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<SEC-DOCUMENT>0000950144-07-000141.txt : 20070108
<SEC-HEADER>0000950144-07-000141.hdr.sgml : 20070108
<ACCEPTANCE-DATETIME>20070108144551
ACCESSION NUMBER:		0000950144-07-000141
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		12
CONFORMED PERIOD OF REPORT:	20061231
ITEM INFORMATION:		Entry into a Material Definitive Agreement
ITEM INFORMATION:		Completion of Acquisition or Disposition of Assets
ITEM INFORMATION:		Unregistered Sales of Equity Securities
ITEM INFORMATION:		Changes in Control of Registrant
ITEM INFORMATION:		Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers
ITEM INFORMATION:		Change in Shell Company Status
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20070108
DATE AS OF CHANGE:		20070108

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ORTHODONTIX INC
		CENTRAL INDEX KEY:			0001006281
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-MANAGEMENT SERVICES [8741]
		IRS NUMBER:				650643773
		STATE OF INCORPORATION:			FL
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-27836
		FILM NUMBER:		07517229

	BUSINESS ADDRESS:	
		STREET 1:		1428 BRICKELL AVENUE
		STREET 2:		SUITE 105
		CITY:			MIAMI
		STATE:			FL
		ZIP:			33131
		BUSINESS PHONE:		3054468661

	MAIL ADDRESS:	
		STREET 1:		1428 BRICKELL AVE
		STREET 2:		STE 105
		CITY:			MIAMI
		STATE:			FL
		ZIP:			33131

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	EMBASSY ACQUISITION CORP
		DATE OF NAME CHANGE:	19960124
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>g04822e8vk.htm
<DESCRIPTION>ORTHODONTIX INC.
<TEXT>
<HTML>
<HEAD>
<TITLE>Orthodontix Inc.</TITLE>
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<BODY bgcolor="#FFFFFF">
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>








<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>Washington, D.C. 20549</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><DIV align="center"><DIV style="font-size: 3pt; margin-top: 16pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>

</DIV>
<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>FORM 8-K</B>
</DIV>


<DIV align="center" style="font-size: 12pt; margin-top: 12pt"><B>CURRENT
REPORT</B></DIV>
<DIV align="center" style="font-size: 12pt; margin-top: 0pt"><B>
Pursuant to Section&nbsp;13 or 15(d)<BR>
of the Securities Exchange Act of 1934</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><DIV align="center"><DIV style="font-size: 3pt; margin-top: 16pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>Date of Report (Date of earliest event reported): December&nbsp;31, 2006</B>

</DIV>
<DIV align="center" style="font-size: 24pt; margin-top: 12pt"><B>Orthodontix, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt">(Exact name of registrant as specified in its charter)</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
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    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top">Florida
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">000-27836
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">65-0643773</TD>
</TR>
<TR style="font-size: 1px">
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">(State or other <BR>
jurisdiction of <BR>
incorporation)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Commission<BR>
File Number)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(IRS Employer<BR>
Identification No.)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>2 Snunit Street<BR>
Science Park<BR>
POB 455<BR>
Carmiel, Israel 21000</B>

</DIV>
<DIV align="center" style="font-size: 10pt">
<DIV style="margin-top: 1px"><FONT style="border-top: 1px solid #000000">(Address of principal executive offices) (Zip Code)</FONT></DIV></DIV>



<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">
<FONT style="border-bottom: 1px solid #000000">1428 Brickell Avenue,
Suite&nbsp;105, Miami, Florida 33131</FONT>

</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 0pt">(Former Name or Former Address, if Changed Since Last Report)

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Registrant&#146;s telephone number, including area code: (305)&nbsp;371-4112
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;Written communications pursuant to Rule&nbsp;425 under the Securities Act (17 CFR 230.425)
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;Soliciting material pursuant to Rule&nbsp;14a-12 under the Exchange Act (17 CFR 240.14a-12)
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;Pre-commencement communications pursuant to Rule&nbsp;14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;Pre-commencement communications pursuant to Rule&nbsp;13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
</DIV>


<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>





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<DIV style="font-family: 'Times New Roman',Times,serif">








<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The statements set forth under the captions &#147;Business,&#148; &#147;Management&#146;s Discussion and Analysis of
Financial Condition and Results of Operations,&#148; and &#147;Risk Factors&#148;, and other statements included
elsewhere in this Current Report on Form 8-K, which are not historical, constitute &#147;Forward Looking
Statements&#148; within the meaning of Section&nbsp;27A of the Securities Act of 1933, as amended, and
Section&nbsp;21E of the Securities Exchange Act of 1934, as amended, including statements regarding the
expectations, beliefs, intentions or strategies for the future. When used in this report, the
terms &#147;anticipate,&#148; &#147;believe,&#148; &#147;estimate,&#148; &#147;expect&#148; and &#147;intend&#148; and words or phrases of similar
import, as they relate to our or our subsidiaries or our management, are intended to identify
forward-looking statements. We intend that all forward-looking statements be subject to the
safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are only predictions and reflect our views as of the date they are made
with respect to future events and financial performance. Forward-looking statements are subject to
many risks and uncertainties that could cause our actual results to differ materially from any
future results expressed or implied by the forward-looking statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Examples of the risks and uncertainties include, but are not limited to the following: the inherent
risks and uncertainties in developing drug platforms and products of the type we are developing;
delays in our preparation and filing of applications for regulatory approval; delays in the
approval or potential rejection of any applications we file with the FDA, or other health
regulatory authorities; risks that any of these regulatory authorities will not approve the
marketing and sale of a drug product even after they grant us initial approval of any of these drug
products; possible changes in our financial condition; any lack of progress of our research and
development (including the results of clinical trials being conducted by us); interruptions in the
supply of adequate amounts of drug substance and drug product for our clinical trials, which may be
difficult or uneconomical to procure or manufacture; obtaining on a timely basis sufficient patient
enrollment in our clinical trials; the impact of development of competing therapies and/or
technologies by other companies; our ability to obtain additional financings required to fund our
research programs; the risk that we will not be able to develop a successful sales and marketing
organization in a timely manner, if at all; the additional costs and delays that may result from
requirements imposed by the health regulatory authorities in connection with obtaining the required
approvals; assessment of the outcome and financial impact of litigation and other governmental
proceedings and the potential impact of unasserted claims; our ability to establish and maintain
strategic license, collaboration and distribution arrangements and to manage our relationships with
collaborators, distributors and partners; potential product liability risks and risks of securing
adequate levels of product liability and clinical trial insurance coverage; the availability of
reimbursement to patients from health care payors for procedures in which our products are used;
the possibility of infringing a third party&#146;s patents or other intellectual property rights; the
uncertainty of obtaining patents covering our products and processes and in successfully enforcing
them against third parties; and the possible disruption of our operations due to terrorist
activities and armed conflict, including as a result of the disruption of operations of regulatory
authorities, our subsidiaries, our manufacturing facilities and our customers, suppliers,
distributors, couriers, collaborative partners, licensees, and clinical trial sites.
</DIV>


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<TR><TD colspan="9"><A HREF="#000">Item&nbsp;1.01. Entry into a Material Definitive Agreement</A></TD></TR>
<TR><TD colspan="9"><A HREF="#001">Item&nbsp;2.01. Completion of Acquisition or Disposition of Assets</A></TD></TR>
<TR><TD colspan="9"><A HREF="#002">Items 3.02. Unregistered Sales of Equity Securities</A></TD></TR>
<TR><TD colspan="9"><A HREF="#003">Item. 5.01. Changes in Control of Registrant</A></TD></TR>
<TR><TD colspan="9"><A HREF="#004">Item&nbsp;5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers, Compensatory Arrangements of Certain Officer</A></TD></TR>
<TR><TD colspan="9"><A HREF="#005">Item&nbsp;5.06. Change in Shell Company Status</A></TD></TR>
<TR><TD colspan="9"><A HREF="#006">Item&nbsp;9.01. Financial Statements and Exhibits</A></TD></TR>
<TR><TD colspan="9"><A HREF="#007">SIGNATURES</A></TD></TR>
<TR><TD colspan="9"><A HREF="g04822exv4w1.htm">EX-4.1 Form of Warrant</A></TD></TR>
<TR><TD colspan="9"><A HREF="g04822exv10w1.htm">EX-10.1 2006 Stock Incentive Plan</A></TD></TR>
<TR><TD colspan="9"><A HREF="g04822exv10w2.htm">EX-10.2 Employment Agreement w/Yoseph Shaaltiel</A></TD></TR>
<TR><TD colspan="9"><A HREF="g04822exv10w3.htm">EX-10.3 Employment Agreement w/Einat Almon</A></TD></TR>
<TR><TD colspan="9"><A HREF="g04822exv10w4.htm">EX-10.4 Employment Agreement w/David Aviezer</A></TD></TR>
<TR><TD colspan="9"><A HREF="g04822exv10w5.htm">EX-10.5 Employment Agreement w/Yossi Maimon</A></TD></TR>
<TR><TD colspan="9"><A HREF="g04822exv10w6.htm">EX-10.6 License Agreement</A></TD></TR>
<TR><TD colspan="9"><A HREF="g04822exv10w7.htm">EX-10.7 Research and License Agreement</A></TD></TR>
<TR><TD colspan="9"><A HREF="g04822exv10w8.htm">EX-10.8 Agreement between Teva and Protalix</A></TD></TR>
<TR><TD colspan="9"><A HREF="g04822exv10w9.htm">EX-10-9 Unprotected Lease Contract</A></TD></TR>
<TR><TD colspan="9"><A HREF="g04822exv10w10.htm">EX-10.10 Merger Agreement and Plan</A></TD></TR>
</TABLE>
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, companies in the pharmaceutical and biotechnology industries have suffered
significant setbacks in advanced clinical trials, even after obtaining promising earlier trial
results. These associated risks and other risks and uncertainties are detailed under &#147;Risk
Factors&#148; and in any documents incorporated by reference in this Current Report on Form 8-K. We
undertake no obligation to update, and we do not have a policy of updating or revising, these
forward-looking statements. Except where the context otherwise requires, the terms, &#147;we&#148;, &#147;us&#148;,
&#147;our&#148;, &#147;the Company,&#148; or &#147;Orthodontix&#148; refer to the business of Orthodontix, Inc. and its
consolidated subsidiaries, and &#147;Protalix&#148; or &#147;Protalix Ltd.&#148; refers to the business of Protalix
Ltd., our wholly-owned subsidiary and sole operating unit.
</DIV>
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<DIV align="left"><A NAME="000"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;1.01. Entry into a Material Definitive Agreement</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The disclosures set forth in Items 2.01, 5.02, and 5.03 to this Current Report are incorporated
into this item by reference.
</DIV>

<!-- link1 "Item&nbsp;2.01. Completion of Acquisition or Disposition of Assets" -->
<DIV align="left"><A NAME="001"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;2.01. Completion of Acquisition or Disposition of Assets.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>The Merger</B>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On December&nbsp;31, 2006, we acquired through a merger of our wholly owned subsidiary, Protalix
Acquisition Co. Ltd., all of the outstanding shares of Protalix Ltd., a privately-held Israeli
biotechnology company, in exchange for shares of our common stock, par value $.001 per share. As a
result, Protalix Ltd. is now our wholly-owned subsidiary, with the former shareholders of Protalix
Ltd. acquiring in excess of 99% of our outstanding shares of common stock. In connection with the
merger, we effected a one-for-ten reverse stock split. All share numbers in this Current Report on
Form 8-K give effect to such reverse stock split. We incurred acquisition related costs in
connection with this transaction which will be reflected in the
financial statements we file with the Securities and Exchange
Commission.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our trading symbol was &#147;OTIX.BB&#148;; however, in connection with the reverse split, it was changed to
&#147;ORTX.BB&#148;. We intend to change our name to Protalix BioTherapeutics, Inc., and our trading symbol
to &#147;PLXB&#148;. The merger was consummated pursuant to a Merger Agreement and Plan of Reorganization,
dated August&nbsp;21, 2006, as amended on October&nbsp;31, 2006 and November&nbsp;30, 2006, by and among us,
Protalix Acquisition Co. Ltd., and Protalix Ltd.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">At the closing of the merger, the former shareholders of Protalix Ltd. received shares of our
common stock in exchange for all of their shares of Protalix Ltd. in a proportion equal to
approximately 61 shares of our common stock for each 1 ordinary share of Protalix Ltd. As a result,
at the closing of the merger, we issued an aggregate of 61,198,679 shares of our common stock to
the former shareholders of Protalix Ltd, and the shares of Orthodontix common stock that were
outstanding prior to the merger were converted into shares representing less than 1% of the
outstanding shares of Orthodontix&#146;s common stock on a fully diluted basis. Of the 61,198,679
shares of Orthodontix&#146;s common stock issued in the merger,
12,243,130, or approximately 15.82% of
the outstanding shares of common stock on a fully diluted basis at the closing of the merger, were
received by a trust controlled by Phillip Frost, M.D., one of our directors, Glenn L. Halpryn, a
former director of ours and certain other recent investors in Protalix Ltd. In addition, we
assumed the obligations under outstanding warrants previously
issued by Protalix Ltd. to purchase 117,168 of Protalix Ltd.&#146;s ordinary shares and, in connection
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">therewith,
we issued warrants and options to purchase 7,504,242 shares of our common stock to
certain shareholders and board members of Protalix Ltd. Of the foregoing, warrants to purchase
3,875,416 shares of common stock were issued to the recent investors in Protalix Ltd.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Immediately prior to the closing of the merger, Protalix Ltd. had outstanding options to purchase
88,001 ordinary shares under its employee stock option plan. Pursuant to the terms of the Merger
Agreement, Orthodontix assumed all of the outstanding obligations under such plan and, accordingly,
Orthodontix anticipates issuing 5,375,174 shares of its common stock upon the exercise of such
options in lieu of shares of Protalix Ltd. and has reserved an
additional 4,366,481 shares of its
common stock under its incentive plan for future allocation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In addition, prior to the closing of the merger, on September&nbsp;12, 2006, pursuant to a share
purchase agreement dated August&nbsp;21, 2006, Protalix Ltd. completed the sale of 163,774 ordinary
shares, or 14% of its outstanding ordinary shares, and warrants to purchase an additional 57,691
ordinary shares, or 5% of the outstanding ordinary shares, of Protalix Ltd., on a fully diluted
basis, in a private placement to a trust controlled by Dr.&nbsp;Frost, Glenn L. Halpryn and certain
other investors introduced to Protalix Ltd. by Dr.&nbsp;Frost. Protalix Ltd. received gross proceeds
from the private placement equal to $15,000,000. In connection with such share purchase agreement,
prior to the closing of the merger, the investors invested an
additional $122,988. As a
result of the merger, the shares received by these investors were converted into 10,054,600 shares
of our common stock, representing 12.99% of our total outstanding capital stock on a fully-diluted
basis after the closing of the merger, and the warrants were converted into warrants issued by us
that are exercisable into 3,875,416 shares of our common stock,
representing approximately 5% of our total
outstanding shares on a fully diluted basis at the closing of the merger.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under the terms of this share purchase agreement, in connection with services provided and
anticipated to be provided to the merged company, including the services to be provided by each of
Dr.&nbsp;Frost and Dr.&nbsp;Hsiao as directors, we have issued to Dr.&nbsp;Frost, Jane Hsiao, Ph.D. and one other
investor options that are exercisable into 2.5%, 0.5% and 0.5%, respectively, of our issued and
outstanding common stock on a fully-diluted basis immediately after the closing of the merger.
Such amounts equaled 1,937,708, 387,542 and 387,542 shares, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The private placement was made solely to &#147;accredited investors,&#148; as that term is defined in
Regulation&nbsp;D under the Securities Act of 1933, as amended, and was conducted in reliance on the
exemption from registration afforded by Section&nbsp;4(2), Rule&nbsp;506 of Regulation&nbsp;D and Regulation&nbsp;S
under the Securities Act of 1933, as amended, and corresponding provisions of state securities
laws.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have agreed to use our best efforts to file a shelf registration statement with the SEC covering
the resale of all shares of common stock received by Protalix Ltd.&#146;s former shareholders after our
common stock has been listed for trading on the American Stock Exchange, if at all, and to use our
best efforts to cause such registration statement to be declared effective as promptly as possible
after filing. We are obligated to maintain the effectiveness of this shelf registration statement
until the shares registered under it are eligible for resale under
</DIV>



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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Rule&nbsp;144(k) of the
Securities Act of 1933, as amended. There can be no assurance that the American Stock Exchange
will list our shares for trading.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Tax Ruling and Lock-up Agreements</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In connection with the merger, substantially all of the former shareholders of Protalix Ltd.
entered into lock-up agreements to satisfy Israeli tax laws and contractual obligations. The
lock-up agreements prohibit such former Protalix shareholders from, directly or indirectly, selling
or otherwise transferring the shares of our common stock issued to them as a result of the merger
during a period commencing upon the closing of the merger and ending on January&nbsp;1, 2009. However,
during such period, each such former Protalix shareholder may, under the terms of the lock-up
agreements and the tax ruling described below, sell an aggregate of 10% of each such shareholder&#146;s
original number of locked-up shares. All permitted sales of locked-up shares that may be made
during such time period are cumulative.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Furthermore, under applicable tax law, incorporated by reference into the tax ruling obtained by
Protalix Ltd. from the Israeli tax authorities, during the lock-up period, we must maintain our
holding of at least 51% of Protalix Ltd. and our shareholders at the time of the consummation of
the merger must maintain, in the aggregate, holdings of at least 51% of our outstanding share
capital.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We and Protalix Ltd. are entitled to issue up to 25% of our respective share capital to third
parties or a higher number of shares in a public offering, provided that we and Protalix Ltd. each
remain compliant with the limitations described above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Notwithstanding the limitations described above, the following transactions shall not be subject to
any limitation on the sale of shares under the ruling: (i)&nbsp;dispositions by any shareholder of our
company that holds less than 5% of our voting rights or issued and outstanding share capital upon
the merger; or (ii)&nbsp;a shareholder who is not subject to, or is exempt from, the payment of taxes in
Israel. These transactions are restricted pursuant to the contractual lock-ups described above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">According to the tax ruling, until the second anniversary of the closing of the merger, the
operation of our company and/or that of Protalix Ltd. shall be further limited as follows:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Most of Protalix Ltd.&#146;s operations and activities shall be directed to research and
development activities. The Encouragement of Industrial Research and Development Law,
1984, of the State of Israel defines research and development activity to include
certain expenses incurred by a company in connection with the transition to the
manufacturing and marketing of the products or technology that result from the research
and development efforts.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The consideration received and to be received in connection with the issuance of our
shares or rights, those of Protalix Ltd. or Orthodontix shall be used and reinvested in
research and development activity as defined above. Such consideration includes any
investment made in Protalix Ltd. prior to the merger</TD>
</TR>

</TABLE>
</DIV>
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<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>and the cash held by us as of the closing of the merger, after the deduction of any
amounts required for the operation of our company in the United States.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>at least 75% of the research and development expenditures of Protalix Ltd. shall be
made in Israel. However, the Israeli tax authorities may establish a lower percentage
if Protalix Ltd. makes expenditures in connection with clinical and toxicology trials
that cannot be conducted in Israel.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Business</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Orthodontix was formed as Embassy Acquisition Corp., a Florida corporation, in November&nbsp;1995 for
the purpose of effecting a merger with an operating business. In April&nbsp;1998, we merged with an
orthodontic practice management company and acquired assets and assumed certain liabilities of 26
orthodontic practices in exchange for shares of our common stock and the entering into of practice
management service agreements with these practices. Upon completing these acquisitions, we changed
our name to Orthodontix, Inc. and began managing the business aspects of these practices. By
November&nbsp;1999, we had ceased providing practice management services. By May&nbsp;2001, we had
terminated our affiliation with all these practices and, during the years ended December&nbsp;31, 2000
and 2001, we sold each of these practices until we had no further operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Upon the completion of the merger, we adopted the business of Protalix Ltd., which is our
wholly-owned subsidiary and operating unit. All references to Protalix for periods after the
closing of the merger shall refer to us and Protalix Ltd., collectively. We intend to change our
name from Orthodontix, Inc. to Protalix BioTherapeutics, Inc.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Company Overview</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We are an emerging clinical stage biopharmaceutical company that is focused on developing and
producing recombinant therapeutic proteins that are produced through our proprietary plant cell
system. In the biotechnology field, the production or manufacture of recombinant proteins is
commonly referred to as the &#147;expression&#148; of such proteins. Recombinant therapeutic proteins are
proteins that are produced by different genetically modified organisms following the insertion of
the relevant DNA into their genome and are the basis of most biopharmaceutical drugs currently
under development. Our sole operating unit, Protalix Ltd., was originally incorporated in Israel
as Metabogal Ltd. on December&nbsp;27, 1993, and, as it changed its focus to the expression of
recombinant therapeutic proteins in plant cells, changed its name to Protalix Ltd. on April&nbsp;26,
2004. Our principal business address is 2 Snunit Street, Science Park, POB 455, Carmiel, Israel
21000, where we operate a research and manufacturing facility. We use our plant cell culture and
bioreactor technology for the expression of recombinant therapeutic proteins, and we are currently
developing several such biotherapeutic products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our patented plant cell system enables the expression in plant cells of specific human genes, most
often genes coding for proteins of pharmaceutical or therapeutic value. Once the plant cells
produce a therapeutic protein, this protein may be grown on an industrial-scale in our proprietary
bioreactor system. Subsequently, the protein is extracted from the cells and purified to a
clinical
grade. Our system presents a proprietary method for the production of
recombinant proteins that we believe
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">is
safe and scaleable and will allow for the cost-effective industrial-scale production of such
recombinant human therapeutic proteins. In addition, we believe that our proprietary plant-cell
system has a number of advantages over other expression methodologies, as follows:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The glycosilation of a protein is the addition of a glycan, or sugar, residue
structure on the protein which, in certain
cases, binds the protein to a target cell and enables the
protein&#146;s therapeutic function and/or its bioactivity. In
certain cases, Protalix&#146;s proprietary manufacturing methods for
expressing proteins may provide
patent protection for the production method and potential market
advantage for the proteins produced through our system. Patent
protection and potential market advantage may be achieved for a
protein as well as the glycosilation structure of the protein;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our plant cell expression system is a contained
regulatory-compliant bioprocess that significantly reduces the
risk of contamination with pathogenic agents, such as viruses,
which are ordinarily associated with mammalian expression
methodologies; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A degree of control of the glycosilation process that is available through
our expression system enables the control of the glycosilation
process, thereby allowing for the production of highly uniform
therapeutic protein products which is necessary for large scale
production.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our lead
product candidate, prGCD, is a proprietary plant cell expressed recombinant form of
Glucocerebrosidase (GCD)&nbsp;for the treatment of Gaucher Disease, a lysosomal storage disorder in
humans. Glucocerebrosidase is an enzyme-based protein, the lack of which is a symptom of Gaucher
Disease. Enzymes are proteins that catalyze, or accelerate, chemical reactions in cells. Gaucher
Disease is commonly treated through enzyme replacement therapy (ERT), a medical treatment in which
an enzyme is replaced in patients in whom the enzyme is lacking or deficient. The only recombinant
Glucocerebrosidase currently available on the market and approved worldwide for the treatment of
Gaucher Disease is Cerezyme<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>, which is produced by Genzyme Corporation. According to
public reports issued by Genzyme, annual sales of Cerezyme approached $1&nbsp;billion in 2005 and sales
of Cerezyme in 2006 are exceeding 2005 sales. We received approval from the FDA to commence Phase
I clinical trials of prGCD under an IND (Investigational New Drug) application in July&nbsp;2005. The
Phase I clinical study was completed in June&nbsp;2006, and we believe that the data presented in the
final clinical report of this trial was promising for proceeding to the next phase of clinical
testing. We are currently preparing an application for FDA approval to commence a Phase III
pivotal trial of prGCD, which we expect to commence in 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We believe that we have demonstrated the potential of our plant cell manufacturing platform to
become a safe and efficacious expression technology for the manufacture or expression of a wide
variety of biopharmaceutical products. Accordingly, we are employing a two-pronged business
strategy that enables us to pursue our goal of becoming a fully integrated biopharmaceutical
company. In addition to our focused development of prGCD, we are using our protein expression
technology to develop an innovative proprietary product pipeline. We are evaluating and initiating
additional internal research programs through collaboration agreements with academic institutions,
such as the Yeda Research and Development Company Limited, the technology transfer arm of Israel&#146;s
Weizmann Institute of Science. In addition, we continuously review and consider development and
commercialization alliances with corporate partners in
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">specific and identified markets worldwide for specific products or territories in order to enable
us to optimize our resources and effectively penetrate target markets. We have recently entered
into such an agreement with Teva Pharmaceutical Industries Ltd.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Proprietary Technology</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Due to the high cost of protein expression through mammalian cells, many pharmaceutical and
biotechnology companies are considering new production technologies. The current industry standard
for expression of recombinant therapeutic glycoproteins, proteins that contain sugar residues, is
expression in cultured mammalian cells. The cells most often used in connection with mammalian
protein expression are Chinese hamster ovary (CHO)&nbsp;cells that are grown in highly sophisticated and
costly stainless steel bioreactors. Despite their widespread use, such mammalian systems have a
number of disadvantages. The stainless-steel bioreactors used in such systems involve extensive
and very rigid monitoring and regulation of environmental conditions, such as temperature, pH
levels, and oxygen levels, making such systems expensive and complicated to operate. Mammalian
expression systems require large quantities of sophisticated and
expensive growth medium. The expression of therapeutic proteins
through mammalian systems, in certain cases, produces a mixture of different forms of the glycoprotein requiring
complex post-expression modifications to the glycosilation structure
of the desired protein. For example, with respect to the expression of
prGCD, modifications to the expressed protein are necessary to achieve the sugar residue structure
necessary for the expressed protein to have binding qualities for attachment to a target cell, and
for the protein to be able to effect the desired bioactivity. Without such modifications, the
expressed protein would not be effective in connection with enzyme replacement therapy as it will
neither bind with a target cell nor effect the desired bioactivity. Lastly, the mammalian systems
present the potential risk of transferring mammalian derived pathogenic agents, such as viruses,
resulting in the need for viral inactivation and monitoring for unexpected toxic agents.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Another protein expression methodology is prokaryotic systems, which involve the expression of
proteins in a bacterial culture. The industrial-scale production of recombinant proteins through
prokaryotic systems is more cost-effective than other expression methodologies. However,
prokaryotic expression systems can only be used for the production of simple proteins, such as
insulin or growth hormones, because bacterial cultures cannot produce glycoproteins. This is a significant
limitation because glycoproteins constitute the majority of newly developed biotherapeutic drugs.
In addition, several companies and research institutions have explored the expression of human
proteins in genetically-modified organisms, or GMOs, such as transgenic field-grown plants and
transgenic animals. However, these alternate techniques may be restricted by environmental risks
and by the difficulty in applying current good manufacturing practices (cGMPs) standards of the
pharmaceutical industry to these expression technologies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As an alternative to such expression methodologies, we have developed a novel and proprietary
bioreactor system for the expression and manufacture of recombinant proteins that uses plant cells,
such as carrot cells, as the platform. Our flexible and disposable bioreactors are uniquely suited
for plant cell growth using a simple chemically defined growth medium. The reactors are
custom-designed and optimized for plant cell cultures, easy to use,
rapidly scalable at a low
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">cost, require less hands-on maintenance between cycles, and entail very low initial capital
investment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We believe that our plant cell expression system has the following advantages over other expression
systems:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The
expression of certain proteins through our proprietary plant cell system does not infringe certain
patents that cover the mammalian cell production of such proteins;</TD>

</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A protein expressed using our system may provide the basis for patents covering both the protein
and methods of producing the protein, thereby providing potential market advantage;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>There is significantly reduced risk of disease transmission to humans as our system does not
involve the use of mammalian cells or mammalian components;</TD>

</TR>



<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The
relatively uniform glycosilation pattern of proteins produced in our system enables drug product
consistency;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>When compared to other protein production techniques, our system includes simpler production
elements, is easily scalable, and requires less capital expenditures and initial capital
investments; and</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We expect our system to involve lower operational expenses as it requires minimal personnel
training and less hands-on maintenance.</TD>
</TR>


</TABLE>
</DIV>


    <DIV align="left" style="font-size: 10pt; margin-top: 6pt">However, we believe that our plant cell expression system faces the following disadvantages:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The system is novel and is still in the early stages of
development and optimization;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Mammalian cells have been used in connection with recombinant therapeutic protein expression for
more than 20&nbsp;years and are the subject of a wealth of data; similar amounts of data have not been
generated for plant cell expression;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Protein glycosilation is not identical to the natural human glycosilation pattern and its long term
effect on human patients is still unknown; and</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>There is a need to design custom-made equipment and to generate specific growth media for the plant
cells, as this is a new technology that cannot always rely on
existing equipment.</TD>
</TR>


</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We believe, based upon our research and development efforts, that our plant cell expression system
is capable of producing &#147;human like&#148; proteins that maintain the amino acid structure of the desired
human protein as well as a very similar, but not identical, glycan, or sugar, structure. Our
research has demonstrated that by having a glycan structure similar to naturally produced protein,
the plant cell expressed proteins maintain the biological activity that characterizes the human
protein when tested in the relevant biological assays. Taken together, our research suggests that
proteins produced by our plant cell system are likely to mimic the therapeutic functions of
the natural human proteins which they are produced to replace.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have successfully demonstrated the feasibility of our system by producing, on an exploratory,
research scale, a variety of therapeutic proteins belonging to different drug classes, such as
enzymes, hormones, interferones, monoclonal antibodies and vaccines.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>prGCD for the Treatment of Gaucher Disease</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our lead
proprietary product candidate, prGCD, is a plant recombinant Glucocerebrosidase enzyme (GCD)&nbsp;for the
treatment of Gaucher Disease. In July&nbsp;2005, we received FDA approval of our IND application for
prGCD, allowing us to initiate an FDA-approved clinical development program for prGCD that does not
require us to conduct Phase II clinical trials. The Phase I clinical trial was completed in June,
2006. We expect that, based upon the results of such concluded Phase I clinical trial together
with the results of certain preclinical studies, we should be able to obtain FDA approval to
initiate a pivotal Phase III trial of prGCD for the treatment of Gaucher Disease. We anticipate
that we will be able to commence such trial in 2007. However, there can be no assurance that we
will obtain FDA approval to initiate such Phase III trial.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Gaucher Disease is the most prevalent lysosomal storage disorder in humans. It is caused by
mutations or deficiencies in the gene encoding GCD, a lysosomal enzyme that catalyzes the
degradation of glucosylceramide (GlcCer). The normal degradation products of GlcCer are glucose
and ceramide that are easily excreted by the cells through normal human processes. The absence of
an active GCD enzyme leads to the accumulation of GlcCer in lysosomes of certain white blood cells
called macrophages. Macrophages affected by the disease become highly enlarged due to the
accumulation of GlcCer and are referred to as &#147;Gaucher cells.&#148; Gaucher cells accumulate in the
spleen, liver, lungs, bone marrow and brain. Associated clinical symptoms of Gaucher Disease
include enlarged spleen and liver (hepatosplenomegaly), anemia, thrombocytopenia, skeletal
deterioration and possible brain damage.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">There are three different types of Gaucher Disease, each determined by the level of GCD activity.
The associated clinical symptoms of Type I Gaucher Disease include severe enlargement of the spleen
and liver, anemia, thrombocytopenia, osteoporosis, skeletal deterioration and bone fractures. Type
1 Gaucher Disease occurs worldwide in all populations; however, it is most prevalent in the
Ashkenazi Jewish population (Jewish people of Eastern European ancestry) where it occurs at a rate
of 1:450 births. Type 2 Gaucher Disease involves an accumulation of Gaucher cells in the brain
leading to acute brain damage and is usually fatal during the first three years of life. Type 2
Gaucher Disease occurs at a rate of 1:100,000 births. Type 3 Gaucher Disease is the chronic
neuropathic form of the disease and occurs at a rate of 1:50,000 births. Neurological symptoms of
Type 3 Gaucher Disease may include loss of motor control, mental deterioration and myoclonic
seizures. Type 3 Gaucher Disease is generally fatal within 20 to 30&nbsp;years of birth. According to
published scientific studies, types 2 and 3 show no ethnic predilection.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Gaucher Disease is currently treated by enzyme replacement therapy (ERT)&nbsp;using recombinant GCD to
replace the mutated or deficient natural GCD enzyme. The only recombinant GCD currently available
on the market and approved worldwide for the treatment of Gaucher Disease is Cerezyme, produced by
Genzyme. There are no known severe side effects to the use of Cerezyme and its approved use over
the past decade suggests that it is an effective treatment.
According to public reports issued by Genzyme, annual sales of Cerezyme approached $1&nbsp;billion
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">in
2005 and sales of Cerezyme in 2006 are exceeding 2005 sales. Cerezyme is expressed in mammalian
Chinese hamster ovary (CHO)&nbsp;cells. In order for a GCD enzyme to be effective in connection with
enzyme replacement therapy, exposed terminal mannose sugar residues, the structures on the protein
that bind to the target cell and facilitate the internalization of the protein into the target
cell, must be present on the sugar residue covering the protein in order to permit binding to
macrophage mannose receptors, the structures to which the terminal mannose residues attach.
Cerezyme production involves sequential complex laboratory de-glycosilation processing in order to
modify the drug to expose the terminal mannose residues so they can bind to the macrophage mannose
receptors of the target cells, a procedure that increases the production cost of Cerezyme. We
believe that the high cost of Cerezyme, which has been reported to cost an average of approximately
$200,000 per year per patient, places an economic burden on healthcare systems. Cerezyme is
currently used to treat approximately 4,500 patients.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Another much less frequently used drug for the treatment of Gaucher Disease is Zavesca<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>
(miglustat), marketed by Actelion Ltd. Zavesca has been approved for use in the United States by
the FDA as an oral treatment. However, it has side effects and the
FDA has approved it only for the administration to those patients that cannot be treated through enzyme replacement therapy (ERT) (such as
Cerezyme) and, accordingly, have no other treatment alternative. As a result, Zavesca&#146;s use has
been very limited and Actelion reported sales of Zavesca of approximately $11&nbsp;million for 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">prGCD expression in carrot cells permits intra cellular manipulation of the protein glycosilation
process, generating terminal mannose structures <I>in vivo </I>directly by the cells. This enables the
production of a &#147;ready to use&#148; GCD enzyme, thus precluding the need for the costly post-production
de-glycosilation modification required for proteins generated through mammalian cell expression.
The prGCD terminal mannose residues on the sugar chains of prGCD facilitate elevated uptake and
internalization into the target cells as compared to Cerezyme. Furthermore, when compared to
Cerezyme, prGCD displays a superior to equivalent level of the desired enzymatic activity,
depending on the biological test used. prGCD is potentially very safe and less expensive to
produce as it does not require mammalian-derived components in the manufacturing process. For the
foregoing reasons, we believe that prGCD&#146;s elevated internalization rates and bioactivity may lead
prGCD to become a highly effective, attractive, and cost effective treatment alternative for
Gaucher Disease patients; however, there can be no assurance that prGCD will be approved as a
treatment of Gaucher Disease.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have filed process patents, as well as composition of matter patents for prGCD thereby providing
us with patent-pending manufacturing methodologies with respect to GCD. We believe that our strong
intellectual property position in combination with the potential cost-effectiveness and superior
bioactivity of prGCD, if indeed also demonstrated in the anticipated Phase III clinical trial,
should allow aggressive penetration and establishment of prGCD as a treatment in this market;
however, there can be no assurance that we are correct.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Pipeline Drug Candidates</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">To further expand our internal drug pipeline, we are taking advantage of our ability to produce
recombinant therapeutic proteins in a plant cell system to develop certain additional therapeutic
proteins available on the market at a high cost without infringing the method patents or other
intellectual property rights of third parties in connection with production of such proteins. In
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">order to select additional candidates for clinical development, we are testing, in-house and
through collaborations with academic partners, several product candidates oriented towards
specialty market segments. We have expressed a number of different proteins demonstrating
biological activity. We are also exploring drugs in several potential markets, including the
following:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>PRX-102</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are developing a proprietary alpha Galactosidase enzyme, which is a therapeutic enzyme for
the treatment of Fabry disease, a rare genetic lysosomal storage disorder, the symptoms of which
involve the accumulation of lipids in the cells of the kidneys, heart and other organs. Fabry
disease affects more than 8,000 people globally. We believe that the treatment of Fabry disease is
a specialty clinical niche with a high growth potential. Currently there are two drugs available
on the market to treat Fabry disease. Fabrazyme<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP>, made by Genzyme, was approved for the
treatment of Fabry disease in Europe in 2001 and in the United States in 2003. Another approved
drug for the treatment of Fabry disease in the European Union is Replagal<SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP> sold by Shire
plc.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>PRX-111</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are developing two variants of a human fertility hormone targeted at the infertility
market. We believe that the market for infertility treatments presents a strong opportunity. We
are currently performing further research in order to evaluate the potential of these proteins. To
date, we believe that our <I>in vitro </I>experiments have demonstrated promising biochemical and cellular
results when compared to the currently marketed biotherapeutic proteins used in approved
infertility treatments. However, we are performing additional evaluation studies to determine
whether it is in our interest to continue the research and development of these hormones.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>The Biogeneric Protein Expression Market</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Recombinant technologies have become the cornerstone of the modern medical biotechnology industry.
There is a strong demand in the market for the discovery and development of recombinant DNA
products such as therapeutic proteins, vaccines and antibodies. According to a 2005 report issued
by <I>Datamonitor</I>, a leading provider of online database and analyses services for key industry
sectors, the total market for recombinant technologies in the United States is anticipated to grow
to $53&nbsp;billion by 2010.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As patents relating to various therapeutic proteins expire, pharmaceutical companies seek to
produce biogeneric versions of such proteins in order to capture a portion of the market share of
the proteins. Biogeneric proteins are the therapeutic equivalents of a referenced
protein. Biogeneric drugs face significant barriers to market entry, such as difficulty of
developing an effective product and cell culture manufacturing process, strong branded competition,
and the complex patent coverage still surrounding many of the recombinant
therapeutic proteins with high annual sales. Companies that can demonstrate superior methods
of production may take advantage of commercial opportunities in the market for biogeneric products.
</DIV>



