Document:

20-F

Exhibit 4.6  

SECURITIES PURCHASE
AGREEMENT 

        THIS
SECURITIES PURCHASE AGREEMENT (the “AGREEMENT”), dated as of April 30,
2007, is made by and among Elbit Vision Systems Ltd., a company organized under the laws
of Israel, with headquarters located at 1 Hayasur Street, Hasharon Industrial Park,
Kadima, P.O.B. 5030, Israel (the “COMPANY”), and the investors listed on
the Schedule of Buyers attached hereto (individually, a “BUYER” and
collectively, the “BUYERS”). 

      WHEREAS:

     A.
The Company and each Buyer is executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Rule 903 of
Regulation S of the Securities Act of 1933, as amended (the “1933
ACT”) (“REGULATION S”) as promulgated by the United
States Securities and Exchange Commission (the “SEC”) under the 1933
Act.  

     B.
          Each Buyer wishes to purchase, and the Company wishes to sell, upon the terms
          and conditions stated in this Agreement, (i) that aggregate amount of ordinary
          shares of the Company par value NIS 1.0 (the “ORDINARY SHARES”)
          set forth opposite such Buyer’s name in column (3) on the Schedule of
          Buyers (which aggregate amount for all Buyers together shall be
          up to nine million six hundred thousand (9,600,000) Ordinary Shares and shall
          collectively be referred to herein as the “PURCHASED SHARES”);
          (ii) warrants, in substantially the form attached hereto as EXHIBIT
          A (the “WARRANTS”), to acquire that number of
          shares of Ordinary Shares set forth opposite such Buyer’s name in column
          (4) on the Schedule of Buyers (which aggregate amount for all Buyers together
          shall be up to four million eight hundred thousand (4,800,000) Ordinary Shares)
          (as exercised, collectively, the “WARRANT
          SHARES”). 

     C.
          Contemporaneously with the execution and delivery of this Agreement, the parties
          hereto are executing and delivering a Registration Rights
          Agreement, substantially in the form attached hereto as
          EXHIBIT B (the “REGISTRATION RIGHTS
          AGREEMENT” and together with this Agreement and the Schedules and
          Exhibits hereto, the “TRANSACTION DOCUMENTS”), pursuant to
          which the Company has agreed to provide certain registration rights with respect
          to the Purchased Shares and the Warrant Shares under the 1933 Act and the rules
          and regulations promulgated thereunder, and applicable state securities laws. 

     D.
          The Purchased Shares, the Warrants and the Warrant Shares collectively are
          referred to herein as the “SECURITIES”. 

        NOW,
THEREFORE, the Company and each Buyer hereby agree as follows: 

1.     PURCHASE
AND SALE OF PURCHASED SHARES AND WARRANTS.  

1

         a.       
          PURCHASE OF PURCHASED SHARES AND WARRANTS. Subject to the satisfaction (or
          waiver) of the conditions set forth in Sections 4 and 5 below, the Company shall
          issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees
          to purchase from the Company on the Closing Date (as defined below), the number
          of Purchased Shares as set forth opposite such Buyer’s name on the Schedule
          of Buyers, along with Warrants to acquire that number of Warrant Shares as set
          forth opposite such Buyer’s name on the Schedule of Buyers (the
          “CLOSING”). 

         b.       
          PURCHASE PRICE. The purchase price for each Buyer (the “PURCHASE
          PRICE”) of the Purchased Shares and Warrants to be purchased by each
          such Buyer at Closing shall be equal to thirty one and one half ($0.315) Cents
          for each Purchased Share being purchased by such Buyer at the Closing. The
          exercise price of the Warrant Shares shall be equal to forty-five ($0.45) Cents
          for each Warrant Share exercised under the Warrants. 

         c.       
          CLOSING Date. The date and time of the Closing (the “CLOSING
          DATE”) shall be 10:00 a.m., Israel time, on the first business day
          after notification of satisfaction (or waiver) of the conditions to the Closing
          set forth in Sections 4 and 5 below but not later than 30 days after the date
          hereof (or such later date or period as is mutually agreed to by the Company and
          the holders of the majority of the Purchased Shares). 

         d.       
          FORM OF PAYMENT. On the Closing Date, (i) the Company shall deliver to the
          office of Yigal Arnon and Co, located at 1 Azrieli Center, Round Building,
          Israel, certificates for the Purchased Shares and the Warrants duly executed on
          behalf of the Company and registered in the name of each Buyer (which
          certificates shall be held in trust by the Company’s counsel until actual
          receipt of the entire Purchase Price payable by the relevant Buyer), and (ii)
          each Buyer shall pay its Purchase Price to the Company for the Purchased Shares
          and Warrants to be issued and sold to such Buyer at the Closing, by wire
          transfer of immediately available funds in accordance with the Company’s
          written wire instructions. 

         e.       
          SALE OF ADDITIONAL SECURITIES. (a) After the Closing, the Company may sell, on
          the same terms and conditions as those contained in this Agreement, any Ordinary
          Shares not purchased by Buyers at the Closing (the “ADDITIONAL
          SECURITIES”), to one or more buyers (the “ADDITIONAL
          BUYERS”), provided that (i) such subsequent sale is consummated prior
          to 14 days after the Closing, (or such longer period agreed to by Tamir Fishman
          Underwriting (1997) Ltd., (“TAMIR FISHMAN”) and the Company);
          (ii) each Additional Buyer shall become a party to the Transaction Documents, as
          defined below, by executing and delivering a counterpart signature page to each
          of the Transaction Agreements and (iii) the aggregate amount of Additional
          Securities shall not exceed the difference between the number of Purchased
          Shares purchased at the Closing and nine million six hundred thousand
          (9,600,000) Ordinary Shares (the “Limitation Amount”. Upon the
          execution of such signature pages by each Additional Buyer, such party shall be
          deemed a “BUYER” for all purposes hereunder, and the Additional
          Securities so purchased shall be deemed “SECURITIES” for all purposes
          hereunder. The Schedule of Buyers to this Agreement shall be updated to reflect
          the number of Additional Securities purchased at each such closing and the
          parties purchasing such Additional Securities. At each additional closing, the
          Company shall deliver to each Additional Buyer a certificate representing the
          shares of Ordinary Shares and the Warrants that such Additional Buyer is
          purchasing at the additional closing and each Additional Buyer shall deliver
          payment of the purchase price therefor to the Company by check or wire transfer
          in immediately available funds. 

2

2.     BUYER’S
REPRESENTATIONS AND WARRANTIES.  

Each Buyer represents and warrants
with respect to only itself that: 

         a.       
          NO PUBLIC SALE OR DISTRIBUTION; PRIOR SALES. Such Buyer is (i) acquiring the
          Purchased Shares and the Warrants, and (ii) upon exercise of the Warrants, will
          acquire the Warrant Shares issuable upon exercise thereof, 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 or exempted under the 1933 Act and has no agreement
          or understanding, directly or indirectly, with any Person to distribute any of
          the Securities; PROVIDED, HOWEVER, that by making the representations herein,
          such Buyer does not agree to hold any of the Securities for any minimum or other
          specific term and reserves the right to dispose of the Securities at any time
          provided that such disposition is in accordance with or pursuant to a
          registration statement or an exemption under the 1933 Act. 

         b.       
          NON U.S. PERSON STATUS. Such Buyer certifies that (i) it is not a “U.S.
          Person” as that term is defined in Rule 902(k) of Regulation S , and (ii)
          it is not acquiring the securities for the account or benefit of any U.S.
          person. Each Buyer agrees to resell such securities only in accordance with the
          provisions of Regulation S (§§ 230.901 through 230.905, and
          Preliminary Notes), pursuant to registration under the 1933 Act, or pursuant to
          an available exemption from registration; and agrees not to engage in hedging
          transactions with regard to such securities unless in compliance with the 1933
          Act. 

         c.       
          RELIANCE ON EXEMPTIONS. No prospectus or offering memorandum has been delivered
          to the Buyer in connection with the purchase of Securities. Such Buyer
          understands that the Securities are being offered and sold to it in reliance on
          specific exemptions from the registration requirements of United States federal
          and state securities laws and that the Company is relying in part upon the truth
          and accuracy of, and such Buyer’s compliance with, the representations,
          warranties, agreements, acknowledgments and understandings of such Buyer set
          forth herein in order to determine the availability of such exemptions and the
          eligibility of such Buyer to acquire the Securities. 

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         d.       
          INFORMATION. Such Buyer and its advisors, if any, have been furnished with all
          materials relating to the business, finances and operations of the Company and
          materials relating to the offer and sale of the Securities that have been
          requested for deciding whether to acquire the Ordinary Shares. Such Buyer and
          its advisors, if any, have been afforded the opportunity to ask questions of the
          Company and have received, to their satisfaction, answers to such questions.
          Neither such inquiries nor any other investigations conducted by such Buyer or
          its advisors, if any, or its representatives shall modify, amend or affect such
          Buyer’s right to rely on the Company’s representations and warranties
          contained herein. Such Buyer is able to afford a complete loss of such
          investment. Such Buyer further represents to the Company that such Buyer’s
          decision to enter into the Transaction Documents, as defined below, has been
          based solely on the independent evaluation by such Buyer and its representatives
          and the provisions of the Transaction Documents. Such Buyer understands that the
          market price of the Company’s Ordinary Shares is volatile and that no
          representation is being made as to the future value of the Company’s
          Ordinary Shares. Such Buyer has sought such accounting, legal and tax advice as
          it has considered necessary to make an informed investment decision with respect
          to its acquisition of the Securities. 

         e.       
          NO GOVERNMENTAL REVIEW. Such Buyer understands that no United States federal or
          state agency or any other government or governmental agency has passed on or
          made any recommendation or endorsement of the Securities or the fairness or
          suitability of the investment in the Securities nor have such authorities passed
          upon or endorsed the merits of the offering of the Securities. 

         f.       
          TRANSFER OR RESALE. Such Buyer understands that except as provided in the
          Registration Rights Agreement: (i) the Securities have not been and are not
          being registered under the 1933 Act or any state securities laws, and subsequent
          offers and sales of the Securities prior to the date which is one year after the
          original issuance of the Securities shall be made only (A) to the Company or a
          subsidiary thereof, (B) pursuant to a registration statement which has been
          declared effective under the 1933 Act, (C) pursuant to a resale to a person that
          is not a U.S. Person, as that term is defined in Rule 902(k) of Regulation S,
          that occurs outside the United States within the meaning of Regulation S under
          the 1933 Act and in compliance with Rules 904 and 905 thereunder, or (D)
          pursuant to any other available exemption from the registration requirements of
          the 1933 Act; and (ii) any sale of the Securities 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 Securities under circumstances in which
          the seller (or the Person (as defined in Section 3(r)) through whom the sale is
          made) may be deemed to be an underwriter (as that term is defined in the 1933
          Act) may require compliance with some other exemption under the 1933 Act or the
          rules and regulations of the SEC thereunder. Such Buyer acknowledges that the
          Company shall require, prior to any offer, sale or other transfer of the
          Securities, the delivery of an opinion of counsel, in generally acceptable form,
          to the effect that such Securities to be sold, assigned or transferred may be
          sold, assigned or transferred pursuant to an exemption from registration under
          the 1933 Act. 

         g.       
          LEGENDS. Such Buyer understands that the certificates or other instruments
          representing the Purchased Shares and the Warrants and, until such time as the
          resale of the Purchased Shares and the Warrant Shares have been registered under
          the 1933 Act as contemplated by the Registration Rights Agreement, the stock
          certificates representing the Warrant 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): 

4

“THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
THESE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
OR IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION, ACCOMPANIED BY AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER SUCH ACT. HEDGING TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED
UNLESS IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED”. 

