws regulating the
protection of human health, including without limiting the generality of the
foregoing, laws relating to the manufacture, processing, packaging, labeling,
marketing, distribution, use, inspection, treatment, storage, disposal,
transport or handling of the Company’s products, and regulated or hazardous
substances, as well as all authorizations, codes, decrees, demands or demand
letters, injunctions, judgments, licenses, notices or notice letters, orders,
permits, plans or regulations issued, entered, promulgated or approved
thereunder, all as may be in effect from time to time and all successors,
replacements and expansions thereof, or (iv) involves injury to or death of
any person arising from or relating to any of the Company’s product. The SEC has
not issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company under the Exchange Act or the
Securities Act.

     

    
      
        
        

      

      
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    (j)           Compliance.  Except
as would not, individually or in the aggregate, have or be reasonably likely to
result in a Material Adverse Effect, (i)  neither the Company nor any
Subsidiary 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 written 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 (including any Material Contract) 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) neither the Company nor any
Subsidiary is in violation of any order of any court, arbitrator or governmental
body, or (iii)  neither the Company nor any Subsidiary is or has been in
violation of any statute, rule or regulation of any governmental authority,
including without limitation, all applicable rules and regulations of the Food
and Drug Administration (the “FDA”), and all applicable
laws, statutes, ordinances, rules or regulations (including, without limitation,
the Federal Food, Drug and Cosmetic Act of 1938, as amended and similar foreign
laws and regulations) enforced by the FDA or equivalent foreign
authorities.

     

    (k)           FDA.  The
preclinical and clinical trials conducted by or on behalf of the Company that
are described in the SEC Reports were and, if still pending, are to the extent
required by law being, conducted in all material respects in compliance with all
applicable current good laboratory practices, Good Clinical Practice and local,
state and federal laws, rules and regulations. The descriptions of the results
of such studies and trials contained in the SEC Reports are accurate and
complete in all material respects. The Company is not aware of any studies,
tests or trials, the results of which reasonably call into question the studies,
tests or clinical trials described or referred to in the SEC Reports when viewed
in the context in which such results are described and the clinical state of
development. The Company has not received any notices or correspondence from the
FDA or other governmental agency requiring the termination, suspension or
material modification of any clinical trials conducted by, or on behalf, of the
Company or in which the Company has participated.

     

    (l)           Title to
Assets.  Neither the Company nor any Subsidiary owns real
property.  The Company and each Subsidiary has good and marketable
title in all personal property owned by them that is material to the business of
the Company and each Subsidiary, in each case free and clear of all Liens,
except for Liens that do not, individually or in the aggregate, have or be
reasonably likely to result in a Material Adverse Effect.  Any real
property and facilities held under lease by the Company or any Subsidiary is
held by it under valid, subsisting and enforceable leases of which the Company
and each Subsidiary is in material compliance.

     

    
      
        
        

      

      
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    (m)           No General Solicitation;
Placement Agent’s Fees.  Neither the Company, nor any of its
Affiliates, nor any Person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D) in connection with the offer or sale of the Common
Shares.  The Company shall be responsible for the payment of any
placement agent’s fees, financial advisory fees, or brokers’ commission (other
than for persons engaged by any Investor or its investment advisor) relating to
or arising out of the issuance of the Common Shares pursuant to this
Agreement.

     

    (n)           Private Placement;
Investment Company; U.S. Real Property Holding
Corporation.  Neither the Company nor any of its Affiliates nor
any Person acting on the Company’s behalf has, directly or indirectly, at any
time within the past six months, made any offer or sale of any security or
solicitation of any offer to buy any security under circumstances that would
(i) eliminate the availability of the exemption from registration under
Regulation D under the Securities Act in connection with the offer and sale
by the Company of the Common Shares as contemplated hereby or (ii) cause
the offering of the Common Shares pursuant to the Transaction Documents to be
integrated with prior offerings by the Company for purposes of any applicable
law, regulation or stockholder approval provisions, including, without
limitation, under the rules and regulations of any Trading
Market.  Assuming the accuracy of the representations and warranties
of the Investors set forth in Section 3.2, no
registration under the Securities Act is required for the offer and sale of the
Common Shares by the Company to the Investors as contemplated hereby. The sale
and issuance of the Common Shares hereunder does not contravene the rules and
regulations of any Trading Market on which the Common Stock is listed or
quoted.  The Company is not required to be registered as an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended.

     

    (o)           Listing and Maintenance
Requirements.  The Company has not, in the twelve months
preceding the date hereof, received notice (written or oral) from any Trading
Market on which the Common Stock is or has been listed or quoted to the effect
that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market.  The Company is, and has no
reason to believe that it will not in the foreseeable future continue to be, in
compliance with all such listing and maintenance requirements.

     

    (p)           Registration
Rights.  None of the execution of this Agreement or the
issuance of the Common Shares as contemplated by this Agreement give rise to any
rights (including “piggy-back” registration rights) to have any securities of
the Company registered with the SEC or any other governmental authority that
have not expired or been satisfied or waived.

     

    (q)           Application of Takeover
Protections.  The Company and its Board of Directors have taken
all necessary action, if any, to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company’s
charter documents or the laws of its state of incorporation that is or could
become applicable to any of the Investors as a result of the Investors 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 Common Shares and the Investors’ ownership of the
Common Shares.

     

    
      
        
        

      

      
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    (r)           Disclosure.  Except
for information in respect of the offering of Common Shares contemplated hereby
and in the Transaction Documents, the Company confirms that neither it nor any
officers, directors or Affiliates, has provided any of the Investors or their
agents or counsel with any information that constitutes or might constitute
material, nonpublic information (other than the existence and terms of the
issuance of Common Shares, as contemplated by this Agreement). The Company
understands and confirms that each of the Investors will rely on the foregoing
representations in effecting transactions in securities of the
Company.  To the Company’s knowledge, except for the transactions
contemplated by this Agreement, no event or circumstance has occurred or
information exists with respect to the Company or any Subsidiary or their
businesses, properties, operations or financial condition, which, under
applicable law, rule or regulation, requires public disclosure or announcement
by the Company but which has not been so publicly announced or
disclosed.  The Company acknowledges and agrees that no Investor makes
or has made any representations or warranties with respect to the transactions
contemplated hereby other than those set forth in the Transaction
Documents.