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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We believe that one of our competitive strengths is our ability to use our plant cell expression
system to overcome such barriers to market entry. We believe that our system allows us, in certain
cases, to produce proteins without infringing method-based patents or other intellectual property
rights held by third parties relating to various drug candidates. These factors are important
features for differentiation in the biogeneric therapeutic field and allow for the establishment of
new production lines for the development of biogeneric products. We anticipate that a number of
biogeneric products may be developed in collaboration with large pharmaceutical and biotechnology
companies, and we expect to be able to generate up-front milestones and royalty revenue by entering
early-stage deals with such partners to develop and scale up their biogeneric and innovative
product candidates. We recently entered into a collaboration agreement with Teva Pharmaceutical
Industries Ltd. for the development and manufacture of two proteins using our bioreactor system and
the potential development and commercialization of products based on such proteins.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Strategic Collaborations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Teva Pharmaceutical Industries</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On September&nbsp;14, 2006, Protalix Ltd. entered into a collaboration and licensing agreement with Teva
Pharmaceutical Industries Ltd. for the development and manufacturing of two proteins using our
plant cell system. The proteins, aimed at large-sized markets, are not part of our current product
development pipeline. Pursuant to the agreement, we will collaborate on the research and
development of the two proteins utilizing our plant cell expression system. We will grant to Teva
an exclusive license to commercialize the developed products in return for royalty and milestone
payments payable upon the achievement of certain pre-defined goals. We will retain certain
exclusive manufacturing rights with respect to the active pharmaceutical ingredient of the proteins
following the first commercial sale of a licensed product under the agreement and other rights
thereafter.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Weizmann Institute of Science/Yeda Research and Development Company Limited</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In March, 2006, Protalix Ltd. entered into a Research and License Agreement with the Yeda Research
and Development Company Limited, the technology transfer arm of Israel&#146;s Weizmann Institute of
Science, pursuant to which Yeda is using its technology to develop a next generation of
Glucocerebrosidase (GCD)&nbsp;for the treatment of Gaucher Disease. The licensed technology provides a
methodology for the rational design of an improved drug for the treatment of Gaucher Disease by
enzyme replacement therapy (ERT)&nbsp;based on the 3-dimensional crystal structure of GCD that was
solved by certain scientists associated with the Weizmann Institute of Science during their
research in recent years. A team of scientists at the Weizmann Institute of Science has attempted
to design modifications to the enzyme structure that may lead to development of a second generation
enzyme for the treatment of Gaucher Disease. The research activities under the license are also
funded by a grant by the Magneton program of the Ministry of Industry and
Trade of Israel, a program created to support the transfer of emerging technologies from the
academy to the industry. In consideration for Yeda&#146;s research, Protalix Ltd. agreed to pay a fixed
research budget amount. Yeda has granted Protalix Ltd. a license to use the licensed information
for the development, manufacture, production and sale of enzymatically active mutants of GCD and
derivatives therefrom for the treatment of Gaucher Disease. We are
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">responsible for commercializing
the products developed under the license. Commencing upon the fifth anniversary of the execution
of the agreement and continuing through the 19<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> anniversary of the agreement, we are
obligated to pay certain minimum royalty amounts and varying fixed royalty amounts on net sales of
products for the treatment of Gaucher Disease, products for other indications and for sublicensing
revenues. Accordingly, we will owe these payment obligations to Yeda even in the event that we fail
to generate any sales revenue from these products.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Licensing Arrangements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>ICON Genetics- Bayer Innovations</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In April&nbsp;2004, Protalix Ltd. entered into a Collaborative Research Agreement with Icon Genetics AG
(which was subsequently acquired by Bayer Corporation) regarding certain proteins and an option to
license Icon&#146;s amplification technology for utilization in the expression of our products. In
connection with such option, Protalix Ltd. entered into a license agreement with Icon on April&nbsp;12,
2005, pursuant to which we received an exclusive worldwide license to develop, test, use, and
commercialize Icon&#146;s technology to make certain proteins in our bioreactor platform. In addition,
we are entitled to a non-exclusive worldwide license to make and have made other proteins expressed
by using Icon&#146;s technology in our technology. In consideration for the licenses, we are obligated
to pay to Icon development milestone payments and royalties.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Patents and Other Intellectual Property</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our success, competitive position, and future revenues, if any, depend in part on our ability, and
that of our licensees, to obtain and successfully leverage intellectual property covering our
products and product candidates, know-how, methods, processes, and other technologies, to protect
our trade secrets, to prevent others from using our intellectual property, and to operate
without infringing the intellectual property of third parties. Our policy is to seek to protect
our competitive position by filing United States, Israeli and other foreign patent applications
covering our technology, including both new technology and improvements to existing technology.
Our patent strategy includes obtaining patents, where possible, on methods of manufacture,
compositions of matter and methods of use. We also rely on know-how, continuing technological
innovation, licensing and partnership opportunities to develop and maintain our competitive
position. Lastly, we monitor third parties for activities that may infringe our intellectual
property, as well as the progression of third party patent applications that may cover our products
or methods and thus, potentially, interfere with the development of our business. We are aware,
for example, of United States patents, and corresponding international counterparts of such
patents, owned by third parties that contain claims covering methods of producing GCD. We do not
believe that, if any claim of infringement were to be asserted against us based upon such patents,
prGCD would be found to infringe any valid claim under such patents. However, there can be no
assurance that a court would find in our favor or that, if we
choose or are required to seek a license to any one or more of such patents, a license would be
available to us on acceptable terms or at all.
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our patent portfolio consists of several patent families (consisting of patents and patent
applications) covering our technology. We have been issued patents in the United States, Israel,
the EC, Mexico, Poland, Hong Kong, and India that cover our disposable bioreactor system used in
the expression of proteins. We have also been issued patents that protect the methods that we use
for culturing and harvesting plant cells and/or tissues in consecutive cycles. Another patent
family in our patent portfolio covers our system and method for producing glycosilated proteins,
including prGCD, in a plant culture, particularly proteins having a high mannose glycosilation. An
additional patent family covers a system and method for production of antibodies in a plant cell
culture, and antibodies produced in such a system. Lastly, our patent portfolio includes a patent
family that covers human glycoprotein hormone and chain splice variants, including isolated nucleic
acids encoding these variants. More specifically, this patent portfolio covers a new splice
variant of human FSH. There are 28 pending patent applications related to these aspects of our
technology.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Virginia Tech Intellectual Properties Inc. has granted us a non-exclusive license to a certain
production patent, and continuing applications thereof, including divisions, substitutions, and
continuations-in-part (but only to extent that the claims thereof are enabled by disclosure of the
parent application); any patents issuing on said applications including reissues, reexaminations
and extensions; and any corresponding foreign applications or patents. See &#147;Risk Factors&#151;If
Protalix fails to adequately protect or enforce its intellectual property rights or secure rights
to patents of others, the value of its intellectual property rights would diminish and its business
and competitive position would suffer.&#148;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Manufacturing</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our drug product candidates, including prGCD, must be manufactured in a sterile environment and in
compliance with current good manufacturing practices (cGMPs) set by the FDA and other relevant
worldwide regulatory authorities. We use our current facility, which has approximately 5,000 sq/ft
of clean rooms, built according to industry standards, to develop, process, and manufacture prGCD
and other recombinant proteins. The entire protein production process takes place in a controlled
environment. We outsource certain services in connection with final manufacturing processes to
Teva. We anticipate entering into further internal and partnership programs in the future that
will require additional scale-up of our manufacturing capacity. Consequently, we are planning to
establish larger scale manufacturing facilities that will satisfy our production needs for the
foreseeable future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under the terms of certain grants and other benefits granted to us by the Israeli government and
entities affiliated with the Israeli government, our technology is subject to certain transfer of
technology and manufacturing rights restrictions. For a description of such restrictions, see
&#147;Israeli Government Programs.&#148;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Raw Materials and Suppliers</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We believe that the raw materials that we require throughout the manufacturing process are widely
available from numerous suppliers and are generally considered to be generic industrial biological
supplies. We do not rely on a single or unique supplier for the current production of any
biotherapeutic proteins in our pipeline.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Development and regulatory approval of our pharmaceutical products are dependent upon our ability
to procure active ingredients and certain packaging materials from FDA-approved sources. Since the
FDA approval process requires manufacturers to specify their proposed suppliers of active
ingredients and certain packaging materials in their applications, FDA approval of a supplemental
application to use a new supplier would be required if active ingredients or such packaging
materials were no longer available from the specified supplier, which could result in manufacturing
delays. From time to time, we intend to identify alternative FDA approved suppliers to ensure
continued supply of necessary raw materials.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Competition</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The biotechnology and pharmaceutical industries are characterized by rapidly evolving technology
and significant competition. Competition from numerous existing companies and others entering the
fields in which we operate is intense and expected to increase. Most of these companies have
substantially greater research and development, manufacturing, marketing, financial, technological
personnel and managerial resources than we do. In addition, many specialized biotechnology
companies have formed collaborations with large, established companies to support research,
development and commercialization of products that may be competitive with our current and future
product candidates and technologies. Acquisitions of competing companies by large pharmaceutical
or biotechnology companies could enhance such competitors&#146; financial, marketing and other
resources. Academic institutions, governmental agencies and other public and private research
organizations are also conducting research activities and seeking patent protection and may
commercialize competitive products or technologies on their own or through collaborations with
pharmaceutical and biotechnology companies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We specifically face competition from companies with alternate treatments of Gaucher Disease, as
well as companies that are developing other platforms for the production of recombinant therapeutic
pharmaceuticals and biogeneric producers in general. We are aware of other companies that are
developing alternative technologies to develop and produce protein therapeutics in anticipation of
the expiration of certain patent claims covering marketed proteins. Competitors developing
alternative expression technologies, including alternate plant-based technologies, include, but are
not limited to, Biolex, Inc., Chlorogen, Inc., greenovation Biotech GmbH, Dow, Crucell N.V.,
Glycofi, Inc. and Shire Pharmaceuticals. Other companies have programs focused on developing
competitive products to treat Gaucher Disease and other lysosomal disorders. These companies
include Genzyme, Shire Pharmaceuticals, Actelion and Amicus.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Several biogeneric companies are pursuing the opportunity to develop and commercialize follow-on
versions of currently marketed biologic products, including growth factors, hormones, enzymes,
interferones, and monoclonal antibodies, areas that interest us. These companies include, among
others, Novartis/Sandoz, BioGeneriX, Stada, BioPartners and Teva.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Government Regulation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The United States federal government regulates healthcare through various agencies, including but
not limited to the following: (i)&nbsp;the FDA, which administers the Federal Food, Drug, and
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Cosmetic
Act (FDCA), as well as other relevant laws; (ii)&nbsp;the Center for Medicare &#038; Medicaid Services (CMS),
which administers the Medicare and Medicaid programs; (iii)&nbsp;the Office of Inspector General (OIG)
which enforces various laws aimed at curtailing fraudulent or abusive practices, including by way
of example, the Anti-Kickback Law, the Anti-Physician Referral Law, commonly referred to as Stark,
the Anti-Inducement Law, the Civil Money Penalty Law, and the laws that authorize the OIG to
exclude healthcare providers and others from participating in federal healthcare programs; and (iv)
the Office of Civil Rights, which administers the privacy aspects of the Health Insurance
Portability and Accountability Act of 1996 (HIPAA). All of the aforementioned are agencies within
the Department of Health and Human Services (HHS). Healthcare is also provided or regulated, as
the case may be, by the Department of Defense through its TriCare program, the Department of
Veterans Affairs, especially through the Veterans Health Care Act of 1992, the Public Health
Service within HHS under Public Health Service Act &#167; 340B (42 U.S.C. &#167; 256b), the Department of
Justice through the Federal False Claims Act and various criminal statutes, and state governments
under the Medicaid and other state sponsored or funded programs and their internal laws regulating
all healthcare activities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Medicare is the federal healthcare program for those who are (i)&nbsp;over 65&nbsp;years of age, (ii)
disabled, (iii)&nbsp;suffering from end-stage renal disease or (iv)&nbsp;suffering from Lou Gehrig&#146;s disease.
Medicare consists of part A, which covers inpatient costs, part B, which covers services by
physicians and laboratories, durable medical equipment and certain drugs, primarily those
administered by physicians, and part D, which provides drug coverage for most prescription drugs
other than those covered under part B. Medicare also offers a managed care option under part C.
Medicare is administered by CMS. In contrast, Medicaid is a state-federal healthcare program for
the poor and is administered by the states pursuant to an agreement with the Secretary of Health
and Human Services. Most state Medicaid programs cover most outpatient prescription drugs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The testing, manufacture, distribution, advertising and marketing of drug products are subject to
extensive regulation by federal, state and local governmental authorities in the United States,
including the FDA, and by similar agencies in other countries. Any product that we develop must
receive all relevant regulatory approvals or clearances, as the case may be, before it may be
marketed in a particular country.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The regulatory process, which includes overseeing preclinical studies and clinical trials of each
pharmaceutical compound to establish its safety and efficacy and confirmation by the FDA that good
laboratory, clinical and manufacturing practices were maintained during testing and manufacturing,
can take many years, requires the expenditure of substantial resources, and gives
larger companies with greater financial resources a competitive advantage over us. Delays or
terminations of clinical trials that we undertake would likely impair our development of product
candidates. Delays or terminations could result from a number of factors, including stringent
enrollment criteria, slow rate of enrollment, size of patient population, having to compete with
other clinical trials for eligible patients, geographical considerations and others.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The FDA review process can be lengthy and unpredictable, and we may encounter delays or rejections
of our applications when submitted. Generally, in order to gain FDA approval, we must first
conduct preclinical studies in a laboratory and in animal models to obtain preliminary
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">information
on a compound and to identify any safety problems. The results of these studies are
submitted as part of an IND application that the FDA must review before human clinical trials of an
investigational drug can commence.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Clinical trials are normally done in three sequential phases and generally take two to five years
or longer to complete. Phase I consists of testing the drug product in a small number of humans,
normally healthy volunteers, to determine preliminary safety and tolerable dose range. Phase II
usually involves studies in a limited patient population to evaluate the effectiveness of the drug
product in humans having the disease or medical condition for which the product is indicated,
determine dosage tolerance and optimal dosage and identify possible common adverse effects and
safety risks. Phase III consists of additional controlled testing at multiple clinical sites to
establish clinical safety and effectiveness in an expanded patient population of geographically
dispersed test sites to evaluate the overall benefit-risk relationship for administering the
product and to provide an adequate basis for product labeling. Phase IV clinical trials may be
conducted after approval to gain additional experience from the treatment of patients in the
intended therapeutic indication.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">After completion of clinical trials of a new drug product, FDA and foreign regulatory authority
marketing approval must be obtained. Assuming that the clinical data support the product&#146;s safety
and effectiveness for its intended use, a New Drug Application (NDA)&nbsp;is submitted to the FDA for
its review. Generally, it takes one to three years to obtain approval. If questions arise during
the FDA review process, approval may take a significantly longer period of time. The testing and
approval processes require substantial time and effort and we may not receive approval on a timely
basis, if at all, or the approval that we receive may be for a narrower indication than we had
originally sought, potentially undermining the commercial viability of the product. Even if
regulatory approvals are obtained, a marketed product is subject to continual review, and later
discovery of previously unknown problems or failure to comply with the applicable regulatory
requirements may result in restrictions on the marketing of a product or withdrawal of the product
from the market as well as possible civil or criminal sanctions. For marketing outside the United
States, we also will be subject to foreign regulatory requirements governing human clinical trials
and marketing approval for pharmaceutical products. The requirements governing the conduct of
clinical trials, product licensing, pricing and reimbursement vary widely from country to country.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">None of our products under development has been approved for marketing in the United States or
elsewhere. We may not be able to obtain regulatory approval for any such products under
development in a timely manner, if at all. Failure to obtain requisite governmental approvals or
failure to obtain approvals of the scope requested will delay or preclude us, or our licensees or
marketing partners, from marketing our products, or limit the commercial use of our products, and
thereby would have a material adverse effect on our business, financial condition and results of
operations. See &#147;Risk Factors&#151;Protalix may not obtain the necessary U.S. or worldwide regulatory
approvals to commercialize its drug candidates which would severely undermine its business by
reducing the number of salable products and, therefore, corresponding product revenues.&#148;
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Israeli Government Programs</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following is a summary of the current principal Israeli tax laws applicable to us and Protalix
Ltd., and of the Israeli Government programs from which we benefit. Some parts of this discussion
are based on new tax legislation that has not been subject to judicial or administrative
interpretation. Therefore, the views expressed in the discussion may not be accepted by the tax
authorities in question. The discussion should not be construed as legal or professional tax
advice and does not cover all possible tax considerations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>General Corporate Tax Structure in Israel</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Israeli companies are generally subject to corporate tax based on their taxable income. This rate
was 34% in 2005 and 35% for 2004. Pursuant to a new tax reform plan, this tax rate is scheduled to
decline to 31% in 2006, 29% in 2007, 27% in 2008, 26% in 2009 and 25% in 2010 and thereafter. As
discussed below, the corporate tax rate is effectively reduced for income derived from an Approved
Enterprise.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Law for the Encouragement of Capital Investments, 1959</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Law for the Encouragement of Capital Investments, 1959, known as the Investment Law, provides
certain incentives for capital investments in a production facility (or other eligible assets).
Generally, an investment program that is implemented in accordance with the provisions of the
Investment Law, referred to as an &#147;Approved Enterprise,&#148; is entitled to benefits. These benefits
may include cash grants from the Israeli government and tax benefits, based upon, among other
things, the location of the facility in which the investment is made or the election of the
grantee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Investment Law was significantly amended effective April&nbsp;2005. We will continue to enjoy the
tax benefits under the pre-revision provisions of the Investment Law, but if we are granted any new
benefits in the future we will be subject to the provisions of the amended Investment Law.
Therefore, the following discussion is a summary of the Investment Law prior to its amendment as
well as the relevant changes contained in the new legislation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under the Investment Law prior to its amendment, a company that wished to receive benefits had to
receive an approval from the Investment Center of the Israeli Ministry of Industry, Trade and
Labor, or Investment Center. Each certificate of approval for an Approved Enterprise relates to a
specific investment program in the Approved Enterprise, delineated both by the financial scope of
the investment and by the physical characteristics of the facility or the asset.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">An Approved Enterprise may elect to forego any entitlement to the grants otherwise available under
the Investment Law and, instead, participate in an alternative benefits program under which the
undistributed income from the Approved Enterprise is fully exempt from corporate tax for a defined
period of time. Under the alternative package of benefits, a company&#146;s undistributed income
derived from an approved enterprise will be exempt from corporate tax for a period of between two
and 10&nbsp;years from the first year of taxable income, depending upon the geographic location within
Israel of the Approved Enterprise. Upon expiration of the exemption period, the Approved
Enterprise is eligible for the reduced tax rates otherwise applicable under
</DIV>



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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">the Investment Law for
any remainder of the otherwise applicable benefits period (up to an aggregate benefits period of
either seven or 10&nbsp;years, depending on the location of the company or its definition as a foreign
investors&#146; company). If a company has more than one Approved Enterprise program or if only a
portion of its capital investments are approved, its effective tax rate is the result of a weighted
combination of the applicable rates. The tax benefits from any certificate of approval relate only
to taxable profits attributable to the specific Approved Enterprise. Income derived from activity
that is not integral to the activity of the Approved Enterprise must be allocated among the
different Approved Enterprises and therefore does not enjoy tax benefits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A company that has an approved enterprise program may be eligible for further tax benefits if it
qualifies as a foreign investor&#146;s company. A foreign investor&#146;s company eligible for benefits is
essentially a company that is more than 25% owned (measured by both share capital, and combined
share and loan capital) by non-Israeli residents. A company that qualifies as a foreign investor&#146;s
company and has an approved enterprise program is eligible for tax benefits for a 10&nbsp;year benefit
period and may enjoy a reduced corporate tax rate of 10% to 25%, depending on the amount of the
company&#146;s shares held by non-Israeli shareholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If a company that has an approved enterprise program is a wholly owned subsidiary of another
company, then the percentage of foreign investments is determined based on the percentage of
foreign investment in the parent company. The tax rates and related levels of foreign investments
are set forth in the following table:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="52%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Percent of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Rate of</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 0px solid #000000"><B>Foreign Ownership</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000"><B>Reduced Tax</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">0-25%
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">25</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">25-49%
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">25</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">49-74%
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">20</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">75-90%
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">15</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">90-100%
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In addition, if a company that has an approved enterprise distributes a dividend during the tax
benefit period or within 12&nbsp;years thereafter (or, in the case of a foreign investor&#146;s company,
without time limitation), the dividend recipient is taxed at the reduced rate of 15% applicable to
dividends from approved enterprises.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our facility in Israel has been granted &#147;Approved Enterprise&#148; status, and we have elected to
participate in the alternative benefits program. Under the terms of our Approved Enterprise
program, the facility is located in a top priority location, or &#147;Zone A&#148;, and, therefore, our
income from that Approved Enterprise will be tax exempt for a period of 10&nbsp;years, commencing with
the year in which we first generate taxable income from the relevant Approved Enterprise. The
current benefits program may not continue to be available and we may not continue to qualify for
its benefits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A company that has elected to participate in the alternative benefits program and that subsequently
pays a dividend out of the income derived from the Approved Enterprise during the
</DIV>


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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">tax exemption
period will be subject to corporate tax in respect of the amount distributed at the rate that would
have been applicable had the company not elected the alternative benefits program (generally 10% to
25%). If the dividend is distributed within twelve years after the commencement of the benefits
period, the dividend recipient is taxed at the reduced withholding tax rate of 15%, or at the lower
rate under an applicable tax treaty. After this period, the withholding tax rate is 25%, or at the
lower rate under an applicable tax treaty. In the case of a company with a foreign investment
level (as defined by the Investment Law) of 25% or more, the twelve-year limitation on reduced
withholding tax on dividends does not apply. The company must withhold this tax at its source,
regardless of whether the dividend is converted into foreign currency.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Investment Law also provides that an Approved Enterprise is entitled to accelerated
depreciation on its property and equipment that are included in an approved investment program.
This benefit is an incentive granted by the Israeli government regardless of whether the
alternative benefits program is elected.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The benefits available to an Approved Enterprise are conditioned upon terms stipulated in the
Investment Law and regulations and the criteria set forth in the applicable certificate of
approval. If Protalix Ltd. does not fulfill these conditions in whole or in part, the benefits can
be canceled and Protalix Ltd. may be required to refund the amount of the benefits, linked to the
Israeli consumer price index and with the addition of interest. We believe that Protalix Ltd.
currently operates in compliance with all applicable conditions and criteria, but there can be no
assurance that it will continue to do so. There can be no assurance that any approved enterprise
status granted to Protalix Ltd.&#146;s facilities will entitle us to the same benefits to which it is
currently entitled.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pursuant to a recent amendment to the Investment Law, the approval of the Investment Center is
required only for Approved Enterprises that receive cash grants. Approved Enterprises that do not
receive benefits in the form of governmental cash grants, but only tax benefits, are no longer
required to obtain this approval. Instead, these Approved Enterprises are required to make certain
investments as specified in the law. These Approved Enterprises may, at their discretion, elect to
apply for a pre-ruling from the Israeli tax authorities confirming that they are in compliance with
the provisions of the law or Approved Enterprises may claim the benefits offered under the
Investment Law in their tax returns (provided they meet the criteria for such tax benefits).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The amended Investment Law specifies certain conditions for an Approved Enterprise to be entitled
to benefits. These conditions include:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Approved Enterprise&#146;s revenues from any single country or a separate customs territory may not
exceed 75% of the Approved Enterprise&#146;s total revenues; or
</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>at least 25% of the Approved Enterprise&#146;s revenues during the benefits period must be derived from
sales into a single country or a separate customs territory with a population of at least 12
million.
</TD>
</TR>
</table>
</Div>


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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">There can be no assurance that we will comply with the above conditions in the future or that we
will be entitled to any additional benefits under the Investment Law. In addition, it is possible
that we may not be able to operate in a way that maximizes utilization of the benefits under the
Investment Law.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Encouragement of Industrial Research and Development Law, 1984</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the past, Protalix Ltd. received grants from the Office of the Chief Scientist of the Israeli
Ministry of Industry, Trade and Labor, the OCS, for the financing of a portion of our research and
development expenditures in Israel. Since inception, Protalix Ltd. received or accrued grants from
the OCS in respect of our continuing operations totaling approximately $4.9&nbsp;million. Protalix Ltd.
is required to repay up to 100% of the dollar value of these grants (plus interest equal to the
LIBOR rate applied to the grants received on or after January&nbsp;1, 1999) to the OCS through payments
of royalties at a rate of 3% to 6% of revenues generated (depending on the sales period) from an
OCS-funded project until the entire amount is repaid, plus interest. As of September&nbsp;30, 2006,
Protalix Ltd. has not paid or accrued royalties. As of September&nbsp;30, 2006, Protalix Ltd.&#146;s
contingent liability to the OCS with respect to grants received was approximately $4.2&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under the Israeli Law for the Encouragement of Industrial Research and Development, 1984 and
related regulations, or the Research Law, recipients of grants from the OCS are prohibited from
manufacturing products developed using these grants outside of the State of Israel without special
approvals. If Protalix Ltd. receives approval to manufacture the products developed with government
grants outside of Israel, it will be required to pay an increased total amount of royalties
(possibly up to 300% of the grant amounts plus interest), depending on the manufacturing volume
that is performed outside of Israel, as well as a possible increased royalty rate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Additionally, under the Research Law, Protalix Ltd. is prohibited from transferring the OCS
financed technologies and related intellectual property rights outside of the State of Israel
except under limited circumstances and only with the approval of the Research Committee of the OCS.
Protalix Ltd. may not receive the required approvals for any proposed transfer and, if received,
Protalix Ltd. may be required to pay the OCS a portion of the consideration that it receives upon
any sale of such technology by a non-Israeli entity. The scope of the support received, the
royalties that Protalix Ltd. paid, the amount of time that elapsed between the date on which the
know-how was transferred and the date on which the grants were received, and the sale price and the
form of transaction, will be taken into account in order to calculate the amount of the payment.
Approval of the transfer of technology to residents of the State of Israel is required, and may be
granted in specific circumstances only if the recipient abides by the provisions of
applicable laws, including the restrictions on the transfer of know-how and the obligation to pay
royalties in an amount that may be increased. No assurances can be made that consent, if
requested, will be granted.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The State of Israel does not own intellectual property rights in technology developed with OCS
funding and there is no restriction on the export of products manufactured using technology
developed with OCS funding. The technology is, however, subject to transfer of technology and
manufacturing rights restrictions as described above. OCS approval is not required for the
</DIV>


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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">export
of any products resulting from the research or development or for the licensing of any technology
in the ordinary course of business. For a description of such restrictions, please see &#147;Risk
Factors&#151;Risks Relating to Our Operations in Israel.&#148;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Special Provisions Relating to Taxation under Inflationary Conditions</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We are taxed under the Income Tax Law (Inflationary Adjustments), 1985, generally referred to as
the Inflationary Adjustments Law. The Inflationary Adjustments Law is highly complex, and
represents an attempt to overcome the problems presented to a traditional tax system by an economy
undergoing rapid inflation. The provisions that are material to us are summarized below:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Where a company&#146;s equity, as calculated under the Inflationary Adjustments Law, exceeds the
depreciated cost of its fixed assets (as defined in the Inflationary Adjustments Law), a deduction
from taxable income is permitted equal to this excess multiplied by the applicable annual rate of
inflation. The maximum deduction permitted under this provision in any single tax year is 70% of
taxable income, with the unused portion permitted to be carried forward, linked to the Israeli
consumer price index.
</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Where a company&#146;s depreciated cost of fixed assets exceeds its equity, then the excess multiplied
by the applicable annual rate of inflation is added to taxable income.
</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Subject to specified limitations, depreciation deductions carryforwards on fixed assets and losses
are adjusted for inflation based on the change in the consumer price index.
</TD>
</TR>
</table>
</Div>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under the Inflationary Adjustments Law, results for tax purposes are measured in real terms, in
accordance with changes in the Israeli consumer price index. The difference between the change in
the Israeli consumer price index and the exchange rate of Israeli currency in relation to the
dollar may in future periods cause significant differences between taxable income and the income
measured in dollars as reflected in our consolidated financial statements.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Law for the Encouragement of Industry (Taxes), 1969</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We believe that Protalix Ltd. currently qualifies as an &#147;Industrial Company&#148; within the meaning of
the Law for the Encouragement of Industry (Taxes), 1969, or the Industry Encouragement Law. The
Industry Encouragement Law defines &#147;Industrial Company&#148; as a company resident in Israel that
derives 90% or more of its income in any tax year (other than specified kinds of passive income
such as capital gains, interest and dividends) from an &#147;Industrial Enterprise&#148; that
it owns. An &#147;Industrial Enterprise&#148; is defined as an enterprise whose major activity in a given
tax year is industrial production.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following corporate tax benefits, among others, are available to Industrial Companies:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>amortization of the cost of purchased know-how and patents over an eight-year period for tax
purposes;
</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>accelerated depreciation rates on equipment and buildings;
</TD>
</TR>
</table>
</Div>