The legend set forth above shall be
removed and the Company shall issue a certificate without such legend to the holder of the
Securities upon which it is stamped, if, unless otherwise required by state securities
laws, (i) such Securities are registered for sale under the 1933 Act, or (ii) in
connection with a sale, assignment or other transfer, such holder provides the Company
with an opinion of counsel, in a generally acceptable form, to the effect that such sale,
assignment or transfer of the Securities is made in accordance with the provisions of
Regulation S (§§ 230.901 through 230.905, and Preliminary Notes, may be made
without registration under the 1933 Act and that such legend is no longer required. 

         h.       
          VALIDITY; ENFORCEMENT. This Agreement and the Registration Rights Agreement have
          been duly and validly authorized, executed and delivered on behalf of such Buyer
          and shall constitute the legal, valid and binding obligations of such Buyer
          enforceable against such Buyer in accordance with their respective terms, except
          (i) as such enforceability may be limited by general principles of equity or
          applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
          similar laws relating to, or affecting generally, the enforcement of applicable
          creditors’ rights and remedies, or (ii) as any rights to indemnity or
          contribution hereunder may be limited by federal and state securities laws and
          public policy consideration. 

         i.       
          RESIDENCY. Such Buyer is a resident of that country and/or state specified below
          its address on the Schedule of Buyers. 

3.     REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.  

The Company represents and warrants
to each of the Buyers as of the date hereof and as of the Closing Date that: 

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         a.       
          ORGANIZATION; GOOD STANDING; POWER; etc. The Company is duly organized and
          validly existing under the laws of the State of Israel. The Company has the
          requisite power and authority to execute, deliver and perform this Agreement and
          the other Transaction Documents and to consummate the transactions contemplated
          hereby and thereon. The execution, delivery and performance by the Company of
          this Agreement and consummation of the transactions contemplated hereby and
          thereon have been duly authorized by all necessary corporate actions of the
          Company. Each Transaction Document has been (or upon delivery will have been)
          duly executed by the Company and, when delivered in accordance with the terms
          hereof, will constitute the valid and binding obligation of the Company
          enforceable against the Company in accordance with its terms, except as such
          enforceability may be limited by applicable bankruptcy, insolvency,
          reorganization, moratorium, liquidation or similar laws relating to, or
          affecting generally the enforcement of, creditors’ rights and remedies or
          by other equitable principles of general application. Each of the Purchased
          Shares and Warrant Shares, when issued to the Buyers according to this Agreement
          will be duly authorized, validly issued, fully paid, and non-assessable, and
          free and clear of liens, security interests, pledges, charges and encumbrances
          (“Liens”) other than those Liens created or known of by the Buyers. No
          securities of the Company are entitled to preemptive or similar rights, and no
          third party has any right of first refusal, preemptive right, right of
          participation, or any similar right to participate in the transactions
          contemplated by the Transaction Documents. Other than as set forth in
          Schedule 3a., hereto, to the knowledge of the Company,
          there are no outstanding options, warrants, rights to subscribe to, calls or
          commitments of any character whatsoever relating to, or securities, rights or
          obligations convertible into or exchangeable for, or giving any third party any
          right to subscribe for or acquire, any shares of the Company, or contracts,
          commitments, understandings or arrangements by which the Company is or may
          become bound to issue additional Ordinary Shares, or securities or rights
          convertible or exchangeable into Ordinary Shares. The issue and sale of the
          Securities will not, immediately or with the passage of time, obligate the
          Company to issue Ordinary Shares or other securities to any Person (other than
          the Buyers) and will not result in a right of any holder of Company securities
          to adjust the exercise, conversion, exchange or reset price under such
          securities. 

         b.       
          NO CONFLICTS. The Company is not in violation of any of the provisions of
          its memorandum or articles of incorporation or other organizational or charter
          documents. The execution, delivery and performance of the Transaction Documents
          by the Company and the consummation by the Company of the transactions
          contemplated thereby do not and will not (i) conflict with or violate any
          provision of the Company’s or ScanMaster Systems (IRT) Ltd. (the
          “Subsidiary”)certificate or articles of incorporation, bylaws
          or other organizational or charter documents, or (ii) conflict with, or
          constitute a default (or an event that with notice or lapse of time or both
          would become a default) under, or give to others any rights of termination,
          amendment, acceleration or cancellation (with or without notice, lapse of time
          or both) of, any agreement, credit facility, debt or other instrument
          (evidencing a Company or Subsidiary debt or otherwise) or other understanding to
          which the Company or the Subsidiary is a party or by which any property or asset
          of the Company or the Subsidiary is bound or affected, or (iii) result in a
          violation of any law, rule, regulation, order, judgment, injunction, decree or
          other restriction of any court or governmental authority to which the Company or
          a Subsidiary is subject, or by which any property or asset of the Company or a
          Subsidiary is bound or affected; except in the case of each of clauses (ii) and
          (iii), such as could not, individually or in the aggregate, have or reasonably
          be expected to result in a Material Adverse Effect. “MATERIAL ADVERSE
          EFFECT” means any of (A) a material and adverse effect on the legality,
          validity or enforceability of any Transaction Document, (B) a material and
          adverse effect on the results of operations, assets, business or condition
          (financial or otherwise) of the Company, or (C) an adverse impairment to the
          Company’s ability to perform on a timely basis its obligations under any
          Transaction Document. 

6

         c.       
          CAPITALIZATION. The authorized capitalization of EVS on the date hereof is
          60,000,000 NIS divided into 60,000,000 ordinary shares, par value NIS 1.00 each.
          As of the date hereof, 29,516,314 ordinary shares are outstanding. The Company
          has reserved from its duly authorized share capital Ordinary Shares issuable
          pursuant to this Agreement and the Warrants in order to issue the Shares and the
          Warrant Shares. 

         d.       
          DOCUMENTS. The Company has filed all reports required to be filed by it under
          the Securities Act and the Exchange Act, including pursuant to Section 13(a) or
          15(d) thereof, for the twelve months preceding the date hereof (or such shorter
          period as the Company was required by law to file such reports) (the foregoing
          materials together with reports on Form 6-K furnished by the Company to the
          Commission being collectively referred to herein as the “SEC
          REPORTS”) on a timely basis or has timely filed a valid extension of
          such time of filing and has filed any such SEC Reports prior to the expiration
          of any such extension. 

        As
of their respective dates, the SEC Reports complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and regulations of
the Commission promulgated thereunder, and none of the SEC Reports, when filed, contained
any untrue statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. 

         e.       
          FINANCIAL STATEMENTS. The audited consolidated financial statements (the
          “Financial Statements”) for the year ended December 31, 2005 of EVS
          disclosed all material liabilities of EVS as of the date thereof, were prepared
          in accordance with generally accepted standards in the United States
          consistently applied throughout the periods involved and fairly present, in all
          material respects, the consolidated financial condition, results of operations,
          cash flows and changes in shareholders’ equity of EVS and its consolidated
          subsidiaries at the dates and for the periods presented. 

         f.       
          FILINGS, CONSENTS AND APPROVALS. The Company is not required to obtain any
          consent, waiver, authorization or order of, give any notice to, or make any
          filing or registration with, any court or other federal, state, local or other
          governmental authority or other Person in connection with the execution,
          delivery and performance by the Company of the Transaction Documents, other than
          (i) the filing with the United States Securities and Exchange Commission (the
          “Commission”) of the Registration Statement in accordance with
          the requirements of the Registration Rights Agreement, (ii) filings required by
          state securities laws, and (iii) those that have been made or obtained prior to
          the date of this Agreement. 

7

         g.       
          MATERIAL CHANGES. Since the date of the latest audited financial statements
          included within the SEC Reports, except as specifically disclosed in the SEC
          Reports, (i) there has been no event, occurrence or development that has had or
          that could reasonably be expected to result in a Material Adverse Effect, (ii)
          the Company has not incurred any liabilities (contingent or otherwise) other
          than (A) trade payables, accrued expenses and other liabilities 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 Commission, (iii)
          the Company has not altered its method of accounting or the identity of its
          auditors, (iv) the Company has not declared or made any dividend or distribution
          of cash or other property to its stockholders or purchased, redeemed or made any
          agreements to purchase or redeem any shares of its capital stock, and (v) the
          Company has not issued any equity securities to any officer, director or
          Affiliate, except pursuant to existing Company stock option plans. The Company
          does not have pending before the Commission any request for confidential
          treatment of information. 

         h.       
          LITIGATION. There is no action which (i) adversely affects or challenges the
          legality, validity or enforceability of any of the Transaction Documents or the
          Securities or (ii) except as specifically disclosed in the SEC Reports, could,
          if there were an unfavorable decision, individually or in the aggregate, have or
          reasonably be expected to result in a Material Adverse Effect. Neither the
          Company nor the Subsidiary, nor any director or officer thereof (in his or her
          capacity as such), is or has been the subject of any action involving a claim of
          violation of or liability under federal or state securities laws or a claim of
          breach of fiduciary duty, except as specifically disclosed in the SEC Reports.
          There has not been, and to the knowledge of the Company, there is not pending
          any investigation by the Commission involving the Company or any current or
          former director or officer of the Company (in his or her capacity as such). The
          Commission has not issued any stop order or other order suspending the
          effectiveness of any registration statement filed by the Company or any
          Subsidiary under the Exchange Act or the Securities Act. 

         i.       
          LABOR RELATIONS. No material labor dispute exists or, to the knowledge of the
          Company, is imminent with respect to any of the employees of the Company. 

         j.       
          COMPLIANCE. Neither the Company nor its Subsidiary (i) is in default under or in
          violation of (and no event has occurred that has not been waived that, with
          notice or lapse of time or both, would result in a default by the Company or the
          Subsidiary under), nor has the Company or any Subsidiary received notice of a
          claim that it is in default under or that it is in violation of, any indenture,
          loan or credit agreement or any other agreement or instrument to which it is a
          party or by which it or any of its properties is bound (whether or not such
          default or violation has been waived), (ii) is in violation of any order of any
          court, arbitrator or governmental body, or (iii) is or has been in violation of
          any statute, rule or regulation of any governmental authority, including without
          limitation all foreign, federal, state and local laws relating to taxes,
          environmental protection, occupational health and safety, product quality and
          safety and employment and labor matters, except in each case as could not,
          individually or in the aggregate, have or reasonably be expected to result in a
          Material Adverse Effect. The Company is in compliance with all effective
          requirements of the Sarbanes-Oxley Act of 2002, as amended, and the rules and
          regulations thereunder, that are applicable to it, except where such
          noncompliance could not have or reasonably be expected to result in a Material
          Adverse Effect. 