     

    (s)           Acknowledgment Regarding
Investors’ Purchase of Common Shares.  Based upon the
assumption that the transactions contemplated by this Agreement are consummated
in all material respects in conformity with the Transaction Documents, the
Company acknowledges and agrees that each of the Investors is acting solely in
the capacity of an arm’s length purchaser with respect to the Transaction
Documents and the transactions contemplated hereby and thereby.  The
Company further acknowledges that no Investor  is acting as a
financial advisor or fiduciary of the Company (or in any similar capacity) with
respect to this Agreement and the transactions contemplated
hereby.  The Company further represents to each Investor that the
Company’s decision to enter into this Agreement has been based solely on the
independent evaluation of the transactions contemplated hereby by the Company
and its advisors and representatives.

     

    (t)           Patents and
Trademarks.  The Company and each Subsidiary owns, or possesses
adequate rights or licenses to use, all trademarks, trade names, service marks,
service mark registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations, trade secrets and
other intellectual property rights (“Intellectual Property Rights”)
necessary to conduct their respective businesses as now conducted or as proposed
to be conducted.  None of the Company’s or any Subsidiary’s
Intellectual Property Rights have expired or terminated, or are expected to
expire or terminate within three years from the date of this
Agreement.  Neither the Company nor any Subsidiary is infringing the
Intellectual Property Rights of others, nor is the Company aware of any basis
for any infringement.  Except as disclosed in the SEC Reports, there
is no claim, action or proceeding being made or brought, or to the knowledge of
the Company, being threatened, against the Company or any Subsidiary regarding
its Intellectual Property Rights.  To the knowledge of the Company,
(i) there are no rights of third parties to any of the Company’s
Intellectual Property Rights and (ii) there is no infringement by third
parties of any such Intellectual Property Rights.  The Company has
duly and properly filed or caused to be filed with the United States Patent and
Trademark Office (the “PTO”) and applicable foreign
and international patent authorities all patent applications owned by the
Company (the “Company Patent
Applications”). To the knowledge of the Company, the Company has complied
with the PTO’s duty of candor and disclosure for the Company Patent Applications
and has made no material misrepresentation in the Company Patent Applications.
The Company is not aware of any information material to a determination of
patentability regarding the Company Patent Applications not called to the
attention of the PTO or similar foreign authority. The Company is not aware of
any information not called to the attention of the PTO or similar foreign
authority that would preclude the grant of a patent for the Company Patent
Applications. The Company has no knowledge of any information that would
preclude the Company from having clear title to the Company Patent
Applications.

     

    
      
        
        

      

      
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    (u)           Insurance.  The
Company and each Subsidiary is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses and locations in which the Company and each
Subsidiary is engaged.  The Company has not received any notice of
cancellation of any such insurance, nor is the Company aware that it will be
unable to renew its existing insurance coverage for the Company or any
Subsidiary as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business without a
significant increase in cost.

     

    (v)           Regulatory
Permits.  The Company and each Subsidiary possesses all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities, including without limitation the
FDA, necessary to conduct their respective businesses as presently conducted and
described in the SEC Reports (“Material Permits”), except
where the failure to possess such permits would not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect, and neither the Company nor any Subsidiary has received any written
notice of proceedings relating to the revocation or modification of any Material
Permit.  The Company is unaware of any facts or circumstances that the
Company would reasonably expect to give rise to the revocation or modification
of any Material Permits.

     

    (w)           Transactions With Affiliates
and Employees.  Except as set forth or incorporated by
reference in the Company’s SEC Reports, none of the officers, directors or
employees of the Company is presently a party to any transaction with the
Company that would be required to be reported on Form 10-K pursuant to
Regulation SK Item 404(a) (other than for ordinary course services as employees,
officers or directors).

     

    (x)           Internal Accounting
Controls.  The Company and each Subsidiary 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 generally accepted
accounting principles 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.

     

    (y)           Sarbanes-Oxley Act;
Disclosure Controls. The Company is in compliance in all material
respects with applicable requirements of the Sarbanes-Oxley Act of 2002 and
applicable rules and regulations promulgated by the SEC thereunder, except where
such noncompliance would not have, individually or in the aggregate, a Material
Adverse Effect.  The Company maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15(e) and Rule 15d-15(e)
under the Exchange Act).

     

    
      
        
        

      

      
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    (z)           Foreign Corrupt
Practices.  Neither the Company nor any Subsidiary nor, to the
knowledge of the Company, any director, officer, agent or employee acting on
behalf of the Company or any Subsidiary has, in the course of its actions for,
or on behalf of, the Company (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee or to any foreign or
domestic political parties or campaigns from corporate funds; (iii) violated or
is in violation in any material respect of any provision of the U.S. Foreign
Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe,
rebate, payoff, influence payment, kickback or other unlawful payment to any
foreign or domestic government official or employee.

     