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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>under specified conditions, an election to file consolidated tax returns with additional related
Israeli Industrial Companies; and
</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>expenses related to a public offering are deductible in equal amounts over three years.
</TD>
</TR>
</table>
</Div>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Eligibility for the benefits under the Industry Encouragement Law is not subject to receipt of
prior approval from any governmental authority. It is possible that Protalix Ltd. may fail to
qualify or may not continue to qualify as an &#147;Industrial Company&#148; or that the benefits described
above will not be available in the future.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Tax Benefits for Research and Development</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under specified conditions, Israeli tax laws allow a tax deduction by a company for research and
development expenditures, including capital expenditures, for the year in which such expenditures
are incurred. These expenses must relate to scientific research and development projects and must
be approved by the OCS. Furthermore, the research and development projects must be for the
promotion of the company and carried out by or on behalf of the company seeking such tax deduction.
However, the amount of such deductible expenses is reduced by the sum of any funds received
through government grants for the finance of such scientific research and development projects.
Expenditures not so approved are deductible over a three-year period.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Employees</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We believe that our success will greatly depend on our ability, and the ability of our
subsidiaries, to identify, attract and retain capable employees. As
of December&nbsp;2006, we had 60
employees. Of our employees, 13 have Ph.D.s in their respective scientific fields. We believe
that our relations with these employees are good. Expansion orders issued by the Israeli Ministry
of Labor and Welfare make certain industry-wide collective bargaining agreements applicable to us.
These agreements affect matters such as cost of living adjustments to salaries, length of working
hours and week, recuperation, travel expenses, and pension rights. Otherwise, our employees are not
represented by a labor union or otherwise represented under a collective bargaining agreement. See
&#147;Risk Factors&#151;Protalix depends upon key employees and consultants in a competitive market for
skilled personnel. If Protalix is unable to attract and retain key personnel, it could adversely
affect Protalix&#146;s ability to develop and market its products.&#148; Orthodontix has no employees apart
from those employed by Protalix Ltd.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Risk Factors</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Investors should carefully consider the risks described below together with the other information
included in this Current Report on Form 8-K. Our business, financial condition, and results of
operations could be adversely affected by any of these risks. If any of these risks occur, the
value of our common stock could decline. Because the business of Protalix Ltd. is our sole
operating business, all references to Protalix in the following risk factors for periods after the
merger shall refer to us and Protalix Ltd., combined.
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Risks Related to Investing in our Common Stock</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>An investment in our common stock is very speculative and involves a very high degree of risk.</I></B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To date, neither we nor Protalix Ltd. has generated revenues from product sales, and Protalix
Ltd. has generated only minimal revenues from license agreements. Our accumulated deficit as of
December&nbsp;31, 2004 and 2005, and September&nbsp;30, 2006, was approximately $3,738,000, $3,813,000 and
$3,902,000, respectively; and Protalix Ltd.&#146;s accumulated deficit as of December&nbsp;31, 2004 and 2005,
and September&nbsp;30, 2006, was approximately $5,376,000, $11,122,000 and $17,048,000, respectively.
For the years ended December&nbsp;31, 2005 and 2004, and the nine months ended September&nbsp;30, 2006, we
had net losses of approximately $160,000, $75,000, and $89,000, respectively, and Protalix Ltd. had
net losses of approximately $5,746,000, $2,421,000 and $5,926,000, respectively, primarily as a
result of expenses incurred through a combination of research and development activities related to
the various technologies under Protalix Ltd.&#146;s control and expenses supporting those activities.
Until Protalix Ltd. receives approval from the FDA and other regulatory authorities for its drug
candidates, Protalix Ltd. cannot sell its drugs and will not generate product revenues. Therefore,
for the foreseeable future, we will have to fund all of our operations and capital expenditures
from the net proceeds of equity or debt offerings, cash on hand, licensing fees and grants.
Although we plan to pursue additional financings, we may not be able to secure financing when
needed or obtain financing on terms satisfactory to us. Our operations are subject to the risks
and competition inherent in the establishment of a business enterprise. There can be no assurance
that future operations will be profitable. We may not achieve our business objectives and the
failure to achieve such goals would have an adverse impact on us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>The market price of our common stock may fluctuate significantly.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The market price of our common stock may fluctuate significantly in response to numerous
factors, some of which are beyond our control, such as:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the announcement of new products or product enhancements by us or our competitors;
</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>developments concerning intellectual property rights and regulatory approvals;
</TD>
</TR>


<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>variations in our and our competitors&#146; results of operations;
</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in earnings estimates or recommendations by securities analysts, if our common stock is
covered by analysts;
</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>developments in the biotechnology industry;
</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the results of product liability or intellectual property lawsuits;</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>future issuances of common stock or other securities;
</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the addition or departure of key personnel;
</TD>
</TR>
</table>
</Div>



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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>announcements by us or our competitors of acquisitions, investments or strategic alliances; and
</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>general market conditions and other factors, including factors unrelated to our operating
performance.
</TD>
</TR>
</table>
</Div>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Further, the stock market in general, and the market for biotechnology companies in
particular, has recently experienced extreme price and volume fluctuations. Continued market
fluctuations could result in extreme volatility in the price of our common stock, which could cause
a decline in the value of our common stock. Price volatility of our common stock might be worse if
the trading volume of our common stock is low. We have not paid, and do not expect to pay, any
cash dividends on our common stock as any earnings generated from future operations will be used to
finance our operations and as a result, investors will not realize any income from an investment in
our common stock until and unless their shares are sold at a profit.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Some or all of the &#147;restricted&#148; shares of our common stock issued to former shareholders of
Protalix Ltd. in connection with the merger or held by other of our shareholders may be offered
from time to time in the open market pursuant to an effective registration statement or Rule&nbsp;144,
and these sales may have a depressive effect on the market for our common stock. We have
undertaken to register for resale substantially all of the outstanding shares of common stock held
by previous shareholders of Protalix Ltd. pursuant to contractual obligations of Protalix Ltd.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Because Protalix became public by means of a reverse merger, Protalix may not be able to attract
the attention of major brokerage firms.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additional risks may exist because Protalix became public through a &#147;reverse merger&#148;.
Security analysts of major investment banking firms may not elect to cover us. Further, investment
banking firms may not seek to conduct any secondary offerings of our common stock in the future.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Trading of our common stock is limited and trading restrictions imposed on us by regulatory
authorities may further reduce our trading, making it difficult for our shareholders to sell their
shares.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trading of our common stock is currently conducted on the National Association of Securities
Dealers, Inc.&#146;s, OTC Bulletin Board, or &#147;OTC BB&#148;. The liquidity of our common stock is limited,
not only in terms of the number of shares that can be bought and sold at a given
price, but may also be adversely affected by delays in the timing of transactions and
reduction in security analysts&#146; and the media&#146;s coverage of us, if at all.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Currently, there are approximately 47 holders of record and 423 beneficial holders of our
common stock. Under the terms of a tax ruling obtained by Protalix Ltd. from the Israeli tax
authorities in connection with the merger of Protalix Ltd. into our company, we and Protalix Ltd.
are subject to various restrictions and conditions in connection with the issuance of shares for a
period commencing upon the closing of the merger through January&nbsp;1, 2009, including, but not
limited to, a requirement that we maintain
our holdings of at least 51% of the outstanding shares
of Protalix Ltd. and that the shareholders at the time of the closing of the merger maintain
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">aggregate holdings of at least 51% of our outstanding shares. See &#147;Business&#151;Israeli Government
Programs&#148;.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These factors may result in lower prices for our common stock than might otherwise be obtained
and could also result in a larger spread between the bid and ask prices for our common stock. In
addition, without a large float, our common stock is less liquid than the stock of companies with
broader public ownership and, as a result, the trading prices of our common stock may be more
volatile. In the absence of an active public trading market, an investor may be unable to
liquidate his investment in our common stock. Trading of a relatively small volume of our common
stock may have a greater impact on the trading price of our stock than would be the case if our
public float were larger. We cannot predict the prices at which our common stock will trade in the
future.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Because our common stock may be a &#147;penny stock,&#148; it may be more difficult for investors to sell
shares of our common stock, and the market price of our common stock may be adversely affected.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our common stock may be a &#147;penny stock&#148; if, among other things, the stock price is below $5.00
per share, it is not listed on a national securities exchange or approved for quotation on the
American Stock Exchange, the Nasdaq Stock Market or any other national stock exchange or it has not
met certain net tangible asset or average revenue requirements. Broker-dealers who sell penny
stocks must provide purchasers of these stocks with a standardized risk-disclosure document
prepared by the Securities and Exchange Commission. This document provides information about penny
stocks and the nature and level of risks involved in investing in the penny-stock market. A broker
must also give a purchaser, orally or in writing, bid and offer quotations and information
regarding broker and salesperson compensation, make a written determination that the penny stock is
a suitable investment for the purchaser, and obtain the purchaser&#146;s written agreement to the
purchase. Broker-dealers must also provide customers that hold penny stock in their accounts with
such broker-dealer a monthly statement containing price and market information relating to the
penny stock. If a penny stock is sold to an investor in violation of the penny stock rules, the
investor may be able to cancel its purchase and get its money back.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If applicable, the penny stock rules may make it difficult for investors to sell their shares
of our common stock. Because of the rules and restrictions applicable to a penny stock, there is
less trading in penny stocks and the market price of our common stock may be adversely
affected. Also, many brokers choose not to participate in penny stock transactions.
Accordingly, investors may not always be able to resell their shares of our common stock publicly
at times and prices that they feel are appropriate.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Directors, executive officers, principal shareholders and affiliated entities own a significant
percentage of our capital stock, and they may make decisions that you do not consider to be in the
best interests of our shareholders.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of the closing of the merger, our directors, executive officers, principal shareholders and
affiliated entities beneficially owned, in the aggregate, approximately 70% of our outstanding
voting securities. As a result, if some or all of them acted together, they would have
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">the ability
to exert substantial influence over the election of our Board of Directors and the outcome of
issues requiring approval by our shareholders. This concentration of ownership may have the effect
of delaying or preventing a change in control of our company that may be favored by other
shareholders. This could prevent transactions in which shareholders might otherwise recover a
premium for their shares over current market prices.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Failure to achieve and maintain effective internal controls in accordance with Section&nbsp;404 of the
Sarbanes-Oxley Act could have a material adverse effect on our business and operating results. In
addition, current and potential shareholders could lose confidence in our financial reporting,
which could have a material adverse effect on the price of our common stock.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective internal controls are necessary for us to provide reliable financial reports and
effectively prevent fraud. If we cannot provide reliable financial reports or prevent fraud, our
operating results could be harmed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will be required to document and test our internal control procedures in order to satisfy
the requirements of Section&nbsp;404 of the Sarbanes-Oxley Act of 2002, which requires annual management
assessments of the effectiveness of our internal controls over financial reporting and a report by
our independent registered public accounting firm addressing these assessments. During the course
of our testing, we may identify deficiencies and weaknesses which we may not be able to remediate
in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements
of Section&nbsp;404. In addition, if we fail to maintain the adequacy of our internal controls, as such
standards are modified, supplemented or amended from time to time, we may not be able to ensure
that we can conclude on an ongoing basis that we have effective internal controls over financial
reporting in accordance with Section&nbsp;404 of the Sarbanes-Oxley Act. Disclosing deficiencies or
weaknesses in our internal controls, failing to remediate these deficiencies or weaknesses in a
timely fashion or failing to achieve and maintain an effective internal control environment may
cause investors to lose confidence in our reported financial information, which could have a
material adverse effect on the price of our common stock.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Compliance with changing regulations concerning corporate governance and public disclosure may
result in additional expenses.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There have been changing laws, regulations and standards relating to corporate governance and
public disclosure, including the Sarbanes-Oxley Act, new regulations promulgated by the Commission
and rules promulgated by the American Stock Exchange, the other national securities exchanges and
the NASDAQ. These new or changed laws, regulations and standards are subject to varying
interpretations in many cases due to their lack of specificity, and, as a result, their application
in practice may evolve over time as new guidance is provided by regulatory and governing bodies,
which could result in continuing uncertainty regarding compliance matters and higher costs
necessitated by ongoing revisions to disclosure and governance practices. As a result, our efforts
to comply with evolving laws, regulations and standards are likely to continue to result in
increased general and administrative expenses and a diversion of management time and attention from
revenue-generating activities to compliance activities. Our board members, Chief Executive Officer
and Chief Financial Officer could face
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">an increased risk of personal liability in connection with
the performance of their duties. As a result, we may have difficulty attracting and retaining
qualified board members and executive officers, which could harm our business. If our efforts to
comply with new or changed laws, regulations and standards differ from the activities intended by
regulatory or governing bodies, we could be subject to liability under applicable laws or our
reputation may be harmed.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We have not yet evaluated our internal controls over financial reporting to determine whether they
are in compliance with Section&nbsp;404 of the Sarbanes-Oxley Act and, accordingly, cannot assure you
that these internal controls are in compliance which may be necessary to maintain investor
confidence in our financial reporting and interest in our stock.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are required to comply with the internal control evaluation and certification requirements
of Section&nbsp;404 of the Sarbanes-Oxley Act. We are in the process of determining whether our
existing internal controls over financial reporting systems are compliant with Section&nbsp;404 and,
accordingly, cannot assure you yet that these internal controls are in compliance. This process
may divert internal resources and will take a significant amount of time and effort to complete.
If it is determined that we are not in compliance with Section&nbsp;404, we may be required to implement
new internal control procedures and reevaluate our financial reporting. We may experience higher
than anticipated operating expenses as well as higher independent auditor fees during the
implementation of these changes and thereafter. Further, we may need to hire additional qualified
personnel in order for us to comply with Section&nbsp;404. If we are unable to implement these changes
effectively or efficiently, it could harm our operations, financial reporting or financial results
and could result in our being unable to obtain an unqualified report on internal controls from our
independent auditors. Our inability to obtain this unqualified report from our independent
auditors could adversely affect the confidence investors have in our financial reporting which
could adversely impact the price of our stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Risks Related to our New Business</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Protalix may not obtain the necessary U.S. or worldwide regulatory approvals to commercialize its
drug candidates which would severely undermine its business by reducing the number of salable
products and, therefore, corresponding product revenues.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Protalix will need FDA approval to commercialize its drug candidates in the U.S. and approvals
from foreign regulators to commercialize its drug candidates elsewhere. In order to obtain FDA
approval of any of its drug candidates, Protalix must submit to the FDA a New Drug Application, or
NDA, demonstrating that the drug candidate is safe for humans and effective for its intended use.
This demonstration requires significant research and animal tests, which are referred to as
pre-clinical studies, as well as human tests, which are referred to as clinical trials.
Satisfaction of the FDA&#146;s regulatory requirements typically takes many years, and depends upon the
type, complexity and novelty of the drug candidate and requires substantial resources for research,
development and testing. Protalix&#146;s research and clinical efforts may not result in drugs that the
FDA considers safe for humans and effective for indicated uses. After clinical trials are
completed, the FDA has substantial discretion in the drug approval process of the drug candidate
and may require Protalix to conduct additional pre-clinical and clinical testing or to perform
post-marketing studies.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The approval process may also be delayed by changes in government regulation, future
legislation or administrative action or changes in FDA policy that occur prior to or during its
regulatory review. Delays in obtaining regulatory approvals may:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>delay commercialization of, and Protalix&#146;s ability to derive product revenues from, its drug
candidates;
</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>impose costly procedures on Protalix; and
</TD>
</TR>


<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>diminish any competitive advantages that Protalix may otherwise enjoy.
</TD>
</TR>
</table>
</Div>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Even if Protalix complies with all FDA requests, the FDA may ultimately reject one or more of
its NDAs. Protalix might not obtain regulatory clearance for its drug candidates in a timely
manner, if at all. Failure to obtain FDA approval of any of its drug candidates in a timely manner
or if at all will severely undermine our business by reducing the number of salable products and,
therefore, corresponding product revenues.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In foreign jurisdictions, Protalix must receive approval from the appropriate regulatory
authorities before it can commercialize its drug. Foreign regulatory approval processes generally
include all of the risks associated with the FDA approval procedures described above. Protalix
might not be able to obtain the approvals necessary to commercialize its drug candidates for sale
outside the United States in a timely manner, if at all.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Protalix currently has no product revenues, and we will need to raise additional capital to operate
its business, the failure of which may force us to reduce or discontinue product development,
licensing, sales or marketing efforts.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Until Protalix receives approval from the FDA and other regulatory authorities for its drug
candidates, Protalix cannot sell its drugs and will not have product revenues. Therefore, for the
foreseeable future, we will have to fund all of our operations and capital expenditures from the
net proceeds of equity or debt offerings, cash on hand, licensing fees and grants. We will need
additional financing, which may not be available on favorable terms, if at all. Over the next
twelve months, Protalix expects to spend a minimum of approximately $5&nbsp;million on clinical
development for its products under development. Based on its current plans and its capital
resources, Protalix believes that its cash and cash equivalents will be sufficient to enable it to
meet its minimum planned operating needs for at least the next twelve months. However, changes may
occur that would consume our existing capital at a faster rate than projected, including, among
others, the progress of our research and development efforts, the cost and timing of regulatory
approvals and the costs of protecting our intellectual property rights. Following completion of
the merger, we may seek additional financing to implement and fund longer-term product development,
clinical trial and research and development efforts to the maximum extent of our operating plan,
including pre-clinical studies and clinical trials for the drugs in Protalix&#146;s pipeline as well as
additional drug candidates and other research and development projects. Under the terms of a tax
ruling obtained by Protalix Ltd. from the Israeli tax authorities in connection with the merger
into our company, we and Protalix Ltd. are subject to various restrictions and conditions in
connection with the issuance of shares for a period commencing upon the closing of the merger
through January&nbsp;1, 2009, including, but not limited
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">to, a requirement that we maintain our holdings
of at least 51% of the outstanding shares of Protalix Ltd. and that the shareholders at the time of
the closing of the merger maintain aggregate holdings of at least 51% of our outstanding shares.
If we are unable to secure additional financing in the future on acceptable terms, or at all, we
may be unable to commence or complete planned pre-clinical and clinical trials or obtain approval
of Protalix&#146;s drug candidates from the FDA and other regulatory authorities. In addition, Protalix
may be forced to reduce or discontinue product development or product licensing, reduce or forego
sales and marketing efforts and forego attractive business opportunities in order to improve its
liquidity to enable it to continue operations. Any additional sources of financing will likely
involve the sale of our equity securities, which will have a dilutive effect on shareholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Protalix is not currently profitable and may never become profitable.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Protalix expects to incur substantial losses for the foreseeable future and might never become
profitable. Protalix also expects to continue to incur significant operating and capital
expenditures and anticipates that its expenses will increase substantially in the foreseeable
future as Protalix:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>continues to undertake pre-clinical development and clinical trials for its current and new drug
candidates;
</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>seeks regulatory approvals for its drug candidates;
</TD>
</TR>


<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>implements additional internal systems and infrastructure;
</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>seeks to license in additional technologies to develop; and
</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>hires additional personnel.
</TD>
</TR>

</table>
</Div>





<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We expect to continue to experience negative cash flow for the foreseeable future as we fund
Protalix&#146;s operating losses and capital expenditures. As a result, we will need to generate
significant revenues in order to achieve and maintain profitability. We may not be able to
generate these revenues or achieve profitability in the future. Our failure to achieve or maintain
profitability could negatively impact the value of our common stock. Protalix has a limited
operating history upon which to base an investment decision.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Protalix&#146;s operations have been limited to organizing and staffing its company, acquiring,
developing, and securing its proprietary technology and undertaking, through third parties,
pre-clinical trials and clinical trials of its principal drug candidates. To date, Protalix has
completed Phase I clinical trials only on prGCD and expects to commence preclinical trials of its
other drug candidates in the future. These operations provide a limited basis for investors to
assess Protalix&#146;s ability to commercialize its drug candidates and the advisability of investing in
Protalix.
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->30<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Protalix may be
forced to abandon development altogether, which will significantly impair its ability to generate
product revenues.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon the completion of any clinical trial by Protalix, if at all, the results of these trials
might not support the claims sought by Protalix. Further, success in pre-clinical testing and
early clinical trials does not ensure that later clinical trials will be successful, and the
results of later clinical trials may not replicate the results of prior clinical trials and
pre-clinical testing. The clinical trial process may fail to demonstrate that Protalix&#146;s drug
candidates are safe for humans and effective for indicated uses. Any such failure may cause
Protalix to abandon a drug candidate and may delay development of other drug candidates. Any delay
in, or termination of, its clinical trials will delay the filing of NDAs with the FDA and,
ultimately, Protalix&#146;s ability to commercialize its drug candidates and generate product revenues.
In addition, certain of Protalix&#146;s clinical trials involve a specific patient population. Because
of the small sample size, the results of these early clinical trials may not be indicative of
future results. If the clinical trials do not support Protalix&#146;s drug product claims, the
completion of development of such drug candidates may be significantly delayed or Protalix may be
forced to abandon development which will significantly impair Protalix&#146;s ability to generate
product revenues and will materially adversely affect our results of operations.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Even if Protalix successfully completes clinical trials for its product candidates, there are no
assurances that Protalix will be able to submit, or obtain FDA approval of, an NDA, the failure to
so submit or obtain would hinder or halt Protalix&#146;s ability to commercialize its products.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There can be no assurance that, if Protalix&#146;s clinical trials for any of its product
candidates are successfully completed, Protalix will be able to submit an NDA to the FDA or that
any NDA Protalix submits will be approved by the FDA in a timely manner, if at all. After
completing clinical trials for a product candidate in humans, a drug dossier is prepared and
submitted to the FDA as an NDA in order to allow the FDA to review such drug dossier and to
consider a product candidate for approval for commercialization in the United States. If Protalix
is unable to submit an NDA with respect to any of its product candidates, or if any NDA Protalix
submits is not approved by the FDA, Protalix will be unable to commercialize that product in the
United States. The FDA can and does reject NDAs and requires additional clinical trials, even when
drug candidates perform well or achieve favorable results in large-scale Phase III clinical trials.
If Protalix fails to commercialize any of its product candidates, we may be unable to generate
sufficient revenues to continue operations or attain profitability and Protalix&#146;s reputation in the
industry and our reputation in the investment community would likely be damaged, each of which
could cause our stock price to significantly decrease.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Protalix&#146;s product candidates will remain subject to ongoing regulatory requirements even if they
receive marketing approval, and if Protalix fails to comply with these requirements, it could lose
these approvals, and the sales of any approved commercial products could be suspended.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Even if Protalix receives regulatory approval to market a particular product candidate, the
product will remain subject to extensive regulatory requirements, including requirements relating
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">to manufacturing, labeling, packaging, adverse event reporting, storage, advertising, promotion,
distribution and record keeping. Even if regulatory approval of a product is granted, the approval
may be subject to limitations on the uses for which the product may be marketed or the conditions
of approval, or may contain requirements for costly post-marketing testing and surveillance to
monitor the safety or efficacy of the product, which could negatively impact Protalix or its
collaboration partners by reducing revenues or increasing expenses, and cause the approved product
candidate not to be commercially viable. In addition, as clinical experience with a drug expands
after approval, typically because it is used by a greater number and more diverse group of patients
after approval than during clinical trials, side effects and other problems may be observed after
approval that were not seen or anticipated during pre-approval clinical trials or other studies.
Any adverse effects observed after the approval and marketing of a product candidate could result
in limitations on the use of or withdrawal of any approved products from the marketplace. Absence
of long-term safety data may also limit the approved uses of our products, if any. If we fail to
comply with the regulatory requirements of the FDA and other applicable United States and foreign
regulatory authorities, or previously unknown problems with any approved commercial products,
manufacturers or manufacturing processes are discovered, Protalix could be subject to
administrative or judicially imposed sanctions or other setbacks, including the following:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Restrictions on the products, manufacturers or manufacturing processes;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Warning letters;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Civil or criminal penalties, fines and/or injunctions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Product seizures or detentions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Import or export bans or restrictions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Voluntary or mandatory product recalls and related publicity requirements;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Suspension or withdrawal of regulatory approvals;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Total or partial suspension of production; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Refusal to approve pending applications for marketing approval of new products or
supplements to approved applications.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If Protalix or its collaborators are slow to adapt, or are unable to adapt, to changes in
existing regulatory requirements or adoption of new regulatory requirements or policies, marketing
approval for Protalix&#146;s product candidates may be lost or cease to be achievable, resulting in
decreased revenue from milestones, product sales or royalties, which would have a material adverse
effect on our results of operations.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>If Protalix fails to adequately protect or enforce its intellectual property rights or secure
rights to patents of others, the value of its intellectual property rights would diminish and its
business and competitive position would suffer.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Protalix&#146;s success, competitive position, and future revenues, if any, depend in part on its
ability, and that of its licensees, to obtain and successfully leverage intellectual property
covering its products and product candidates, know-how, methods, processes, and other
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->32<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>If the results of Protalix&#146;s clinical trials do not support its drug candidate claims, the
completion of development of such drug candidates may be significantly delayed or</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">technologies,
to protect its trade secrets, to prevent others from using Protalix&#146;s intellectual property
and to operate without infringing the intellectual property rights of third parties. For a
description of Protalix&#146;s intellectual property and policy with respect to protecting its
intellectual property, see &#147;Business&#151;Patents and Other Intellectual Property&#148;.
</DIV>




<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>With respect to intellectual property rights, Protalix cannot predict:</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the degree and range of protection any patents will afford Protalix against competitors, including whether third
parties will find ways to invalidate or design around its own or licensed patents;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>if and when patents will issue;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>whether or not others will obtain patents claiming aspects similar to those covered by its own or licensed patents and
patent applications; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>whether it will need to initiate litigation or administrative proceedings that may be costly whether it wins or loses.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If patent rights covering Protalix&#146;s products and methods are not sufficiently broad, they may
not provide Protalix with any protection against competitors with similar products and
technologies. Furthermore, if the United States Patent and Trademark Office or foreign patent
offices issue patents to Protalix or its licensors, others may challenge the patents or design
around the patents, or the patent office or the courts may invalidate the patents. Thus, any
patents Protalix owns or licenses from or to third parties may not provide any protection against
its competitors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Protalix is aware of United States patents, and corresponding international counterparts of
such patents, owned by third parties that contain claims related to methods of producing
Glucocerebrosidase. If any claim for infringement is asserted against Protalix based upon such
patents, there can be no assurance that a court would find in Protalix&#146;s favor or that, if Protalix
chooses or is required to seek a license to any one or more of such patents, a license would be
available to Protalix on acceptable terms, or at all.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Furthermore, the life of Protalix&#146;s patents is limited. The basic platform patent will expire
in 2016. If patents issue from other currently submitted patent applications, those patents will
expire between 2023 and 2025.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>If Protalix infringes the intellectual property rights of third parties it could be prevented from
selling products, forced to pay damages and defend against litigation.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If Protalix&#146;s products, methods, processes, and other technologies infringe the intellectual
property rights of other parties, it could incur substantial costs and it may have to:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>obtain licenses, which may not be available on commercially reasonable terms, if at all;
</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>redesign its products or processes to avoid infringement;
</TD>
</TR>
</table>
</Div>




<P align="center" style="font-size: 10pt"><!-- Folio -->33<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>stop using the subject matter claimed in the patents held by others, which could cause it to lose
the use of one or more of its drug candidates;
</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>pay damages; or
</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>defend litigation or administrative proceedings which may be costly whether Protalix wins or loses,
and which could result in a substantial diversion of its management resources.
</TD>
</TR>

</table>
</Div>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Protalix has not received to date any claims of infringement by any third parties. However,
as its drug candidates progress into clinical trials and commercialization, if at all, the public
profile of Protalix and its drug candidates may be raised and generate such claims. Any claims of
infringement asserted against Protalix, whether or not successful, may have a material adverse
effect on Protalix.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Clinical trials are very expensive, time-consuming and difficult to design and implement and, as a
result, we may suffer delays or suspensions in future trials which would have a material adverse
effect on our ability to generate revenues.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Human clinical trials are very expensive and difficult to design and implement, in part
because they are subject to rigorous regulatory requirements. The clinical trial process is also
time-consuming. Protalix estimates that clinical trials of its current drug candidates will take
at least several years to complete. Furthermore, failure can occur at any stage of the trials, and
Protalix may encounter problems that cause it to abandon or repeat clinical trials. The
commencement and completion of clinical trials may be delayed by several factors, including:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>unforeseen safety issues;
</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>determination of dosing issues;
</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>lack of effectiveness or efficacy during clinical trials;
</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>failure of third party suppliers to perform final manufacturing steps for the drug substance;
</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>slower than expected rates of patient recruitment;
</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>inability to monitor patients adequately during or after treatment;
</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>inability or unwillingness of medical investigators and institutional review boards to follow
Protalix&#146;s clinical protocols; and
</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>lack of sufficient funding to finance the clinical trials.
</TD>
</TR>

</table>
</Div>




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Protalix may suffer delays in future clinical trials. In addition, Protalix or the FDA may
suspend its clinical trials at any time if it appears that Protalix is exposing participants to
unacceptable health risks or if the FDA finds deficiencies in Protalix&#146;s IND submissions or the
conduct of these trials. Any suspension of clinical trials will have a material adverse effect on
us.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>If physicians and patients do not accept and use Protalix&#146;s drugs, its ability to generate revenue
from sales of its products will be materially impaired.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Even if the FDA approves Protalix&#146;s drug candidates for commercialization, physicians and
patients may not accept and use such candidates. Future acceptance and use of Protalix&#146;s products
will depend upon a number of factors including:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>perceptions by members of the health care community, including physicians, about the safety and
effectiveness of Protalix&#146;s drugs;
</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>pharmacological benefit and cost-effectiveness of Protalix&#146;s products relative to competing
products;
</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>availability of reimbursement for its products from government or other healthcare payers;
</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>effectiveness of marketing and distribution efforts by Protalix and its licensees and distributors,
if any; and
</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the price at which Protalix sells its products.
</TD>
</TR>

</table>
</Div>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because we expect sales of Protalix&#146;s current drug candidates, if approved, to generate
substantially all of our revenues for the foreseeable future, the failure of any of these drugs to
find market acceptance would harm our business and could require us to seek additional financing.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>The manufacture of Protalix&#146;s products is an exacting and complex process, and if Protalix or one
of its materials suppliers encounter problems manufacturing its products, our business could
suffer.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The FDA and foreign regulators require manufacturers to register manufacturing facilities.
The FDA and foreign regulators also inspect these facilities to confirm compliance with cGMP or
similar requirements that the FDA or foreign regulators establish. Protalix or its materials
suppliers may face manufacturing or quality control problems causing product production and
shipment delays or a situation where Protalix or the supplier may not be able to maintain
compliance with the FDA&#146;s cGMP requirements, or those of foreign regulators, necessary to continue
manufacturing our drug substance. Drug manufacturers are subject to ongoing periodic
unannounced inspections by the FDA, the United States Drug Enforcement Agency and
corresponding foreign standards to ensure strict compliance with cGMP requirements and other
governmental regulations and corresponding foreign standards. Any failure to comply with cGMP
requirements or other FDA or foreign regulatory requirements could adversely affect Protalix&#146;s
clinical research activities and Protalix&#146;s ability to market and develop its products. Protalix&#146;s
current facility has not been audited by the FDA and such approval may not be granted in the
future.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Protalix relies on third parties for final processing of its prGCD candidate, which exposes
Protalix to a number of risks that may delay development, regulatory approval and commercialization
of Protalix&#146;s products or result in higher product costs.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Protalix has no experience in the final filling and freeze drying steps of the drug
manufacturing process. Protalix has entered into a contract with Teva to perform the final
manufacturing steps for its prGCD drug candidate in connection with its clinical trials. If any of
Protalix&#146;s drug candidates receive FDA approval, Protalix will rely on Teva or other third-party
contractors to perform the final manufacturing steps for its drugs on a commercial scale. Protalix
may be unable to identify manufacturers and replacement manufacturers on acceptable terms or at all
because the number of potential manufacturers is limited and the FDA must approve any replacement
manufacturer and any such third party manufacturers might be unable to formulate and manufacture
Protalix&#146;s drugs in the volume and of the quality required to meet its clinical needs and
commercial needs. If Protalix engages any contract manufacturers, such manufacturers may not
perform as agreed or may not remain in the contract manufacturing business for the time required to
supply its clinical trials or to successfully produce, store and distribute its products. Each of
these risks could delay Protalix&#146;s clinical trials, the approval, if any, of Protalix&#146;s drug
candidates by the FDA, or the commercialization of Protalix&#146;s drug candidates or result in higher
costs or otherwise deprive Protalix of potential product revenues.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Protalix has no experience selling, marketing, or distributing products, and, as a result, it might
not be able to effectively market and sell its products, which would have a material adverse effect
on us.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;While Protalix intends to have a role in the commercialization of its products, Protalix
currently has no sales, marketing or distribution capabilities. Protalix&#146;s future success depends,
in part, on its ability to enter into and maintain collaborative relationships with other companies
having sales, marketing and distribution capabilities, the collaborator&#146;s strategic interest in the
products under development and such collaborator&#146;s ability to successfully market and sell any such
products. Protalix intends to pursue additional collaborative arrangements regarding the sales and
marketing of its products; however, Protalix might not be able to establish or maintain such
collaborative arrangements, or if such arrangements are made, Protalix&#146;s counterparties might not
have effective sales and marketing forces. To the extent that Protalix decides not to, or is
unable to, enter into collaborative arrangements with respect to the sales and marketing of its
proposed products, significant capital expenditures, management resources and time will be required
to establish and develop an in-house marketing and sales force with technical expertise. Protalix
may not be able to establish or maintain relationships with third party collaborators or develop
in-house sales and distribution capabilities. To the extent that Protalix depends on third
parties for marketing and distribution, any revenues it receives will depend upon the efforts
of such third parties, as well as the terms of its agreements with such third parties, which cannot
be predicted at this early stage of its development. As a result, Protalix might not be able to
market and sell its products in the United States or overseas, which would have a material adverse
effect on us.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Protalix&#146;s strategy, in many cases, is to enter into collaboration agreements with third parties
with respect to its products and Protalix may require additional collaboration</I></B>
</DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>agreements. If
Protalix fails to enter into these agreements or if Protalix or the third parties do not perform
under such agreements, it could impair Protalix&#146;s ability to commercialize its products.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Protalix&#146;s
strategy for the completion of the required development and clinical
testing of a number of its
products and for the marketing and commercialization of products, in many cases, depends upon
entering into collaboration arrangements with pharmaceutical companies to market, commercialize and
distribute its products. To date, Protalix has entered into an agreement with Teva, which relates
to the development of two proteins, and licensing by Teva of such proteins in consideration for
royalties and milestone payments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If Protalix or any of its partners breach or terminate the agreements that make up such
collaboration arrangements or such partners otherwise fail to conduct their collaboration-related
activities in a timely manner or if there is a dispute about their obligations, Protalix may need
to seek other partners or may have to develop its own internal sales and marketing capability for
its current and future products. Accordingly, Protalix may need to enter into additional
collaboration agreements, and our success may depend upon obtaining additional collaboration
partners. In addition, we may depend on our collaborators&#146; expertise and dedication of sufficient
resources to develop and commercialize our proposed products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may, in the future, grant to collaboration partners rights to license and commercialize
pharmaceutical products developed under collaboration agreements. Under these arrangements, our
collaboration partners may control key decisions relating to the development of the products. The
rights of our collaboration partners would limit our flexibility in considering alternatives for
the commercialization of our products. If we fail to successfully develop these relationships or
if our collaboration partners fail to successfully develop or commercialize any of our products, it
may delay or prevent us from developing or commercializing our products in a competitive and timely
manner and would have a material adverse effect on the commercialization of our products. See
&#147;Risk Factors&#151;Protalix has no experience selling, marketing, or distributing products, and, as a
result, it might not be able to effectively market and sell its products, which would have a
material adverse effect on us.&#148;
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Developments by competitors may render Protalix&#146;s products or technologies obsolete or
non-competitive.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will compete against fully integrated pharmaceutical companies and smaller companies that
are collaborating with larger pharmaceutical companies, academic institutions, government agencies
and other public and private research organizations. In addition, many of these
competitors, either alone or together with their collaborative partners, operate larger
research and development programs, and have substantially greater financial resources than we do,
as well as significantly greater experience in:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>developing drugs;
</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>undertaking pre-clinical testing and human clinical trials;
</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>obtaining FDA and other regulatory approvals of drugs;
</TD>
</TR>