8

         k.       
          REGULATORY PERMITS. The Company and the Subsidiary possess all certificates,
          authorizations and permits issued by the appropriate federal, state, local or
          foreign regulatory authorities necessary to conduct their respective businesses
          as described in the SEC Reports, except where the failure to possess such
          permits could not, individually or in the aggregate, have or reasonably be
          expected to result in a Material Adverse Effect, and neither the Company nor the
          Subsidiary has received any notice of proceedings relating to the revocation or
          modification of any such permits. 

         l.       
          TITLE TO ASSETS. The Company and the Subsidiary have good and marketable title
          in fee simple to all real property owned by them that is material to their
          respective businesses and good and marketable title in all personal property
          owned by them that is material to their respective businesses, in each case free
          and clear of all Liens, except for Liens as do not materially affect the value
          of such property and do not materially interfere with the use made and proposed
          to be made of such property by the Company and the Subsidiary. Any real property
          and facilities held under lease by the Company and the Subsidiary are held by
          them under valid, subsisting and enforceable leases of which the Company and the
          Subsidiary are in compliance, except as could not, individually or in the
          aggregate, have or reasonably be expected to result in a Material Adverse
          Effect. 

         m.       
          PATENTS AND TRADEMARKS. The Company and the Subsidiary have, or have rights to
          use, all patents, patent applications, trademarks, trademark applications,
          service marks, trade names, copyrights, licenses and other similar rights that
          are necessary or material for use in connection with their respective businesses
          as described in the SEC Reports and which the failure to so have could,
          individually or in the aggregate, have or reasonably be expected to result in a
          Material Adverse Effect (collectively, the “INTELLECTUAL PROPERTY
          RIGHTS”). Except as set forth in the SEC Reports, neither the Company
          nor the Subsidiary has received a written notice that the Intellectual Property
          Rights used by the Company or any Subsidiary violates or infringes upon the
          rights of any Person. Except as set forth in the SEC Reports, to the knowledge
          of the Company, all such Intellectual Property Rights are enforceable and there
          is no existing infringement by another Person of any of the Intellectual
          Property Rights. 

         n.       
          INSURANCE The Company and the Subsidiary are insured by insurers of recognized
          financial responsibility against such losses and risks and in such amounts as
          are prudent and customary in the businesses in which the Company and the
          Subsidiary are engaged. The Company has no reason to believe that it will not be
          able to renew its and the Subsidiary’s existing insurance coverage as and
          when such coverage expires or to obtain similar coverage from similar insurers
          as may be necessary to continue its business on terms consistent with market for
          the Company’s and the Subsidiary’s respective lines of business. 

9

         o.       
          TRANSACTIONS WITH AFFILIATES AND EMPLOYEES. Except as set forth in the SEC
          Reports and in Schedule 3(o) hereto, none of the officers
          or directors of the Company and, to the knowledge of the Company, none of the
          employees of the Company is presently a party to any transaction with the
          Company or any Subsidiary (other than for services as employees, officers and
          directors), including any contract, agreement or other arrangement providing for
          the furnishing of services to or by, providing for rental of real or personal
          property to or from, or otherwise requiring payments to or from any officer,
          director or such employee or, to the knowledge of the Company, any entity in
          which any officer, director, or any such employee has a substantial interest or
          is an officer, director, trustee or partner. 

         p.       
          INTERNAL ACCOUNTING CONTROLS. The Company and the 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 GAAP and to maintain
          asset accountability, (iii) access to assets is permitted only in accordance
          with management’s general or specific authorization, and (iv) the recorded
          accountability for assets is compared with the existing assets at reasonable
          intervals and appropriate action is taken with respect to any differences. The
          Company has established disclosure controls and procedures (as defined in
          Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such
          disclosure controls and procedures to ensure that material information relating
          to the Company, including its Subsidiary, is made known to the certifying
          officers by others within those entities, particularly during the period in
          which the Company’s Form 20-F is being prepared. The Company’s
          certifying officers have evaluated the effectiveness of the Company’s
          controls and procedures in accordance with Item 307 of Regulation S-K under the
          Exchange Act for the Company’s most recently ended fiscal year (such date,
          the “EVALUATION DATE”). The Company presented in its most
          recently filed Form 20-F the conclusions of the certifying officers about the
          effectiveness of the disclosure controls and procedures based on their
          evaluations as of the Evaluation Date. Since the Evaluation Date, there have
          been no significant changes in the Company’s internal controls (as such
          term is defined in Item 308(c) of Regulation S-K under the Exchange Act) or, to
          the Company’s knowledge, in other factors that could significantly affect
          the Company’s internal controls. 

         q.       
          SOLVENCY. Based on the financial condition of the Company as of the Closing Date
          (and assuming that the Closing shall have occurred), (i) the Company’s fair
          saleable value of its assets exceeds the amount that will be required to be paid
          on or in respect of the Company’s existing debts and other liabilities
          (including known contingent liabilities) as they mature, (ii) the Company’s
          assets do not constitute unreasonably small capital to carry on its business for
          the current fiscal year as now conducted and as proposed to be conducted
          including its capital needs taking into account the particular capital
          requirements of the business conducted by the Company, and projected capital
          requirements and capital availability thereof, and (iii) the current cash flow
          of the Company, together with the proceeds the Company would receive, were it to
          liquidate all of its assets, after taking into account all anticipated uses of
          the cash, would be sufficient to pay all amounts on or in respect of its debt
          when such amounts are required to be paid. The Company does not intend to incur
          debts beyond its ability to pay such debts as they mature (taking into account
          the timing and amounts of cash to be payable on or in respect of its debt). 

10

         r.       
          CERTAIN REGISTRATION MATTERS. Assuming the accuracy of the Buyers’
          representations and warranties set forth herein, no registration under the
          Securities Act is required for the offer and sale of the Shares and Warrants and
          the offer of the Warrant Shares by the Company to the Buyers under the
          Transaction Documents. The Company is eligible to register its Ordinary Shares
          for resale by the Investors under Form F-3 promulgated under the Securities Act.
          Except as specified in the Registration Rights Agreement, the Company has not
          granted or agreed to grant to any Person any rights (including
          “piggy-back” registration rights) to have any securities of the
          Company registered with the Commission or any other governmental authority that
          have not been satisfied. 

         s.       
          LISTING AND MAINTENANCE REQUIREMENTS. Except as specified in the SEC Reports,
          the Company has not, in the two years preceding the date hereof, received notice
          from any Trading Market to the effect that the Company is not in compliance with
          the listing or maintenance requirements thereof. The issuance and sale of the
          Securities under the Transaction Documents does not contravene the rules and
          regulations of the Trading Market on which the Ordinary Shares are currently
          quoted (the “Principal Market”), and no approval of the
          shareholders of the Company thereunder is required for the Company to issue and
          deliver to the Buyers the Securities contemplated by Transaction Documents. 

         t.       
          INVESTMENT COMPANY. The Company is not, and is not an Affiliate of, and
          immediately following the Closing will not have become, an “investment
          company” within the meaning of the Investment Company Act of 1940, as
          amended. 

         u.       
          NO ADDITIONAL AGREEMENTS. The Company does not have any agreement or
          understanding with any Buyer with respect to the transactions contemplated by
          the Transaction Documents other than as specified in the Transaction Documents. 

         v.       
          FOREIGN CORRUPT PRACTICES. To the knowledge of the Company, neither the Company,
          nor the Subsidiary, nor any director, officer, agent, employee or other Person
          acting on behalf of the Company or the 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 from corporate funds; (iii)
          violated or is in violation 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. 

11

         w.       
          DISCLOSURE. The Company confirms that neither it nor any Person acting on its
          behalf has provided any Buyer or its respective agents or counsel with any
          information that the Company believes constitutes material, non-public
          information except insofar as the existence and terms of the proposed
          transactions hereunder may constitute such information. The Company understands
          and confirms that the Buyers will rely on the foregoing representations and
          covenants in effecting transactions in securities of the Company. All disclosure
          provided to the Buyers regarding the Company, its business and the transactions
          contemplated hereby, furnished by or on behalf of the Company (including the
          Company’s representations and warranties set forth in this Agreement) are
          true and correct and do not contain any untrue statement of a material fact or
          omit to state any material fact necessary in order to make the statements made
          therein, in light of the circumstances under which they were made, not
          misleading. 

         x.       
          NO GENERAL SOLICITATION; COMPLIANCE WITH SECURITIES LAWS. Neither the Company,
          nor any of its affiliates, nor to the knowledge of the Company, any Person
          acting on its or their behalf, has engaged in any form of “general
          solicitation” or “general advertising” or Directed Selling
          Efforts (within the meaning of Regulation D or S, respectively) in connection
          with the offer or sale of the Securities. The Securities have been offered in
          compliance with all applicable securities laws, including, without limitation,
          the Israeli Securities Law, 1968. 

         y.       
          ISRAELI LAW COMPLIANCE. The Company is in compliance in all material respects
          with all conditions and requirements stipulated by the instruments of approval
          granted to it with respect to the “Approved Enterprise” status of any
          of the Company’s facilities by Israeli laws and regulations relating to
          such “Approved Enterprise” status and other tax benefits received by
          the Company; and the Company or its Subsidiary have not received any notice of
          any proceeding or investigation relating to revocation or modification of any
          “Approved Enterprise” status granted with respect to any of the
          Company’s facilities which the Company believes could reasonably be
          expected to result in material liability to the Company. The Company and its
          Subsidiary are not in violation of any condition or requirement stipulated by
          the instruments of approval granted to the Company by the Office of Chief
          Scientist in the Israeli Ministry of Industry and Trade (the “OCS”)
          and any applicable laws and regulations with respect to any research and
          development grants given to it by such office. All information supplied by the
          Company with respect to such applications was true, correct and complete in all
          material respects when supplied to the appropriate authorities. The
          Company’s and its Subsidiary’s contingent liabilities to the OCS are
          disclosed in the Company’s SEC Reports. 