    (aa)           Indebtedness.  Except
as disclosed in the SEC Reports, neither the Company nor any Subsidiary (i) has
any outstanding Indebtedness (as defined below), (ii) is in violation of any
term of and is not in default under any contract, agreement or instrument
relating to any Indebtedness, except where such violations and defaults would
not result, individually or in the aggregate, in a Material Adverse Effect and
(iii) is a party to any contract, agreement or instrument relating to any
Indebtedness, the performance of which, in the judgment of the Company’s
officers, has or is expected to have a Material Adverse Effect.  For
purposes of this Agreement:  (x) “Indebtedness” of any Person
means, without duplication (A) all indebtedness for borrowed money, (B) all
obligations issued, undertaken or assumed as the deferred purchase price of
property or services (other than trade payables entered into in the ordinary
course of business), (C) all reimbursement or payment obligations with respect
to letters of credit, surety bonds and other similar instruments, (D) all
obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the acquisition
of property, assets or businesses, (E) all indebtedness created or arising under
any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to any property or assets acquired with
the proceeds of such indebtedness (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to
repossession or sale of such property), (F) all monetary obligations under
any leasing or similar arrangement which, in connection with generally accepted
accounting principles, consistently applied for the periods covered thereby, is
classified as a capital lease, (G) all indebtedness referred to in clauses
(A) through (F) above secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any mortgage,
lien, pledge, charge, security interest or other encumbrance upon or in any
property or assets (including accounts and contract rights) owned by any Person,
even though the Person which owns such assets or property has not assumed or
become liable for the payment of such indebtedness, and (H) all Contingent
Obligations in respect of indebtedness or obligations of others of the kinds
referred to in clauses (A) through (G) above; and (y) “Contingent Obligation” means,
as to any Person, any direct or indirect liability, contingent or otherwise, of
that Person with respect to any indebtedness, lease, dividend or other
obligation of another Person if the primary purpose or intent of the Person
incurring such liability, or the primary effect thereof, is to provide assurance
to the obligee of such liability that such liability will be paid or discharged,
or that any agreements relating thereto will be complied with, or that the
holders of such liability will be protected (in whole or in part) against loss
with respect thereto.

     

    
      
        
        

      

      
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    (bb)           Employee
Relations.  Neither the Company nor any Subsidiary is a party
to any collective bargaining agreement or employs any member of a
union.  Except as disclosed in the SEC Reports, during the period
covered by the SEC Reports, no executive officer of the Company has notified the
Company or any Subsidiary that such officer intends to leave the Company or a
Subsidiary, as applicable, or otherwise terminate such officer’s employment with
the Company or a Subsidiary, as applicable.

     

    (cc)           Labor
Matters.                                                      The
Company and each Subsidiary is in compliance in all material respects with all
federal, state, local and foreign laws and regulations respecting labor,
employment and employment practices and benefits, terms and conditions of
employment and wages and hours, except where failure to be in compliance would
not, either individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect.

     

    (dd)           Environmental
Laws.  The Company and each Subsidiary (i) is in compliance in
all material respects with any and all Environmental Laws (as hereinafter
defined), (ii) has received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their respective
businesses and (iii) is in compliance in all material respects with all terms
and conditions of any such permit, license or approval where, in each of the
foregoing clauses (i), (ii) and (iii), the failure to so comply would be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect.  The term “Environmental Laws” means all
federal, state, local or foreign laws relating to pollution or protection of
human health or the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata), including,
without limitation, laws relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, “Hazardous Materials”) into
the environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, as well as all authorizations, codes, decrees, demands or
demand letters, injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations issued, entered, promulgated or approved
thereunder.

     

    (ee)           Subsidiary
Rights.  The Company or one of its Subsidiaries has the
unrestricted right to vote, and (subject to limitations imposed by applicable
law) to receive dividends and distributions on, all capital securities of its
Subsidiaries as owned by the Company or such Subsidiary.

     

    (ff)           Tax
Status.  The Company and each Subsidiary (i) has made or filed
all foreign, federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject, (ii) has paid
all taxes and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and declarations,
except those being contested in good faith and (iii) has set aside on its books
provision reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations
apply.  There are no unpaid taxes in any material amount claimed to be
due by the taxing authority of any jurisdiction, and the officers of the Company
know of no basis for any such claim.

     

    
      
        
        

      

      
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    (gg)           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 (including
the issuance of the Common Shares), other than (i) filings required by
applicable state securities laws, (ii) the filing of a Notice of Sale of
Securities on Form D with the SEC under Regulation D of the Securities
Act, (iii) the filing of any requisite notices and/or application(s) to any
Trading Market for the issuance and sale of the Common Shares and the listing of
the Common Shares for trading or quotation, as the case may be, thereon in the
time and manner required thereby and (iv) those that have been made or
obtained prior to the date of this Agreement (collectively, the “Required
Approvals”).

     

    (hh)           Off Balance Sheet
Arrangements. There is no transaction, arrangement, or other relationship
between the Company and an unconsolidated or other off balance sheet entity that
is required to be disclosed by the Company in its SEC Reports and is not so
disclosed or that otherwise would have a Material Adverse Effect.

     

    (ii)           No Additional
Agreements. The Company does not have any agreement or understanding with
any Investor with respect to the transactions contemplated by the Transaction
Documents other than as specified in the Transaction Documents.

     

    (jj)           Shell Company.  The Company is
not, nor has it been, a “shell company” (as such term is defined in Rule 12b-2
promulgated under the Exchange Act) since May 9, 2007.

     

    3.2           Representations and
Warranties of the Investors.  Each
Investor hereby, as to itself only and for no other Investor, represents and
warrants to the Company as follows:

     

    (a)           Organization;
Authority.  Such Investor is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with the requisite corporate, partnership or other 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 purchase by such Investor of the Common Shares
hereunder and the consummation of the transactions contemplated by the
Transaction Documents have been duly authorized by all necessary corporate,
partnership or other action on the part of such Investor.  This
Agreement and the Transaction Documents to which such Investor is a party or has
or will execute have been duly executed and delivered by such Investor and
constitute the valid and binding obligations of such Investor, enforceable
against it in accordance with their 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 Public Sale or
Distribution.  Such Investor is acquiring the Common Shares in
the ordinary course of business for its own account and not with a view towards,
or for resale in connection with, the public sale or distribution thereof,
except pursuant to sales registered under the Securities Act or under an
exemption from such registration and in compliance with applicable federal and
state securities laws, and such Investor does not have a present arrangement to
effect any distribution of the Common Shares to or through any person or
entity.

     

    
      
        
        

      

      
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    (c)           Investor
Status.  Such Investor is an “accredited investor” as defined
in Rule 501(a) under the Securities Act or a “qualified institutional buyer” as
defined in Rule 144A(a) under the Securities Act.  Such Investor is
not a registered broker dealer registered under Section 15(a) of the Exchange
Act, or a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”) or an entity engaged
in the business of being a broker dealer.  Except as otherwise
disclosed in writing to the Company in such Investor’s Selling Stockholder
Questionnaire, such Investor is not affiliated with any broker dealer registered
under Section 15(a) of the Exchange Act, or a member of the FINRA or an entity
engaged in the business of being a broker dealer.