</table>
</Div>




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<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>formulating and manufacturing drugs; and
</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>launching, marketing and selling drugs.
</TD>
</TR>
</table>
</Div>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Genzyme and Actelion currently sell proprietary compounds for the treatment of Gaucher
Disease. In addition, companies pursuing different but related fields represent substantial
competition. Many of these organizations have substantially greater capital resources, larger
research and development staffs and facilities, longer drug development history, more experience in
obtaining regulatory approvals, and greater manufacturing and marketing capabilities than we do.
These organizations also compete with us to attract qualified personnel, parties for acquisitions,
joint ventures, and other collaborations.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>If Protalix cannot meet requirements under its license agreements, it could lose the rights to its
products.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Protalix
has signed licensing agreements with third parties to maintain the intellectual
property rights to certain of our products under development. Presently, Protalix has licensed
rights from Icon (Bayer), Virginia Tech, and Yeda. These agreements require Protalix to make
payments and satisfy performance obligations in order to maintain its rights under these licensing
agreements. All of these agreements last either throughout the life of the patents, or with
respect to other licensed technology, for a number of years after the first commercial sale of the
relevant product.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, Protalix is responsible for the cost of filing and prosecuting certain patent
applications and maintaining certain issued patents licensed to Protalix. If Protalix does not
meet its obligations under its license agreements in a timely manner, it could lose the rights to
its proprietary technology.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Finally, Protalix may be required to obtain licenses to patents or other intellectual property
rights of third parties in connection with the development and use of its products and
technologies. Licenses required under any such patents or intellectual property rights might not
be made available on terms acceptable to Protalix, if at all.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>If Protalix is unable to successfully manage its growth, its business may be harmed.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to its own internally developed drug candidates, Protalix seeks to review,
proactively, opportunities to license advance recombinant DNA products such as therapeutic
proteins, vaccines, and antibodies that are strategic and have value-creating potential to
take advantage of and leverage its development know-how. Protalix is also actively pursuing
additional drug candidates to acquire for development. Such additional drug candidates may
significantly increase Protalix&#146;s capital requirements and place further strain on or otherwise
adversely affect the development of Protalix&#146;s existing drug candidates. Alternatively, Protalix
may be required to hire more employees, further increasing the size of its organization and related
expenses. If Protalix is unable to manage its growth effectively, Protalix may not efficiently use
its resources, which may delay the development of its drug candidates and negatively impact its
business, results of operations, and financial condition.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Protalix depends upon key employees and consultants in a competitive market for skilled personnel.
If Protalix is unable to attract and retain key personnel, it could adversely affect Protalix&#146;s
ability to develop and market its products.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Protalix is highly dependent upon the principal members of its management team, as well as its
scientific advisory board members, consultants, and collaborating scientists. Many of these people
have been involved in the formation of Protalix (or have otherwise been involved with Protalix) for
many years, have played integral roles in the progress of Protalix, and Protalix believes that they
will continue to provide value to Protalix. A loss of any of these personnel may have a material
adverse effect on aspects of Protalix&#146;s business and clinical development and regulatory programs.
As of September&nbsp;30, 2006, Protalix had employment agreements with seven key employees and officers
expiring at will and terminable by either party upon prior notice ranging from 30 to 90&nbsp;days.
Although these employment agreements generally include non-competition covenants, the applicable
non-compete provisions can be difficult and costly to monitor and enforce. The loss of any of
these persons&#146; services would adversely affect Protalix&#146;s ability to develop and market its
products and obtain necessary regulatory approvals. Further, Protalix does not maintain key-man
life insurance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Protalix&#146;s future success also will depend in part on the continued service of its key
scientific and management personnel and its ability to identify, hire, and retain additional
personnel, including marketing and sales staff. Protalix experiences intense competition for
qualified personnel, and the existence of non-competition agreements between prospective employees
and their former employers may prevent Protalix from hiring those individuals or subject Protalix
to suit from their former employers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;While Protalix attempts to provide competitive compensation packages to attract and retain key
personnel, some of its competitors are likely to have greater resources and more experience than
Protalix has, making it difficult for Protalix to compete successfully for key personnel.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Protalix may enter into distribution arrangements and marketing alliances, which could require it
to give up rights to its product candidates.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Protalix may rely on third-party distributors to distribute its products or enter into
marketing alliances to sell its products. Protalix may not be successful in entering into
distribution arrangements and marketing alliances with third parties. Protalix&#146;s failure to
successfully develop
a marketing and sales team or to enter into these arrangements on favorable terms could delay
or impair its ability to commercialize its product candidates and could increase its costs of
commercialization. Protalix&#146;s dependence on distribution arrangements and marketing alliances to
commercialize its product candidates will subject Protalix to a number of risks, including:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Protalix may be required to relinquish important rights to its products or product candidates;
</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Protalix may not be able to control the amount and timing of resources that its distributors or
collaborators may devote to the commercialization of its product candidates;
</TD>
</TR>
</table>
</Div>



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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Protalix&#146;s distributors or collaborators may experience financial difficulties;
</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Protalix&#146;s distributors or collaborators may not devote sufficient time to the marketing and sales
of Protalix&#146;s products thereby exposing Protalix to potential expenses in terminating such
distribution agreements; and
</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>business combinations or significant changes in a collaborator&#146;s business strategy may adversely
affect a collaborator&#146;s willingness or ability to complete its obligations under any arrangement.
</TD>
</TR>

</table>
</Div>




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Protalix may need to enter into additional co-promotion arrangements with third parties where
its own sales force is neither well situated nor large enough to achieve maximum penetration in the
market. Protalix may not be successful in entering into any co-promotion arrangements, and the
terms of any co-promotion arrangements may not be favorable to Protalix. In addition, if Protalix
enters into co-promotion arrangements or markets and sells additional products directly, Protalix
may need to further expand its sales force and incur additional costs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If Protalix fails to enter into arrangements with third parties in a timely manner or if it
fails to perform, it could adversely affect sales of our products. Protalix and any of its
third-party collaborators must also market Protalix&#146;s products in compliance with federal, state,
and local laws relating to the providing of incentives and inducements. Violation of these laws
can result in substantial penalties.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Protalix relies on confidentiality agreements that could be breached and may be difficult to
enforce, which could result in third parties using Protalix&#146;s intellectual property to compete
against it.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although Protalix believes that it takes reasonable steps to protect its intellectual
property, including the use of agreements relating to the non-disclosure of confidential
information to third parties, as well as agreements that purport to require the disclosure and
assignment to Protalix of the rights to the ideas, developments, discoveries, and inventions of its
employees and consultants while Protalix employs them, the agreements can be difficult and costly
to enforce. Although Protalix seeks to obtain these types of agreements from its contractors,
consultants, advisors, and research collaborators, to the extent that they apply or independently
develop intellectual property in connection with any of Protalix&#146;s projects, disputes may arise as
to the intellectual property rights to this type of information. If a dispute arises, a court may
determine that the right belongs to a third party, and enforcement of Protalix&#146;s rights can be
costly and unpredictable. In addition, Protalix relies on trade secrets and proprietary know-how
that it will seek to protect in part by
confidentiality agreements with its employees, contractors, consultants, advisors or others.
Despite the protective measures Protalix employs, it still faces the risk that:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>these agreements may be breached;
</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>these agreements may not provide adequate remedies for the applicable type of breach;
</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Protalix&#146;s trade secrets or proprietary know-how will otherwise become known;
</TD>
</TR>

</table>
</Div>




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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Protalix&#146;s competitors will independently develop similar technology; or
</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Protalix&#146;s competitors will independently discover our proprietary information and trade secrets.
</TD>
</TR>
</table>
</Div>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Under current U.S. and Israeli law, Protalix may not be able to enforce employees&#146; covenants not to
compete and therefore may be unable to prevent its competitors from benefiting from the expertise
of some of its former employees.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Protalix has entered into non-competition agreements with all of its employees. These
agreements prohibit Protalix&#146;s employees, if they cease working for Protalix, from competing
directly with Protalix or working for Protalix&#146;s competitors for a limited period. Under current
U.S. and Israeli law, Protalix may be unable to enforce these agreements, and it may be difficult
for Protalix to restrict its competitors from gaining the expertise its former employees gained
while working for Protalix. If Protalix cannot enforce the non-compete agreements with its
employees, Protalix may be unable to prevent its competitors from benefiting from the expertise of
its former employees.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Protalix may incur substantial liabilities and may be required to limit commercialization of its
products in response to product liability lawsuits.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The clinical testing of, marketing, and use of Protalix&#146;s products exposes Protalix to product
liability claims in the event that the use or misuse of those products causes injury, disease or
results in adverse effects. Use of Protalix&#146;s products in clinical trials, as well as commercial
sale, could result in product liability claims. In addition, sales of Protalix&#146;s products through
third party arrangements could subject Protalix to product liability claims. Protalix carried
clinical trial liability insurance for its Phase I clinical trial of prGCD with coverages of up to
$3&nbsp;million per occurrence and $3&nbsp;million in the aggregate, an amount we consider reasonable and
customary relating to such Phase I clinical trial. However, this insurance coverage includes
various deductibles, limitations and exclusions from coverage, and in any event might not fully
cover any potential claims. Protalix will need to obtain additional clinical trial liability
coverage prior to initiating additional clinical trials. Protalix expects to obtain product
liability insurance coverage before commercialization of its proposed products; however, the
insurance is expensive and insurance companies may not issue this type of insurance when Protalix
needs it. Protalix may not be able to obtain adequate insurance in the future at an acceptable
cost. Any product liability claim, even one that was not in excess of Protalix&#146;s insurance
coverage or one that is meritless and/or unsuccessful, could adversely affect Protalix&#146;s cash
available for other purposes, such as research and development. In addition, the existence of a
product liability claim could affect the market price of our common stock.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Protalix expects the healthcare industry to face increased scrutiny over reimbursement and
healthcare reform, which could adversely impact how much or under what circumstances healthcare
providers will prescribe or administer Protalix&#146;s products.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In both the United States and other countries, sales of Protalix&#146;s products will depend in
part upon the availability of reimbursement from third party payors, which include government
health administration authorities, managed care providers, and private health insurers.
Third
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">party payors are increasingly challenging the price and examining the cost effectiveness of medical
products and services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Increasing expenditures for healthcare have been the subject of considerable public attention
in the United States. Both private and government entities are seeking ways to reduce or contain
healthcare costs. Numerous proposals that would effect changes in the United States healthcare
system have been introduced or proposed in Congress and in some state legislatures, including
reductions in the cost of prescription products and changes in the levels at which consumers and
healthcare providers are reimbursed for purchases of pharmaceutical products. For example, the
Medicare Prescription Drug, Improvement, and Modernization Act of 2003 and the implementing
regulations thereunder impose new requirements for the distribution and pricing of prescription
drugs which could reduce reimbursement of prescription drugs for healthcare providers and insurers.
Some of our proposed products may be reimbursed differently than the corresponding API.
Specifically, Medicare provides limited drug coverage under part B for drugs that are administered
by physicians on an outpatient basis. Reimbursement for drugs covered under Medicare part B is set
by a restrictive formula. Medicare part B, however, does not cover drugs that a patient may
self-administer, other than cancer drugs which come in two versions&#151;physician administered and
self-administered. Most drugs not covered under part B are covered under part D and prices for
those drugs are negotiated between private insurers, known as Prescription Drug Plans, and the drug
manufacturer. Although we cannot predict the full effect on our business of the implementation of
this legislation, we believe that legislation that reduces reimbursement for our products could
adversely impact how much or under what circumstances healthcare providers will prescribe or
administer our products. This could materially and adversely impact our business by reducing our
ability to generate revenue, raise capital, obtain additional collaborators and market our
products. In addition, we believe the increasing emphasis on managed care in the United States has
and will continue to put pressure on the price and usage of pharmaceutical products, which may
adversely impact product sales.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We are subject to federal anti-kickback laws and regulations, the failure with which to comply
could have adverse consequences to us.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are extensive federal and state laws and regulations prohibiting fraud and abuse in the
healthcare industry that can result in significant criminal and civil penalties. These federal
laws include: the anti-kickback statute, which prohibits certain business practices and
relationships, including the payment or receipt of remuneration for the referral of patients whose
care will be paid by Medicare or other federal healthcare programs; the physician self-referral
prohibition, commonly referred to as the Stark Law; the anti-inducement law, which prohibits
providers from offering anything to a Medicare or Medicaid beneficiary to induce that beneficiary
to use items or services covered by either program; the False Claims Act, which prohibits any
person from
knowingly presenting or causing to be presented false or fraudulent claims for payment by the
federal government, including the Medicare and Medicaid programs, and; the Civil Monetary Penalties
Law, which authorizes the United States Department of Health and Human Services to impose civil
penalties administratively for fraudulent or abusive acts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sanctions for violating these federal laws include criminal and civil penalties that range
from punitive sanctions, damage assessments, money penalties, imprisonment, denial of
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Medicare and
Medicaid payments, or exclusion from the Medicare and Medicaid programs, or both. As federal and
state budget pressures continue, federal and state administrative agencies may also continue to
escalate investigation and enforcement efforts to root out waste and to control fraud and abuse in
governmental healthcare programs. Private enforcement of healthcare fraud has also increased, due
in large part to amendments to the civil False Claims Act in 1986 that were designed to encourage
private persons to sue on behalf of the government. A violation of any of these federal and state
fraud and abuse laws and regulations could have a material adverse effect on our liquidity and
financial condition. An investigation into the use by physicians of any of our products, once
commercialized, may dissuade physicians from either purchasing or using them, and could have a
material adverse effect on our ability to commercialize those products.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Risks Relating to Our Operations in Israel</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Potential political, economic and military instability in the State of Israel, where the majority
of Protalix&#146;s senior management and its research and development facilities are located, may
adversely affect our results of operations.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Protalix&#146;s office and research and development facilities are located in the State of Israel.
Political, economic and military conditions in Israel may directly affect Protalix&#146;s business.
Since the State of Israel was established in 1948, a number of armed conflicts have occurred
between Israel and its Arab neighbors. Any hostilities involving Israel or the interruption or
curtailment of trade between Israel and its present trading partners, or a significant downturn in
the economic or financial condition of Israel, could affect adversely our operations. Ongoing and
revived hostilities or other Israeli political or economic factors could harm Protalix&#146;s operations
and product development and cause our revenues to decrease. Furthermore, several countries,
principally those in the Middle East, still restrict business with Israel and Israeli companies.
These restrictive laws and policies may limit seriously Protalix&#146;s ability to sell its products in
these countries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although Israel has entered into various agreements with Egypt, Jordan, and the Palestinian
Authority, there has been an increase in unrest and terrorist activity, which began in September
2000 and has continued with varying levels of severity into 2006. The recent election of
representatives of the Hamas movement to a majority of seats in the Palestinian Legislative Council
has resulted in an escalation in violence among Israel, the Palestinian Authority, and other
groups. In July and August&nbsp;2006, significant fighting took place between Israel and the Hezbollah
in Lebanon, resulting in rockets being fired from Lebanon up to 50 miles into Israel. Protalix&#146;s
facilities are located in northern Israel, are in range of rockets that were fired recently from
Lebanon into Israel and suffered minimal damages during one of the rocket attacks. In the event
that Protalix&#146;s facilities are damaged as a result of hostile action, its operations may be
materially adversely affected.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Protalix&#146;s operations may be disrupted by the obligations of its personnel to perform military
service.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Many of Protalix&#146;s male employees in Israel, including members of senior management, are
obligated to perform one month (in some cases more) of annual military reserve duty until
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">they
reach age 42 and, in the event of a military conflict, could be called to active duty. Protalix&#146;s
operations could be disrupted by the absence of a significant number of Protalix&#146;s employees
related to military service or the absence for extended periods of military service of one or more
of its key employees. A disruption could materially adversely affect Protalix&#146;s business.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>The tax benefits available to Protalix require it to meet several conditions and may be terminated
or reduced in the future, which would increase Protalix&#146;s taxes.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Protalix is able to take advantage of tax exemptions and reductions resulting from the
&#147;Approved Enterprise&#148; status of its facilities in Israel. To remain eligible for these tax
benefits, Protalix must continue to meet certain conditions, including making specified investments
in property and equipment (of NIS 5.4&nbsp;million), and financing at least 30% of such investments with
share capital. If Protalix fails to meet these conditions in the future, the tax benefits will be
canceled and Protalix may be required to refund any tax benefits it already has enjoyed. As of
September&nbsp;30, 2006, Protalix has not utilized any of such tax benefits. These tax benefits are
subject to investment policy by the Israeli Government Investment Center and may not be continued
in the future at their current levels or at any level. In recent years the Israeli government has
reduced the benefits available and has indicated that it may further reduce or eliminate some of
these benefits in the future. The termination or reduction of these tax benefits or Protalix&#146;s
inability to qualify for additional &#147;Approved Enterprise&#148; approvals may increase Protalix&#146;s tax
expenses in the future, which would reduce our expected profits. Additionally, if Protalix
increases its activities outside of Israel, for example, by future acquisitions, its increased
activities generally may not be eligible for inclusion in Israeli tax benefit programs.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>The government grants Protalix has received for certain research and development expenditures
restrict its ability to manufacture products and transfer technologies outside of Israel and
require Protalix to satisfy specified conditions. If Protalix fails to satisfy these conditions,
it may be required to refund grants previously received together with interest and penalties.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Protalix&#146;s research and development efforts have been financed, in part, through grants that
it has received from the Office of the Chief Scientist of the Israeli Ministry of Industry, Trade or OCS. Protalix, therefore, must comply with the requirements of the Israeli Law for
the Encouragement of Industrial Research and Development, 1984 and related regulations, or the
Research Law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Research Law, the discretionary approval of an OCS committee is required for any
transfer of technology developed with OCS funding. Such restriction may impair Protalix
Ltd.&#146;s ability to outsource manufacturing, engage in change-of-control transactions or
otherwise transfer its technology developed with government grants outside of the State of Israel.
Protalix Ltd. has no current intention to manufacture or transfer technologies out of the State of
Israel. The restrictions will continue to apply even after Protalix Ltd. has repaid the full
amount of royalties payable for the grants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Further, if Protalix. Ltd. fails to comply with any of the conditions imposed by the OCS, it
may be required to refund any grants received together with interest and penalties, and may be
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">subject to criminal charges. In recent years, the government of Israel has accelerated the rate of
repayment of OCS grants and may further accelerate them in the future. In addition, the Israeli
government has, from time to time, discussed reducing or eliminating the availability of these
grants. There can be no assurance that the Israeli government&#146;s support of such grants will
continue.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;OCS approval is not required for the export of any products resulting from the research or
development, or for the licensing of the technology in the ordinary course of business. Protalix
may not receive the required approvals for any proposed transfer. Such approvals, if granted, may
be subject to the following additional restrictions:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Protalix may be required to pay the OCS a portion of the consideration it receives upon any sale of
such technology by an entity that is not Israeli. The scope of the support received, the royalties
that were paid by Protalix, the amount of time that elapsed between the date on which the know-how
was transferred and the date on which the grants were received, as well as the sale price, will be
taken into account in order to calculate the amount of the payment; and
</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the transfer of manufacturing rights could be conditioned upon an increase in the royalty rate and
payment of increased aggregate royalties (up to 300% of the amount of the grant plus interest,
depending on the percentage of the manufacturing that is foreign).
</TD>
</TR>
</table>
</Div>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These restrictions may impair Protalix&#146;s ability to sell its technology assets or to outsource
manufacturing outside of Israel. Protalix has no current intent to manufacture or transfer
technologies out of Israel. The restrictions will continue to apply even after Protalix has repaid
the full amount of royalties payable for the grants.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Investors may have difficulties enforcing a U.S. judgment, including judgments based upon the civil
liability provisions of the U.S. federal securities laws against Protalix, its executive officers
and directors or asserting U.S. securities laws claims in Israel.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Many of Protalix&#146;s directors and officers are not residents of the United States and some of
their assets and Protalix&#146;s assets are located outside the United States. Service of process upon
Protalix&#146;s non-U.S. resident directors and officers and enforcement of judgments obtained in the
United States against Protalix, some of its directors and executive officers may be difficult to
obtain within the United States. Protalix has been informed by its legal counsel in Israel that it
may be difficult to assert claims under U.S. securities laws in original actions instituted in
Israel or obtain a judgment based on the civil liability provisions of U.S. federal securities
laws. Israeli courts may refuse to hear a claim based on a violation of U.S. securities laws
against Protalix or
its officers and directors because Israel is not the most appropriate forum to bring such a
claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli
law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the
content of applicable U.S. law must be proved as a fact which can be a time-consuming and costly
process. Certain matters of procedure will also be governed by Israeli law. There is little
binding case law in Israel addressing the matters described above.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Israeli courts might not enforce judgments rendered outside Israel which may make it difficult
to collect on judgments rendered against Protalix. Subject to certain time limitations, an Israeli
court may declare a foreign civil judgment enforceable only if it finds that:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the judgment was rendered by a court which was, according to the laws of the state of the court,
competent to render the judgment;
</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the judgment may no longer be appealed;
</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the obligation imposed by the judgment is enforceable according to the rules relating to the
enforceability of judgments in Israel and the substance of the judgment is not contrary to public
policy; and
</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the judgment is executory in the state in which it was given.
</TD>
</TR>

</table>
</Div>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Even if these conditions are satisfied, an Israeli court will not enforce a foreign judgment
if it was given in a state whose laws do not provide for the enforcement of judgments of Israeli
courts (subject to exceptional cases) or if its enforcement is likely to prejudice the sovereignty
or security of the State of Israel. An Israeli court also will not declare a foreign judgment
enforceable if:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the judgment was obtained by fraud;
</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>there is a finding of lack of due process;
</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the judgment was rendered by a court not competent to render it according to the laws of private
international law in Israel;
</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the judgment is at variance with another judgment that was given in the same matter between the
same parties and that is still valid; or
</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>at the time the action was brought in the foreign court, a suit in the same matter and between the
same parties was pending before a court or tribunal in Israel.
</TD>
</TR>
</table>
</Div>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Properties</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Protalix&#146;s manufacturing facility and executive offices, which are leased for a period ending in
April, 2009, are located in Carmiel, Israel. Protalix has the option
to extend the lease for an additional five-year period. The facilities contain approximately 1,300 square
meters of laboratory and office space and are leased at a rate of approximately $9,000 per month.
The facilities are equipped with the requisite laboratory services required to conduct Protalix&#146;s
business, and we believe that the existing facilities are adequate to meet Protalix&#146;s needs for the
foreseeable future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Legal Proceedings</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We are not involved in any material legal proceedings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</B>
</DIV>



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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">You should read the following discussion and analysis of Protalix Ltd.&#146;s financial condition and
results of operations together with Protalix Ltd.&#146;s financial statements and the related notes
appearing at the end of this report. Some of the information contained in this discussion and
analysis or set forth elsewhere in this report, including information with respect to Protalix
Ltd.&#146;s plans and strategy for Protalix Ltd.&#146;s business and related financing, includes
forward-looking statements that involve risks and uncertainties. You should read the &#147;Risk
Factors&#148; section of this report for a discussion of important factors that could cause actual
results to differ materially from the results described in or implied by the forward-looking
statements contained in the following discussion and analysis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The discussion and analysis of Protalix Ltd.&#146;s financial condition and results of operations are
based on Protalix Ltd.&#146;s financial statements, which Protalix Ltd. has prepared in accordance with
U.S. generally accepted accounting principles. The preparation of these financial statements
requires Protalix Ltd. to make estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent assets and liabilities at the date of the
financial statements, as well as the reported revenues and expenses during the reporting periods.
On an ongoing basis, Protalix Ltd. evaluates such estimates and judgments, including those
described in greater detail below. Protalix Ltd. bases its estimates on historical experience and
on various other factors that Protalix Ltd. believes are reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying value of assets and
liabilities that are not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following discussion and analysis excludes the impact of Orthodontix&#146;s financial condition and
results of operations because they were not material for any of the periods presented.
Specifically, for the years ended December&nbsp;31, 2005, 2004 and 2003, Orthodontix had no revenue,
expenses consisting solely of general and administrative expenses (i.e., legal, accounting and
other professional fees) in the amount of $93,295, $165,582 and $147,385, respectively, and other
income (i.e., amounts earned from investing available cash in a money market account) in the amount
of $18,364, $5,512 and $6,671, respectively. During the nine months ended September&nbsp;30, 2006,
Orthodontix had no revenue, and expenses consisted solely of general and administrative expenses in
the amount of $164,843 and other income in the amount of $75,787. Orthodontix&#146;s balance sheet as
of September&nbsp;30, 2006 consisted solely of total current assets
equal to $837,825 ($825,702 of which consisted of cash and cash equivalents) and total liabilities
equal to $12,150. During these periods, Orthodontix had no sources of cash and its sole use of
cash was payment of the aforementioned professional fees and other costs associated with complying
with Orthodontix&#146;s reporting obligations under the rules and regulations promulgated by the SEC and
consummating the merger with Protalix.
</DIV>



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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Overview</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Protalix Ltd. is an emerging clinical stage biopharmaceutical company that is developing and
producing recombinant therapeutic proteins which are expressed through its proprietary plant cell
system. Recombinant therapeutic proteins are proteins that are produced by different genetically
modified organisms following the insertion of the relevant DNA into their genome and are the basis
of most biopharmaceutical drugs currently under development. Protalix Ltd. is leveraging its plant
cell culture and bioreactor technology for the production of recombinant therapeutic proteins, and
it is currently developing several such biotherapeutic products. Protalix Ltd.&#146;s patented plant
cell system enables the expression in plant cells of specific human genes, most often genes coding
for proteins of pharmaceutical or therapeutic value. Once the plant cells produce a therapeutic
protein, such protein may be grown on an industrial scale in Protalix Ltd.&#146;s proprietary bioreactor
system. Subsequently, the protein is extracted from the cells and purified to a clinical grade.
Protalix Ltd.&#146;s system presents a proprietary method for the production of recombinant proteins
which we believe is safe and scaleable and may allow for the cost-effective industrial scale production of such
recombinant human therapeutic proteins. In addition, Protalix believes that its plant-cell system
has a number of advantages over other expression methodologies, as follows:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The glycosilation structure and proprietary manufacturing methods of certain of the expressed
proteins can provide patent protection and potential market advantage;
</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Protalix Ltd.&#146;s plant cell expression system is a contained regulatory-compliant bioprocess which
significantly reduces the risk of contamination with pathogenic agents, such as viruses, which are
ordinarily associated with mammalian production processes; and
</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The control of the glycosilation process which is available through Protalix Ltd.&#146;s system enables
the production of highly uniform therapeutic protein products.
</TD>
</TR>

</table>
</Div>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Protalix
Ltd.&#146;s lead product candidate, prGCD, is a proprietary plant cell expressed recombinant
Glucocerebrosidase enzyme-based protein for the treatment of Gaucher Disease. Genzyme Corporation
currently dominates the market for the treatment of Gaucher Disease with reported sales approaching
$1&nbsp;billion for 2006. In July&nbsp;2005, Protalix Ltd. received FDA approval of its IND for prGCD,
allowing it to initiate an FDA-approved clinical development program for prGCD which does not
require Protalix Ltd. to conduct Phase II clinical trials. The Phase I clinical trial was
completed in June&nbsp;2006. Protalix Ltd. expects that, based upon the results of such concluded Phase
I clinical trial, together with the results of certain preclinical studies, it should be able to
obtain FDA approval to initiate a pivotal Phase III trial of prGCD for the treatment of Gaucher
Disease, although there can be no assurance that Protalix will get such approval. Protalix Ltd.
anticipates that it will be able to commence such trial in 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Protalix Ltd. believes that it has demonstrated the potential of its plant cell manufacturing
platform to become a safe and efficacious expression technology for the manufacturing of a wide
variety of biopharmaceutical products. Accordingly, Protalix Ltd. is employing a two-pronged
business strategy that enables it to pursue its goal of becoming a fully integrated
biopharmaceutical company. In addition to its development of prGCD, Protalix Ltd. is using its
protein expression technology to develop an innovative proprietary product pipeline. Protalix
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Ltd.
is evaluating and initiating additional internal research programs through collaboration agreements
with academic institutions, such as the Yeda Research and Development Company Limited, the
technology transfer arm of the Weizmann Institute of Science. In addition, Protalix Ltd.
continuously reviews and considers development and commercialization alliances with corporate
partners in specific and identified markets worldwide for specific products or territories in order
to enable Protalix Ltd. to optimize its resources and effectively penetrate target markets.
Protalix has recently entered into such an agreement with Teva Pharmaceutical Industries Ltd.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Since its inception in December&nbsp;1993, Protalix Ltd. has generated significant losses in connection
with the research and development of its technology, including the clinical development of prGCD,
and has accumulated a deficit equal to $17.0&nbsp;million. Since it does not generate revenue from any
of its product candidates, Protalix Ltd. expects to continue to generate losses in connection with
the continued clinical development of prGCD and the research and development activities relating to
its technology and other drug candidates, including PRX 102 and PRX 111. Such research and
development activities are budgeted to expand over time and will require further resources if
Protalix Ltd. is to be successful. As a result, Protalix believes that its operating losses are
likely to be substantial over the next several years. Protalix Ltd. will need to obtain additional
funds to further develop its research and development programs.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Results of Operation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">While Protalix
Ltd.&#146;s significant accounting policies are more fully described
in Note&nbsp;2 to Protalix Ltd.&#146;s financial statements appearing
at the end of this Current Report on Form&nbsp;8-K. Protalix Ltd.
believes that these accounting policies are critical for one to fully
understand and evaluate Protalix Ltd.&#146;s financial condition and
results of operations.
</div>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Revenue</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Protalix Ltd. has not generated any substantial revenue since its inception. To date, Protalix
Ltd. has funded its operations primarily through the sale of equity securities. If Protalix Ltd.&#146;s
development efforts result in clinical success, regulatory approval and successful
commercialization of Protalix Ltd.&#146;s products, Protalix Ltd. could generate revenue from sales of
Protalix Ltd.&#146;s products.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Research and Development Expense</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Protalix Ltd. expects its research and development expense to increase as it continues to develop
its product candidates. Research and development expense consists of:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>internal costs associated with research and development activities;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>payments made to third party contract research organizations, contract
manufacturers, investigative sites, and consultants;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>manufacturing development costs;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>personnel-related expenses, including salaries, benefits, travel, and related costs
for the personnel involved in the research and development;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>activities relating to the advancement of product candidates through preclinical
studies and clinical trials; and</TD>
</TR>