12

4.     CONDITIONS
TO THE COMPANY’S OBLIGATION TO SELL.  

CLOSING DATE. The obligation of the
Company hereunder to issue and sell the Purchased Shares and the related Warrants to each
Buyer at the Closing is subject to the satisfaction, at or before the Closing Date, of
each of the following conditions, provided that these conditions are for the
Company’s sole benefit and may be waived by the Company at any time in its sole
discretion by providing each Buyer with prior written notice thereof: 

          	 	(i) 	
               Buyers shall have subscribed to purchase at least such number of the Purchased
               Shares with an aggregate Purchase Price of not less than four hundred fifty US
               Dollars ($450,000); 

               

          	 	(ii) 	
               Each Buyer shall have executed each of the Transaction Documents to which it is
               a party and delivered the same to the Company. 

               

          	 	(iii) 	
               Each Buyer shall have delivered to the Company the Purchase Price for the
               Purchased Shares and the related Warrants being purchased by such Buyer at the
               Closing by wire transfer of immediately available funds pursuant to the wire
               instructions provided by the Company. 

               

          	 	(iv) 	
               The representations and warranties of such Buyer shall be true and correct in
               all material respects (except for representations and warranties that are
               qualified by materiality, which shall be true and correct in all respects) as of
               the date when made and as of the Closing Date as though made at that time, and
               such Buyer shall have performed, satisfied and complied in all material respects
               (except for covenants, agreements and conditions that are qualified by
               materiality, which shall be complied with in all respects) with the covenants,
               agreements and conditions required by this Agreement to be performed, satisfied
               or complied with by such Buyer at or prior to the Closing Date. 

               

5.     CONDITIONS
TO EACH BUYER’S OBLIGATION TO PURCHASE.  

CLOSING DATE. The obligation of each
Buyer hereunder to purchase the Purchased Shares and the related Warrants at the Closing
is subject to the satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for each Buyer’s sole benefit and may
be waived by a the Buyers who have subscribed to purchase the majority of the Purchased
Shares, at any time in their sole discretion by providing the Company with written notice
thereof: 

          	 	(i) 	
               The Company shall have executed and delivered to such Buyer (i) each of the
               Transaction Documents and (ii) the Purchased Shares and the related Warrants
               being purchased by such Buyer at the Closing pursuant to this Agreement as set
               forth opposite such Buyer’s name in the Schedule of Buyers. 

               

13

          	 	(ii) 	
               The Company shall have delivered to such Buyer the resolutions of the
               Company’s Board of Directors issuing and allotting the Purchased Shares and
               Warrants to the Buyers in the form attached hereto as EXHIBIT
               C. 

               

          	 	(iii) 	
               The Company shall have obtained all governmental, regulatory or third party
               consents and approvals, if any, necessary for the sale of the Purchased Shares
               and the Warrants. 

               

          	 	(iv) 	
               An opinion of counsel to the Company in form attached hereto as EXHIBIT D. 

               

          	 	(v) 	
               The Company shall deliver to the Buyers a certificate, signed by the
               Company’s chief executive officer, confirming that the representations and
               warranties of the Company contained in this Agreement shall be true and correct
               as of the date of this Agreement and the Closing Date as if made on and as of
               the Closing Date. 

               

6.     UNDERTAKING.
The Company hereby undertakes and covenants that it shall not                issue,
grant, agree or undertake to, issue or grant any securities or rights to
               issue securities in the Company, upon terms preferable to the terms
offered to                the Buyers herein, for a period of five months from the date
hereof, without                receiving the prior written consent of Tamir Fishman prior
to any such issue,                grant, undertaking or agreement. Without derogating
from the generality of the                foregoing, the Company hereby undertakes for a
period of six months from the                date hereof, not to amend any existing
securities or rights to issue securities                in the Company held by Mivtach
Shamir Holdings Ltd. (as described in Schedule 3A                hereto) to provide for
terms preferable to the terms offered to the Buyers                herein.  

7.     TERMINATION.
In the event that the Closing shall not have occurred with respect                to a
Buyer on or before thirty (30) days from the date hereof due to the                Company’s
or such Buyer’s failure to satisfy the conditions set forth                in
Sections 4 and 5 above (and the nonbreaching party’s failure to waive
               such unsatisfied condition(s)), the nonbreaching party shall have the
option to                terminate this Agreement with respect to such breaching party at
the close of                business on such date without any liability of any party to
any other party and                without any surviving liability to either party.  

8.     MISCELLANEOUS.  

    a.        GOVERNING LAW.
This Agreement shall be governed by and construed in accordance                with the
internal laws of the State of Israel, without giving effect to any
               statutes concerning choice or conflict of law (whether of the State of
Israel or                any other jurisdiction) that would cause the application of the
laws of any                jurisdiction other that the State of Israel. Any controversy
or claim arising                out of or in connection with this agreement or any breach
or alleged breach                hereof shall be exclusively resolved by the competent
courts of Haifa, Israel,                and each of the parties hereby irrevocably
submits to the exclusive jurisdiction                of such courts.  

14

         b.       
          FEES. Immediately following Closing Date, the Company shall reimburse Tamir
          Fishman in an aggregate amount based on the total gross proceeds actually
          received by the Company under this Agreement, for Tamir Fishman’s
          reasonable expenses actually incurred in connection with the preparation,
          execution and performance of this Agreement and the transactions contemplated
          hereunder. The Company shall not be responsible for any other placement agent
          fees or broker’s commissions relating to or arising out of the transactions
          contemplated hereby. 

         c.       
          SURVIVAL. Unless this Agreement is terminated under Section 7, the
          representations and warranties of the Company contained in Section 3 (other than
          3.c. relating to capitalization which shall survive without limitation) and of
          the Buyers contained in Section 2, shall survive for a period of two years
          following the Closing. Each Buyer shall be responsible only for its own
          representations, warranties, agreements and covenants hereunder. 

         d.       
          COUNTERPARTS. This Agreement may be executed in two or more identical
          counterparts, all of which shall be considered one and the same agreement and
          shall become effective when counterparts have been signed by each party and
          delivered to the other party; provided that a facsimile signature shall be
          considered due execution and shall be binding upon the signatory thereto with
          the same force and effect as if the signature were an original, not a facsimile
          signature. 

         e.       
          HEADINGS. The headings of this Agreement are for convenience of reference and
          shall not form part of, or affect the interpretation of, this Agreement. 

         f.       
          SEVERABILITY. If any provision of this Agreement shall be invalid or
          unenforceable in any jurisdiction, such invalidity or unenforceability shall not
          affect the validity or enforceability of the remainder of this Agreement in that
          jurisdiction or the validity or enforceability of any provision of this
          Agreement in any other jurisdiction. 

         g.       
          ENTIRE AGREEMENT; AMENDMENTS. This Agreement supersedes all other prior oral or
          written agreements between the Buyers, the Company, their affiliates and Persons
          acting on their behalf with respect to the matters discussed herein, and this
          Agreement and the instruments referenced herein contain the entire understanding
          of the parties with respect to the matters covered herein and therein and,
          except as specifically set forth herein or therein, neither the Company nor any
          Buyer makes any representation, warranty, covenant or undertaking with respect
          to such matters. No provision of this Agreement may be amended other than by an
          instrument in writing signed by the Company and the holders of Purchased Shares
          representing at least seventy-five percent (75%) of the Purchased Shares,
          purchased pursuant to this Agreement. Notwithstanding the foregoing, the joinder
          of Additional Buyers up to the Limitation Amount to the Transaction Documents
          pursuant to Section 1(e) above shall not be deemed an amendment hereto or
          thereto, and each of the parties hereto hereby consents to the joinder of the
          Additional Buyers pursuant to the terms of such section, subject only to the
          approval of the Company as to the identity of each such Additional Buyer. No
          provision hereof may be waived other than by an instrument in writing signed by
          the party against whom enforcement is sought. No such amendment shall be
          effective to the extent that it applies to less than all of the holders of the
          Purchased Shares then outstanding. 

15

         h.       
          NOTICES. Any notices, consents, waivers or other communications required or
          permitted to be given under the terms of this Agreement must be in writing and
          will be deemed to have been delivered: (i) upon receipt, when delivered
          personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
          transmission is mechanically or electronically generated and kept on file by the
          sending party); or (iii) two business days in Israel after deposit with an
          overnight courier service, in each case properly addressed to the party to
          receive the same. The addresses and facsimile numbers for such communications
          shall be: 

If to the Company: 

		
	 	Elbit Vision Systems Ltd.

1 Hayasur Street,

Hasharon Industrial Park,

Kadima, P.O. Box 60920,

Israel

Telephone: 972-9-866 1610

Fax:            972-9- 8661700

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

Yigal Arnon & Co.

One Azrieli Center, Round Tower, Tel Aviv, Israel

Telephone:   +(972)-3-608-7864

Facsimile:    +(972)-3-608-7714

Attention:     Adrian Daniels, Adv.

If to a Buyer, to its address and
facsimile number set forth on the Schedule of Buyers, with copies to such Buyer’s
representatives as set forth on the Schedule of Buyers, or to such other address and/or
facsimile number and/or to the attention of such other Person as the recipient party has
specified by written notice given to each other party five (5) days prior to the
effectiveness of such change. Written confirmation of receipt (A) given by the recipient
of such notice, consent, waiver or other communication, (B) mechanically or electronically
generated by the sender’s facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (C) provided by an
overnight courier service shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from an overnight courier service in accordance with clause (i), (ii)
or (iii) above, respectively. 

16

         i.       
          SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the
          benefit of the parties and their respective successors and assigns, including
          any purchasers of the Purchased Shares or the Warrants. A Buyer may assign some
          or all of its rights hereunder after closing without the consent of the Company,
          in which event such assignee shall be deemed to be a Buyer hereunder with
          respect to such assigned rights. 

         j.       
          NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the benefit of the
          parties hereto and their respective permitted successors and assigns, and is not
          for the benefit of, nor may any provision hereof be enforced by, any other
          Person. 

         k.       
          FURTHER ASSURANCES. Each party shall do and perform, or cause to be done and
          performed, all such further acts and things, and shall execute and deliver all
          such other agreements, certificates, instruments and documents, as any other
          party may reasonably request in order to carry out the intent and accomplish the
          purposes of this Agreement and the consummation of the transactions contemplated
          hereby. 

         l.       
          NO STRICT CONSTRUCTION. 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. 

         m.       
          INDEPENDENT NATURE OF BUYERS’ OBLIGATIONS AND RIGHTS. The obligations of
          each Buyer under any Transaction Document are several and not joint with the
          obligations of any other Buyer, and no Buyer shall be responsible in any way for
          the performance of the obligations of any other Buyer under any Transaction
          Document. Nothing contained herein or in any other Transaction Document, and no
          action taken by any Buyer pursuant hereto or thereto, shall be deemed to
          constitute the Buyers as a partnership, an association, a joint venture or any
          other kind of entity, or create a presumption that the Buyers are in any way
          acting in concert or as a group with respect to such obligations or the
          transactions contemplated by the Transaction Documents. Each Buyer confirms that
          it has independently participated in the negotiation of the transaction
          contemplated hereby with the advice of its own counsel and advisors. Each Buyer
          shall be entitled to independently protect and enforce its rights, including,
          without limitations, the rights arising out of this Agreement or out of any
          other Transaction Documents, and it shall not be necessary for any other Buyer
          to be joined as an additional party in any proceeding for such purpose. 