     

    (d)           General
Solicitation.  Such Investor is not purchasing the Common
Shares as a result of any advertisement, article, notice or other communication
regarding the Common Shares published in any newspaper, magazine or similar
media, broadcast over television or radio, disseminated over the Internet or
presented at any seminar or any other general solicitation or general
advertisement.

     

    (e)           Experience of Such Investor;
Risk of Loss.  Such Investor 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 Common
Shares, and has so evaluated the merits and risks of such
investment.  Such Investor understands that it must bear the economic
risk of this investment in the Common Shares indefinitely, and is able to bear
such risk and is able to afford a complete loss of such
investment.  Such Investor has the ability to bear the economic risks
of its prospective investment in the Common Shares and can afford the complete
loss of such investment.

     

    (f)           Access to
Information.  Such Investor acknowledges that it has reviewed
the Disclosure Materials and has been afforded:  (i) the
opportunity to ask such questions as it has deemed necessary of, and to receive
answers from, representatives of the Company concerning the terms and conditions
of the offering of the Common Shares and the merits and risks of investing in
the Common Shares; (ii) access to information (other than material
non-public information) about the Company and each Subsidiary and its financial
condition, results of operations, business, properties, management and prospects
sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information that the Company possesses or
can acquire without unreasonable effort or expense that is necessary to make an
informed investment decision with respect to the investment.  Neither
such inquiries nor any other investigation conducted by or on behalf of such
Investor or its representatives or counsel shall modify, amend or affect such
Investor’s right to rely on the truth, accuracy and completeness of the
Disclosure Materials and the Company’s representations and warranties contained
in the Transaction Documents.  Such Investor acknowledges receipt of
copies of the SEC Reports.

     

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

     

    
      
        
        

      

      
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    (h)           No
Conflicts.  The execution, delivery and performance by such
Investor of this Agreement and the consummation by such Investor of the
transactions contemplated hereby will not (i) result in a violation of the
organizational documents of such Investor or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which such Investor is a party, or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws) applicable to such Investor, except in the
case of clauses (ii) and (iii) above, for such that are not material and do not
otherwise affect the ability of such Investor to consummate the transactions
contemplated hereby or perform its obligations hereunder.

     

    (i)           Prohibited Transactions;
Confidentiality.  Such Investor has not, directly or
indirectly, and no Person acting on behalf of or pursuant to any understanding
with such Investor has, engaged in any purchases or sales in any of the
Company’s securities, including derivatives thereof, including, without
limitation, any Short Sales involving any of the Company’s securities (a “Transaction”), since the time
that such Investor was first contacted by the Company or any other Person
regarding an investment in the Company.  Such Investor covenants that
neither it nor any Person acting on its behalf or pursuant to any understanding
with such Investor will engage, directly or indirectly, in any Transactions in
the securities of the Company prior to the time the transactions contemplated by
this Agreement are publicly disclosed.  “Short Sales” include, without
limitation, all “short
sales” as defined in Rule 200 promulgated under Regulation SHO under the
Exchange Act and all types of direct and indirect stock pledges, forward sale
contracts, options, puts, calls, short sales, swaps, derivatives and similar
arrangements (including on a total return basis), and sales and other
transactions through non-U.S. broker-dealers or foreign regulated
brokers.

     

    (j)           No Legal, Tax or Investment
Advice.  Such Investor understands that nothing in this
Agreement or any other materials presented by or on behalf of the Company to the
Investor in connection with the purchase of the Common Shares constitutes legal,
tax or investment advice.  Such Investor 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 Common Shares and has made
its own assessment and has satisfied itself concerning the relevant tax and
other economic considerations relevant to its investment in the Common
Shares.

     

    (k)           Reliance on
Exemptions.  Such Investor understands that the Common Shares
are being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of, and such Investor’s
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of such Investor set forth herein and in the other
Transaction Documents in order to determine the availability of such exemptions
and the eligibility of such Investor to acquire the Common Shares.

     

    
      
        
        

      

      
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    (l)           Residency.  Such
Investor is a resident of that jurisdiction specified below its address on the
Schedule of Investors.

     

    (m)           Transfer or
Resale.  Such Investor understands that:  (i) the
Common Shares have not been and are not being registered under the Securities
Act, any U.S. state securities laws or the laws of any foreign country or other
jurisdiction, and may not be offered for sale, sold, assigned or transferred
unless (A) subsequently registered thereunder, (B) such Investor shall have
delivered to the Company an opinion of counsel, in a form reasonably acceptable
to the Company, to the effect that such Common Shares to be sold, assigned or
transferred may be sold, assigned or transferred pursuant to an exemption from
such registration or (C) such Investor provides the Company with reasonable
assurance that such Common Shares can be sold, assigned or transferred pursuant
to Rule 144 promulgated under the Securities Act (or a successor rule thereto);
(ii) any sale of the Common Shares made in reliance on Rule 144 may be made only
in accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of the Common Shares under circumstances in which the
seller (or the Person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any
other Person is under any obligation to register the Common Shares under the
Securities Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder.

     

    (n)           Legends.  Such
Investor understands that the certificates representing the Common Shares,
except as set forth below, shall bear any legend as required by the “blue sky”
laws of any state and a restrictive legend in substantially the following form
(and a stop-transfer order may be placed against transfer of such stock
certificates):

     

    THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY
APPLICABLE STATE SECURITIES LAWS 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 COMPLIANCE WITH
APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS.

     

    Such
investor understands that the legend set forth above shall be removed and the
Company shall issue a certificate without such legend to the holder of the
Common Shares upon which it is stamped, if, unless otherwise required by state
securities laws, (i) such Common Shares are registered for resale pursuant to an
effective registration statement under the Securities Act and are resold
pursuant to such registration statement or (ii) in connection with a sale,
assignment or other transfer pursuant to Rule 144, such holder provides the
Company with an opinion of a law firm reasonably acceptable to the Company, in a
form reasonably acceptable to the Company, to the effect that such sale,
assignment or transfer may be made in compliance with Rule 144.