</TABLE>
</DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>facilities and other allocated expenses, which include direct and allocated expenses
for rent and maintenance of facilities, as well as laboratory and other supplies.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">These costs and expenses are partially funded by grants received by Protalix Ltd. from the OCS.
See &#147;Business&#151;Encouragement of Industrial Research and Development Law, 1984.&#148; There can be no
assurance that Protalix Ltd. will continue to receive grants from the OCS in amounts sufficient for
its operations, if at all.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Protalix Ltd. expects its research and development expenditures to increase most significantly in
the near future in connection with the anticipated commencement of the Phase III clinical trial for
prGCD. In addition, Protalix Ltd. intends to consider establishing a new manufacturing facility
which would meet the FDA requirements for the manufacture of its product candidates, which would
increase Protalix Ltd.&#146;s capital expenditures significantly. Protalix Ltd. intends to continue to
hire new employees, in research and development, manufacturing and administration, in order to meet
its operation plans.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Protalix Ltd. has multiple research and development projects ongoing at any one time. Protalix
Ltd. utilizes its internal resources, employees, and infrastructure across multiple projects and
tracks time spent by employees on specific projects. Protalix Ltd. is required to do so by the OCS
in order to qualify for the grants it receives for its different projects. Protalix Ltd. expenses
research and development costs as incurred. Protalix Ltd. believes that significant investment in
product development is a competitive necessity and plans to continue these investments in order to
realize the potential of its product candidates. From its inception in December&nbsp;1993 through
September&nbsp;30, 2006, Protalix Ltd. has incurred a gross research and development expense in the
aggregate of $15.4&nbsp;million, which includes salaries and related expenses equal to $6.1&nbsp;million (of
which stock-based compensation was $1.3&nbsp;million), subcontractors expenses equal to $2.6&nbsp;million,
and expenses relating to materials and consumables equal to $2.3&nbsp;million. These expenses were
partially offset by grants received from the OCS equal to $4.9&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Protalix Ltd. believes that its cash balance as of the date of the merger is sufficient to satisfy
all its capital needs for the next twelve months.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The successful development of Protalix Ltd.&#146;s product candidates is subject to numerous risks,
uncertainties, and other factors, which are discussed in detail in the section entitled &#147;Risk
Factors&#148;. Beyond the next twelve months, Protalix Ltd. cannot reasonably estimate or know the
nature, timing and costs of the efforts that will be necessary to complete the remainder of the
development of, or the period, if any, in which material net cash inflows may commence from prGCD,
PRX 102, and PRX 111 or any of Protalix Ltd.&#146;s other development efforts. This is due to the
numerous risks and uncertainties associated with the duration and cost of clinical trials
which vary significantly over the life of a project as a result of differences arising during
clinical development, including:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the time needed for the research phase prior to preclinical and clinical trials;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>completion of such preclinical and clinical trials;</TD>
</TR>


</TABLE>
</DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>receipt of necessary regulatory approvals;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the number of clinical sites included in the trials;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the length of time required to enroll suitable patients;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the number of patients that ultimately participate in the trials;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>adverse medical events or side effects in treated patients;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>lack of comparability with complementary technologies;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>obtaining capital necessary to fund operations, including the research and
development efforts; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the results of clinical trials.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Protalix Ltd.&#146;s expenditures are subject to additional uncertainties, including the terms and
timing of regulatory approvals, and the expense of filing, prosecuting, defending and enforcing any
patent claims or other intellectual property rights. Protalix Ltd. may obtain unexpected results
from its clinical trials. Protalix Ltd. may elect to discontinue, delay or modify clinical trials
of some product candidates or focus on others. A change in the outcome of any of the foregoing
variables with respect to the development of a product candidate could mean a significant change in
the costs and timing associated with the development of that product candidate. For example, if
the FDA or other regulatory authorities were to require Protalix Ltd. to conduct clinical trials
beyond those which it currently anticipates will be required for the completion of the clinical
development of a product candidate, or if Protalix Ltd. experiences significant delays in
enrollment in any of its clinical trials, Protalix Ltd. could be required to expend significant
additional financial resources and time on the completion of clinical development. Drug
development may take several years and millions of dollars in development costs. If Protalix Ltd.
does not obtain or maintain regulatory approval for its products, its financial condition and
results of operations will be substantially harmed.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>General and Administrative Expense</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">General and administrative expense consists primarily of salaries and other related costs,
including stock-based compensation expense, for persons serving in Protalix Ltd.&#146;s executive,
finance, accounting and administration functions. Other general and administrative expense
includes facility-related costs not otherwise included in research and development expense, costs
associated with industry and trade shows and professional fees for
legal and accounting services. Protalix Ltd. expects that its general
and administrative expenses will increase as it adds additional
personnel and becomes subject to the reporting obligations applicable
to public companies in the United States. From its inception in
December 1993 through September 30, 2006, Protalix Ltd. has spent
$7.3 million on general and administrative expense, including
stock-based compensation expense of $3.2 million for options granted
to its employees and consultants.
</DIV>



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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Financial Expense and Income</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Financial Expense and Income consists of the following:

</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>interest earned on Protalix Ltd.&#146;s cash and cash equivalents;
</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>interest expense on short term bank credit and loan;
</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>expense or income resulting from fluctuations of the New Israeli Shekel, which a portion of
Protalix Ltd.&#146;s assets and liabilities are denominated in,
against the United States Dollar and other foreign currencies.
</TD>
</TR>
</table>
</Div>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Stock-based compensation</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Until December&nbsp;31, 2005, Protalix Ltd. accounted for employee stock-based compensation in
accordance with Accounting Principles Board (&#147;APB&#148;) Opinion No.&nbsp;25, &#147;Accounting for Stock Issued to
Employees&#148; (&#147;APB 25&#148;), and related interpretations. Under APB 25, compensation expense is based on
the difference, if any, on the date of the grant, between the fair value of Protalix Ltd.&#146;s
ordinary shares and the exercise price. In addition, in accordance with FAS No.&nbsp;123 &#147;Accounting
for Stock-Based Compensation&#148; (&#147;SFAS 123&#148;), Protalix Ltd. disclosed pro forma data assuming it had
accounted for employee share option grants using the fair value-based method defined in SFAS 123.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As to options granted in consideration of services granted by consultants, Protalix Ltd. applies
EITF 96-18 &#147;Accounting for Equity Instruments That Are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling, Goods or Services&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of January&nbsp;1, 2006, Protalix Ltd. adopted SFAS No.&nbsp;123 (Revised 2004), &#147;Share-Based Payment&#148;
(&#147;SFAS 123(R)&#148;), using the modified prospective method. This new standard requires measurement of
stock-based compensation cost for all stock-based awards at the fair value on the grant date and
recognition of stock-based compensation over the service period for awards that Protalix Ltd.
expects will vest. The fair value of stock options is determined based on the number of shares
granted and the price of Protalix Ltd.&#146;s ordinary shares, and calculated based on the Black-Scholes
valuation model, which is consistent with Protalix Ltd.&#146;s valuation techniques previously utilized
for options in footnote disclosures required under SFAS 123, as amended by SFAS No.&nbsp;148,
&#147;Accounting for Stock-Based Compensation &#151; Transition and Disclosure.&#148; Protalix Ltd. recognizes
such value as expense over the service period, net of estimated forfeitures, using the accelerated
method under SFAS 123(R). Due to its adoption of SFAS 123(R), Protalix Ltd. no longer has employee
stock-based compensation awards subject to variable accounting treatment. The cumulative effect of
Protalix Ltd.&#146;s adoption of SFAS 123(R), as of January&nbsp;1, 2006 was not material.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table illustrates the pro forma effect on loss and loss per share assuming Protalix
Ltd. had applied the fair value recognition provisions of SFAS 123 to its stock-based employee
compensation:
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->52<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="50%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Period from</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 27,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>1993</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Nine months</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>through</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year ended December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000" nowrap align="center" colspan="10"><B>(In thousands, except per share data)</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss as reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(646</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,421</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(5,746</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(11,122</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(3,816</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Add: stock based
employee compensation
expense included in
the reported loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">149</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">509</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">732</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">350</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deduct: stock-based
employee compensation
expense determined
under fair value
method
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(67</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(170</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(539</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(788</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(370</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Pro forma loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(652</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,442</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(5,776</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(11,178</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(3,836</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss per share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic as reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2.10</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(7.86</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(18.67</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(12.40</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic &#150; pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2.12</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(7.93</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(18.76</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(12.46</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted &#150; as reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2.10</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(7.86</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(18.67</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(12.40</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted &#150; pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2.12</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(7.93</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(18.76</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(12.46</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The fair value of options granted to employees during 2003, 2004, and 2005 was $389,000, $0,
and $939,000, respectively. The fair value of each option granted is estimated on the date of
grant using the Black&#150;Scholes option-pricing model, with the following weighted average
assumptions:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dividend yield</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected volatility</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">59.00</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">54.00</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Risk-free interest rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">3.28</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">3.83</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected life &#150; in years</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.70</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Protalix Ltd. had multiple classes of stock before the conversion of all preferred shares into
ordinary shares in September&nbsp;2006. Through December&nbsp;31, 2005, Protalix Ltd. considered the three
commonly used methods described by the AICPA practice aid &#147;Valuation of Privately-Held Company
Equity Securities Issued as Compensation&#148; and determined that the Probability-Weighted Expected
Return Method to be the appropriate method. Protalix Ltd. chose this method because it is
forward-looking and incorporates future economic events and outcomes into the determination of
value at the time of calculation. The method is limited, as are all forward-looking methods, in
that it relies on a number of assumptions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under the Probability-Weighted Expected Return Method, the value of the ordinary shares is
estimated based upon an analysis of future values for the enterprise assuming various future
outcomes. Share value is based upon the probability-weighted present value of expected future
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->53<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">investment returns, considering each of the possible future outcomes available to the enterprise,
as well as the rights of each share class. Although the future outcomes considered in any given
valuation model will vary based upon the enterprise&#146;s facts and circumstances, common future
outcomes modeled might include an initial public offering, merger or sale, dissolution, or
continued operation as a viable private enterprise.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Probability-Weighted Expected Return Method analysis presents value afforded to shareholders
under four possible scenarios for the Company. Three of the scenarios assume a shareholder
realization, either through an initial public offering, sale, merger or liquidation. The last
scenario assumes operations continue as a private company and no realization transaction occurs.
Fair value calculations of Protalix Ltd.&#146;s ordinary shares were performed for dates close to the
dates on which it issued preferred shares to third parties. Protalix Ltd. considered the issuance
price of each series of preferred shares to third parties in the calculation of the fair value of
the ordinary shares. For each of the first three realization scenarios, estimated future and
present values for each of the share classes were calculated utilizing assumptions which consisted
of the following:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>expected pre-money value at the realization date;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>standard deviation around the above pre-money value;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>expected date of the realization scenario occurring;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>standard deviation around the expected realization
scenario occurrence date (in days); and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an appropriate risk-adjusted discount rate.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">SFAS 123(R) allows companies to estimate the expected term of the option rather than simply using
the contractual term of an option. Because of lack of data on past option exercises of Protalix
Ltd.&#146;s employees, the expected term of the options could not be based on historic exercise
patterns. Accordingly, Protalix Ltd. adopted the simplified method as stipulated in SAB 107,
according to which companies which cannot provide a good estimation regarding their options&#146;
expected life, may calculate the expected term as the average between the vesting date and the
expiration date, assuming the option was granted as a &#147;plain vanilla&#148; option.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">SAB 107 defines &#147;plain vanilla share options&#148; as those having the following characteristics:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Share options are granted at the money;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Exercisability is conditional only on performing service through the vesting date;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If an employee terminates service prior to vesting, the employee forfeits the share
options;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If an employee terminates service after vesting, the employee has a limited period
of time (typically 30-90&nbsp;days) to exercise the share options; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Share options are nontransferable and nonhedgeable</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">All of the outstanding options of Protalix Ltd. were granted at an exercise price that was lower
than the then share price. Accordingly, Protalix Ltd. assumed that the exercise period will on
average be shorter than the average period between the vesting and the expiration of the options.
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->54<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">However, due to the lack of information regarding exercise behavior and recognizing the approach to
be conservative, Protalix Ltd. implemented the methodology proposed above for the calculation of
the expected term for all grants including those which were &#147;in the money&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In performing the valuation, Protalix Ltd. assumed an expected 0% dividend yield in the previous
years and in the next years. Protalix Ltd. does not have a dividend policy and given the
development stage of the Company, dividends are not expected in the foreseeable future. SFAS
123(R) stipulates a number of factors that should be considered when estimating the expected
volatility, including the implied volatility of traded options, historical volatility and the
period that the shares of the company are being publicly traded. As Protalix Ltd. does not have
any traded shares or options, the expected volatility figures used in this valuation have been
calculated by using the historical volatility of traded shares of similar companies. In addition,
Protalix Ltd. examined the standard deviation of shares of additional biotechnology companies that
engage in research of cells and other relevant developments. Protalix Ltd. found that the standard
deviation of the shares of comparable companies was in the range of 40%-60% over periods of three
to six years. The volatility used for each grant differed based on its expected term. For the
term of each grant of options by Protalix Ltd., the historical volatility was calculated based upon
the overall trading history of the common stock of comparable companies.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Risk&#150;Free Rate Methodology</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The risk free rate has been based on the implied yield of U.S. federal reserve zero&#150;coupon
government bonds. The remaining term of the bonds used for each valuation was equal to the
expected term of the grant. This methodology has been applied to all grants valued by Protalix
Ltd.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Rationale</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">SFAS 123(R) requires the use of a risk&#150;free interest rate based on the implied yield currently
available on zero&#150;coupon government issues of the country in whose currency the exercise price is
expressed, with a remaining term equal to the expected life of the option being valued. This
requirement has been applied for all grants valued as part of this report.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Nine Months Ended September&nbsp;30, 2006 Compared to Nine Months Ended September&nbsp;30, 2005</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Revenues</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Revenues were $150,000 for the nine months ended September&nbsp;30, 2005. The revenues were generated
in connection with the achievement by Protalix Ltd. of development milestones under a research and
development program between Protalix Ltd. and Ferring Pharmaceuticals. The program with Ferring
Pharmaceuticals was completed, and $150,000 of development milestones payments payable to Protalix
Ltd. in connection therewith were made, by the end of fiscal year 2005. No revenues were recorded
during the nine months ended September&nbsp;30, 2006.
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->55<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Research and Development Expenses</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Research
and development expenses were $4.8&nbsp;million for the nine months ended September&nbsp;30, 2006, an
increase of $1.6&nbsp;million, or 50%, from $3.2&nbsp;million for the nine months ended September&nbsp;30, 2005.
The increase resulted primarily from the increase of $900,000 in development expenses related to
salaries for personnel involved in research and development and related materials and general
development expenses. The increase was partially offset by $723,000 due to the receipt of grants
by Protalix Ltd. from the OCS equal to $1.5&nbsp;million during the nine months ended on September&nbsp;30, 2006, as
compared to the receipt of grants equal to $787,000 during the nine months ended September&nbsp;30,
2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Protalix Ltd. expects Research and Development expenses to continue to increase as it enters into a
more advanced stage of clinical trials for Protalix Ltd.&#146;s product candidates, especially with
respect to the expected phase III trial for prGCD.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>General and Administrative Expenses</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">General and administrative expenses were $2.8&nbsp;million for the nine months ended September&nbsp;30, 2006,
an increase of $1.3&nbsp;million, or 87%, from $1.5&nbsp;million for the nine months ended September&nbsp;30,
2005. The increase resulted primarily from a $1.1&nbsp;million increase in share-based compensation,
resulting from additional stock option awards in the nine months ended September&nbsp;30, 2006.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Financial Expenses and Income</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Financial income was $73,000 for the nine months ended on September&nbsp;30, 2006, an increase of
$35,000, or 92%, compared to $38,000 the nine months ended September&nbsp;30, 2005. The increase
resulted primarily from a higher balance of cash and cash equivalents Protalix Ltd. had during
these periods, primarily the result of the proceeds generated from the sale of Preferred Shares in
December&nbsp;2005 and September&nbsp;2006, which resulted in higher interest income.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Year Ended December&nbsp;31, 2005 Compared to Year Ended December&nbsp;31, 2004</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Revenues</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Revenues were $150,000 for the year ended December&nbsp;31, 2005, a decrease of $280,000, or 65%, from
$430,000 for the year ended December&nbsp;31, 2004. The revenues were generated in connection with the
achievement by Protalix Ltd. of development milestones under its research and development program
with Ferring Pharmaceuticals. The decrease resulted primarily from Protalix Ltd.&#146;s achievement of
more significant development milestones under the program during the year 2004 as compared to the
year 2005, resulting in the receipt by Protalix Ltd. of higher milestone payments during the year
2004.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Research
and Development Expenses</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Research
and development expenses were $4.7&nbsp;million for the year ended December&nbsp;31, 2005, an increase
of $2.2&nbsp;million, or 88%, from $2.5&nbsp;million for the year ended December&nbsp;31, 2004. The
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">increase
resulted primarily from an increase of $1.2&nbsp;million in development expenses related to salaries and
related consulting and materials associated with the development of prGCD. The increase was
incurred in connection with the higher costs associated with the end of Protalix Ltd.&#146;s preclinical
trials and with the initiation of Phase I clinical trials by Protalix
Ltd. during 2005. In
addition, Protalix Ltd. incurred a $498,000 increase in share based compensation. The increase was
partially offset by a $362,000 increase in grant funds received by
Protalix Ltd. from the OCS; Protalix Ltd.
received grants equal to $935,000 during the year ended December&nbsp;31, 2005 as compared to the
receipt of grants equal to $573,000 during the year ended December&nbsp;31, 2004.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>General and Administrative Expenses</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">General and Administrative expenses were $2.1&nbsp;million for the year ended December&nbsp;31, 2005, an
increase of $1.3&nbsp;million, or 175%, from $807,000 for the year ended December&nbsp;31, 2004. The
difference resulted primarily from a $1.1&nbsp;million increase in share based compensation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Financial Expenses and Income</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Financial income was $43,000 for the year ended December&nbsp;31, 2005, compared to expense of $4,000
for the year ended December&nbsp;31, 2004. The increase resulted primarily from the higher balance of
cash and cash equivalents held by Protalix Ltd. during such periods and the incurrence by Protalix
Ltd. of interest expense in connection with a $1.0&nbsp;million loan.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Year Ended December&nbsp;31 2004 compared to Year Ended December&nbsp;31, 2003</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Revenues</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Revenues were $430,000 for the year ended December&nbsp;31, 2004, an increase of $180,000, or 72%, from
$250,000 for the year ended December&nbsp;31, 2003. The revenues were generated in connection with the
achievement by Protalix Ltd. of development milestones under its research and development program
with Ferring Pharmaceuticals. The increase resulted primarily from the achievement by Protalix
Ltd. of more significant development milestones under the program during the year 2004 as compared
to the year 2003, resulting in the receipt by Protalix Ltd. of higher milestone payments during the
year 2004.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Research and Development Expenses</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Research and development expense was $2.5&nbsp;million for the year ended December&nbsp;31, 2004, an increase
of $1.8&nbsp;million, or 269%, from $668,000 for the year ended December&nbsp;31, 2003. The increase
resulted primarily from an increase of $1.3&nbsp;million in development expenses related to salaries and
related consulting and materials associated with preclinical trials commenced by Protalix Ltd.
during 2004. The increase was offset by $144,000 due to the receipt of grants by
Protalix Ltd. from the OCS equal to $573,000 during the year ended December&nbsp;31, 2004, as compared to the receipt
of grants equal to $429,000 during the year ended December&nbsp;31, 2003.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->57<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>General and Administrative Expenses</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">General and Administrative expenses were $807,000 for the year ended December&nbsp;31, 2004, an increase
of $204,000, or 33%, from $603,000 for the year ended December&nbsp;31, 2004. The increase resulted
primarily from a natural growth in the operations of Protalix Ltd. between the periods, including
an increase of $144,000 of salaries and related expenses incurred in connection with the hiring of
new employees during the year ended December&nbsp;31, 2004.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Financial Expenses and Income</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Financial income was $4,000 and $3,000 for the year ended December&nbsp;31, 2004 and 2003, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Source of Liquidity</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As a result of its significant research and development expenditures and the lack of any approved
products to generate product sales revenue, Protalix Ltd. has not been profitable and has generated
operating losses since its inception. To date, Protalix Ltd. has funded its operations primarily
with proceeds equal to $30.3&nbsp;million from the sale of convertible preferred and ordinary stock
through September&nbsp;30, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table summarizes Protalix Ltd.&#146;s funding sources:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="65%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center">Security</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Year</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Number of Shares</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Amount(1)</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="13" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ordinary Shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">1996-2000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">307,813</TD>
    <TD nowrap>(2)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,100,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Series&nbsp;A Convertible Preferred Shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">2001</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">190,486</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2,000,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD nowrap><DIV style="margin-left:15px; text-indent:-15px">Series&nbsp;B Convertible Preferred Shares(3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><FONT style="white-space: nowrap">2004-2005</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">117,477</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4,500,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Series&nbsp;C Convertible Preferred Shares(4)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90,264</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7,700,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ordinary
Shares(5)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center">2006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">163,774</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">15,000,000</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Represents gross proceeds.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes the issuance of ordinary shares to founders.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>During 2005, 16,954 Series&nbsp;B Preferred Shares were converted on a 1:1 basis, into Series&nbsp;C
Preferred Shares for no consideration. Also in connection with such
funding, warrants to
purchase 2,967 Series&nbsp;B Preferred Shares were issued for no
additional consideration with a total exercise price of $0.1
million. As of the closing date of the merger, 2,751 of such warrants were exercised for net
proceeds to Protalix Ltd. equal to approximately $96,000 and 216 of such warrants have been
forfeited.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>In connection with such funding, warrants to purchase an additional 145,099 Series&nbsp;C
Preferred Shares were granted to the investors for no additional
consideration with a total exercise price equal to $9.0
million. As of the closing date of the merger, 86,613 of such warrants were exercised for net
proceeds to Protalix Ltd. equal to $8.7&nbsp;million, 55,410 were
assumed by our company and 3,076 expired.</TD>
</TR>
<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD>In connection with such funding, warrants to purchase 57,691
ordinary shares of Protalix Ltd. were issued for no additional
consideration with a total exercise price equal to $5&nbsp;million.
</TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On September&nbsp;11, 2006, all Preferred Shares were converted into ordinary shares on a 1:1
basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As of
September&nbsp;30, 2006, Protalix Ltd. had cash and cash equivalents
of $15.6&nbsp;million. In addition, at the closing of the merger,
Protalix Ltd. received $8.7&nbsp;million as a result of the exercise
of outstanding warrants. Protalix
Ltd.&#146;s cash and investment balances are held in a variety of interest-bearing instruments.
Wherever possible, Protalix Ltd. seeks to minimize the potential effects of concentration and
degrees of risk. Protalix Ltd. maintains cash balances with financial institutions in excess of
insured limits. Protalix Ltd. does not anticipate any losses with respect to such cash balances.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->58<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Cash Flows</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net cash used in operations was $3.3&nbsp;million and $2.3&nbsp;million for the nine months ended September
30, 2006 and 2005, respectively. The net loss for the nine months ended September&nbsp;30, 2006 of $5.9
million resulted primarily from non-cash charges for share-based compensation of $2.3&nbsp;million and
depreciation of $314,000.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net cash used in investing activities for the nine months ended September&nbsp;30, 2006, was $712,000
and consisted primarily of purchase of property and equipment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net cash provided by financing activities for the nine months ended September&nbsp;30, 2006, was $14.9
million, consisting of net proceeds from the sale of ordinary shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net cash used in operations was $3.2&nbsp;million and $1.8&nbsp;million for the years ended December&nbsp;31, 2005
and 2004, respectively. The net loss for 2005 of $5.7&nbsp;million was mainly offset by $1.9&nbsp;million of
non-cash share based compensation and depreciation equal to $311,000.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net cash used in investing activities for the year ended December&nbsp;31, 2005 was $900,000 and
consisted primarily of $844,000 for purchases of property and equipment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Net cash provided from financing activities for 2005 was $7.4&nbsp;million, which consisted primarily of
net proceeds of $8.4&nbsp;million from the sale of Series&nbsp;C Preferred Shares, which was partially offset
by the redemption of a $1.0&nbsp;million loan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Funding Requirements</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Protalix Ltd. expects to incur losses from operations for the foreseeable future. Protalix Ltd.
expects to incur increasing research and development expenses, including expenses related to the
hiring of personnel and additional clinical trials. Protalix Ltd. expects that general and
administrative expenses will also increase as Protalix Ltd. expands its finance and administrative
staff, adds infrastructure, and incurs additional costs related to being a public company in the
United States, including the costs of directors&#146; and officers&#146; insurance, investor relations
programs, and increased professional fees. Protalix Ltd.&#146;s future capital requirements will depend
on a number of factors, including the continued progress of its research and development of product
candidates, the timing and outcome of clinical trials and regulatory approvals, the costs involved
in preparing, filing, prosecuting, maintaining, defending, and enforcing patent claims and other
intellectual property rights, the acquisition of licenses to new products or compounds, the status
of competitive products, the availability of financing, and Protalix Ltd.&#146;s success in developing
markets for its product candidates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Protalix Ltd. believes that its existing cash and cash equivalents and short-term investments will
be sufficient to enable us to fund Protalix Ltd.&#146;s operating expenses and capital expenditure
requirements at least for the next twelve months. Protalix Ltd. has based this estimate on
assumptions that may prove to be wrong or subject to change, and Protalix Ltd. may be required to
use its available capital resources sooner than it currently expects. Because of the numerous
risks and uncertainties associated with the development and commercialization of its product
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->59<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">candidates, Protalix is unable to estimate the amounts of increased capital outlays and operating
expenditures associated with its current and anticipated clinical trials.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Protalix Ltd.&#146;s future capital requirements will depend on many factors, including the progress and
results of its clinical trials, the duration and cost of discovery and preclinical development, and
laboratory testing and clinical trials for Protalix Ltd.&#146;s product candidates, the timing and
outcome of regulatory review of Protalix Ltd.&#146;s product candidates, the number and development
requirements of other product candidates that Protalix Ltd. pursues, and the costs of
commercialization activities, including product marketing, sales, and distribution.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Protalix Ltd. does not anticipate that it will generate product revenues for at least the next
several years. In the absence of additional funding, Protalix Ltd. expects continuing operating
losses to result in increases in Protalix Ltd.&#146;s cash used in operations over the next several
years. To the extent that Protalix Ltd.&#146;s capital resources are insufficient to meet its future
capital requirements, Orthodontix will need to finance its future cash needs through public or
private equity offerings, debt financings, or corporate collaboration and licensing arrangements.
Neither Orthodontix nor Protalix Ltd. currently has any commitments for future external funding.
Orthodontix and Protalix Ltd. may need to raise additional funds more quickly if one or more of
Protalix Ltd.&#146;s assumptions prove to be incorrect or if Protalix Ltd. chooses to expand its product
development efforts more rapidly than it presently anticipates, and Orthodontix and Protalix Ltd.
may decide to raise additional funds even before Protalix Ltd. needs them if the conditions for
raising capital are favorable. Orthodontix and Protalix Ltd. may seek to sell additional equity or
debt securities or obtain a bank credit facility. The sale of additional equity or debt securities
may result in dilution to Orthodontix&#146;s shareholders. The incurrence of indebtedness would result
in increased fixed obligations and could also result in covenants that would restrict Orthodontix&#146;s
operations. Additional equity or debt financing, grants, or corporate collaboration and licensing
arrangements may not be available on acceptable terms, if at all. If adequate funds are not
available, Orthodontix may be required to delay, reduce the scope of or eliminate its research and
development programs, reduce its planned commercialization efforts or obtain funds through
arrangements with collaborators or others that may require us to relinquish rights to certain
product candidates that we might otherwise seek to develop or commercialize independently.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Effects of Inflation and Currency Fluctuations</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Inflation generally affects Protalix Ltd. by increasing its cost of labor and clinical trial costs.
Protalix Ltd. does not believe that inflation has had a material effect on its results of
operations during the years ended December&nbsp;31, 2003, 2004 or 2005, or the nine months ended
September&nbsp;30, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Currency fluctuations could affect Protalix Ltd. by increased or decreased costs mainly for goods
and services acquired outside of Israel. Protalix Ltd. does not believe currency fluctuations have
had a material effect on Protalix Ltd.&#146;s results of operations during the years ended December&nbsp;31,
2003, 2004 or 2005, or the nine months ended September&nbsp;30, 2006.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->60<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Off-Balance Sheet Arrangements</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Protalix Ltd. has no off-balance sheet arrangements as of December&nbsp;31, 2004, 2005 and September&nbsp;30,
2006. See Note 5 of the financial Statements for a full description of certain contingent royalty
payments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Recently Issued Accounting Pronouncements</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In June&nbsp;2006, the FASB issued FASB Interpretation (FIN)&nbsp;No.&nbsp;48 &#147;Accounting for Uncertainty in
Income Taxes&#148;, an interpretation of FASB Statement 109. FIN 48 prescribes a comprehensive model
for recognizing, measuring, presenting, and disclosing in the financial statements tax positions
taken or expected to be taken on a tax return, including a decision whether to file or not to file
in a particular jurisdiction. FIN 48 is effective for fiscal years beginning after December&nbsp;15,
2006 (January&nbsp;1, 2007 for Protalix Ltd.). If there are changes in net assets as a result of
application of FIN 48, these will be accounted for as an adjustment to retained earnings. Protalix
Ltd. is currently assessing the impact of FIN 48 on its financial position and results of
operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In September&nbsp;2006, the Financial Accounting Standards Board (the &#147;FASB&#148;) issued Statement of
Financial Accounting Standard No.&nbsp;157, &#147;Fair Value Measurements&#148; (FAS 157). FAS 157 defines fair
value, establishes a framework for measuring fair value in accordance with generally accepted
accounting principles, and expands disclosures about fair value measurements. The provisions of
FAS 157 are effective commencing upon the fiscal year beginning after September&nbsp;1, 2008. Protalix
Ltd. is currently evaluating the impact of the provisions of FAS 157 on its financial position and
results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In September&nbsp;2006, the SEC released Staff Accounting Bulletin (SAB)&nbsp;No.&nbsp;108, &#147;Considering the
Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial
Statements&#148;, which provides interpretive guidance on the consideration of the effects of prior year
misstatements in quantifying current year misstatements for the purpose of a materiality
assessment. Protalix Ltd. is required to initially apply SAB No.&nbsp;108 during fiscal year 2007.
Protalix Ltd. is currently evaluating the impact of the provisions of FAS 158 on its financial
position and results of operations.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->61<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Security Ownership of Certain Beneficial Owners and Management</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following tables set forth information, as of the closing date of the merger, regarding
beneficial ownership of our common stock to the extent known to us by:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>each person who is known by us to own beneficially more than 5% of our common stock;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>each director;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our Chief Executive Officer and our two most highly compensated officers other than our Chief
Executive Officer who served in such capacities in 2005 (collectively, the &#147;Named Executive
Officers&#148;); and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(iv)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>all of our directors and Named Executive Officers collectively.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except as otherwise noted, each person has sole voting and investment power as to his or her
shares. Unless otherwise noted, we believe that all persons named in the table have sole voting
and investment power with respect to all shares of our common stock beneficially owned by them.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For purposes of these tables, a person is deemed to be the beneficial owner of securities that
can be acquired by such person within 60&nbsp;days from the date hereof upon exercise of options,
warrants and convertible securities. Each beneficial owner&#146;s percentage ownership is determined by
assuming that options, warrants and convertible securities that are held by such person (but not
those held by any other person) and that are exercisable within 60&nbsp;days from the date hereof have
been exercised.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Security Ownership of 5% Beneficial Owners</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="31%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Title of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Name and Address or</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Amount and Nature of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Percentage of</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Class</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Number in Group</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Beneficial Ownership</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Class (%)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD nowrap><DIV style="margin-left:15px; text-indent:-15px">Common Stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Biocell Ltd. (1)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">14,466,319</TD>
    <TD nowrap>(7)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23.42</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common Stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Pontifax G.P. Ltd. (2)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">5,394,436</TD>
    <TD nowrap>(8)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.39</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common Stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center"><FONT style="white-space: nowrap">Techno-Rov Holdings (1993) Ltd. (3)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">6,186,046</TD>
    <TD nowrap>(9)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.01</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common Stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Marathon Investments Ltd. (4)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">6,556,381</TD>
    <TD nowrap>(10)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.61</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common Stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Frost Gamma Investment Trust (5)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">9,766,273</TD>
    <TD nowrap>(11)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.27</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common Stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Yoseph Shaaltiel, Ph.D. (6)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">3,188,431</TD>
    <TD nowrap>(12)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.14</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>The address is Moshe Aviv Tower, 7 Jabotinsky Street, Ramat Gan, Israel.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>The address of Pontifax (Israel) L.P. and Pontifax (Cayman) L.P. is 8 Hamanofim St. Herzliya
46725, Israel.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>The address is Alrov Tower, 46 Rothschild Blvd., Tel Aviv.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>The address is 7 Hanagar Street, Holon, Israel.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD>The address is 4400 Biscayne Blvd., Miami, Florida 33137.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(6)</TD>
    <TD>&nbsp;</TD>
    <TD>The address is c/o Orthodontix, Inc., 2 Snunit Street, Science Park, POB 455, Carmiel,
Israel, 21000.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(7)</TD>
    <TD>&nbsp;</TD>
    <TD>Biocell Ltd.&#146;s investment and voting decisions are made collectively by its Board of
Directors.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(8)</TD>
    <TD>&nbsp;</TD>
    <TD>Consists of 2,575,843 shares of our common stock held by Pontifax (Cayman) L.P., 1,378,278 of
which shares are owned of record and 1,197,565 of which shares are issuable upon exercise of
options that are exercisable within 60&nbsp;days of the closing date of the merger and 2,818,593
shares of our common stock held by Pontifax (Israel) L.P., 1,508,169 of which shares are owned
of record and 1,310,424 of which shares are issuable upon exercise of options that are
exercisable within 60&nbsp;days of the closing date of the merger. Pontifax (Cayman) L.P. and
Pontifax (Israel) L.P. are governed by Pontifax Management L.P. Pontifax G.P. Ltd. is the
general partner of Pontifax Management L.P. Pontifax G.P. Ltd.&#146;s investment and voting
decisions are made collectively by its Board of Directors.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(9)</TD>
    <TD>&nbsp;</TD>
    <TD>Mr.&nbsp;Amos Bar-Shalev is the manager of Techno-Rov Holdings (1993)&nbsp;Ltd. and has the power to
control its investment decisions.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(10)</TD>
    <TD>&nbsp;</TD>
    <TD>Marathon Investments Ltd.&#146;s investment and voting decisions are made collectively by its
Board of Directors.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->62<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">