[SIGNATURE PAGE
FOLLOWS] 

17

        IN
WITNESS WHEREOF, each Buyer and the Company have caused this Securities Purchase Agreement
to be duly executed as of the date first written above. 

COMPANY: 

Elbit Vision Systems Ltd. 

	By:
——————————————

Name:
Title:		

BUYERS:

	By:
——————————————

Name:
——————————————
Title:
——————————————		

18

SCHEDULE OF BUYERS

					
	(1)	(2)	(3)	(4)	(5)

	NAME 	ADDRESS AND 
FACSIMILE NUMBER	 NUMBER OF

PURCHASED SHARES 	NUMBER OF

WARRANTS 	AGGREGATE 
PURCHASE PRICE 

19

SCHEDULE 3A  

The Company has granted share options
to purchase up to 4,774,353 ordinary shares, to its employees, officers, directors and
consultants pursuant to its existing employee share option plans. 

The Company granted its public
shareholders warrants to purchase up to 2,257,664 ordinary shares pursuant to a plan of
arrangement approved by the District Court of Haifa in November 2003. 

In August 2005, the Company issued a
warrant to Mizrachi Bank for the purchase of up to 571,428 ordinary shares. 

The Company has granted Mivtach
Shamir Holdings Ltd. (“Mivtach”), warrants to purchase up to 4,000,000
ordinary shares pursuant to a warrant granted on February 21, 2006; and pursuant to a
Convertible Promissory Note (the “Note”) issued on the same date, the
Company may issue Mivtach up to 6,000,000 ordinary shares upon the conversion of the Note
by Mivtach. The Company and Mivtach are contemplating an amendment to the Note, whereby
the Company will reduce the conversion price of the Note and upon exercise at the Purchase
Price per share by Mivtach the Company will issue Mivtach 9,523,810 ordinary shares. 

The Company has granted Elbit Ltd.,
options to purchase up to 1,512,863 ordinary shares pursuant to a plan of arrangement
approved by the District Court of Haifa in November 2003. 

The Company is contemplating entering
into an agreement with Elbit Ltd. (“Elbit”) pursuant to which Elbit will agree
to convert a debt of approximately $440,000 owed to it by the Company into ordinary shares
at the Purchase Price per share, and to invest a further amount of approximately $250,000
at the Purchase Price per share. 

20

SCHEDULE 3(O)  

On May 1, 2006, the Company entered
into a Consulting Agreement with MA&AT, an Austrian company which receives services
from, but is not controlled by a director of the Company Mr. Nir Alon. The Consulting
Agreement was ratified by the shareholders of the company at a meeting of the Company held
on November 20, 2006. 

21

EXHIBITS 

		
	Exhibit A	Form of Warrants
	Exhibit B	Form of Registration Rights Agreement
	Exhibit C	Form of Board Resolution
	Exhibit D	Form of Opinion

2220-F

Exhibit 4.7  

REGISTRATION RIGHTS
AGREEMENT 

        THIS
REGISTRATION RIGHTS AGREEMENT (this “AGREEMENT”), dated as of April 30, 2007, is
made by and among Elbit Vision Systems Ltd., a company organized under the laws of Israel,
with headquarters located at 1 Hayasur Street, Hasharon Industrial Park, Kadima, P.O.B.
5030, Israel (the “COMPANY”), and the investors listed on the Schedule of
Buyers attached hereto (each, a “BUYER” and collectively, the
“BUYERS”). 

WHEREAS: 

        A.
          In connection with the Securities Purchase Agreement by and among the parties
          hereto of even date herewith (the “SECURITIES PURCHASE
          AGREEMENT”), the Company has agreed, upon the terms and subject to the
          conditions of the Securities Purchase Agreement, to issue and sell on the date
          hereof to the Buyers up to (i) nine million six hundred thousand (9,600,000)
          Ordinary Shares of the Company par value NIS 1.00 (the “ORDINARY
          SHARES”) set forth opposite such Buyer’s name in column (3) on
the Schedule of Buyers (which aggregate amount for all Buyers
          together shall be up to nine million six hundred thousand (9,600,000) Ordinary
          Shares and shall collectively be referred to herein as the “PURCHASED
          SHARES”); (ii) warrants, substantially in the form attached hereto as
EXHIBIT A (the “WARRANTS”), to acquire
          that number of Ordinary Shares set forth opposite such Buyer’s name in
          column (4) on the Schedule of Buyers (which aggregate amount for all Buyers
          together shall be up to 4,800,000 Ordinary Shares) (as exercised, collectively,
          the “WARRANT SHARES”);  

        B.
          To induce the Buyers to execute and deliver the Securities Purchase Agreement,
          the Company has agreed to provide certain registration rights under the
          Securities Act of 1933, as amended, and the rules and regulations thereunder,
or           any similar successor statute (collectively, the “1933 ACT”), and
          applicable state securities laws.  

        NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and each of the Buyers hereby agree as follows: 

        1.
          DEFINITIONS.  

        As
used in this Agreement, the following terms shall have the following meanings: 

	 	        a.
“BUSINESS DAY” means any day other than Saturday, Sunday or any other
          day on which commercial banks in The City of New York are authorized or
required           by law to remain closed.  

	 	        b.
“INVESTOR” means a Buyer, any transferee or assignee thereof to whom a
          Buyer assigns its rights under this Agreement and who agrees in writing to
          become bound by the provisions of this Agreement and any transferee or assignee
          thereof to whom a transferee or assignee assigns its rights under this
Agreement           and who agrees in writing to become bound by the provisions of this
Agreement.  

	 	        c.
“PERSON” means an individual, a limited liability company, a
          partnership, a joint venture, a corporation, a trust, an unincorporated
          organization and governmental or any department or agency thereof.  

	 	        d.
“REGISTER,” “REGISTERED,” and “REGISTRATION” refer
          to a registration effected by preparing and filing one or more Registration
          Statements (as defined below) in compliance with the 1933 Act and pursuant to
          Rule 415 under the 1933 Act or any successor rule providing for offering
          securities on a continuous or delayed basis (“RULE 415”), and the
          declaration or ordering of effectiveness of such Registration Statement(s) by
          the United States Securities and Exchange Commission (the           “SEC”).  

	 	        e.
“REGISTRABLE SECURITIES” means (i) the Purchased Shares, (ii) the
          Warrant Shares issued or issuable upon exercise of the Warrants and (iii) any
          shares issued or issuable with respect to the Purchased Shares, the Warrant
          Shares or the Warrants as a result of any share split, share dividend,
          recapitalization, exchange or similar event or otherwise, without regard to any
          limitations on exercise of the Warrants.  

	 	        f.
“REGISTRATION STATEMENT” means a registration statement or
          registration statements of the Company filed under the 1933 Act covering the
          Registrable Securities.  

        Capitalized
terms used herein and not otherwise defined herein shall have the respective meanings set
forth in the Securities Purchase Agreement. 

        2.
          REGISTRATION.  

	 	        a.
MANDATORY REGISTRATION. The Company shall use its best efforts to prepare and
          file with the SEC, by July 31, 2007 (the “FILING DEADLINE”), a
          Registration Statement on Form F-3, covering the resale of at least seven
          million two hundred and sixty thousand (7,260,000) of the Registrable
Securities           (the “Initial Registration Shares”) and any
additional           Securities which the SEC permits to be registered under the
Registration           Statement. In the event that Form F-3 is unavailable for such a
registration,           the Company shall use such other form as is available for such a
registration.           The Registration Statement prepared pursuant hereto shall
register for resale at           least all of the Initial Registration Shares. The
Company shall use its best           efforts to have the Registration Statement declared
effective by the SEC as soon           as practicable. The Company shall use its best
efforts to respond, file, amend           the Registration Statement, and satisfy (“RESPONSE”),
as soon           as practicable, any questions, comments, demands, or any other requests
of the           SEC, but in no event later than 30 days after the receipt of the same
(or such           other period agreed in writing by the Company and the holders of the
majority of           the Registrable Securities (the “EFFORTS DEADLINE”).  

	 	        b.
ALLOCATION OF REGISTRABLE SECURITIES. In the event that the SEC requires that in
          order for the Registration Statement to be declared effective, the number of
          Registrable Securities included in the Registration Statement be reduced, then
          first the Warrant Shares issued to the Buyers shall not be included in the
          Registration Statement, and then in the event that the number of Registrable
          Securities needs to be further reduced, the number of Registrable Securities
          included in any Registration Statement shall be allocated pro rata among the
          Investors based on the number of Registrable Securities held by each Investor
at           the Closing Date.  

2

	 	        c.
ADDITIONAL REGISTRATION STATEMENT. In the event that the Company is unable to
          register all of the Registrable Securities in the Registration Statement
          described in Section 2b, the Company shall file a new Registration Statement
(on           the short form available therefor, if applicable), so as to cover the
remaining           Registrable Securities (other than the Warrant Shares) as soon as
practicable           after the remaining Registrable Securities may be covered by a new
Registration           Statement. The Buyers acknowledge that in the event that the
Company is unable           to register all of the Registrable Securities in the
Registration Statement           described in Section 2b, the registration of the Warrant
Shares under a           subsequent Registration Statement pursuant to this Section 2c
may be delayed           until after the registration of up to 5,000,000 Ordinary Shares
held by Elron           Electronic Industries Ltd. (or any wholly owned subsidiary
thereof), which           number of Ordinary Shares eligible to be registered prior to
the Warrant Shares           shall not include (i) any Ordinary Shares issued by the
Company to Elron (or any           wholly owned subsidiary thereof) pursuant to any
agreements entered into by the           Company after the date hereof with the exception
of such agreements described in           Schedule 3A of the Securities Purchase
Agreement) or (ii) any convertible           securities issued to Elron or Ordinary
Shares issued upon the exercise of such           convertible securities.  