     

    
      
        
        

      

      
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    (o)           Subsequent Closings;
Placement Agent.  Such Investor acknowledges that the Company
may elect at its sole discretion to offer and sell additional shares of Common
Stock in one or more closings shortly after the Closing Date on substantially
identical terms to those contained in this Agreement, subject to then-current
pricing of such shares and terms and conditions in respect of a placement agent,
which placement agent may be compensated by the Company in respect of such
subsequent sales of Common Stock.

     

    ARTICLE
IV

    OTHER
AGREEMENTS OF THE PARTIES

     

    4.1           Transfer
Restrictions.

     

    (a)           The
Investors covenant that the Common Shares will be disposed of only pursuant to
an effective registration statement under, and in compliance with the
requirements of, the Securities Act or pursuant to an available exemption from
the registration requirements of the Securities Act, and in compliance with
applicable state securities laws.  In connection with any transfer of
Common Shares other than pursuant to an effective registration statement or to
the Company, the Company may require the transferor to provide to the Company an
opinion of counsel selected by the transferor, the form and substance of which
opinion shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration under the Securities
Act.  Notwithstanding the foregoing, the Company hereby consents to
and agrees to register on the books of the Company and with its Transfer Agent,
without any such legal opinion, except to the extent that the transfer agent
requests such legal opinion, any transfer of Common Shares by an Investor to an
Affiliate of such Investor, provided that such transfer does not involve a
“sale” within the meaning of Section 2(a)(3) of the Securities Act and provided
that such Affiliate does not request any removal of any existing legends on any
certificate evidencing the Common Shares.

     

    (b)           The
Investors agree to the imprinting, until no longer required by this Section 4.1(b), of the
following legend on any certificate evidencing any of the Common
Shares:

     

    THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY
APPLICABLE STATE SECURITIES LAWS 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 COMPLIANCE WITH
APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS.

     

    
      
        
        

      

      
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    Certificates
evidencing the Common Shares shall not be required to contain such legend or any
other legend (i) following any sale of such Common Shares pursuant to an
effective registration statement under the Securities Act, (ii) pursuant to Rule
144 if the holder provides the Company with a legal opinion (and the documents
upon which the legal opinion is based) reasonably acceptable to the Company to
the effect that the Common Shares can be sold under Rule 144 or (iii) if the
holder provides the Company with a legal opinion (and the documents upon which
the legal opinion is based) reasonably acceptable to the Company to the effect
that the legend is not required under applicable requirements of the Securities
Act (including controlling judicial interpretations and pronouncements issued by
the Staff of the SEC).  At such earlier time as a legend is no longer
required for certain Common Shares, the Company will no later than five Trading
Days following the delivery by an Investor to the Company or the Transfer Agent
(if delivery is made to the Transfer Agent a copy shall be contemporaneously
delivered to the Company) of (x) a legended certificate representing such Common
Shares to be transferred pursuant to a sale under the registration statement
referred to in clause (i), endorsed or with stock powers attached, signatures
guaranteed, and otherwise in form necessary to effect transfer, and (y) an
opinion of counsel to the extent required by Section 4.1(a), deliver
or cause to be delivered to such transferee a certificate representing such
Common 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 expand the restrictions on transfer set
forth in this Section.

     

    4.2           Furnishing of
Information.  Until
the date that any Investor owning Common Shares may sell all of them under Rule
144 of the Securities Act (or any successor provision), the Company covenants to
use its commercially reasonable efforts to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act.

     

    4.3           Integration.  The
Company shall not, and shall use its commercially reasonable efforts to ensure
that no Affiliate thereof shall, 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
Common Shares in a manner that would require the registration under the
Securities Act of the sale of the Common Shares to the Investors or that would
be integrated with the offer or sale of the Common Shares for purposes of the
rules and regulations of any Trading Market.

     

    4.4           Securities Laws Disclosure;
Publicity.  The
Company may issue a press release in accordance with Rule 135c under the
Securities Act disclosing the transactions contemplated hereby at or before 9:00
a.m., New York time, on the first Trading Day following execution of this
Agreement.  On the Closing Date, the Company shall file a Current
Report on Form 8-K with the SEC (the “8-K Filing”) describing the
terms of the transactions contemplated by the Transaction Documents and
including as exhibits to such Current Report on Form 8-K the material
Transaction Documents in the form required by the Exchange
Act.  Thereafter, the Company shall timely file any filings and
notices required by the SEC or applicable law with respect to the transactions
contemplated hereby.  Except as herein provided or in connection with
the filing of the 8-K Filing, neither the Company nor any Subsidiary shall
publicly disclose the name of any Investor, or include the name of any Investor
in any press release without the prior written consent of such Investor (which
consent shall not be unreasonably withheld or delayed), unless otherwise
required by law, regulatory authority or Trading Market.

     

    
      
        
        

      

      
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    4.5           Use of
Proceeds.  The
Company intends to use the net proceeds from the sale of the Common Shares to
fund clinical trials and preclinical studies for its product candidates, future
potential acquisitions, working capital and general corporate
purposes.  The Company also may use a portion of the net proceeds,
currently intended for general corporate purposes, to acquire or invest in
technologies, products or services that complement its
business.  Pending these uses, the Company intends to invest the net
proceeds from this offering in short-term, interest-bearing, investment-grade
securities, or as otherwise pursuant to the Company’s customary investment
policies.

     

    4.6           Transfer Agent
Instructions.  The
Company represents and warrants that no instructions other than the Transfer
Agent Instructions or instructions consistent therewith referred to in this
Section 4.6 will be given by the Company to its transfer agent in
connection with this Agreement, and that the Common Shares shall otherwise be
freely transferable on the books and records of the Company as and to the extent
provided in this Agreement, the other Transaction Documents and applicable
law.