<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(11)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes warrants to purchase 2,157,302 shares of common stock issuable upon exercise of
outstanding warrants exercisable within 60&nbsp;days of the closing date
of the merger. Frost Gamma, L.P. is the sole and exclusive beneficiary of Frost Gamma
Investments Trust. Dr.&nbsp;Phillip Frost is the sole limited partner of Frost Gamma, L.P. The
general partner of Frost Gamma, L.P. is Frost Gamma, Inc. and the sole shareholder of Frost
Gamma, Inc. is Frost-Nevada Corporation. Dr.&nbsp;Frost is also the sole shareholder of
Frost-Nevada Corporation. Does not include options to purchase
1,937,708 shares of common stock issued to Dr.&nbsp;Frost with
vesting periods that commence upon the listing of our common stock
on the American Stock Exchange, if at all. </TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(12)</TD>
    <TD>&nbsp;</TD>
    <TD>The address is c/o Orthodontix, Inc., 2 Snunit Street, Science Park, POB 455, Carmiel,
Israel, 21000. Includes 244,324 shares of our common stock issuable upon exercise of
outstanding options within 60&nbsp;days after the closing date of the Merger, held by Dr.
Shaaltiel.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Security Ownership of Board of Directors and Management</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="31%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Title of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Name and Address or</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Amount and Nature of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Percentage of</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Class</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Number in Group</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Beneficial Ownership</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Class (%)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD nowrap><DIV style="margin-left:15px; text-indent:-15px">Common Stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Eli Hurvitz</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">5,394,436 </TD>
    <TD nowrap>(1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.39</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common Stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Yoseph Shaaltiel, Ph.D.</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">3,188,431 </TD>
    <TD nowrap>(2)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common Stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Phillip Frost, M.D.</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">9,766,273 </TD>
    <TD nowrap>(3)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.27</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common Stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Jane H. Hsiao, Ph.D., MBA</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1,134,060 </TD>
    <TD nowrap>(4)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.83</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common Stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">David Aviezer, Ph.D., MBA</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">930,020 </TD>
    <TD nowrap>(5)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.48</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common Stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Zeev Bronfeld</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">14,466,319 </TD>
    <TD nowrap>(6)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23.42</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common Stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Amos Bar-Shalev</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">6,186,046 </TD>
    <TD nowrap>(7)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.01</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common Stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Sharon Toussia-Cohen</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">6,556,381 </TD>
    <TD nowrap>(8)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.61</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common Stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Eyal Sheratzki</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">14,466,319 </TD>
    <TD nowrap>(9)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23.42</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common Stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Pinhas Barel Buchris</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common Stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Einat Brill Almon, Ph.D.</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">125,827 </TD>
    <TD nowrap>(10)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common Stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Yossi Maimon</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common Stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center">All Executive Officers and Directors as a group (12 persons)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">47,747,793 </TD>
    <TD nowrap>(11)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70.21</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>less than 1%.</TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The address for all holders listed herein is c/o Orthodontix, Inc., 2 Snunit Street, Science Park,
POB 455, Carmiel, Israel, 21000.
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 6pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Consists of 2,575,843 shares of our common stock held by Pontifax (Cayman) L.P., 1,378,278
of which shares are owned of record and 1,197,565 of which shares are issuable upon exercise
of options that are exercisable within 60&nbsp;days of the closing date of the merger and 2,818,593
shares of our common stock held by Pontifax (Israel) L.P., 1,508,169 of which shares are owned
of record and 1,310,424 of which shares are issuable upon exercise of options that are
exercisable within 60&nbsp;days of the closing date of the merger. Mr.&nbsp;Hurvitz disclaims
beneficial ownership of these shares.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes 244,324 shares of our common stock issuable upon exercise of outstanding options
within 60&nbsp;days after the closing date of the Merger, held by Dr.&nbsp;Shaaltiel.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes 7,608,971 shares of common stock and 2,157,302 shares of common stock issuable upon
exercise of outstanding warrants owned by Frost Gamma Investments
Trust exercisable within 60&nbsp;days of the closing date of the merger. Does not include
options to purchase 1,937,708 shares of common stock issued to Dr.&nbsp;Frost with vesting periods
that commence upon the listing of our common stock on the American Stock Exchange, if at all.
Frost Gamma, L.P. is the sole and exclusive beneficiary of Frost Gamma Investments Trust. Dr.
Frost is the sole limited partner of Frost Gamma, L.P. The general partner of Frost Gamma,
L.P. is Frost Gamma, Inc. and the sole shareholder of Frost Gamma, Inc. is Frost-Nevada
Corporation. Dr.&nbsp;Frost is also the sole shareholder of Frost-Nevada Corporation.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes 258,355 shares of our common stock issuable upon exercise of outstanding warrants
held by Dr.&nbsp;Hsiao. Does not include options to purchase 387,542 shares of common stock issued
to Dr.&nbsp;Hsiao with vesting periods that commence upon the listing of our common stock on the
American Stock Exchange, if at all.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes 930,020 shares of common stock issuable upon exercise of outstanding options within
60&nbsp;days after the closing date of the merger, held by Dr.&nbsp;Aviezer.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(6)</TD>
    <TD>&nbsp;</TD>
    <TD>Consists of 14,466,319 shares of our common stock held by Biocell Ltd. Mr.&nbsp;Bronfeld is a
director and Chief Executive Officer of Biocell. Mr.&nbsp;Bronfeld disclaims beneficial ownership
of these shares.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(7)</TD>
    <TD>&nbsp;</TD>
    <TD>Consists of 6,186,046 shares of our common stock held by Techno-Rov Holdings (1993)&nbsp;Ltd. Mr.
Bar-Shalev is the manager and has the power to control its investment decisions. Mr.
Bar-Shalev disclaims beneficial ownership of these shares.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(8)</TD>
    <TD>&nbsp;</TD>
    <TD>Consists of 6,556,381 shares of our common stock held by Marathon Investments Ltd. Mr.
Toussia-Cohen is a director and Chief Executive Officer of Marathon Investments Ltd. Mr.
Toussia-Cohen disclaims beneficial ownership of these shares.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(9)</TD>
    <TD>&nbsp;</TD>
    <TD>Consists of 14,466,319 shares of our common stock held by Biocell Ltd. Mr.&nbsp;Sheratzki is the
Chairman of the Board of Biocell. Mr.&nbsp;Sheratzki disclaims beneficial ownership of these
shares.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(10)</TD>
    <TD>&nbsp;</TD>
    <TD>Consists of 125,827 shares of our common stock issuable upon exercise of outstanding options
within 60&nbsp;days after the closing date of the merger, held by Dr.&nbsp;Brill Almon.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(11)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes of 6,223,817 shares of our common stock issuable upon exercise of warrants or
options, as applicable, within 60&nbsp;days after the closing date of the merger.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->63<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Directors and Executive Officers</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our directors and executive officers, their ages and positions as of the closing date of the
merger, are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="26%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="17%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Age</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Position</B></TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Directors</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Eli Hurvitz</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">74</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman of the Board</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD nowrap><DIV style="margin-left:15px; text-indent:-15px">David Aviezer, Ph.D., MBA</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">42</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director, President and Chief Executive Officer</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Yoseph Shaaltiel, Ph.D.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">53</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="white-space: nowrap">Director and Executive VP, Research and Development</FONT></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Zeev
Bronfeld(1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">55</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amos
Bar-Shalev(2)(3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">53</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Sharon
Toussia-Cohen(1)(2)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">47</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Eyal
Sheratzki(1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">38</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Pinhas Barel
Buchris(2)(3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">56</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Phillip Frost, M.D.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">70</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD nowrap><DIV style="margin-left:15px; text-indent:-15px">Jane
H. Hsiao, Ph.D., MBA(3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">59</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Executive Officers</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Einat Brill Almon, Ph.D.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">47</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice President, Product Development</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Yossi Maimon</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">37</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Financial Officer, Treasurer and Secretary</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 6pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Member of Nominating Committee</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>
<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Member of Audit Committee</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>
<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Member of Compensation Committee</TD>
</TR>
</table>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>David Aviezer, Ph.D</I></B><B>., </B><B><I>MBA. </I></B>Dr.&nbsp;Aviezer has served as Protalix Ltd.&#146;s Chief Executive Officer
since 2002 and is a member of our board of directors. Dr.&nbsp;Aviezer has over a decade of experience
in biotechnology management, advancing products from early-stage research up to their regulatory
approval and commercialization. Prior to joining Protalix Ltd., from 1996 to 2002, he served as
General Manager of ProChon Biotech Ltd., an Israeli company focused on orthopedic disorders.
Previously Dr.&nbsp;Aviezer was a visiting scientist at the Medical Research Division of American
Cyanamid, a subsidiary of Wyeth (NYSE:WEY), in New York. Dr.&nbsp;Aviezer is the recipient of the Clore
Foundation Award and the J.F. Kennedy Scientific Award. He holds a Ph.D. in Molecular Biology and
Biochemistry from the Weizmann Institute of Science and an M.B.A. from the Bar Ilan University
Business School.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Yoseph Shaaltiel, Ph.D</I></B><B>. </B>Dr.&nbsp;Shaaltiel founded Protalix Ltd. in 1993 and currently serves as a
member of our Board of Directors and Vice President, Research and Development. Prior to
establishing Protalix Ltd., from 1988 to 1993, Dr.&nbsp;Shaaltiel was a Research Associate at the MIGAL
Technological Center. He also served as Deputy Head of the Biology Department of the Biological
and Chemical Center of the Israeli Defense Forces and as a Biochemist at Makor Chemicals Ltd. Dr.
Shaaltiel was a Postdoctoral Fellow at the University of California at Berkeley and at Rutgers
University in New Jersey. He has co-authored over 40 articles and abstracts on plant biochemistry
and holds seven patents. Dr.&nbsp;Shaaltiel received his Ph.D. in Plant Biochemistry from the Weizmann
Institute of Science, an Ms.C. in Biochemistry from the Hebrew University, and a B.Sc. in Biology
from the Ben Gurion University.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Einat Brill Almon, Ph.D. </I></B>Dr.&nbsp;Almon joined Protalix Ltd. in December&nbsp;2004 and has served as its
Vice President, Product Development since then. Dr.&nbsp;Almon has many years of experience in
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->64<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">the
management of life science projects and companies, including biotechnology and agrobiotech, with
direct experience in clinical, device and scientific software development, as well as a strong
background and work experience in Intellectual Property. Prior to joining Protalix Ltd., from 2001
to 2004, she served as Director of R&#038;D and IP of Biogenics Ltd, a company that developed an
autologous platform for tissue based protein drug delivery. Biogenics, based in Israel, is a
wholly-owned subsidiary of Medgenics Inc. Dr.&nbsp;Almon has trained as a biotechnology patent agent at
leading IP firms in Israel. Dr.&nbsp;Almon holds a Ph.D. and an M.Sc. in molecular biology of cancer
research from the Weizmann Institute of Science, a B.Sc. from the Hebrew University and has carried
out Post-Doctoral research at the Hebrew University in the area of plant molecular biology.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Yossi Maimon, CPA</I></B><B>. </B>Yossi Maimon has served as our Vice President and Chief Financial Officer since
he joined Protalix Ltd. in 2006. Prior to joining Protalix, from 2002 to 2006, he served as the
Chief Financial Officer of Colbar LifeScience Ltd., a biomaterial company focusing on aesthetics,
where he led all of the corporate finance activities, fund raisings, and legal aspects of Colbar
including the sale of Colbar to Johnson and Johnson. Prior to that, from 2000 to 2002, he served
as the Chief Financial Officer of Way2Call Communications, Ltd., an Israeli start up company in the
telecommunications field, where he led the fund raising efforts, accounting issues, and business
development activities. Prior to that, from 1998 to 2000, he served as the controller of PEC, a
United States company publicly traded on the New York Stock Exchange, where he was responsible for
reporting and compliance with the SEC and led the process of delisting and merging PEC into
Discount Investment Bank. Mr.&nbsp;Maimon has a B.A. in accounting from the City University of New York
and an M.B.A. from Tel Aviv University, and he is a Certified Public Accountant in the United
States (New York State) and Israel.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Board of Directors</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Eli Hurvitz. </I></B>Mr.&nbsp;Hurvitz serves as Chairman of Protalix Ltd.&#146;s board of directors and has served
as a director of Protalix Ltd. since 2005. Mr.&nbsp;Hurvitz has served as Chairman of the Board of Teva
since April&nbsp;2002. Previously, he served as Teva&#146;s President and Chief Executive Officer for over
25&nbsp;years and has been employed at Teva in various capacities for over 40&nbsp;years. He serves as
Chairman of the Board of The Israel Democracy Institute (IDI), Chairman of the Board of
NeuroSurvival Technologies Ltd. (a private company) and a director of Vishay Intertechnology. He
served as Chairman of the Israel Export Institute from 1974 through 1977 and as the President of
the Israel Manufacturers Association from 1981 through 1986. He served as Chairman of the Board of
Bank Leumi Ltd. from 1986 through 1987. He was a director of Koor Industries Ltd. from 1997
through 2004 and a member of the Belfer Center for Science and International Affairs at the John F.
Kennedy School of Government at Harvard University from 2002 through 2005. He received his B.A. in
Economics and Business Administration from the Hebrew University in 1957.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Phillip Frost, M.D. </I></B>Dr.&nbsp;Frost has served as a director of Protalix Ltd. since 2006. Dr.&nbsp;Phillip
Frost was named the Vice Chairman of the Board of Teva in January&nbsp;2006 when Teva acquired IVAX
Corporation. Dr.&nbsp;Frost had served as Chairman of the Board of Directors and Chief
Executive Officer of IVAX Corporation since 1987. Dr.&nbsp;Frost was named Chairman of the Board of
Ladenburg Thalman &#038; Co., Inc., an American Stock Exchange-listed investment
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->65<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">banking and securities
brokerage firm, in July&nbsp;2006 and has been a director of Ladenburg Thalman since March&nbsp;2005. He was
Chairman of the Department of Dermatology at Mt. Sinai Medical Center of Greater Miami, Miami
Beach, Florida from 1972 to 1986. Dr.&nbsp;Frost was Chairman of the Board of Directors of Key
Pharmaceuticals, Inc. from 1972 until the acquisition of Key Pharmaceuticals by Schering Plough
Corporation in 1986. He serves on the Board of Regents of the Smithsonian Institution, a member of
the Board of Trustees of the University of Miami, a Trustee of each of the Scripps Research
Institutes, the Miami Jewish Home for the Aged, and the Mount Sinai Medical Center and is Vice
Chairman of the Board of Governors of the American Stock Exchange. Dr.&nbsp;Frost is also a director of
Continucare Corporation, an American Stock Exchange-listed provider of outpatient healthcare and
home healthcare services, Northrop Grumman Corp., a New York Stock Exchange-listed global defense
and aerospace company, Castle Brands, Inc., an American Stock Exchange-listed developer and
marketer of alcoholic beverages, and Cellular Technical Services, Inc., a provider of products and
services for the telecommunications industry. Dr.&nbsp;Frost received a B.A. in French Literature from
the University of Pennsylvania and an M.D. from the Albert Einstein College of Medicine.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Jane H. Hsiao, Ph.D., MBA</I></B><B>. </B>Dr.&nbsp;Hsiao has served as a director of Protalix Ltd. since 2006. Dr.
Hsiao served as the Vice Chairman-Technical Affairs of IVAX Corporation from 1995 to January&nbsp;2006,
when Teva acquired IVAX. Dr.&nbsp;Hsiao served as IVAX&#146;s Chief Technical Officer since 1996, and as
Chairman, Chief Executive Officer and President of IVAX Animal Health, IVAX&#146;s veterinary products
subsidiary, since 1998. From 1992 until 1995, Dr.&nbsp;Hsiao served as IVAX&#146;s Chief Regulatory Officer
and Assistant to the Chairman. Dr.&nbsp;Hsiao served as Chairman and President of DVM Pharmaceuticals
from 1998 through 2006 and is also a director of Cellular Technical Services Company, Inc., a
provider of products and services for the telecommunications industry. Dr.&nbsp;Hsiao received a B.S.
in Pharmacy from the National Taiwan University and a Ph.D. in Pharmaceutical Chemistry from the
University of Illinois, Chicago.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Zeev Bronfeld</I></B><B>. </B>Mr.&nbsp;Bronfeld has served as a director of Protalix Ltd. since 1996. Mr.&nbsp;Bronfeld
brings to Protalix vast experience in management and value building of biotechnology companies.
Mr.&nbsp;Bronfeld is an experienced businessman who is involved in a number of biotechnology companies.
He is a co-founder of Biocell Ltd., an Israeli publicly traded holding company specializing in
biotechnology companies and has served as its chief executive officer since 1986. Mr.&nbsp;Bronfeld
currently serves as a director of Biocell Ltd., Nasvax Ltd., D. Medical Industries Ltd., and
Biomedix Incubator Ltd., all of which are public companies traded on the Tel Aviv Stock Exchange.
Mr.&nbsp;Bronfeld is also a director of each of the following privately-held companies: Meitav
Technological Incubator Ltd., Innovetica Ltd., Ecocycle Israel Ltd., Contipi Ltd., Nilimedix Ltd.,
G-Sense Ltd., and L.N. Innovative Technologies. Mr.&nbsp;Bronfeld holds a B.A. in Economics from the
Hebrew University of Jerusalem.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Amos
Bar-Shalev</I></B><B>. </B>Mr.&nbsp;Bar-Shalev has served as a
director of Protalix Ltd. since 2005. Mr.&nbsp;Bar-Shalev
brings to Protalix extensive experience in managing technology
companies. Currently Mr.&nbsp;Bar-Shalev
is the President of 1andOne Technology, and manages the Technorov portfolio. Until recently he was
the Managing Director of TDA Israel, a management company of the TGF (Templeton Tadiran) Fund. Mr.
Bar-Shalev was Vice President of Eurofund and a senior analyst
at Teuza. He has served on the board of directors of many companies, such as Schema, ScitexVision,
MessageVine, Objet, Idanit and ART. Mr.&nbsp;Bar-Shalev holds a B.Sc. in Electrical
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->66<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Engineering from
the Technion, Israel and an M.B.A. from the Tel Aviv University. He holds the highest award from
the Israeli Air Force for technological achievements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Sharon Toussia-Cohen</I></B><B>. </B>Mr.&nbsp;Toussia-Cohen has served as a director of Protalix Ltd. since 2004. Mr.
Toussia-Cohen is the president, chief executive officer and a director of Marathon Investments, an
Israeli publicly-traded company since 2004. During the period from 1996 to 2002, he served as the
chief executive officer of the Aleppo Group and also as Managing Director of Israel&#146;s Airport City
Project. From the years 2002 through 2004, Mr.&nbsp;Toussia-Cohen was a partner and Managing Director
of the Tiv Taam Group and from the years 2004 through 2006 he was the chief executive officer and a
director of ISRI Investments Ltd. Mr.&nbsp;Toussia-Cohen currently serves on the Board of Directors of
Bioview, an Israeli company traded on the Tel Aviv Stock Exchange, and several privately-held
companies including Nanomotion, Margan Business Development Ltd., Pegasus, Chromat Ltd., and
Yeulit. Mr.&nbsp;Toussia-Cohen is certified in Bank Management by the First International Bank of
Israel and at the Republic National Bank of New York. He was also the co-owner and director of a
strategic consulting firm in Israel. Mr.&nbsp;Toussia-Cohen holds a Bachelor&#146;s degree in Economics and
Political Science and an M.B.A. from the Hebrew University in Jerusalem.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Eyal Sheratzki</I></B><B>. </B>Mr.&nbsp;Sheratzki has served as a director of Protalix Ltd. since 2005. Mr.&nbsp;Sheratzki
has served as a director of Ituran Location &#038; Control, a publicly-traded company quoted on the
Nasdaq, since 1995 and as a co-chief executive officer since 2003. Prior to such date, he served
as an alternate chief executive officer of Ituran from 2002 through 2003 and as Vice President of
Business Development from 1999 through 2002. Mr.&nbsp;Sheratzki also serves as a director of Moked
Ituran Ltd. and of Ituran&#146;s subsidiaries. From 1994 to 1999 he served as the chief executive
officer of Moked Services, Information and Investments Ltd. and as legal advisor to several of
Ituran&#146;s affiliated companies. Mr.&nbsp;Sheratzki holds LL.B and LL.M degrees from Tel Aviv University
School of Law and an Executive M.B.A. degree from Kellogg University.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Pinhas Barel Buchris. </I></B>Mr.&nbsp;Buchris has served as a director of Protalix since December&nbsp;2006. Mr.
Buchris is currently a Venture Partner at Apax Partners and is a Managing Director of Tamares
Capital Ltd., both of which positions he has held since 2002. From 2002 to the present, Mr.&nbsp;Buchris
has been engaged, from time to time, as an independent consultant and advisor for several high-tech
companies and security-based organizations. From 1974 through 2001, Mr.&nbsp;Buchris served in the
Israeli Defense Forces where he achieved the rank of Brigadier General (retired). From 1997 through
2001, he led the Israeli Defense Force&#146;s largest technology information gathering unit, the Central
Unit of Technology Intelligence. Mr.&nbsp;Buchris currently serves on the Board of Directors of Bezeq
the Israeli Telecommunications Corp. Ltd., an Israeli company traded on the Tel Aviv Stock
Exchange, and several privately-held companies including Tamares Israel Investments Ltd., Tamares
Capital Ltd., Global Medical Networks, and AGN Knafaim Holdings Ltd. Mr.&nbsp;Buchris holds a B.Sc. in
Computer Science from the Technion Technology Institute of Haifa, Israel, and an MBA from the
Israeli extension of Derby University, United Kingdom. Mr.&nbsp;Buchris has also completed an Executive
Finance program and an Advanced Directors program at the Israeli Management Center as well as an
Advanced
Management program at Harvard University. In 1993, Mr.&nbsp;Buchris was awarded the Israel Defense
Prize, one of the most prestigious awards in Israel.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->67<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Executive Compensation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table sets forth a summary for the fiscal years ended December&nbsp;31, 2005 and 2004,
respectively, of the cash and non-cash compensation awarded, paid or accrued by Protalix Ltd. to
our Named Executive Officers. There were no restricted stock awards, long-term incentive plan
payouts or other compensation paid during fiscal years 2005 and 2004 by Protalix Ltd. to the Named
Executive Officers, except as set forth below. During such periods the Named Executive Officers
were not employees of Orthodontix. All currency amounts are expressed in U.S. dollars.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Summary Compensation Table</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="18%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Nonqualified</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Non-Equity</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Deferred</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>All Other</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Stock</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Option</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Incentive Plan</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Compensation</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Compen-</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Name and Principal</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Salary</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Bonus</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Award(s)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Award(s)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Compensation</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Earnings</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>sation</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Position</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Year</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>($)</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>($)</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>($)</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>($)</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>($)</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>($)</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>($)(1)</B></TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>($)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px">David Aviezer, Ph.D., MBA (2)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">198,890</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">272,879</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">546,769</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:0px; text-indent:-0px"><I>President and CEO</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">161,409</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">147,124</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">328,533</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Yoseph Shaaltiel, Ph.D.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">120,855</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,022</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,077</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,283</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">173,237</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:0px; text-indent:-0px"><I>Executive Vice President, Research and Development</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">96,809</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,302</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,269</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">134,380</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:0px; text-indent:-0px">Einat Brill Almon, Ph.D.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79,818</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,915</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67,824</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,605</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">178,162</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:0px; text-indent:-0px"><I>Vice President, Product Development</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,316</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">772</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,088</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes employer contributions to pension and/or insurance plans and other miscellaneous
payments.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Dr.&nbsp;Aviezer served as Protalix Ltd.&#146;s Chief Executive Officer on a consultancy basis, until
September&nbsp;2006, pursuant to a Consulting Services Agreement between Protalix Ltd. and Agenda
Biotechnology Ltd., a company wholly-owned by Dr.&nbsp;Aviezer.</TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Yossi Maimon joined Protalix Ltd. as Chief Financial Officer on October&nbsp;15, 2006 and is
Protalix Ltd.&#146;s most recently hired senior executive. Although Mr.&nbsp;Maimon is not included in the
Summary Compensation Table because he was not an executive officer of Protalix Ltd. during fiscal
year 2005, information about his employment agreement is included under &#147;Employment Agreements and
Change in Control Arrangements.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Outstanding Equity Awards at Fiscal Year-End</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table sets forth information with respect to the Named Executive Officers concerning
equity awards granted by Protalix Ltd. as of December&nbsp;31, 2005. During such period the Named
Executive Officers were not employees of Orthodontix. All share amounts represent ordinary shares
of Protalix Ltd. In connection with the merger, the share amounts were subsequently converted into
shares of Orthodontix&#146;s common stock at a ratio of approximately 61 shares of Orthodontix&#146;s common
stock for every one ordinary share of Protalix Ltd. No officer of Orthodontix received compensation
during the year ended December&nbsp;31, 2005.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->68<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="19%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
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    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD nowrap align="center" colspan="19" style="border-bottom: 1px solid #000000">Option Awards</TD>

    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15" style="border-bottom: 1px solid #000000">Stock Awards</TD>


</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Equity</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Incentive</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
     <td>&nbsp;</td>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Plan</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Equity</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Awards:</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Incentive</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Market or</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>


    <TD colspan="8">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Plan</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Payout</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Equity</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Awards:</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Value</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Incentive</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Market</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Number</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">of</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Number</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Plan Awards:</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Number</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Value of</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">of</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Unearned</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">of</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Number</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000">Number</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">of Shares</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Shares or</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Unearned</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Shares,</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Securities</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">of Securities</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000">of Securities</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">or Units</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Units of</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Shares,</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Units or</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Underlying</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Underlying</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Underlying</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">of Stock</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Stock</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Units or</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Other</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Unexercised</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Unexercised</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Unexercised</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Option</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">That Have</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">That</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Other</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Rights</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Options</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Options</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Unearned</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Exercise</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Option</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Not</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Have Not</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Rights</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">That Have</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(#)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">(#)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Options</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Price</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Expiration</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Vested</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Vested</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">That Have</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Not Vested</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Name</TD>
    <TD style="border-bottom: 0px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Exercisable</TD>
    <TD style="border-bottom: 0px solid #000000">&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Unexercisable</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(#)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">($)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Date</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(#)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">($)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Not Vested (#)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">($)</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">David Aviezer, Ph.D.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,670</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,557</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8/1/2013</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Yoseph Shaaltiel, Ph.D.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">0.01NIS</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6/30/2011</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Einat Brill Almon, Ph.D.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,030</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,089</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8/1/2013</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table sets forth information with respect to compensation of directors of
Protalix during fiscal year 2005. No director of Orthodontix received compensation during fiscal
year 2005. All currency amounts are expressed in U.S. dollars.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Nonqualified</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Non-Equity</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Deferred</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Fees Earned or</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Option</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Incentive Plan</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Compensation</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000">All Other</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Paid in Cash</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Stock Award</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Awards</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Compensation</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Earnings</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000">Compensation</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">Total</TD>
    <TD>&nbsp;</TD>

</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Name</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">($)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">($)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">($)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">($)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">($)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">($)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">($)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Eli
Hurvitz (1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,549</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">855,388</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">879,936</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Zeev Bronfeld</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amos Bar-Shalev</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Sharon Toussia-Cohen</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Eyal Sheratzki</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Alon
Dumanis, Ph.D. (2)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Phillip
Frost, M.D. (3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Jane H.
Hsiao, Ph.D., MBA (3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>






<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Represents amounts paid to Pontifax Management Company, Ltd.
pursuant to a management consulting agreement.
</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Dr.&nbsp;Dumanis ceased to serve as a director of Protalix Ltd. in December&nbsp;2006.</TD>
</TR>