	 	        d.
EFFECT OF FAILURE TO FILE AND OBTAIN AND MAINTAIN EFFECTIVENESS OF REGISTRATION
          STATEMENT. If (i) a Registration Statement covering the Registrable Securities
          required to be covered thereby and required to be filed by the Company pursuant
          to this Agreement is (A) not filed with the SEC on or before the Filing
Deadline           (a “FILING FAILURE”) or (B) the Company has not filed
a           Response with the SEC on or before an Efforts Deadline (an “EFFORTS
          FAILURE”) or (ii) on any day after such Registration Statement has
been           declared effective by the SEC, sales of all the Registrable Securities
required           to be included on such Registration Statement cannot be made (other
than during           an Allowable Grace Period (as defined in Section 3(q)) pursuant to
such           Registration Statement (including, without limitation, because of a
failure to           keep such Registration Statement effective, to disclose such
information as is           necessary for sales to be made pursuant to such Registration
Statement or to           register sufficient ordinary shares) (a “MAINTENANCE
FAILURE”),           then, as relief for the damages to any holder by reason of
any such delay in or           reduction of its ability to sell the underlying ordinary
shares (which remedy           shall be exclusive of any other remedies available at law
or in equity), the           Company shall pay to each Investor relating to such
Registration Statement: on           the earlier of the last day of each 30 day period
after a Filing Failure, an           Efforts Failure and the initial day of a Maintenance
Failure, as the case may           be, or on the third Business Day after any such Filing
Failure, Efforts Failure           or Maintenance Failure is cured, an amount in cash
equal to the product of (i)           the Aggregate Purchase Price (as such term is
defined in Securities Purchase           Agreement) paid by such Investor multiplied by
(ii) 0.01 per month (or a           prorated daily amount for a period of less than a
month). In the event the           Company fails to make any payments pursuant to this
Section 2(f) in a timely           manner, such payments shall bear interest at the rate
of 1.0% per month, or such           lower maximum amount as is permitted by law,
(prorated for partial months) until           paid in full. Notwithstanding the
foregoing, if a Filing Failure, an Efforts           Failure, or a Maintenance Failure,
results from the Company not exerting its           best efforts to avoid any such
failure, then the remedy set forth above shall be           non-exclusive of any other
remedies available at law or in equity.           Notwithstanding anything herein to the
contrary, the provisions of this Section           3d., shall not apply in the event that
delays in registration of the Registrable           Securities are the result of an SEC
requirement to reduce the number of           Registrable Securities which can be covered
by a Registration Statement.  

3

	 	        e.
NO EARLIER REGISTRATION. The Company undertakes to the Buyers that it shall not
          register for resale any ordinary shares or any other securities of the Company
          purchased by any third parties, prior to the effective registration of all of
          the Registrable Securities.  

	 	        f.
LEGAL COUNSEL. Subject to Section 5 hereof, the Buyers holding at least a
          majority of the Registrable Securities shall have the right to select one legal
          counsel to review and oversee any registration pursuant to this Section 2
          (“LEGAL COUNSEL”), which shall be Gross, Kleinhendler, Hodak,
          Halevy, Greenberg & Co. or such other counsel as thereafter designated by
          the holders of at least a majority of the Registrable Securities, the fees of
          whom will be paid by the Company, up to a maximum of $5,000 (including VAT).  

        3.
        RELATED OBLIGATIONS.  

        At
such time as the Company is obligated to file a Registration Statement with the SEC
pursuant to Section 2(a) or 2(e), the Company will use its best efforts to effect the
registration of the Registrable Securities in accordance with the intended method of
disposition thereof and, pursuant thereto, the Company shall have the following
obligations: 

	 	        a.
The Company shall submit to the SEC, within two (2) Business Days after the
          Company learns that no review of a particular Registration Statement will be
          made by the staff of the SEC or that the staff of the SEC has no further
          comments on a particular Registration Statement, as the case may be, a request
          for acceleration of effectiveness of such Registration Statement to a time and
          date not later than 96 hours after the submission of such request. The Company
          shall keep each Registration Statement effective pursuant to Rule 415 at all
          times until the earlier of (i) the date as of which the Investors may sell all
          of the Registrable Securities covered by such Registration Statement without
          restriction pursuant to Rule 144(k) (or successor thereto) promulgated under
the           1933 Act or (ii) the date on which the Investors shall have sold all the
          Registrable Securities covered by such Registration Statement (the
          “REGISTRATION PERIOD”). The Company shall ensure that each
          Registration Statement (including any amendments or supplements thereto and
          prospectuses contained therein) shall not contain any untrue statement of a
          material fact or omit to state a material fact required to be stated therein,
or           necessary to make the statements therein (in the case of prospectuses, in
the           light of the circumstances in which they were made) not misleading.  

	 	        b.
The Company shall prepare and file with the SEC such amendments (including
          post-effective amendments) and supplements to a Registration Statement and the
          prospectus used in connection with such Registration Statement, which
prospectus           is to be filed pursuant to Rule 424 promulgated under the 1933 Act,
as may be           necessary to keep such Registration Statement effective at all times
during the           Registration Period. In the case of amendments and supplements to a
Registration           Statement which are required to be filed pursuant to this
Agreement (including           pursuant to this Section 3(b) by reason of the Company
filing a report under the           Securities Exchange Act of 1934, as amended (the
“1934 ACT”),           the Company shall have incorporated such report
by reference into such           Registration Statement, if applicable, or shall file
such amendments or           supplements with the SEC on the same day on which the 1934
Act report is filed           which created the requirement for the Company to amend or
supplement such           Registration Statement.  

4

	 	        c.
The Company shall (A) permit Legal Counsel to review and comment upon (i) a
          Registration Statement at least ten (10) Business Days prior to its filing with
          the SEC and (ii) all amendments and supplements to all Registration Statements
          (except for Annual Reports on Form 20-F, and Current Reports on Form 6-K and
any           similar or successor reports) within a reasonable number of days prior to
their           filing with the SEC, and (B) not file any Registration Statement or
amendment or           supplement thereto in a form to which Legal Counsel reasonably
objects. The           Company shall not submit a request for acceleration of the
effectiveness of a           Registration Statement or any amendment or supplement
thereto without the prior           approval of Legal Counsel, which consent shall not be
unreasonably withheld,           conditioned or delayed. The Company shall furnish to
Legal Counsel, without           charge, (i) copies of any correspondence from the SEC or
the staff of the SEC to           the Company or its representatives relating to any
Registration Statement, (ii)           promptly after the same is prepared and filed with
the SEC, one copy of any           Registration Statement and any amendment(s) thereto,
including financial           statements and schedules, all documents incorporated
therein by reference, if           requested by an Investor and not otherwise available
on the EDGAR system, and           all exhibits and (iii) upon the effectiveness of any
Registration Statement, one           copy of the prospectus included in such
Registration Statement and all           amendments and supplements thereto.  

	 	        d.
The Company shall furnish to Legal Counsel and each Investor whose Registrable
          Securities are included in any Registration Statement, without charge (i)
          promptly after the same is prepared and filed with the SEC, at least one copy
of           such Registration Statement and any amendment(s) thereto, including
financial           statements and schedules, all documents incorporated therein by
reference, if           requested by an Investor and not otherwise available on the EDGAR
system, all           exhibits and each preliminary prospectus, (ii) upon the
effectiveness of any           Registration Statement, at least three (3) copies, and
upon request, additional           copies (provided however, that the Company shall not
be obligated to furnish           more than fifty (50) copies in the aggregate, which
number shall include the           three copies furnished to each Investor) of the
prospectus included in such           Registration Statement and all amendments and
supplements thereto (or such other           number of copies as such Investor may
reasonably request) and (iii) such other           documents, including copies of any
preliminary or final prospectus, as such           Investor may reasonably request from
time to time in order to facilitate the           disposition of the Registrable
Securities owned by such Investor.  

	 	        e.
RESERVED  

	 	        f.
The Company shall notify Legal Counsel and each Investor in writing of the
          happening of any event, as promptly as practicable after becoming aware of such
          event, as a result of which the prospectus included in a Registration
Statement,           as then in effect, includes an untrue statement of a material fact
or omission           to state a material fact required to be stated therein or necessary
to make the           statements therein, in light of the circumstances under which they
were made,           not misleading (provided that in no event shall such notice contain
any           material, nonpublic information), and, subject to Section 3(q), promptly
prepare           a supplement or amendment to such Registration Statement to correct
such untrue           statement or omission, and, if so requested, deliver ten (10)
copies of such           supplement or amendment to Legal Counsel and each Investor (or
such other number           of copies as Legal Counsel or such Investor may reasonably
request). The Company           shall also promptly notify Legal Counsel and each
Investor in writing (i) when a           prospectus or any prospectus supplement or
post-effective amendment has been           filed, and when a Registration Statement or
any post-effective amendment has           become effective (notification of such
effectiveness shall be delivered to Legal           Counsel and each Investor by
facsimile on the same day of such effectiveness and           by overnight mail), (ii) of
any request by the SEC for amendments or supplements           to a Registration
Statement or related prospectus or related information, and           (iii) of the Company’s
reasonable determination that a post-effective           amendment to a Registration
Statement would be appropriate.  

5

	 	        g.
The Company shall use its best efforts to prevent the issuance of any stop order
          or other suspension of effectiveness of a Registration Statement, or the
          suspension of the qualification of any of the Registrable Securities for sale
in           any jurisdiction and, if such an order or suspension is issued, to obtain
the           withdrawal of such order or suspension at the earliest possible moment and
to           notify Legal Counsel and each Investor who holds Registrable Securities
being           sold of the issuance of such order and the resolution thereof or its
receipt of           actual notice of the initiation or threat of any proceeding for such
purpose.  

	 	        h.
If any Investor is required under applicable securities law to be described in
          the Registration Statement as an underwriter, at the reasonable request of such
          Investor, the Company shall furnish to such Investor, on the date of the
          effectiveness of the Registration Statement and thereafter from time to time on
          such dates as an Investor may reasonably request (i) a letter, dated on such
          date, from the Company’s independent certified public accountants in form
          and substance as is customarily given by independent certified public
          accountants to underwriters in an underwritten public offering, addressed to
the           Investors, and (ii) an opinion, dated as of such date, of counsel
representing           the Company for purposes of such Registration Statement, in form,
scope and           substance as is customarily given in an underwritten public offering,
addressed           to the Investors.  

	 	        i.
The Company shall hold in confidence and not make any disclosure of information
          concerning an Investor provided to the Company unless (i) disclosure of such
          information is necessary to comply with federal or state securities laws, or
          applicable rules and regulations relating of the Principal Market (as defined
in           the Securities Purchase Agreement), (ii) the disclosure of such information
is           necessary or desirable to avoid or correct a misstatement or omission in any
          Registration Statement, (iii) the release of such information is ordered
          pursuant to a subpoena or other final, non-appealable order from a court or
          governmental body of competent jurisdiction, or (iv) such information has been
          made generally available to the public other than by disclosure in violation of
          this Agreement or any other agreement. The Company agrees that it shall, upon
          learning that disclosure of such information concerning an Investor is sought
in           or by a court or governmental body of competent jurisdiction or through
other           means, give prompt written notice to such Investor and allow such
Investor, at           the Investor’s expense, to undertake appropriate action to
prevent           disclosure of, or to obtain a protective order for, such information.  

	 	        j.
The Company shall use its best efforts either to (i) cause all the Registrable
          Securities covered by a Registration Statement to be listed on each securities
          exchange on which securities of the same class or series issued by the Company
          are then listed, if any, if the listing of such Registrable Securities is then
          permitted under the rules of such exchange, or (ii) secure designation and
          quotation of all the Registrable Securities covered by a Registration Statement
          on Principal Market (as defined in the Securities Purchase Agreement), or any
          other United States national securities exchange on which the Company’s
          securities become listed. The Company shall pay all fees and expenses in
          connection with satisfying its obligation under this Section 3(j).  