     

    4.7           Form D and Blue
Sky. The
Company agrees to timely file a Form D with respect to the Common Shares as
required under Regulation D and to provide a copy thereof to each Investor
who requests a copy in writing promptly after such filing. The Company, on or
before the Closing Date, shall take such action as the Company shall reasonably
determine is necessary in order to obtain an exemption for or to qualify the
Common Shares for sale to the Investors at the Closing pursuant to this
Agreement under applicable securities or “blue sky” laws of the states of the
United States (or to obtain an exemption from such qualification). The Company
shall make all filings and reports relating to the offer and sale of the Common
Shares required under applicable securities or “blue sky” laws of the states of
the United States following the Closing Date.

     

    4.8           Listing of Common
Shares. The
Company shall use its Best Efforts to list for trading all of its outstanding
shares of Common Stock, on the NYSE Amex or the NASDAQ Capital Market as soon as
possible following the Closing Date.

     

    ARTICLE
V

    CONDITIONS

     

    5.1           Conditions Precedent to the
Obligations of the Investors.  The
obligation of each Investor to acquire Common Shares at the Closing is subject
to the satisfaction or waiver by such Investor, at or before the Closing, of
each of the following conditions:

     

    (a)           Representations and
Warranties.  The representations and warranties of the Company
contained herein shall be true and correct in all material respects as of the
date when made and as of the Closing as though made on and as of such date
(except for those representations and warranties that speak as of a specific
date, which shall be true and correct in all material respects as of such
specified date); and

     

    
      
        
        

      

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

     

    (c)           Approvals.  The
Company shall have obtained all governmental, regulatory or third party consents
and approvals, if any, necessary for the sale of the Common Shares (including
all Required Approvals), all of which shall be and remain so long as necessary
in full force and effect.

     

    (d)           No Suspensions of Trading in
Common Stock; Listing. Trading in the Common Stock shall not have been
suspended by the SEC or any Trading Market (except for any suspensions of
trading of not more than one Trading Day solely to permit dissemination of
material information regarding the Company) at any time since the date of
execution of this Agreement, and the Common Stock shall have been at all times
since such date listed for trading on a Trading Market.

     

    (e)           Absence of
Litigation. No action, suit or proceeding by or before any court or any
governmental body or authority, against the Company or any Subsidiary or
pertaining to the transactions contemplated by this Agreement or their
consummation, shall have been instituted on or before the Closing Date, which
action, suit or proceeding would, if determined adversely, have a Material
Adverse Effect.

     

    (f)           Deliverables.  The
Company shall have executed each of the Transaction Documents to which it is a
party and delivered the same to the Investors.  The Company shall have
delivered to the Investors those items required by Section
2.2(a).

     

    (g)           No Injunction. No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered or promulgated by any court or governmental authority
of competent jurisdiction that prohibits the consummation of any of the
transactions contemplated by the Transaction Documents.

     

    (h)           Termination. This
Agreement shall not have been terminated in accordance with Section 7.1
herein.

     

    5.2           Conditions Precedent to the
Obligations of the Company.  The
obligation of the Company to sell the Common Shares at the Closing is subject to
the satisfaction or waiver by the Company, at or before the Closing, of each of
the following conditions:

     

    (a)           Representations and
Warranties.  The representations and warranties of the
Investors contained herein shall be true and correct in all material respects as
of the date when made and as of the Closing Date as though made on and as of
such date (except for those representations and warranties that speak as of a
specific date, which shall be true and correct in all material respects as of
such specified date); and

     

    (b)           Performance.  The
Investors shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by the Investors at or
prior to the Closing.

     

    
      
        
        

      

      
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    (c)           Approvals.  The
Company shall have obtained all governmental, regulatory or third party consents
and approvals, if any, necessary for the sale of the Common Shares (including
all Required Approvals), all of which shall be and remain so long as necessary
in full force and effect.

     

    (d)           Deliverables.  The
Investors shall have executed each of the Transaction Documents to which it is a
party and delivered the same to the Company.  The Investors shall have
delivered to the Company those items required by Section
2.2(b).

     

    (e)           No Injunction. No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered or promulgated by any court or governmental authority
of competent jurisdiction that prohibits the consummation of any of the
transactions contemplated by the Transaction Documents.

     

    (f)           Termination. This
Agreement shall not have been terminated in accordance with Section 7.1
herein.

     

    ARTICLE
VI

    INDEMNIFICATION

     

    6.1           Indemnification of
Investors. The
Company will indemnify and hold each Investor 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 Investor (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 person (each, an
“Investor 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 reasonable
costs of investigation that any such Investor Party may suffer or incur, as a
result of or relating to third party claims against such Investor relating to
any breach of any of the representations, warranties, covenants or agreements
made by the Company in this Agreement or in the other Transaction Documents,
provided that that such a claim for indemnification relating to any breach of
any of the representations or warranties made by the Company in this Agreement
is made within one year from the Closing. The Company will not be liable to any
Investor Party under this Agreement to the extent, but only to the extent that a
loss, claim, damage or liability is attributable to any Investor Party’s breach
of any of the representations, warranties, covenants or agreements made by such
Investor Party in this Agreement or in the other Transaction
Documents.

     

    
      
        
        

      

      
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    6.2           Conduct of Indemnification
Proceedings.
Promptly after receipt by any Person (the “Indemnified Person”) of notice
of any demand, claim or circumstances which would or might give rise to a claim
or the commencement of any action, proceeding or investigation in respect of
which indemnity may be sought pursuant to Section 6.1, such Indemnified
Person shall promptly notify the Company in writing, and the Company shall
assume the defense thereof, and shall assume the payment of all fees and
expenses;  provided,
however , that the failure of any Indemnified Person so to notify the
Company shall not relieve the Company of its obligations hereunder except to the
extent that the Company is actually prejudiced by such failure to notify. In any
such proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless:  (i) the Company and the Indemnified
Person shall have mutually agreed to the retention of such counsel;
(ii) the Company shall have failed promptly to assume the defense of such
proceeding and to employ counsel reasonably satisfactory to such Indemnified
Person in such proceeding; or (iii) in the reasonable judgment of counsel to
such Indemnified Person, representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them in such proceeding; provided, that, in the case of the foregoing clauses
(i) through (iii), the Company shall not pay for more than one counsel for all
Indemnified Persons. The Company shall not be liable for any settlement of any
proceeding effected without its written consent, which consent shall not be
unreasonably withheld, delayed or conditioned. Without the prior written consent
of the Indemnified Person, which consent shall not be unreasonably withheld,
delayed or conditioned, the Company shall not effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Person is
or could have been a party and indemnity could have been sought hereunder by
such Indemnified Party, unless such settlement includes an unconditional release
of such Indemnified Person from all liability arising out of such
proceeding.