<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>
<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Dr. Frost and Dr. Hsiao did not serve as directors of
Protalix Ltd. during fiscal year 2005.
</TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Employment Agreements and Change in Control Arrangements</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>David Aviezer, Ph.D., MBA. </I></B>Dr.&nbsp;Aviezer originally served as Protalix Ltd.&#146;s Chief Executive
Officer on a consultancy basis pursuant to a Consulting Services Agreement between Protalix Ltd.
and Agenda Biotechnology Ltd., a company wholly-owned by Dr.&nbsp;Aviezer. On September&nbsp;11, 2006,
Protalix entered into an employment agreement with Dr.&nbsp;Aviezer pursuant to which he agreed to be
employed as Protalix Ltd.&#146;s President and Chief Executive Officer, which agreement supersedes the
Consultancy Services Agreement. Protalix Ltd. agreed to pay Dr.&nbsp;Aviezer a monthly base salary
equal to NIS 80,000 (approximately $19,000) and an annual bonus at the Board&#146;s discretion. The
monthly salary is subject to cost of living adjustments from time to time. Dr.&nbsp;Aviezer is eligible
to receive a substantial bonus in the event of certain public
</DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">offerings or acquisition
transactions, which bonus shall be at the discretion of the Board and is not payable solely with
respect to the merger, and certain specified bonuses in the event Protalix achieves certain
specified milestones. In connection with the employment agreement, in addition to other options
already held by Dr.&nbsp;Aviezer, Protalix Ltd. granted to Dr.&nbsp;Aviezer options to purchase 16,000
ordinary shares of Protalix Ltd. at an exercise price equal to $59.40 per share, which we
assumed as options to purchase 977,297 shares of our common stock at $0.97 per share. Such options
vest quarterly retroactively from June&nbsp;1, 2006, over a four year period. The employment agreement
is terminable by either party on 90&nbsp;days&#146; written notice for any reason and we may terminate the
agreement for cause without notice. Dr.&nbsp;Aviezer is entitled to be insured by Protalix Ltd. under a
Manager&#146;s Policy in lieu of severance, company contributions towards vocational studies, annual
recreational allowances, a company car, and a company phone. Dr.&nbsp;Aviezer is entitled to 24 working
days of vacation. All stock options that have not vested as of the date of termination shall be
deemed to have expired.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Yoseph Shaaltiel, Ph.D. </I></B>Dr.&nbsp;Shaaltiel founded Protalix Ltd. in 1993 and currently serves as its
Executive Vice President, Research and Development. Dr.&nbsp;Shaaltiel entered into an employment
agreement with Protalix Ltd. September&nbsp;1, 2001. Pursuant to the employment agreement, Protalix Ltd.
agreed to pay Dr.&nbsp;Shaaltiel a monthly base salary equal to $7,000, subject to annual cost of living
adjustments. His current salary is $10,600 per month. The employment agreement is terminable by
Protalix Ltd. on 90&nbsp;days&#146; written notice for any reason and we may terminate the agreement for
cause without notice. Dr.&nbsp;Shaaltiel is entitled to be insured by Protalix Ltd. under a Manager&#146;s
Policy in lieu of severance, company contributions towards vocational studies, annual recreational
allowances, a company car, and a company phone. Dr.&nbsp;Shaaltiel is entitled to 24 working days of
vacation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Einat Brill Almon, Ph.D. </I></B>Dr.&nbsp;Brill Almon joined Protalix Ltd. as its Vice President, Product
Development, pursuant to an employment agreement effective on December&nbsp;19, 2004 by and between
Protalix Ltd. and Dr.&nbsp;Brill Almon. Pursuant to the employment agreement, Protalix Ltd. agreed to
pay Dr.&nbsp;Brill Almon a monthly base salary equal to NIS 28,000 (approximately $6,575). Her current
salary is NIS 35,000 per month (approximately $8,235). The monthly salary is subject to cost of
living adjustments from time to time. She is also entitled to certain specified bonuses in the
event that Protalix achieves certain specified clinical development milestones within specified
timelines. In connection with the employment agreement, Protalix agreed to grant to Dr.&nbsp;Brill
Almon options to purchase 7,919 ordinary shares of Protalix Ltd. at exercise prices equal to $24.36
and $59.40 per share, which we assumed as options to purchase 483,701 shares of our common stock at
$0.40 and $0.97 per share. The options shall vest over four years. The employment agreement is
terminable by either party on 60&nbsp;days&#146; written notice for any reason and we may terminate the
agreement for cause without notice. Dr.&nbsp;Brill Almon is entitled to be insured by Protalix Ltd.
under a Manager&#146;s Policy in lieu of severance, company contributions towards vocational studies,
annual recreational allowances, a company car, and a company phone at up to NIS 1,000 per month.
Dr.&nbsp;Brill Almon is entitled to 22 working days of vacation. All stock options that have not vested
as of the date of termination shall be deemed to have expired.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Yossi Maimon. </I></B>Mr.&nbsp;Maimon joined Protalix Ltd. as its Chief Financial Officer on pursuant to an
employment agreement effective as of October&nbsp;15, 2006 by and between Protalix Ltd. and Mr.
</DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Maimon.
Pursuant to the employment agreement, Protalix Ltd. agreed to pay Mr.&nbsp;Maimon a monthly base salary
equal to NIS 45,000 (approximately $10,600) and an annual discretionary bonus and additional
discretionary bonuses in the event Protalix achieves significant financial milestones, subject to
the Board&#146;s sole discretion. The monthly salary is subject to cost of living adjustments from time
to time. In connection with the employment agreement, Protalix agreed to grant to Mr.&nbsp;Maimon
options to purchase 10,150 ordinary shares of Protalix Ltd. at an exercise
price equal to $59.40 per share, which we assumed as options to purchase 619,972 shares of our
common stock at $0.97 per share. The first 25% of such options shall vest on the first anniversary
of the grant date and the remainder shall vest quarterly in twelve equal increments. The
employment agreement is terminable by either party on 60&nbsp;days&#146; written notice for any reason and we
may terminate the agreement for cause without notice. Mr.&nbsp;Maimon is entitled to be insured by
Protalix Ltd. under a Manager&#146;s Policy in lieu of severance, company contributions towards
vocational studies, annual recreational allowances, a company car, and a company phone. Mr.&nbsp;Maimon
is entitled to 24 working days of vacation. All stock options that have not vested as of the date
of termination shall be deemed to have expired.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Stock Option Plan</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Immediately prior to the closing of the merger, Protalix Ltd. had outstanding options to purchase
88,001 ordinary shares under its employee stock option plan. Pursuant to the terms of Merger
Agreement, we assumed all of the outstanding obligations under such plan and, accordingly, we
anticipate issuing approximately 5,375,174 shares of our common stock upon the exercise of such
options in lieu of shares of Protalix Ltd. under our 2006 Stock Incentive Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our Board of Directors and a majority of our shareholders approved our 2006 Stock Incentive Plan on
December&nbsp;13, 2006. We have reserved 9,741,655 shares of our common stock for issuance, in the
aggregate, under the 2006 Stock Incentive Plan, subject to adjustment for a stock split or any
future stock dividend or other similar change in our common stock or our capital structure. No
shares of our common stock have been granted under the 2006 Stock Incentive Plan; however, we
anticipate issuing options to purchase approximately 5,375,174 shares of common stock under this
plan in connection with the merger.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>2006 Stock Incentive Plan</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our 2006 Stock Incentive Plan provides for the grant of stock options, restricted stock, restricted
stock units, stock appreciation rights and dividend equivalent rights, collectively referred to as
&#147;awards.&#148; Stock options granted under the 2006 Stock Incentive Plan may be either incentive stock
options under the provisions of Section&nbsp;422 of the Internal Revenue Code, or non-qualified stock
options. Incentive stock options may be granted only to employees. Awards other than incentive
stock options may be granted to employees, directors and consultants. The 2006 Stock Incentive
Plan is also in compliance with the provisions of the Israeli Income Tax Ordinance New Version,
1961 (including as amended pursuant to Amendment 132 thereto) and is intended to enable us to grant
awards to grantees who are Israeli residents as follows: (i)&nbsp;awards to employees pursuant to
Section&nbsp;102 of the Tax Ordinance (definition refers only to employees, office holders and directors
of our company or a related entity excluding those who are considered &#147;Controlling Shareholders&#148;
pursuant to the Tax Ordinance); and (ii)&nbsp;awards to non-employees pursuant to Section&nbsp;3(I) of the
Tax Ordinance. In accordance with the terms and
</DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">conditions imposed by the Tax Ordinance, grantees
who receive awards under the 2006 Stock Incentive Plan may be afforded certain tax benefits in
Israel as described below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our Board of Directors or the compensation committee, referred to as the &#147;plan administrator,&#148; will
administer our 2006 Stock Incentive Plan, including selecting the grantees, determining the
number of shares to be subject to each award, determining the exercise or purchase price of each
award, and determining the vesting and exercise periods of each award.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The exercise price of stock options granted under the 2006 Stock Incentive Plan must be equal to at
least 100% of the fair market value of our common stock on the date of grant; however, in certain
circumstances, grants may be made at a lower price to Israeli grantees who are residents of the
State of Israel. If, however, incentive stock options are granted to an employee who owns stock
possessing more than 10% of the voting power of all classes of our stock or the stock of any parent
or subsidiary of our company, the exercise price of any incentive stock option granted must equal
at least 110% of the fair market value on the grant date and the maximum term of these incentive
stock options must not exceed five years. The maximum term of all other awards must not exceed 10
years. The plan administrator will determine the exercise or purchase price (if any) of all other
awards granted under the 2006 Stock Incentive Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under the 2006 Stock Incentive Plan, incentive stock options and options to Israeli grantees may
not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than
by will or by the laws of descent or distribution and may be exercised during the lifetime of the
participant only by the participant. Other awards shall be transferable by will or by the laws of
descent or distribution and to the extent and in the manner authorized by the plan administrator by
gift or pursuant to a domestic relations order to members of the participant&#146;s immediate family.
The 2006 Stock Incentive Plan permits the designation of beneficiaries by holders of awards,
including incentive stock options.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the event the service of a participant in the 2006 Stock Incentive Plan is terminated for any
reason other than cause, disability or death, the participant may exercise awards that were vested
as of the termination date for a period ending upon the earlier of twelve months or the expiration
date of the awards unless otherwise determined by the plan administrator.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the event of a corporate transaction or a change of control, all awards will terminate unless
assumed by the successor corporation. Unless otherwise provided in a participant&#146;s award
agreement, in the event of a corporate transaction for the portion of each award that is assumed or
replaced, then such award will automatically become fully vested and exercisable immediately upon
termination of a participant&#146;s service if the participant is terminated by the successor company or
us without cause within twelve months after the corporate transaction. For the portion of each
award that is not assumed or replaced, such portion of the award will automatically become fully
vested and exercisable immediately prior to the effective date of the corporate transaction so long
as the participant&#146;s service has not been terminated prior to such date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the event of a change in control, except as otherwise provided in a participant&#146;s award
agreement, following a change in control (other than a change in control that also is a corporate
transaction) and upon the termination of a participant&#146;s service without cause within twelve
</DIV>



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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">months
after a change in control, each award of such participant that is outstanding at such time will
automatically become fully vested and exercisable immediately upon the participant&#146;s termination.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under our 2006 Stock Incentive Plan, a corporate transaction is generally defined as:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#149; a merger or consolidation in which we are not the surviving entity, except for the
principal purpose of changing our company&#146;s state of incorporation;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#149; the sale, transfer or other disposition of all or substantially all of our assets;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#149; the complete liquidation or dissolution of our company;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#149; any reverse merger in which we are the surviving entity but our shares of common stock
outstanding immediately prior to such merger are converted or exchanged by virtue of the merger
into other property, whether in the form of securities, cash or otherwise, or in which securities
possessing more than forty percent (40%) of the total combined voting power of our outstanding
securities are transferred to a person or persons different from those who held such securities
immediately prior to such merger; or
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#149; acquisition in a single or series of related transactions by any person or related
group of persons of beneficial ownership of securities possessing more than fifty percent (50%) of
the total combined voting power of our outstanding securities but excluding any such transaction or
series of related transactions that the plan administrator determines not to be a corporate
transaction (provided however that the plan administrator shall have no discretion in connection
with a corporate transaction for the purchase of all or substantially all of our shares unless the
principal purpose of such transaction is changing our company&#146;s state of incorporation).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under our 2006 Stock Incentive Plan, a change of control is defined as:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#149; the direct or indirect acquisition by any person or related group of persons of
beneficial ownership of securities possessing more than fifty percent (50%) of the total combined
voting power of our outstanding securities pursuant to a tender or exchange offer made directly to
our shareholders and which a majority of the members of our board (who have generally been on our
board for at least twelve months) who are not affiliates or associates of the offeror do not
recommend shareholders accept the offer, or
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#149; a change in the composition of our board over a period of twelve months or less, such
that a majority of our board members ceases, by reason of one or more contested elections for board
membership, to be comprised of individuals who were previously directors of our company;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Unless terminated sooner, the 2006 Stock Incentive Plan will automatically terminate in 2016. Our
Board of Directors has the authority to amend, suspend or terminate our 2006 Stock Incentive Plan.
No amendment, suspension or termination of the 2006 Stock Incentive Plan shall adversely affect any
rights under awards already granted to a participant. To the extent
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">necessary to comply with
applicable provisions of federal securities laws, state corporate and securities laws, the Internal
Revenue Code, the rules of any applicable stock exchange or national market system, and the rules
of any non-U.S. jurisdiction applicable to awards granted to residents therein (including the Tax
Ordinance), we shall obtain shareholder approval of any such amendment to the 2006 Stock Incentive
Plan in such a manner and to such a degree as required.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Impact of Israeli Tax Law</I>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The awards granted to employees pursuant to Section&nbsp;102 of the Tax Ordinance under the 2006 Stock
Incentive Plan may be designated by us as approved options under the capital gains alternative, or
as approved options under the ordinary income tax alternative.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">To qualify for these benefits, certain requirements must be met, including registration of the
options in the name of a trustee. Each option, and any shares of common stock acquired upon the
exercise of the option, must be held by the trustee for a period commencing on the date of grant
and deposit into trust with the trustee and ending 24&nbsp;months thereafter.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under the terms of the capital gains alternative, we may not deduct expenses pertaining to the
options for tax purposes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under the 2006 Stock Incentive Plan, we may also grant to employees options pursuant to Section
102(c) of the Tax Ordinance that are not required to be held in trust by a trustee. This
alternative, while facilitating immediate exercise of vested options and sale of the underlying
shares, will subject the optionee to the marginal income tax rate of up to 50% as well as payments
to the National Insurance Institute and health tax on the date of the sale of the shares or
options. Under the 2006 Stock Incentive Plan, we may also grant to non-employees options pursuant
to Section&nbsp;3(I) of the Tax Ordinance. Under that section, the income tax on the benefit arising to
the optionee upon the exercise of options and the issuance of common stock is generally due at the
time of exercise of the options.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">These options shall be further subject to the terms of the tax ruling that has been obtained by
Protalix Ltd. from the Israeli tax authorities in connection with the merger. Under the tax
ruling, the options issued by us in connection with the assumption of Section&nbsp;102 options
previously issued by Protalix Ltd. under the capital gains alternative shall be issued to a
trustee, shall be designated under the capital gains alternative and the issuance date of the
original options shall be deemed the issuance date for the assumed options for the calculation of
the respective holding period.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Compensation of Directors</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We intend to pay each non-management director a participation fee of $500 for each regular and
special meeting of our board of directors attended and to award each such director stock options
granted under Protalix&#146;s employee stock option plan. Prior to the merger, Protalix compensated
only certain of its directors, which compensation was limited to the granting of options under its
Employee Stock Option Plan. Our board of directors will review director compensation annually and
adjust it according to then current market conditions and good business practices.
</DIV>


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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Certain Relationships and Related Transactions, and Director Independence</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On March&nbsp;17, 2005, Protalix entered into a Management Services Agreement with Pontifax Management
Company, Ltd. in connection with the purchase of Protalix&#146;s Series&nbsp;B Preferred Shares by the
Pontifax Funds. Pursuant to the Management Services Agreement, Mr.&nbsp;Hurvitz serves as a member of
the Board of Directors of Protalix. Further, Protalix agreed not to designate a permanent chairman
of the Board of Directors until Pontifax Management Company chose to nominate Mr.&nbsp;Hurvitz as the
Chairman of the Board in 2006. In consideration for Mr.&nbsp;Hurvitz&#146;s services, Protalix is required
to pay Pontifax Management Company a fee equal to $3,000 per month plus required taxes on such
payment. In addition, in connection with the execution of the Management Services Agreement,
Protalix issued to Pontifax options to purchase a number of Series&nbsp;B Preferred Shares equal to 3.5%
of the then outstanding share capital with an exercise price equal to
the par value of the shares. Lastly, upon the appointment of Mr.&nbsp;Hurvitz as Chairman of
the Board of Directors, Protalix issued to Pontifax additional warrants for Series&nbsp;B Preferred
Shares equal to 3.76% of the then outstanding share capital of Protalix. In connection with the
merger, we assumed the Management Services Agreement and all options granted under the Management
Services Agreement have been converted into options to purchase 3,384,502 shares of our common
stock. Under the terms of the assumed Management Services Agreement, we are obligated only to use
our best efforts to nominate Mr.&nbsp;Hurvitz for election to our Board of Directors which remains
subject to the review and approval of the Nominating Committee of the Board of Directors and the
entire Board of Directors, as applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On September&nbsp;14, 2006, Protalix entered into a collaboration and licensing agreement with Teva
Pharmaceutical Industries Ltd. for the development and manufacturing of two proteins, using its
plant cell system. Mr.&nbsp;Hurvitz, the Chairman of Protalix&#146;s Board of Directors is the Chairman of
Teva&#146;s Board of Directors; and Dr.&nbsp;Frost, one of our directors, is the Vice Chairman of Teva&#146;s
Board of Directors. Pursuant to the agreement, Protalix will collaborate on the research and
development of the two proteins utilizing its plant cell expression system. Protalix will grant to
Teva an exclusive license to commercialize the developed products in return for royalty and
milestone payments payable upon the achievement of certain pre-defined goals. Protalix will retain
certain exclusive manufacturing rights with respect to the active pharmaceutical ingredient of the
proteins following the first commercial sale of a licensed product under the
agreement and other rights thereafter.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Corporate Governance and Independent Directors</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Orthodontix currently trades its shares on the National Association of Securities Dealers, Inc.&#146;s,
OTC Bulletin Board, or &#147;OTCBB&#148;. Accordingly, we are not required to have an audit, compensation or
nominating committee. However, we have submitted a listing application to list our shares on the
American Stock Exchange under the proposed ticker symbol &#147;PLXB&#148;. Although we cannot assure you
that we will be successful in listing our shares with the American
Stock Exchange, in compliance with the listing requirements of the American Stock Exchange, we have
begun operating within a comprehensive plan of corporate governance for the purpose of defining
responsibilities, setting high standards of professional and personal conduct and assuring
compliance with such responsibilities and standards. We currently regularly monitor developments in
the area of corporate governance to ensure we will be in compliance with the
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">standards and
regulations required by the American Stock Exchange. A summary of our corporate governance
measures follows:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Independent Directors</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We believe a majority of the members of our Board of Directors are independent from
management. When making determinations from time to time regarding independence, the Board
of Directors will reference the listing standards adopted by the American Stock Exchange as
well as the independence standards set forth in the Sarbanes-Oxley Act of 2002 and the
rules and regulations promulgated by the SEC under that Act. In particular, our Audit
Committee periodically evaluates and reports to the Board of Directors on the independence
of each member of the Board. We anticipate our audit committee will analyze whether a
director is independent by evaluating, among other factors, the following:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Whether the member of the Board of Directors has any material
relationship with us, either directly, or as a partner, shareholder or
officer of an organization that has a relationship with us;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Whether the member of the Board of Directors is a current
employee of our company or our subsidiaries or was an employee of our
company or our subsidiaries within three years preceding the date of
determination;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Whether the member of the Board of Directors is, or in the
three years preceding the date of determination has been, affiliated with
or employed by (i)&nbsp;a present internal or external auditor of our company
or any affiliate of such auditor, or (ii)&nbsp;any former internal or external
auditor of our company or any affiliate of such auditor, which performed
services for us within three years preceding the date of determination;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Whether the member of the Board of Directors is, or in the
three years preceding the date of determination has been, part of an
interlocking directorate, in which any of our executive officers serve on
the compensation committee of another company that concurrently employs
the member as an executive officer;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Whether the member of the Board of Directors receives any
compensation from us, other than fees or compensation for service as a
member of the Board of Directors and any committee of the Board of
Directors and reimbursement for reasonable expenses incurred in
connection with such service and for reasonable educational expenses
associated with Board of Directors or committee membership matters;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Whether an immediate family member of the member of the Board
of Directors is a current executive officer of our company or was an</TD>
</TR>

</TABLE>
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>executive officer of our company within three years preceding the date of
determination;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Whether an immediate family member of the member of the Board
of Directors is, or in the three years preceding the date of
determination has been, affiliated with or employed in a professional
capacity by (i)&nbsp;a present internal or external auditor of ours or any of
our affiliates, or (ii)&nbsp;any former internal or external auditor of our
company or any affiliate of ours which performed services for us within
three years preceding the date of determination; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">8.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Whether an immediate family member of the member of the Board
of Directors is, or in the three years preceding the date of
determination has been, part of an interlocking directorate, in which any
of our executive officers serve on the compensation committee of another
company that concurrently employs the immediate family member of the
member of the Board of Directors as an executive officer.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The above list is not exhaustive and we anticipate that the Audit Committee will consider all other
factors which could assist it in its determination that a director will have no material
relationship with us that could compromise that director&#146;s independence.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under these standards, our Board of Directors has determined that Dr.&nbsp;Hsiao and Messrs.
Bar-Shalev, Toussia-Cohen and Buchris are considered &#147;independent&#148; pursuant to the rules of the
American Stock Exchange and Section&nbsp;10A(m)(3) of the Securities Exchange Act of 1934, as amended.
In addition, our Board has determined that at least two of these members of the Board of Directors
are able to read and understand fundamental financial statements and have substantial business
experience that results in their financial sophistication, qualifying them for membership on any
audit committee we form. Our Board of Directors has also determined that Dr.&nbsp;Hsiao and Messrs.
Bronfeld, Bar-Shalev, Toussia-Cohen, Sheratzki and Buchris are &#147;independent&#148; pursuant to the rules
of the American Stock Exchange.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our non-management directors hold formal meetings, separate from management, at least
two times per year.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We have no formal policy regarding attendance by our directors at annual shareholders
meetings, although we encourage such attendance and anticipate most of our directors will
attend these meetings. Last year all directors attended Protalix&#146;s annual shareholder
meeting and Orthodontix&#146;s annual shareholder meeting.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><I>&nbsp;</I></TD>
    <TD width="1%"><I>&nbsp;</I></TD>
    <TD><I>Audit Committee</I></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We require that all Audit Committee members possess the required level of financial
literacy and at least one member of the Committee meet the current standard of requisite
financial management expertise as required by the American Stock Exchange and applicable
SEC rules and regulations. Messrs. Toussia-Cohen, Buchris and
Bar-Shalev have been appointed by the Board of Directors to serve on
the Audit Committee.
</TD>
</TR>
</TABLE>
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Messrs.&nbsp;Toussia-Cohen and Bar-Shalev qualify as &#147;audit committee financial experts&#148;
under the applicable rules of the Securities and Exchange Commission. In making the
determination as to these individuals&#146; status as audit committee financial experts, our
board of directors determined they have accounting and related financial management
expertise within the meaning of the aforementioned rules, as well as the listing standards
of the American Stock Exchange.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our Audit Committee operates under a formal charter that governs its duties and conduct.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>All members of the Audit Committee are independent from our executive officers and
management.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our independent registered public accounting firm reports directly to the Audit
Committee.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our Audit Committee meets with management and representatives of our registered public
accounting firm prior to the filing of officers&#146; certifications with the SEC to receive
information concerning, among other things, effectiveness of the design or operation of our
internal controls over financial reporting, as required by section 404 of the
Sarbanes-Oxley Act of 2002.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our Audit Committee has adopted a Policy for Reporting Questionable Accounting and
Auditing Practices and Policy Prohibiting Retaliation against Reporting employees to enable
confidential and anonymous reporting of improper activities to the Audit Committee.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><I>&nbsp;</I></TD>
    <TD width="1%"><I>&nbsp;</I></TD>
    <TD><I>Compensation Committee</I></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our Compensation Committee operates under a formal charter that governs its duties and
conduct.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>All members of the Compensation Committee are independent from our executive officers
and management. Messrs. Buchris and Bar-Shalev and Dr. Hsiao have
been appointed by the Board of Directors to serve on the Compensation
Committee.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><I>&nbsp;</I></TD>
    <TD width="1%"><I>&nbsp;</I></TD>
    <TD><I>Nominating Committee</I></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our Nominating Committee operates under a formal charter that governs its duties and
conduct.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>All members of the Nominating Committee will be independent from our executive officers
and management. Messrs. Toussia-Cohen, Bronfeld and Shervatzki have
been appointed by the Board of Directors to serve on the Nominating
Committee.</TD>
</TR>

</TABLE>
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><I>&nbsp;</I></TD>
    <TD width="1%"><I>&nbsp;</I></TD>
    <TD><I>Code of Business Conduct and Ethics</I></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We have adopted a Code of Business Conduct and Ethics that includes provisions ranging
from restrictions on gifts to conflicts of interest. All of our employees and directors
are bound by this Code of Business Conduct and Ethics. Violations of our Code of Business
Conduct and Ethics may be reported to the Audit Committee.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Code of Business Conduct and Ethics includes provisions applicable to all of our
employees, including senior financial officers and members of our Board of Directors. We
anticipate posting this Code of Business Conduct and Ethics on our website
(http://www.Protalix.com/). We intend to post amendments to or waivers from any such Code
of Business Conduct and Ethics.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><I>&nbsp;</I></TD>
    <TD width="1%"><I>&nbsp;</I></TD>
    <TD><I>Personal Loans to Executive Officers and Directors</I></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We currently prohibit extensions of credit in the form of a personal loan to or for our
directors and executive officers.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><I>&nbsp;</I></TD>
    <TD width="1%"><I>&nbsp;</I></TD>
    <TD><I>Communications with the Board of Directors</I></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Anyone who has a concern about our conduct, including accounting, internal accounting
controls or audit matters, may communicate directly with the Audit Committee. These
communications may be confidential or anonymous, and may be mailed, e-mailed, submitted in
writing or reported by phone. All of these concerns will be forwarded to the appropriate
directors for their review, and will be simultaneously reviewed and addressed by our Chief
Financial Officer in the same way that we address other concerns.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Recent Sales of Unregistered Securities</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The below discussion of recent sales of unregistered securities is expressed in ordinary shares of
Protalix Ltd. In the Merger, each ordinary share of Protalix Ltd. was converted into approximately
61 shares of Orthodontix&#146;s common stock. All currencies are expressed in U.S. dollars.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During the fourth quarter of fiscal year 2006, Protalix Ltd. issued 165,117 of its ordinary shares,
and warrants to purchase 57,758 ordinary shares, to a group of private investors in exchange for
$15,122,988, in the aggregate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In December&nbsp;2005, Protalix Ltd. issued 27,778 of its Series&nbsp;C Preferred Shares, and warrants to
purchase 23,428 Series&nbsp;C Preferred Shares, to a group of private investors in exchange for
$2,360,632, in the aggregate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In July&nbsp;2005, Protalix Ltd. issued 62,486 of its Series&nbsp;C Preferred Shares, and warrants to
purchase 52,698 Series&nbsp;C Preferred Shares, to a group of private investors in exchange for
$5,309,833, in the aggregate.
</DIV>


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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In February&nbsp;2005, Protalix Ltd, issued 16,954 of its Series&nbsp;B Preferred Shares, and warrants to
purchase 13,563 Series&nbsp;B Preferred Shares, to a group of private investors in exchange for
$1,000,000, in the aggregate. In connection with this issuance, additional warrants to purchase
55,410 Series&nbsp;B Preferred Shares were granted to the investor for no consideration, in lieu of
certain management services to be granted to Protalix Ltd. In July&nbsp;2005 these shares and warrants
were converted to Series&nbsp;C Preferred Shares and warrants to purchase Series&nbsp;C Preferred Shares for
no additional consideration.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In October&nbsp;2004, Protalix Ltd. issued 100,523 of its Series&nbsp;B Preferred Shares to a group of
private investors in exchange for $3,500,000, in the aggregate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the fourth quarter of 2006, all of Protalix&#146;s outstanding Preferred Shares were converted into
ordinary shares on a one-to-one basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We believe that the securities sold in these transactions were exempt from registration under the
Securities Act in reliance upon Section&nbsp;4(2) or Regulation&nbsp;S of the Securities Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">From November, 2003 through November, 2006, Protalix Ltd. issued options under its Stock Option
Plan to approximately 60 employees, consultants, and directors to purchase up to an aggregate total
of 126,615 of its ordinary shares under its employee share option
plan, of which 88,001 are
currently outstanding. (in exchange for which we have assumed options
to issue 5,375,174 shares of
our common stock). The exercise prices per share ranged from ($0.002) to $59.40. As of December
2006, options to purchase 29,800 shares of Protalix Ltd.&#146;s ordinary shares have been exercised by
employees, consultants, and a director of Protalix Ltd. No consideration was paid to Protalix Ltd.
by any recipient of any of the foregoing options for the grant of such options. We believe that
the securities sold in these transactions were exempt from registration under the Securities Act in
reliance upon Rule&nbsp;701 or Regulation&nbsp;S of the Securities Act.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Indemnification of Directors and Officers</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We indemnify our directors and officers to the maximum extent permitted by Florida law for the
costs and liabilities of acting or failing to act in an official capacity. We also have purchased
insurance in the aggregate amount of $1,000,000 for our directors and officers against all of the
costs of such indemnification or against liabilities arising from acts or omissions of the insured
person in cases where we may not have power to indemnify the person against such liabilities. Such
policy will be in a run-off &#147;tail&#148; coverage phase as of the merger effective date
and will covering those individuals who were our officers and directors prior to the merger for a
period of six-years after such individual resigned his/her position with our company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, we have entered into indemnification agreements with each of our executive
officers and directors, to provide them with the maximum indemnification allowed under our bylaws
and applicable Florida law, including indemnification for all judgments and expenses incurred as
the result of any lawsuit in which such person is named as a defendant by reason of being our
director, officer or employee, to the extent indemnification is permitted by the laws of
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->80<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Florida.
We believe that the indemnification agreements will enhance our ability to continue to attract and
retain qualified individuals to serve as directors and officers.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Protalix Ltd.&#146;s articles of association allow it to exculpate, indemnify, and insure its
office holders to the fullest extent permitted by Israeli law. Accordingly, Protalix Ltd. has
entered into indemnification agreements with each of its officers and directors undertaking to
indemnify them to the fullest extent permitted by law, including with respect to liabilities
resulting from the merger. This indemnification is limited to events determined as foreseeable by
the Board of Directors based on the activities of Protalix Ltd., and to an amount determined by the
Board of Directors as reasonable under the circumstances.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Protalix Ltd. further purchased and maintains directors and officers liability insurance
policy coverage in the aggregate amount of $3,000,000. Such policy will be in a run-off phase as
of the merger effective date. In addition, we maintain additional directors and officers liability
insurance policy coverage in the aggregate amount of $20,000,000.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of the date of hereof, no claims for directors and officers&#146; liability insurance have been
filed under this policy and Protalix Ltd. is not aware of any pending or threatened litigation or
proceeding involving any of the directors or officers of Protalix Ltd. in which indemnification is
sought.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the merger agreement we have undertaken to fulfill and honor in all respects the
obligations of Protalix Ltd. pursuant to any indemnification agreements between Protalix Ltd. and
its directors in effect immediately prior to the closing of the merger. We further agreed that any
provision of Protalix Ltd.&#146;s charter documents in relation to exculpation and indemnification of
officers and directors of Protalix Ltd. will not be amended, repealed, or otherwise modified in any
manner that would adversely affect the rights thereunder of individuals who, immediately prior to
the closing of the merger, were directors, officers, employees or agents of Company, unless such
modification is required by any applicable law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Israeli law, an Israeli company may not exculpate an office holder from liability for a
breach of the duty of loyalty of the office holder. An Israeli company may exculpate an office
holder in advance from liability to the company, in whole or in part, for a breach of duty of care
(other than in the event that such liability arises out of a prohibited dividend or distribution)
but only if a provision authorizing such exculpation is inserted in its articles of association.
Protalix Ltd.&#146;s articles of association include such a provision.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An Israeli company may indemnify an office holder in respect of certain liabilities either in
advance of an event or following an event provided a provision authorizing such indemnification is
inserted in its articles of association. Protalix Ltd.&#146;s articles of association contain such an
authorization. An undertaking provided in advance by an Israeli company to indemnify an office
holder with respect to a financial liability imposed on or incurred by him or her in favor of
another person pursuant to a judgment, settlement or arbitrator&#146;s award approved by a court must be
limited to events which, in the opinion of the board of directors, can be foreseen based on the
company&#146;s activities when the undertaking to indemnify is given, and to an amount or according to
criteria determined by the board of directors as reasonable under the
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->81<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">circumstances, and such
undertaking shall detail the abovementioned events and amount or criteria. In addition, a company
may indemnify an office holder against the following liabilities incurred for acts performed as an
office holder:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>reasonable litigation expenses, including attorneys&#146; fees, incurred by the office
holder as a result of an investigation or proceeding instituted against him or her by
an authority authorized to conduct such investigation or proceeding, provided that (i)
no indictment was filed against such office holder as a result of such investigation or
proceeding; and (ii)&nbsp;no financial liability, such as a criminal penalty, was imposed
upon him or her as a substitute for the criminal proceeding as a result of such
investigation or proceeding or, if such financial liability was imposed, it was imposed
with respect to an offense that does not require proof of criminal intent; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>reasonable litigation expenses, including attorneys&#146; fees, incurred by the office
holder or imposed by a court in proceedings instituted against him or her by the
company, on its behalf or by a third party or in connection with criminal proceedings
in which the office holder was acquitted or as a result of a conviction for a crime
that does not require proof of criminal intent.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An Israeli company may insure an office holder against the following liabilities incurred for
acts performed as an office holder:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a breach of duty of loyalty to the company, to the extent that the office holder
acted in good faith and had a reasonable basis to believe that the act would not be
detrimental to the interests of the company;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a breach of duty of care to the company or to a third party; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a financial liability imposed on the office holder in favor of a third party in
respect of an act performed in his or her capacity as an office holder.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An Israeli company may not indemnify or insure an office holder against any of the following:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a breach of duty of loyalty, except to the extent that the office holder acted in
good faith and had a reasonable basis to believe that the act would not be detrimental
to the interests of the company;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a grossly negligent or intentional violation of an office holder&#146;s duty of care;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an act or omission committed with intent to derive illegal personal benefit; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a fine levied against the office holder.</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->82<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Israeli law, exculpation, indemnification, and insurance of office holders must be
approved by the board of directors of Protalix Ltd. and, in respect of directors of Protalix Ltd.,
by us as the sole shareholder of Protalix Ltd.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Insofar as indemnification for liabilities arising under the Securities Act of 1933, as
amended, or the Securities Act, may be permitted to our directors and officers pursuant to the
foregoing provisions, or otherwise, we have been advised that, in the opinion of the SEC, such
indemnification is against public policy as expressed in the Securities Act, and is, therefore,
unenforceable.
</DIV>
<!-- link1 "Items 3.02. Unregistered Sales of Equity Securities" -->
<DIV align="left"><A NAME="002"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Items 3.02. Unregistered Sales of Equity Securities.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The disclosure set forth in Item&nbsp;2.01 to this Current Report is incorporated into this item by
reference.
</DIV>

<!-- link1 "Item. 5.01. Changes in Control of Registrant" -->
<DIV align="left"><A NAME="003"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item. 5.01. Changes in Control of Registrant.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The disclosure set forth in Item&nbsp;2.01 to this Current Report is incorporated into this item by
reference.
</DIV>

<!-- link1 "Item&nbsp;5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers, Compensatory Arrangements of Certain Officer" -->
<DIV align="left"><A NAME="004"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.</B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The
disclosure set forth in Item&nbsp;2.01 to this Current Report is
incorporated into this item by reference.
</div>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Prior to the closing of the merger, our board of directors was composed of Glenn L. Halpryn, Curtis
Lockshin, Alan J. Weisberg and Noah M. Silver. At the closing of the merger, in accordance with
our by-laws for filling newly-created board vacancies, these directors appointed Mr.&nbsp;Eli Hurvitz,
Dr.&nbsp;Yoseph Shaaltiel, Mr.&nbsp;Zeev Bronfeld, Mr.&nbsp;Eyal Sheratzky, Mr.&nbsp;Amos Bar-Shalev, Mr.&nbsp;Sharon
Toussia-Cohen, Mr.&nbsp;Pinhas Barel Buchris, Dr.&nbsp;Phillip Frost, Dr.&nbsp;Jane Hsiao and Dr.&nbsp;David Aviezer,
all of whom are directors of Protalix Ltd., to our board of directors, and the former directors
resigned. All directors hold office until the next annual meeting of shareholders and the election
and qualification of their successors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Prior to the closing of the merger, Glenn L. Halpryn was our President, Secretary, and Chief
Executive Officer, and Alan J. Weisberg was our Acting Chief Financial and Accounting Officer. Mr.
Halpryn and Mr.&nbsp;Weisberg resigned from all of the offices that they held effective as of the
closing of the merger.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">At the closing of the merger, our board of directors appointed the following persons to serve in
the offices set forth immediately after their names: Dr.&nbsp;David Aviezer, President and Chief
Executive Officer and Mr.&nbsp;Yossi Maimon, CPA, Vice President, Chief Financial Officer, Treasurer and
Secretary. Officers serve at the discretion of our board of directors.
</DIV>

<!-- link1 "Item&nbsp;5.06. Change in Shell Company Status" -->
<DIV align="left"><A NAME="005"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;5.06. Change in Shell Company Status.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The disclosure set forth in Item&nbsp;2.01 to this Current Report is incorporated into this item by
reference. As a result of the completion of the merger, we believe we are no longer a Shell
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->83<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Company as that term is defined in Rule&nbsp;405 of the Securities Act and Rule&nbsp;126-2 of the Exchange
Act.
</DIV>

<!-- link1 "Item&nbsp;9.01. Financial Statements and Exhibits" -->
<DIV align="left"><A NAME="006"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;9.01. Financial Statements and Exhibits.</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Financial statements of business acquired.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Pro forma financial information.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->84<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">TABLE OF CONTENTS
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Page</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">2</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>FINANCIAL STATEMENTS:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Balance Sheets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">3-4</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Statements of Operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">5-6</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Statements of Changes in Shareholders&#146; Equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">7</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Statements of Cash Flows</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">8-10</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Notes to Financial Statements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">11-40</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">The amounts are stated in U.S. dollars ($)
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">To the Board of Directors and shareholders of