6

	 	        k.
The Company shall cooperate with the Investors who hold Registrable Securities
          being offered and, to the extent applicable, facilitate the timely preparation
          and delivery of certificates (not bearing any restrictive legend) representing
          the Registrable Securities to be offered pursuant to a Registration Statement
          and enable such certificates to be in such denominations or amounts, as the
case           may be, as the Investors may reasonably request and registered in such
names as           the Investors may request.  

	 	        l.
If requested by an Investor, the Company shall (i) as soon as practicable
          incorporate in a prospectus supplement or post-effective amendment such
          information as an Investor reasonably requests in writing to be included
therein           relating to the sale and distribution of Registrable Securities,
including,           without limitation, information with respect to the number of
Registrable           Securities being offered or sold, the purchase price being paid
therefor and any           other terms of the offering of the Registrable Securities to
be sold in such           offering; (ii) as soon as practicable make all required filings
of such           prospectus supplement or post-effective amendment after being notified
of the           matters to be incorporated in such prospectus supplement or
post-effective           amendment; and (iii) as soon as practicable, supplement or make
amendments to           any Registration Statement if reasonably requested by an Investor
holding any           Registrable Securities.  

	 	        m.
The Company shall use its best efforts to cause the Registrable Securities
          covered by a Registration Statement to be registered with or approved by such
          other governmental agencies or authorities as may be necessary to consummate
the           disposition of such Registrable Securities.  

	 	        n.
RESERVED  

	 	        o.
The Company shall otherwise use its best efforts to comply with all applicable
          rules and regulations of the SEC in connection with any registration hereunder.  

	 	        p.
Within two (2) Business Days after a Registration Statement which covers
          Registrable Securities is ordered effective by the SEC, the Company shall
          deliver, and shall cause legal counsel for the Company to deliver, to the
          transfer agent for such Registrable Securities (with copies to the Investors
          whose Registrable Securities are included in such Registration Statement)
          confirmation that such Registration Statement has been declared effective by
the           SEC in the form attached hereto as Exhibit A.  

7

	 	        q.
Notwithstanding anything to the contrary herein, at any time after the
          Registration Statement has been declared effective by the SEC, the Company may
          delay the disclosure of material non-public information concerning the Company
          the disclosure of which at the time is not, in the good faith opinion of the
          Board of Directors of the Company and its counsel, in the best interest of the
          Company and, in the opinion of counsel to the Company, otherwise required (a
          “GRACE PERIOD”); provided, that the Company shall promptly (i) notify
          the Investors in writing of the existence of a Grace Period in conformity with
          the provisions of this Section 3(q) (provided that in each notice the Company
          will not disclose the content of such material non-public information to the
          Investors) and the date on which the Grace Period will begin, and (ii) notify
          the Investors in writing of the date on which the Grace Period ends; and,
          provided further, that no Grace Period shall exceed ten (10) consecutive days
          and during any three hundred sixty five (365) day period such Grace Periods
          shall not exceed an aggregate of thirty (30) days and the first day of any
Grace           Period must be at least two (2) trading days after the last day of any
prior           Grace Period (each, an “ALLOWABLE GRACE PERIOD”). For purposes
of           determining the length of a Grace Period above, the Grace Period shall begin
on           and include the date the Investors receive the notice referred to in clause
(i)           and shall end on and include the later of the date the Investors receive
the           notice referred to in clause (ii) and the date referred to in such notice.
The           provisions of Section 3(g) hereof shall not be applicable during the period
of           any Allowable Grace Period. Upon expiration of the Grace Period, the Company
          shall again be bound by the first sentence of Section 3(f) with respect to the
          information giving rise thereto unless such material non-public information is
          no longer applicable. Notwithstanding anything to the contrary, the Company
          shall cause its transfer agent to deliver unlegended shares of Common Stock to
a           transferee of an Investor in accordance with the terms of the Securities
          Purchase Agreement in connection with any sale of Registrable Securities with
          respect to which an Investor has entered into a contract for sale, and
delivered           a copy of the prospectus included as part of the applicable
Registration           Statement, prior to the Investor’s receipt of the notice of a
Grace Period           and for which the Investor has not yet settled.  

        4.
OBLIGATIONS OF THE INVESTORS.  

	 	        a.
At least fourteen (14) Business Days prior to the first anticipated filing date
          of a Registration Statement, the Company shall notify each Investor in writing
          of the information the Company requires from each such Investor if such Investor
          elects to have any of such Investor’s Registrable Securities included in
          such Registration Statement. It shall be a condition precedent to the
          obligations of the Company to complete the registration pursuant to this
          Agreement with respect to the Registrable Securities of a particular Investor
          that such Investor shall furnish to the Company such information regarding
          itself, the Registrable Securities held by it and the intended method of
          disposition of the Registrable Securities held by it as shall be reasonably
          required to effect the effectiveness of the registration of such Registrable
          Securities and shall execute such documents in connection with such registration
          as the Company may reasonably request. All information provided to the Company
          by an Investor pursuant to this Section 3(a) shall be in writing, and such
          writing shall expressly acknowledge that the information is being provided for
          use in connection with the preparation of the Registration Statement or any such
          amendment thereof or supplement thereto.  

	 	        b.
Each Investor, by such Investor’s acceptance of the Registrable Securities,
          agrees to cooperate with the Company as reasonably requested by the Company in
          connection with the preparation and filing of any Registration Statement
          hereunder, unless such Investor has notified the Company in writing of such
          Investor’s election to exclude all of such Investor’s Registrable
          Securities from such Registration Statement.  

	 	        c.
Each Investor covenants and agrees that it will comply with the prospectus
          delivery requirements of the 1933 Act as applicable to it in connection with
          sales of Registrable Securities pursuant to a Registration Statement.  

8

        5
EXPENSES.  

The Company shall bear all expenses
in connection with the registration procedures set forth in Sections 1 and 2 above, other
than fees and expenses, if any, of counsel or other advisers to any Investor or
underwriting discounts, brokerage fees and commissions incurred by any Investor, if any. 

        6.
          INDEMNITIES. In the event of any registered offering of Ordinary Shares of the
          Company pursuant to this Agreement:  

	 	        a.
The Company will indemnify and hold harmless, to the fullest extent permitted by
          law, each Investor, the directors, officers, partners, employees, agents,
          representatives or and each Person, if any, who controls any Investor (each an
          “Indemnitee”) from and against any and all losses, damages,
          claims, liabilities, joint or several, costs and expenses (including any amounts
          paid in any settlement effected with the Company’s consent) to which an
          Indemnitee may become subject under applicable law, insofar as such losses,
          damages, claims, liabilities (or actions or proceedings in respect thereof),
          costs or expenses arise out of or are based upon (i) any untrue statement or
          alleged untrue statement of any material fact contained in the registration
          statement or included in the final prospectus, as amended or supplemented, or
          (ii) the omission or alleged omission to state therein a material fact required
          to be stated therein or necessary to make the statements therein, in the light
          of the circumstances in which they are made, not misleading, and the Company
          will reimburse an Indemnitee, promptly upon demand, for any reasonable legal or
          any other expenses incurred by them in connection with investigating, preparing
          to defend or defending against or appearing as a third-party witness in
          connection with such loss, claim, damage, liability, action or proceeding;
          provided, however, that the Company will not be liable in any such
          case to the extent that any such loss, damage, liability, cost or expense arises
          out of or is based upon an untrue statement or alleged untrue statement or
          omission or alleged omission so made in conformity with information furnished in
          writing by such Indemnitee; provided, further, that the indemnity
          agreement contained in this subsection 6(a) shall not apply to amounts paid
          in settlement of any such claim, loss, damage, liability or action if such
          settlement is effected without the consent of the Company, which consent shall
          not be unreasonably withheld.  

	 	        b.
Each Investor will indemnify and hold harmless the Company, any underwriter for
          the Company, and each person, if any, who controls the Company or such
          underwriter, from and against any and all losses, damages, claims, liabilities,
          costs or expenses (including any amounts paid in any settlement effected with
          the selling shareholder’s consent) to which the Company or any such
          controlling person and/or any such underwriter may become subject under
          applicable law, insofar as such losses, damages, claims, liabilities (or actions
          or proceedings in respect thereof), costs or expenses arise out of or are based
          on (i) any untrue or alleged untrue statement of any material fact
          contained in the registration statement or included in the prospectus, as
          amended or supplemented, or (ii) the omission or the alleged omission to
          state therein a material fact required to be stated therein or necessary to make
          the statements therein, in the light of the circumstances in which they were
          made, not misleading, and each Investor will reimburse the Company, any
          underwriter and each such controlling person of the Company or any underwriter,
          promptly upon demand, for any reasonable legal or other expenses incurred by
          them in connection with investigating, preparing to defend or defending against
          or appearing as a third-party witness in connection with such loss, claim,
          damage, liability, action or proceeding; in each case to the extent, but only to
          the extent, that such untrue statement or alleged untrue statement or omission
          or alleged omission was so made in strict conformity with written information
          furnished by such Investor specifically for inclusion therein. The foregoing
          indemnity agreement is subject to the condition that, insofar as it relates to
          any such untrue statement (or alleged untrue statement) or omission (or alleged
          omission) made in the preliminary prospectus but eliminated or remedied in the
          amended prospectus at the time the registration statement becomes effective or
          in the final prospectus, such indemnity agreement shall not inure to the benefit
          of (i) the Company and (ii) any underwriter, if a copy of the final
          prospectus was not furnished to the person or entity asserting the loss,
          liability, claim or damage at or prior to the time such furnishing is required
          by the 1933 Act; provided, further, that this indemnity shall not
          be deemed to relieve any underwriter of any of its due diligence obligations;
          provided, further, that the indemnity agreement contained in this
          subsection 6(b) shall not apply to amounts paid in settlement of any such
          claim, loss, damage, liability or action if such settlement is effected without
          the consent of such Investor, which consent shall not be unreasonably withheld.  