     

    ARTICLE
VII

    MISCELLANEOUS

     

    7.1           Termination.  This
Agreement may be terminated by the Company or Investors having the right to
acquire a majority of the Common Shares hereunder, by written notice to the
other parties, if the Closing has not been consummated by the fifth Trading Day
following the date of this Agreement; provided that no such termination will
affect the right of any party to sue for any breach by the other party (or
parties).

     

    7.2           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 sale and issuance of
the applicable Common Shares.

     

    7.3           Entire Agreement; Further
Assurances.  The
Transaction Documents, together with the Exhibits, Annexes and Schedules
thereto, contain the entire understanding of the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings,
oral or written, with respect to such matters, which the parties acknowledge
have been merged into such documents, exhibits and schedules.  At or
after the Closing, and without further consideration, the Company and the
Investors will execute and deliver to the Investors such further documents as
may be reasonably requested in order to give practical effect to the intention
of the parties under the Transaction Documents.

     

    
      
        
        

      

      
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    7.4           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 or email at the facsimile number or
email address specified in this Section  prior to 6:30 p.m. (New York City
time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile or
email at the facsimile number or email address specified in this Section on a
day that is not a Trading Day or later than 6:30 p.m. (New York City time) on
any Trading Day, (c) the Trading Day following the date of deposit with a
nationally recognized overnight courier service, or (d) upon actual receipt
by the party to whom such notice is required to be given.  The
addresses, facsimile numbers and email addresses for such notices and
communications are those set forth on the signature pages hereof, or such other
address or facsimile number as may be designated in writing hereafter, in the
same manner, by any such Person.

     

    7.5           Amendments;
Waivers.  No
provision of this Agreement may be waived or amended except in a written
instrument signed, in the case of an amendment, by the Company and the Investors
holding or having the right to acquire a majority of the Common Shares at the
time of such amendment or, in the case of a waiver, by the party against whom
enforcement of any such waiver is sought.  No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of any party to exercise any right hereunder in any
manner impair the exercise of any such right.

     

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

     

    7.7           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 the Investors; provided, however this Agreement shall
be assigned to any corporation or association into which the Company may be
merged or converted or with which it may be consolidated, or any corporation,
association or other similar entity resulting from any merger, conversion or
consolidation to which the Company shall be a party without the execution or
filing of any paper with any party hereto or any further act on the part of any
of the parties to this Agreement except where an instrument of transfer or
assignment is required by law to effect such succession, anything herein to the
contrary notwithstanding.  Any Investor may assign its rights under
this Agreement to any Person to whom such Investor assigns or transfers any
Common Shares, provided (i) such transferor agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company after such assignment, (ii) the Company is furnished
with written notice of the name and address of such transferee or assignee,
(iii) following such transfer or assignment, the further disposition of such
securities by the transferee or assignee is restricted under the Securities Act
and applicable state securities laws, (iv) such transferee agrees in writing to
be bound, with respect to the transferred Common Shares, by the provisions
hereof that apply to the “Investors” and (v) such
transfer shall have been made in accordance with the applicable requirements of
this Agreement and with all laws applicable thereto.

     

    
      
        
        

      

      
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    7.8           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.

     

    7.9           Governing Law; Venue; Waiver
of Jury Trial.  THE
CORPORATE LAWS OF THE STATE OF NEVADA SHALL GOVERN ALL ISSUES CONCERNING THE
RELATIVE RIGHTS OF THE COMPANY AND ITS STOCKHOLDERS.  ALL QUESTIONS
CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.  THE COMPANY AND INVESTORS HEREBY IRREVOCABLY
SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING
IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN FOR THE ADJUDICATION OF ANY
DISPUTE BROUGHT BY THE COMPANY OR ANY INVESTOR HEREUNDER, 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 WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING
BROUGHT BY THE COMPANY OR ANY INVESTOR, ANY CLAIM THAT IT IS NOT PERSONALLY
SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR
PROCEEDING IS IMPROPER.  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 MANNER PERMITTED BY LAW.  THE
COMPANY AND INVESTORS HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.

     

    7.10           Survival.  Unless
this Agreement is terminated under Section 7.1, the
representations and warranties, agreements and covenants contained herein shall
survive indefinitely or as otherwise set forth therein.

     

    7.11           Execution.  This
Agreement may be executed in counterparts, all of which when taken together
shall be considered one and the same agreement.  In the event that any
signature is delivered by facsimile transmission or email attachment, 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 email-attached signature page were an original
thereof.

     

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

     

    
      
        
        

      

      
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    7.13           Replacement of Common
Shares.  If
any certificate or instrument evidencing any Common Shares is mutilated, lost,
stolen or destroyed, the Company shall issue or cause to be issued in exchange
and substitution for and upon cancellation thereof, or in lieu of and
substitution therefor, a new certificate or instrument, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft or
destruction and the execution by the holder thereof of a customary lost
certificate affidavit of that fact and an agreement to indemnify and hold
harmless the Company for any losses in connection therewith.  The
applicants for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs associated with the issuance of such
replacement Common Shares.

     

    7.14           Payment Set
Aside.  To
the extent that the Company makes a payment or payments to any Investor
hereunder or any Investor enforces or exercises its rights hereunder, 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 by 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.

     

    7.15           Adjustments in Share Numbers
and Prices.  In
the event of any stock split, subdivision, dividend or distribution payable in
shares of Common Stock (or other securities or rights convertible into, or
entitling the holder thereof to receive directly or indirectly shares of Common
Stock), combination or other similar recapitalization or event occurring after
the date hereof, each reference in any Transaction Document to a number of
shares or a price per share shall be amended to appropriately account for such
event.