9

	 	        c.
 Promptly after receipt by an indemnified party pursuant to the provisions of
          Sections 6(a) or 6(b) of notice of the commencement of any action involving the
          subject matter of the foregoing indemnity provisions, such indemnified party
          will, if a claim thereof is to be made against the indemnifying party pursuant
          to the provisions of said Section 6(a) or 6(b), promptly notify the indemnifying
          party of the commencement thereof; but the omission to notify the indemnifying
          party will not relieve it from any liability which it may have to any
          indemnified party otherwise than hereunder, except to the extent that the
          indemnifying party is prejudiced in its ability to defend such action. In case
          such action is brought against any indemnified party and it notifies the
          indemnifying party of the commencement thereof, the indemnifying party shall
          have the right to participate in, and, to the extent that it may wish, jointly
          with any other indemnifying party similarly notified, to assume the defense
          thereof with counsel reasonably satisfactory to such indemnified party;
          provided, however, that if the defendants in any action include
          both the indemnified party and the indemnifying party and there is a conflict of
          interests which would prevent counsel for the indemnifying party from also
          representing the indemnified party, the indemnified party or parties shall have
          the right to select one separate counsel to participate in the defense of such
          action on behalf of such indemnified party or parties. After notice from the
          indemnifying party to such indemnified party of its election so to assume the
          defense thereof, the indemnifying party will not be liable to such indemnified
          party pursuant to the provisions of said Sections 6(a) or 6(b) for any legal or
          other expense subsequently incurred by such indemnified party in connection with
          the defense thereof, unless (i) the indemnified party shall have employed
          counsel in accordance with the provision of the preceding sentence, (ii) the
          indemnifying party shall not have employed counsel reasonably satisfactory to
          the indemnified party to represent the indemnified party within a reasonable
          time after the notice of the commencement of the action and within fifteen (15)
          days after written notice of the indemnified party’s intention to employ
          separate counsel pursuant to the previous sentence, or (iii) the indemnifying
          party has authorized the employment of counsel for the indemnified party at the
          expense of the indemnifying party. No indemnifying party will consent to entry
          of any judgment or enter into any settlement which does not include as an
          unconditional term thereof the giving by the claimant or plaintiff to such
          indemnified party of a release from all liability in respect to such claim or
          litigation.  

	 	        d.
The indemnification required by this Section 6 shall be made by periodic
          payments of the amount thereof during the course of the investigation or
          defense, as and when bills are received or Indemnified Damages are incurred.  

10

        7.
          CONTRIBUTION.  

        To
the extent any indemnification by an indemnifying party is prohibited or limited by law,
the indemnifying party agrees to make the maximum contribution with respect to any amounts
for which it would otherwise be liable under Section 6 to the fullest extent permitted by
law; provided, however, that: (i) no Person involved in the sale of Registrable Securities
which Person is guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) in connection with such sale shall be entitled to contribution from
any Person involved in such sale of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received by such
seller from the sale of such Registrable Securities pursuant to such Registration
Statement. 

        8.
          REPORTS UNDER THE 1934 ACT.  

        With
a view to making available to the Investors the benefits of Rule 144 promulgated under the
1933 Act or any other similar rule or regulation of the SEC that may at any time permit
the Investors to sell securities of the Company to the public without registration
(“RULE 144”), the Company agrees to: 

	 	        a.
make and keep public information available, as those terms are understood and
          defined in Rule 144;  

	 	        b.
file with the SEC in a timely manner all reports and other documents required of
          the Company under the 1933 Act and the 1934 Act so long as the Company remains
          subject to such requirements (it being understood that nothing herein shall
          limit the Company’s obligations under Section 4(c) of the Securities
          Purchase Agreement) and the filing of such reports and other documents is
          required for the applicable provisions of Rule 144; and  

	 	        c.
furnish to each Investor so long as such Investor owns Registrable Securities,
          promptly upon request, (i) a written statement by the Company, if true, that it
          has complied with the reporting requirements of Rule 144, the 1933 Act and the
          1934 Act, (ii) a copy of the most recent annual or quarterly report of the
          Company and such other reports and documents so filed by the Company, and (iii)
          such other information as may be reasonably requested to permit the Investors
to           sell such securities pursuant to Rule 144 without registration.  

        9.
          ASSIGNMENT OF REGISTRATION RIGHTS.  

        The
rights under this Agreement shall be automatically assignable by the Investors to any
transferee of all or any portion of such Investor’s Registrable Securities if: (i)
the Investor agrees in writing with the transferee or assignee to assign such rights, and
a copy of such agreement is furnished to the Company within a reasonable time after such
assignment; (ii) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (a) the name and address of such transferee
or assignee, and (b) the securities with respect to which such registration rights are
being transferred or assigned; (iii) immediately following such transfer or assignment the
further disposition of such securities by the transferee or assignee is restricted under
the 1933 Act and applicable state securities laws; (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence the transferee or
assignee agrees in writing with the Company to be bound by all of the provisions contained
herein; and (v) such transfer shall have been made in accordance with the applicable
requirements of the Securities Purchase Agreement. 

11

        10.
          AMENDMENT OF REGISTRATION RIGHTS.  

        Provisions
of this Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and Investors who then hold at least seventy-five
percent (75%) of the Registrable Securities. Any amendment or waiver effected in
accordance with this Section 6 shall be binding upon each Investor and the Company. No
such amendment shall be effective to the extent that it applies to less than all of the
holders of the Registrable Securities. No consideration shall be offered or paid to any
Person to amend or consent to a waiver or modification of any provision of any of this
Agreement unless the same consideration also is offered to all of the parties to this
Agreement. 

        11.
          MISCELLANEOUS.  

	 	        a.
A Person is deemed to be a holder of Registrable Securities whenever such Person
          owns or is deemed to own of record such Registrable Securities. If the Company
          receives conflicting instructions, notices or elections from two or more
Persons           with respect to the same Registrable Securities, the Company shall act
upon the           basis of instructions, notice or election received from the record
owner of such           Registrable Securities.  

	 	        b.
Any notices, consents, waivers or other communications required or permitted to
          be given under the terms of this Agreement must be in writing and will be
deemed           to have been delivered: (i) upon receipt, when delivered personally;
(ii) upon           receipt, when sent by facsimile (provided confirmation of
transmission is           mechanically or electronically generated and kept on file by
the sending party);           or (iii) one Business Day after deposit with a nationally
recognized overnight           delivery service, in each case properly addressed to the
party to receive the           same. The addresses and facsimile numbers for such
communications shall be:  

If to the Company: 

		
		Elbit Vision Systems Ltd.

1 Hayasur Street,

Hasharon Industrial Park,

Kadima, P.O. Box 60920,

Israel

Telephone: 972-9-866 1610

Fax:            972-9- 8661700

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

Yigal Arnon & Co.

One Azrieli Center, Round Tower, Tel Aviv, Israel

Telephone:   +(972)-3-608-7864

Facsimile:    +(972)-3-608-7714

Attention:     Adrian Daniels, Adv.

12

        If
to an Investor, to its address and facsimile number set forth on the Schedule of Investors
attached hereto, with copies to such Investor’s representatives as set forth on the
Schedule of Investors, or to such other address and/or facsimile number and/or to the
attention of such other Person as the recipient party has specified by written notice
given to each other party five (5) days prior to the effectiveness of such change. Written
confirmation of receipt (A) given by the recipient of such notice, consent, waiver or
other communication, (B) mechanically or electronically generated by the sender’s
facsimile machine containing the time, date, recipient facsimile number and an image of
the first page of such transmission or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, receipt by facsimile or receipt
from a nationally recognized overnight delivery service in accordance with clause (i),
(ii) or (iii) above, respectively. 

	 	        c.
Failure of any party to exercise any right or remedy under this Agreement or
          otherwise, or delay by a party in exercising such right or remedy, shall not
          operate as a waiver thereof.  

	 	        d.
This Rights Agreement shall be governed by and construed in accordance with the
          internal laws of the State of Israel, without giving effect to any statutes
          concerning choice or conflict of law (whether of the State of Israel or any
          other jurisdiction) that would cause the application of the laws of any
          jurisdiction other than the State of Israel. Any controversy or claim arising
          out of or in connection with this agreement or any breach or alleged breach
          hereof shall be exclusively resolved by the competent courts of Tel Aviv,
          Israel, and each of the parties hereby irrevocably submits to the exclusive
          jurisdiction of such courts.  

	 	        e.
This Agreement, the Securities Purchase Agreement, the Warrants and the
          instruments referenced herein and therein constitute the entire agreement among
          the parties hereto with respect to the subject matter hereof and thereof. There
          are no restrictions, promises, warranties or undertakings, other than those set
          forth or referred to herein and therein. This Agreement, the Securities
Purchase           Agreement, the Warrants and the instruments referenced herein and
therein           supersede all prior agreements and understandings among the parties
hereto with           respect to the subject matter hereof and thereof.  

	 	        f.
The headings in this Agreement are for convenience of reference only and shall
          not limit or otherwise affect the meaning hereof.  

	 	        g.
This Agreement may be executed in identical counterparts, each of which shall be
          deemed an original but all of which shall constitute one and the same
agreement.           This Agreement, once executed by a party, may be delivered to the
other party           hereto by facsimile transmission of a copy of this Agreement
bearing the           signature of the party so delivering this Agreement.  

13

	 	        h.
Each party shall do and perform, or cause to be done and performed, all such
          further acts and things, and shall execute and deliver all such other
          agreements, certificates, instruments and documents, as any other party may
          reasonably request in order to carry out the intent and accomplish the purposes
          of this Agreement and the consummation of the transactions contemplated hereby.  

	 	        i.
All consents and other determinations required to be made by the Investors
          pursuant to this Agreement shall be made, unless otherwise specified in this
          Agreement, by Investors holding at least a majority of the Registrable
          Securities, determined as if all the Warrants then outstanding have been
          exercised for Registrable Securities without regard to any limitations on
          exercises of the Warrants.  

	 	        j.
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.  

	 	        k.
This Agreement is intended for the benefit of the parties hereto and their
          respective permitted successors and assigns, and is not for the benefit of, nor
          may any provision hereof be enforced by, any other Person.  

	 	        l.
This Agreement shall terminate and be of no further effect on the date on which
          the Investors shall have sold, or can sell publicly pursuant to Rule 144 (k) ,
          all of the Registrable Securities, without any limitation whatsoever, including
          any volume limitations, and further provided, that the restrictive legend was
          removed of all the Registrable Securities.  

14

        IN
WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be duly
executed as of day and year first above written. 

COMPANY: 

ELBIT VISION SYSTEMS LTD. 

	By:
——————————————

Name:
Title:		

BUYERS:

	By:
——————————————

Name:
——————————————
Title:
——————————————		

15

SCHEDULE OF BUYERS

					
	(1)	(2)	(3)	(4)	(5)

	NAME 	ADDRESS AND 
FACSIMILE NUMBER	NUMBER OF

PURCHASED SHARES 	NUMBER OF

WARRANTS 	AGGREGATE 
PURCHASE PRICE 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

16

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