     

    7.16           Independent Nature of
Investors’ Obligations and Rights.  The
obligations of each Investor under any Transaction Document are several and not
joint with the obligations of any other Investor, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor under any Transaction Documents.  The decision of each
Investor to purchase Common Shares pursuant to this Agreement has been made by
such Investor independently of any other Investor and independently of any
information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company which may have been made or
given by any other Investor or by any agent or employee of any other Investor,
and no Investor or any of its agents or employees shall have any liability to
any other Investor (or any other person) relating to or arising from any such
information, materials, statements or opinions. Nothing contained herein or in
any Transaction Document, and no action taken by any Investor pursuant thereto,
shall be deemed to constitute the Investors as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction
Document.  Each Investor acknowledges that no other Investor has acted
as agent for such Investor in connection with making its investment hereunder
and that no other Investor will be acting as agent of such Investor in
connection with monitoring its investment hereunder.  Each Investor
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 Investor to
be joined as an additional party in any Proceeding for such
purpose.

     

    [SIGNATURE
PAGES FOLLOW]

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

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

     

    
      	 	
              PROLOR
      Biotech, Inc.

            
	 	 
	 	
              By:___________________________

            
	 	
              Name:
      Shai Novik

            
	 	
              Title:   President

            
	 	 
	 	
              Address
      for Notice:

            
	 	
              3
      Sapir Street

              Weizmann
      Science Park

              Nes-Ziona,
      Israel 74140

            
	 	 
      
	 	
              Facsimile
      No.:

            
	 	
              Telephone
      No.:

            
	 	
              Attn:

            
	 	 
	 	
              With
      a copy to:

            
	 	 
	 	
              Greenberg
      Traurig, LLP

            
	 	
              1221
      Brickell Avenue

              Miami,
      FL 33131

            
	 	 
      
	 	
              Facsimile
      No.: 305.579.0500

            
	 	
              Telephone
      No.: 305.579.0717

            
	 	
              Attn:
      Robert L. Grossman

            
	 	 
      

    

     

    COMPANY
SIGNATURE PAGE

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Investor Signature
Page

     

    IN
WITNESS WHEREOF, by its execution and delivery of this signature page, the
undersigned Investor hereby joins in and agrees to be bound by the terms and
conditions of the Securities Purchase Agreement dated as of March __, 2010 (the
“Purchase Agreement”) by
and among PROLOR Biotech, Inc. and the Investors (as defined therein), as to the
number of shares of Common Stock set forth across from such Investor’s name on
the Schedule of Investors, and authorizes this signature page to be attached to
the Purchase Agreement or counterparts thereof.

     

    

    
      	 	
              Name
      of Investor:

               

              ____________________________________

            
	 	 
      
	 	
              By:__________________________________

            
	 	
              Name:

            
	 	
              Title:

            
	 	 
	 	 
	 	
              Address:_____________________________

              

                ____________________________________

              

              

                ____________________________________

              

               

            
	 	
              Telephone
      No.:________________________

            
	 	 
	 	
              Facsimile
      No.:_________________________

            
	 	 
	 	
              Email
      Address:________________________

            

    

    

    Delivery
Instructions (if different than above):

    c/o:_________________________________

    Address:_____________________________

    ____________________________________

    Telephone
No.: ________________________

    Facsimile
No.: _________________________

    Other
Special Instructions: _______________

     

    Exhibits:

     

    A           Instruction
Sheet for Investors

    A-1        Stock
Certificate Questionnaire

    A-2        Investor
Certificate

    B           
Company Transfer Agent Instructions

    C           
Lock-up AgreementLOCK-UP
AGREEMENT

     

    Dated:  March
__, 2010

     

    

    PROLOR
Biotech, Inc.

    3 Sapir
Street

    Weizmann
Science Park

    Nes-Ziona,
Israel 74140

    

     

    Ladies
and Gentlemen:

     

    The
undersigned is acquiring shares (“Shares”) of common
stock, par value $0.00001 per share, of PROLOR Biotech, Inc., a Nevada
corporation (the “Company”), under that
certain Securities Purchase Agreement, dated as of March __, 2010, by and among
the Company and the Investors set forth on the signature pages thereto (the
“Agreement”).  For
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned hereby irrevocably agrees that following the date
first set forth above (the “Effective Date”), the
undersigned will not, directly or indirectly, (1) offer for sale, sell,
pledge or otherwise dispose of (or enter into any transaction or device that is
designed to, or could be expected to, result in the disposition by any person at
any time in the future of) any Shares, including Shares that may be deemed to be
beneficially owned by the undersigned in accordance with the rules and
regulations of the United States Securities and Exchange Commission or
(2) enter into any swap or other derivatives transaction that transfers to
another, in whole or in part, any of the economic benefits or risks of ownership
of any Shares, whether any such transaction described in clause (1) or (2) above
is to be settled by delivery of Shares or other securities, in cash or
otherwise, (3) make any demand for or exercise any right or cause to be
filed a registration statement, including any amendments thereto, with respect
to the registration of any Securities or securities convertible into or
exercisable or exchangeable for any Shares or any other securities of the
Company, or (4) publicly disclose the intention to do any of the foregoing,
in each case, for a period commencing on the Effective Date and ending on the
first anniversary of such date.

     

    In
furtherance of the foregoing, the Company and its transfer agent on its behalf
are hereby authorized to decline to make any transfer of securities if such
transfer would constitute a violation or breach of this Lock-Up
Agreement.

     

    [signature
page follows]

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    The
undersigned hereby represents and warrants that the undersigned has full power
and authority to enter into this Lock-Up Agreement and that, upon request, the
undersigned will execute any additional documents necessary in connection with
the enforcement hereof. All obligations of the undersigned shall be binding upon
the heirs, personal representatives, successors and assigns of the
undersigned.

     

    Acknowledged
and agreed as of the date first set forth above:

    

    [name
of holder]

    

    

    By:_____________________________

    Name:

    Title:

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