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>PROTALIX LTD.</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(A development stage company)

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have audited the accompanying balance sheets of Protalix Ltd. (a development stage company)
(hereafter &#151; the &#147;Company&#148;) as of December&nbsp;31, 2004 and 2005, and the related statements of
operations, changes in shareholder&#146;s equity and cash flows for each of the three years in the
period ended December&nbsp;31, 2005 and for the period from December&nbsp;27, 1993 (date of Company&#146;s
incorporation) through December&nbsp;31, 2005. These financial statements are the responsibility of the
Company&#146;s Board of Directors and management. Our responsibility is to express an opinion on these
financial statements based on our audits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by the Company&#146;s Board of Directors and management, as well as
evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In our opinion, the financial statements referred to above, present fairly, in all material
respects, the financial position of the Company as of December&nbsp;31, 2004 and 2005, and the results
of its operations, changes in shareholder&#146;s equity and cash flows for each of the three years in
the period ended December&nbsp;31, 2005 and for the period from December&nbsp;27, 1993 (date of
incorporation) through December&nbsp;31, 2005, in conformity with accounting principles generally
accepted in the United States.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="58%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">/s/Kesselman &#038; Kesselman</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Tel-Aviv, Israel
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Kesselman &#038; Kesselman</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">December&nbsp;27, 2006
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Certified Public Accountant (Isr.)</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">A member of PricewaterhouseCoopers</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">International Limited</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->F-2<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX
LTD.</B></DIV>
<DIV align="center" style="font-size: 10pt; margin-top: 6pt">
(A development stage company)
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">BALANCE SHEETS<BR>
(U.S. dollars in thousands)

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD align="center"><DIV style="margin-left:15px; text-indent:-15px"><B>ASSETS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>CURRENT ASSETS:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,477</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,741</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">15,621</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">666</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">254</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">833</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,143</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,995</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,454</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>FUNDS IN RESPECT OF EMPLOYEE
RIGHTS UPON RETIREMENT</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">132</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">195</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">268</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>PROPERTY AND EQUIPMENT, NET</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,680</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,035</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,285</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,955</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,225</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">19,007</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->F-3<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD align="center"><DIV style="margin-left:15px; text-indent:-15px"><B>LIABILITIES AND SHAREHOLDERS&#146; EQUITY</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>CURRENT LIABILITIES:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accounts payable and accruals:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Trade</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">591</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">426</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">757</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">655</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">419</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">544</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,246</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">845</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,301</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>LONG-TERM LIABILITIES:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Loan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,028</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Liability for employee rights upon retirement</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">206</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">285</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">388</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Total long-term liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,234</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">285</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">388</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>COMMITMENTS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Total liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,480</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,130</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,689</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>SHAREHOLDERS&#146; EQUITY:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Convertible preferred shares of NIS 0.01 par value:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Authorized &#151; as of December&nbsp;31, 2004 and 2005 -
390,486 and 773,532 shares, respectively and
no shares as of September&nbsp;30, 2006 (unaudited);</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Issued and outstanding &#151; as of December&nbsp;31, 2004
and 2005 - 291,009 and 398,227, respectively,
and no shares as of September&nbsp;30, 2006 (unaudited)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Ordinary Shares of NIS 0.01 par value:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Authorized &#151; as of December&nbsp;31, 2004 and 2005
and September&nbsp;30, 2006 (unaudited), 1,899,514,
1,516,468 and 2,290,000 shares respectively;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Issued and outstanding &#151; as of December&nbsp;31, 2004
and 2005 and September&nbsp;30, 2006 (unaudited);
307,813, 307,813 and 870,661 shares,
respectively</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Additional paid-in capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,849</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,188</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,985</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Warrants</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,027</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,379</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deficit accumulated during the development stage</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,376</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,122</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(17,048</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Total shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,475</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,095</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,318</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Total liabilities and shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,955</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,225</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">19,007</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:60px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>The accompanying notes are an integral part of the financial statements.</B>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->F-4<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="right" style="font-size: 10pt; margin-top: 12pt">(Continued &#151; 1)
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>PROTALIX LTD.</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">(A development stage company)<BR>
STATEMENTS OF OPERATIONS<BR>
(U.S. dollars in thousands, except shares and per share amounts)

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Period from</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Period from</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 27, 1993*</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Nine months ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 27, 1993*</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year ended December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>through</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>through</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>December 31, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>September 30, 2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>REVENUES</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">430</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">830</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">830</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>COST OF REVENUES</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">120</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">206</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">206</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>GROSS PROFIT</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">199</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">310</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">624</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">624</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>RESEARCH AND DEVELOPMENT
EXPENSES -</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">668</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,493</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,708</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,664</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,215</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,759</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,423</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">less &#151; grants</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(429</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(573</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(935</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,365</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(787</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,510</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,875</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">239</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,920</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,773</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,299</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,428</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,249</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,548</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>GENERAL AND ADMINISTRATIVE
EXPENSES</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">603</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">807</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,131</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,471</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,541</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,787</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,258</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>OPERATING LOSS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">643</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,417</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,789</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,146</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,854</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,036</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,182</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>FINANCIAL EXPENSES
(INCOME) &#151; NET</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(43</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(24</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(38</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(73</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(97</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>NET LOSS BEFORE CHANGE IN
ACCOUNTING PRINCIPLE</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">646</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,421</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,746</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,816</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,963</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,085</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING
PRINCIPLE</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(37</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(37</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>NET LOSS FOR THE PERIOD</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">646</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,421</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,746</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11,122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,816</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,926</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">17,048</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->F-5<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt">(Continued &#151; 1)
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>PROTALIX LTD.</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">(A
development stage company)</DIV>
<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">
STATEMENTS OF OPERATIONS<BR>
(U.S. dollars in thousands, except share and per share amounts)

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Nine months ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Year ended December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>(Unaudited)</B></TD>

    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>NET LOSS PER ORDINARY SHARE &#151; BASIC:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Prior to cumulative effect of change in
accounting principle</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7.86</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">18.67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">17.27</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cumulative effect of change in accounting principle</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.11</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7.86</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">18.67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">17.16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>NET LOSS PER ORDINARY SHARE &#151; DILUTED:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Prior to cumulative effect of change in
accounting principle</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7.86</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">18.67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">17.27</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cumulative effect of change in accounting principle</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(0.11</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7.86</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">18.67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">17.16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES USED IN
COMPUTING LOSS PER ORDINARY SHARE:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">307,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">307,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">307,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">307,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">345,364</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">307,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">307,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">307,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">307,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">345,364</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%;  border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt">*
Incorporation date, see Note 1a.</DIV>
<DIV align="center" style="font-size: 10pt; margin-top: 6pt">
<B>The accompanying notes are an integral part of the financial statements.</B>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->F-6<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>PROTALIX LTD.</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 0pt">(A development stage company)<BR>
STATEMENT OF CHANGES IN SHAREHOLDERS&#146; EQUITY<BR>
(U.S. dollars in thousands)

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="55%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
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    <TD width="1%">&nbsp;</TD>
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    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Deficit</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>accumulated</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Convertible</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Convertible</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Additional</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>during</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Ordinary</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>preferred</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Ordinary</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>preferred</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>paid in</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>development</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Warrants</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>capital</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>stage</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Total</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Number of shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Beginning balance &#151; </B>December&nbsp;27, 1993*</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Changes during the period from December&nbsp;27, 1993 through December&nbsp;31, 2002:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Ordinary and convertible preferred A shares issued for cash (net of issuance costs of $124)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">307,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">190,486</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">**</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,305</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,306</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Share based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">109</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">109</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net Loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,309</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,309</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance at December&nbsp;31, 2002</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">307,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">190,486</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,414</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,309</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">106</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Changes during 2003:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Additional consideration for Convertible A preferred shares (net of issuance costs of $38)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">612</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">612</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Share based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">222</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">222</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net Loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(646</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(646</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance at December&nbsp;31, 2003</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">307,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">190,486</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,248</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,955</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">294</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Changes during 2004:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Convertible preferred B shares issued for cash (net of issuance costs of $216)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,523</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,283</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,284</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Share based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">318</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">318</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net Loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,421</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,421</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance at December&nbsp;31, 2004</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">307,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">291,009</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,849</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,376</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,475</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Changes during 2005:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Convertible preferred B and C shares and warrants issued for cash (net of issuance costs
of $192)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">107,218</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">**</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,027</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,452</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,479</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Share based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,887</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,887</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net Loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,746</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,746</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance at December&nbsp;31, 2005</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">307,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">398,227</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,027</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,188</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,122</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,095</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Changes during the nine month period ended September&nbsp;30, 2006 </B>(unaudited):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Ordinary shares and warrants issued for cash (net of issuance costs of $139)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">163,774</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">**</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">352</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,509</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,861</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Exercise of options granted to non&#151;employees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">847</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right" nowrap>**</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Share based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,295</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,295</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Conversion of convertible preferred shares into ordinary shares, see Note 6b</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">399,074</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(399,074</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net Loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,963</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,963</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Change in accounting principle</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(37</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance at September&nbsp;30, 2006 </B>(unaudited)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">870,661</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,379</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">32,985</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(17,048</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">17,318</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Incorporation date, see Note 1a.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">**</TD>
    <TD>&nbsp;</TD>
    <TD>Represents an amount less than $1.</TD>
</TR>

</TABLE>



<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>The accompanying notes are an integral part of the financial statements.</B>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->F-7<!-- /Folio -->
</DIV>


<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt">(Continued &#151; 1)
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)<BR>
STATEMENTS OF CASH FLOWS<BR>
(U.S. dollars in thousands)
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="37%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B></B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B> </B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Period from</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Period from</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B> December 27, 1993*</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Nine months ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B> December 27, 1993*</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year ended December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>through</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>through</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>December
31, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
   <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
<TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B> September 30, 2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>CASH FLOWS FROM OPERATING
ACTIVITIES:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net Loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(646</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,421</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(5,746</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(11,122</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(3,816</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(5,926</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(17,048</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Adjustments required to reconcile net loss to
net cash used in operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:90px; text-indent:-15px">Income and expenses not involving cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:90px; text-indent:-15px">Cumulative effect of change in accounting principle</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(37</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(37</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:90px; text-indent:-15px">Share based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">222</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">297</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,887</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,515</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,337</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,295</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,810</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:90px; text-indent:-15px">Depreciation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">123</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">311</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">678</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">226</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">314</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">992</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:90px; text-indent:-15px">Interest in respect of loan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(28</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:90px; text-indent:-15px">Changes in accrued liability for employee
rights upon retirement</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">285</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">388</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:90px; text-indent:-15px">Loss (gain)&nbsp;on amounts funded in respect of
employee rights upon retirement</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(40</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(35</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:90px; text-indent:-15px">Changes in operating assets and liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:120px; text-indent:-15px">Decrease (increase)&nbsp;in accounts receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(534</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">412</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(254</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">174</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(579</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(833</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:120px; text-indent:-15px">Increase (decrease)&nbsp;in accounts payable
and accrual</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(113</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">691</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(117</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">804</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(243</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">523</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,327</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:120px; text-indent:-15px">Net cash used in operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(385</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,749</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(3,206</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(7,134</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,251</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(3,302</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(10,436</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>CASH FLOWS FROM INVESTING
ACTIVITIES:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Purchase of property and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(184</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,291</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(844</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,645</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(664</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(639</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,284</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Investment grant received in respect of fixed assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Amount funded in respect of employee rights
upon retirement</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(42</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(48</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(83</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(295</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(46</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(85</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(380</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Amount paid in respect of employee rights
upon retirement</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">140</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">147</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Net cash used in investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(226</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,336</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(903</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,762</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(708</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(717</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(3,479</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->F-8 <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="right" style="font-size: 10pt; margin-top: 12pt">(Continued &#151; 2)
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">STATEMENTS OF CASH FLOWS<BR>
(U.S. dollars in thousands)

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Period from</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Period from</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 27,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 27,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>1993</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>1993</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>through</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Nine months ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>through</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year ended December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>CASH FLOWS FROM FINANCING
ACTIVITIES:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loan and convertible bridge loan received</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,145</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,145</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Repayment of loan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Issuance of shares and warrants</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">612</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,546</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,373</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,492</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,039</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">14,869</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,361</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Exercise of options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net increase (decrease)&nbsp;in short-term bank credit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(45</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net cash provided by financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,657</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,301</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,373</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,637</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,039</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,899</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,536</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>NET INCREASE IN CASH AND CASH
EQUIVALENTS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,046</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">216</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,264</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,741</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,080</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,880</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,621</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>BALANCE OF CASH AND CASH
EQUIVALENTS AT BEGINNING OF PERIOD</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">215</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,261</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,477</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,477</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,741</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>BALANCE OF CASH AND CASH
EQUIVALENTS AT END OF PERIOD</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,261</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,477</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,741</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,741</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,557</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">15,621</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">15,621</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->F-9 <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt">(Concluded) &#150; 3
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)<BR>
STATEMENTS OF CASH FLOWS<BR>
(U.S. dollars in thousands)
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Period from</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Period from</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 27,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 27,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>1993*</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>1993*</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>through</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Nine months ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>through</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year ended December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"  style="border-bottom: 1px solid #000000"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"  style="border-bottom: 1px solid #000000"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>SUPPLEMENTARY DISCLOSURE OF
CASH FLOW INFORMATION:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><B>CASH PAID DURING THE YEAR FOR -</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">
interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">**</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">80</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Supplementary information on investing
and financing activities not involving cash
flows:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Conversion of convertible bridge loan into shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,145</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,145</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Purchase of property and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">284</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">106</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">106</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Issuance cost setoff against accounts
and accruals &#151; other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">121</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Consultants&#146; and director credit balance
converted into shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Issuance cost paid by a grant of options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Conversion of convertible preferred
shares into ordinary shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">13,651</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">13,651</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Incorporation date, see Note 1a.<br></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">**</TD>
    <TD>&nbsp;</TD>
    <TD>Represents an amount less than $1.</TD>
</TR>

</TABLE>



<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>The accompanying notes are an integral part of the financial statements.</B>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->F-10 <!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)<BR>
NOTES TO FINANCIAL STATEMENTS<BR>
U.S. dollars in thousands
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 1 &#151; SIGNIFICANT ACCOUNTING POLICIES:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>a.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Operation.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Protalix Ltd. (the &#147;Company&#148;) was incorporated on December&nbsp;27, 1993 under the laws of
the State of Israel, and, since its inception, has been engaged in the biotechnology
field and more recently in the development of protein based medicines in particular,
using genetically engineered plant-based cultures. The Company&#146;s business is located
in Carmiel, Israel.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company is engaged in research and development in the biotechnology field
developing plant-derived human proteins, with its main product, prGCD, being a
plant-derived protein used as a treatment for Gaucher Disease. The Company has
completed Phase I of a clinical study on prGCD, is exempt from Phase II, and expects
to initiate a pivotal Phase III clinical trial in 2007.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>During the years 2003 to 2005, the Company was a party to a research and development
services contract with a pharmaceutical company pursuant to which the Company agreed
to provide certain research and development services. The Company earned total
revenues of $830 throughout the duration of the contract in consideration for the
performance of such services. The contract expired in the first quarter of 2005, and
since that time, the Company has not provided any further research and development
services for third parties. The Company&#146;s plan of operations is to commercialize the
results of its research and development efforts, not to provide research and
development services.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company has been in the development stage since its inception. The Company&#146;s
successful completion of its development program and its transition to profitable
operations is dependent upon obtaining necessary regulatory approvals from the United
States Food and Drug Administration (&#147;FDA&#148;) prior to selling its products within the
U.S., and foreign regulatory approvals must be obtained to sell its products
internationally. There can be no assurance that the Company&#146;s products will receive
regulatory approvals, and a substantial amount of time may pass before the Company
achieves a level of sales adequate to support the Company&#146;s operations, if at all.
The Company will also incur substantial expenditures in connection with the
regulatory approval process and it will need to raise additional capital during the
developmental period. Obtaining marketing approval will be directly dependent on the
Company&#146;s ability to implement the necessary regulatory steps required to obtain
marketing approval in the U. S. and other countries and the success of the Company&#146;s
clinical trials. The Company cannot predict the outcome of these activities.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company currently does not have sufficient resources to complete the
commercialization of any of its proposed products. Based on its current cash
resources and commitments, the Company believes it should be able to maintain its
current planned development activities and the corresponding level of expenditures
for at least the next 12&nbsp;months, although no assurance can be given that it will not
need additional cash prior to such time. Unexpected increases in general and
administrative expenses and research and development expenses may cause the Company
to seek additional financing during the next 12&nbsp;months.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->F-11 <!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)<BR>
NOTES TO FINANCIAL STATEMENTS<BR>
U.S. dollars in thousands
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 1 &#151; SIGNIFICANT ACCOUNTING POLICIES </B>(continued)<B>:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>On August&nbsp;21, 2006, the Company entered into a merger agreement (the &#147;Merger
Agreement&#148;) with Orthodontix, Inc., a publicly-held shell company (&#147;Orthodontix&#148;).
Dr.&nbsp;Frost, a controlling shareholder of Orthodontix, and other additional investors
(the &#147;Frost Group&#148;) were the principal investors in a private offering of the
Company&#146;s ordinary shares which closed on September&nbsp;14, 2006. See Note 6h.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Under the terms of the Merger Agreement, the shareholders of Protalix will own in
excess of 99% of the outstanding capital stock of Orthodontix. The merger is subject
to customary covenants and several additional conditions to closing. See Note 10e for
information regarding the tax ruling issued by the Israeli tax authorities in
connection with the proposed merger.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The merger will be accounted for as a reverse acquisition and a recapitalization.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>b.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Basis of presentation</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The financial statements have been prepared in accordance with generally accepted
accounting principles in the United States (&#147;U.S. GAAP&#148;) and Statement of Financial
Accounting Standards (&#147;SFAS&#148;) No.&nbsp;7 &#147;Accounting and Reporting by Development Stage
Enterprises&#148;. The preparation of financial statements in conformity with US GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ from
those estimates.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The financial statements and these notes to the financial statements are expressed in
U.S. dollars (&#147;$&#148; or &#147;dollar&#148;), in thousands, except for the per share amounts.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>c.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Functional currency</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The currency of the primary economic environment in which the operations of the
Company are conducted is the dollar. The Company is currently in the development stage
with no significant source of revenues, therefore the Company considered the currency
of the primary economic environment to be the currency in which the Company expended
cash. Most of the Company&#146;s expenses and capital expenditures are incurred in
dollars, and a significant source of the Company&#146;s financing has been provided in U.S.
dollars.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Since the dollar is the functional currency, monetary items maintained in currencies
other than the dollar are remeasured using the rate of exchange in effect at the
balance sheet dates and non-monetary items are remeasured at historical exchange
rates. Revenue and expense items are remeasured at the average rate of exchange in
effect during the period in which they occur. Foreign currency translation gains or
losses are recognized in the statement of operations.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->F-12 <!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)<BR>
NOTES TO FINANCIAL STATEMENTS<BR>
U.S. dollars in thousands
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 1 &#151; SIGNIFICANT ACCOUNTING POLICIES </B>(continued)<B>:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>d.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Unaudited Interim Results</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The accompanying balance sheet as of September&nbsp;30, 2006, the statements of
operations and cash flows for the nine months ended September&nbsp;30, 2006 and 2005, and
the statement of changes in shareholders&#146; equity for the nine months ended September
30, 2006 are unaudited.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The unaudited interim financial statements have been prepared on the same basis as
the annual financial statements except for the first time application of SFAS No.
123(R) &#147;Share-Based Payments&#148; (&#147;SFAS 123(R)&#148;) as of January&nbsp;1, 2006 and, in the
opinion of management, reflect all adjustments, which include only normal recurring
adjustments, necessary to present fairly the Company&#146;s financial position as of
September&nbsp;30, 2006 and the results of operations and cash flows for the nine months
ended September&nbsp;30, 2006 and 2005.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The financial data and other information disclosed in these notes to the financial
statements related to such nine month periods are unaudited. The results for the
nine months ended September&nbsp;30, 2006 are not necessarily indicative of the results
to be expected for the year ending December&nbsp;31, 2006 or for any other interim period
or for any future year.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>e.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Cash equivalents</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company considers all short term, highly liquid investments, which include
short-term deposits with original maturities of three months or less from the date
of purchase, that are not restricted as to withdrawal or use and are readily
convertible to known amounts of cash, to be cash equivalents.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>f.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Property and equipment:</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Property and equipment are stated at cost, net of accumulated
depreciation and amortization.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The assets are depreciated by the straight-line method, on
basis of their estimated useful lives at the following annual rates:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">%</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Laboratory equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Furniture</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">7 &#151; 10</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Computer equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Leasehold improvements are amortized by the straight-line method over the term of
the lease, plus optional renewals period that is expected to be used, which are
generally shorter than the estimated useful life of the improvements.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->F-13 <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)<BR>
NOTES TO FINANCIAL STATEMENTS<BR>
U.S. dollars in thousands
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 1 &#151; SIGNIFICANT ACCOUNTING POLICIES </B>(continued)<B>:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>g.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Impairment of Long-Lived Assets</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>SFAS No.&nbsp;144 &#147;Accounting for the Impairment or Disposal of Long-Lived Assets&#148;
(&#147;SFAS 144&#148;), requires that long-lived assets, including definite life intangible
assets to be held and used or disposed of by an entity, be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
the assets may not be recoverable. Under SFAS 144, if the sum of the expected
future cash flows (undiscounted and without interest charges) of the long-lived
assets is less than the carrying amount, the Company must recognize an impairment
loss and write down the assets to their estimated fair values.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>h.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Deferred income taxes</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Deferred taxes are determined utilizing the assets and liabilities method based on
the estimated future tax effects of differences between the financial accounting
and tax bases of assets and liabilities under the applicable tax laws. Deferred tax
balances are computed using the tax rates expected to be in effect when those
differences reverse. A valuation allowance in respect of deferred tax assets is
provided if, based upon the weight of available evidence, it is more likely than
not that some or all of the deferred tax assets will not be realized. The Company
has provided a full valuation allowance with respect to its deferred tax assets.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Paragraph&nbsp;9(f) of SFAS 109 &#147;Accounting for Income Taxes&#148;, prohibits the recognition
of deferred tax liabilities or assets that arise from differences between the
financial reporting and tax bases of assets and liabilities that are measured from
the local currency into dollars using historical exchange rates, and that result
from changes in exchange rates or indexing for tax purposes. Consequently, the
abovementioned differences were not reflected in the computation of deferred tax
assets and liabilities.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>i.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Revenue Recognition</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Revenue generated from research and development services is recognized upon
performance of the services and when persuasive evidence of an arrangement exists,
the price is fixed or determinable, and collection is reasonably assured.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Revenue from the performance milestone payments in connection with research and
development agreements is recognized upon achievement of the milestones as
specified in the agreement, provided payment is proportionate to the effort
expended as measured by the ratio of costs expended to the total estimated
development costs.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>j.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Research and development costs</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Research and development costs are expensed as incurred and consist primarily of
personnel, facilities, equipment and supplies for research and development
activities. Grants received from the Office of the Chief Scientist of the Ministry
of Industry and Trade of Israel and other</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->F-14 <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)<BR>
NOTES TO FINANCIAL STATEMENTS<BR>
U.S. dollars in thousands
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 1 &#151; SIGNIFICANT ACCOUNTING POLICIES </B>(continued)<B>:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>research foundations are recognized when the grant becomes receivable, provided
there is reasonable assurance that the Company will comply with the conditions
attached to the grant and there is reasonable assurance the grant will be received.
The grant is deducted from the related research and development expenses as the
costs are incurred. See also Note 5(a).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In connection with purchase of assets, amounts assigned to intangible assets to be
used in a particular research and development project that has not reached
technological feasibility and has no alternative future use, are charged to
in-process research and development costs at the purchase date.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>k.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Comprehensive loss</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company has no other comprehensive loss components other than loss for the
reported periods.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>l.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Concentration of credit risks</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Financial instruments that subject the Company to credit risk consist primarily of
cash and cash equivalents in dollars, which are deposited in major financial
institutions in Israel.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>m.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Share-based compensation</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Prior to January&nbsp;1, 2006, the Company accounted for employee share-based
compensation under the intrinsic value model in accordance with Accounting
Principles Board Opinion No.&nbsp;25 &#147;Accounting for Stock Issued to Employees&#148; (&#147;APB
25&#148;) and related interpretations. Under APB 25, compensation expense is based on
the difference, if any, on the date of the grant of a stock option, between the
fair value of the shares underlying the option and the exercise price of the
option. In addition, in accordance with SFAS No.&nbsp;123 &#147;Accounting for Stock-Based
Compensation&#148; (&#147;SFAS 123&#148;), which was issued by the Financial Accounting Standards
Board (&#147;FASB&#148;), the Company disclosed pro forma data assuming it had accounted for
employee share option grants using the fair value-based method defined in SFAS 123.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In December&nbsp;2004, the FASB issued the SFAS 123R which addresses the accounting for
share-based payment transactions in which a company obtains employee services in
exchange for (a)&nbsp;equity instruments of a company or (b)&nbsp;liabilities that are based
on the fair value of a company&#146;s equity instruments or that may be settled by the
issuance of such equity instruments. In March&nbsp;2005, the Securities and Exchange
Commission (&#147;SEC&#148;) issued Staff Accounting Bulletin No.&nbsp;107 (&#147;SAB 107&#148;) regarding
the SEC&#146;s interpretation of SFAS 123R.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>SFAS 123R eliminates the ability to account for employee share-based payment
transactions using APB 25, and requires instead that such transactions be accounted
for using the grant-date fair value based method. SFAS 123R is effective as of the
annual reporting period that begins after June&nbsp;15, 2005. SFAS 123R applies to all
awards granted or modified after the effective date</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->F-15 <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)<BR>
NOTES TO FINANCIAL STATEMENTS<BR>
U.S. dollars in thousands
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 1 &#151; SIGNIFICANT ACCOUNTING POLICIES </B>(continued)<B>:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&nbsp;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>of the standard. In addition, compensation cost for the unvested portion of
previously granted awards that remain outstanding on the effective date shall be
recognized on or after the effective date, as the related services are rendered,
based on the awards&#146; grant-date fair value as previously calculated for the pro
forma disclosure under SFAS 123.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company adopted SFAS 123R as of January&nbsp;1, 2006, using the modified prospective
application transition method, as permitted by SFAS 123R. Under such transition
method, the Company&#146;s financial statements for periods prior to the effective date
of SFAS 123R have not been restated.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>SFAS 123R requires forfeitures to be estimated at the time of grant and revised, if
necessary, in subsequent periods if actual forfeitures differ from initial
estimates. Stock-based compensation expense was recorded net of estimated
forfeitures for the nine months ended September&nbsp;30, 2006, such that expense was
recorded only for those stock-based awards that are expected to vest. Under APB
25, to the extent awards were forfeited prior to vesting, the corresponding
previously recognized expense was reversed in the period of forfeiture. Upon
adoption of SFAS 123R, for the nine months ended September&nbsp;30, 2006, the Company
recorded a cumulative adjustment to account for the expected forfeitures of
stock-based awards granted prior to January&nbsp;1, 2006, for which the Company
previously recorded an expense. The adoption of SFAS 123R resulted in a cumulative
benefit from accounting change in the amount of $37 in 2006.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The fair value of stock options granted with service conditions was determined
using the Black-Scholes valuation model, which is consistent with the valuation
techniques previously utilized by the Company for options in footnote disclosures
required under SFAS 123, as amended by SFAS No.&nbsp;148 &#147;Accounting for Stock-Based
Compensation &#151; Transition and Disclosure.&#148; Such value is recognized as an expense
over the service period, net of estimated forfeitures, using the graded method
under SFAS 123R.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Black-Scholes model takes into account a number of valuation parameters. See
also Note 6.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The following table illustrates the pro forma effect on net loss and net loss per
ordinary share assuming the Company had applied the fair value recognition
provisions of SFAS 123 to its share-based employee compensation:</TD>
</TR>

</TABLE>
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->F-16 <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)<BR>
NOTES TO FINANCIAL STATEMENTS<BR>
U.S. dollars in thousands
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 1 &#151; SIGNIFICANT ACCOUNTING POLICIES </B>(continued)<B>:</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Period from</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 27,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>1993</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>through</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Nine months ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year ended December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18" style="border-bottom: 1px solid #000000"><B>(Dollars in thousands, except per share data)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss as reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">($</TD>
    <TD align="right">646</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">($</TD>
    <TD align="right">2,421</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">($</TD>
    <TD align="right">5,746</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">($</TD>
    <TD align="right">11,122</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">($</TD>
    <TD align="right">3,816</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Add: share based employee
Compensation expense included in the
reported net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">149</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">509</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">732</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">350</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deduct: share-based employee compensation
expense determined under fair value
method</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">(</TD>
    <TD align="right">67</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">(</TD>
    <TD align="right">170</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">(</TD>
    <TD align="right">539</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">(</TD>
    <TD align="right">788</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">(</TD>
    <TD align="right">370</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Pro forma net loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">($</TD>
    <TD align="right">652</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">($</TD>
    <TD align="right">2,442</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">($</TD>
    <TD align="right">5,776</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">($</TD>
    <TD align="right">11,178</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">($</TD>
    <TD align="right">3,836</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss per ordinary share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic &#151; as reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">($</TD>
    <TD align="right">2.10</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">($</TD>
    <TD align="right">7.86</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">($</TD>
    <TD align="right">18.67</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">($</TD>
    <TD align="right">12.40</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 0px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic &#151; pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">($</TD>
    <TD align="right">2.12</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">($</TD>
    <TD align="right">7.93</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">($</TD>
    <TD align="right">18.76</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">($</TD>
    <TD align="right">12.46</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Diluted &#151; as reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">($</TD>
    <TD align="right">2.10</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">($</TD>
    <TD align="right">7.86</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">($</TD>
    <TD align="right">18.67</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">($</TD>
    <TD align="right">12.40</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Diluted &#151; pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">($</TD>
    <TD align="right">2.12</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">($</TD>
    <TD align="right">7.93</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">($</TD>
    <TD align="right">18.76</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">($</TD>
    <TD align="right">12.46</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The fair value of options granted to employees during fiscal years 2005, 2004 and
2003 was $939, $0, and $389, respectively. The Company estimated the fair value of
each option on the date of grant using the Black-Scholes option-pricing model, with
the following weighted average assumptions:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dividend yield</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected volatility</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">54</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">59</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Risk-free interest rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">3.83</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">3.28</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected life &#150; in years</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>When stock options are granted as consideration for services provided by consultants
and other non-employees, the transaction is accounted for based on the fair value of
the consideration received or the fair value of the stock options issued, whichever
is more reliably measurable, pursuant to the guidance in EITF 96-18 &#147;Accounting for
Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling Goods or Services&#148;. The fair value of the options granted is
recalculated over the related service period and is recognized over the respective
service period using the straight-line method.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->F-17 <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)<BR>
NOTES TO FINANCIAL STATEMENTS<BR>
U.S. dollars in thousands
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 1 &#151; SIGNIFICANT ACCOUNTING POLICIES </B>(continued)<B>:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>n.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Net Loss per share (&#147;LPS&#148;)</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Basic and diluted LPS is computed by dividing net loss by the weighted average number
of ordinary shares outstanding for each period.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Convertible preferred shares were not taken into account in the computation of the
basic LPS since the holders of the convertible preferred shares do not have a
contractual obligation to share in the losses of the Company.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Convertible preferred shares, options, and warrants were not included in the
computation of diluted LPS because the effect would be anti-dilutive.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The total weighted average number of ordinary shares related to the convertible
preferred shares has been excluded from the calculations of diluted loss per share
were 190,486, 209,214, and 338,045 for the years 2003, 2004, and 2005, respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>o.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Accounting Pronouncements</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Recently Issued Accounting Pronouncements:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In June&nbsp;2006, the FASB issued FASB Interpretation (FIN)&nbsp;No.&nbsp;48
&#147;Accounting for Uncertainty in Income Taxes&#148; (&#147;FIN 48&#148;), an interpretation of
FASB Statement 109. FIN 48 prescribes a comprehensive model for recognizing,
measuring, presenting and disclosing in the financial statements tax positions
taken or expected to be taken on a tax return, including a decision whether to
file or not to file in a particular jurisdiction. FIN 48 is effective for fiscal
years beginning after December&nbsp;15, 2006 (January&nbsp;1, 2007 for the Company). If
there are changes in net assets as a result of application of FIN 48, these will
be accounted for as an adjustment to retained earnings. The Company is currently
assessing the impact of FIN 48 on its financial position and results of
operations.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In September&nbsp;2006, the FASB issued SFAS No.&nbsp;157, &#147;Fair Value
Measurements&#148; (&#147;SFAS 157&#148;). SFAS 157 defines fair value, establishes a framework
for measuring fair value in accordance with generally accepted accounting
principles, and expands disclosures about fair value measurements. The provisions
of SFAS 157 are effective for the fiscal year beginning September&nbsp;1, 2008. The
Company is currently evaluating the impact of the provisions of SFAS 157 on its
financial position and results of operations.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In September&nbsp;2006, the SEC released Staff Accounting Bulletin (SAB)
No.&nbsp;108, &#147;Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements&#148; (&#147;SAB 108&#148;), which provides
interpretive guidance on the consideration of the effects of prior year
misstatements in quantifying current year misstatements for the purpose of a
materiality assessment. The Company is required to initially apply SAB 108 during
fiscal year 2007. The Company is currently evaluating the impact of the
provisions of SAB 108 on its financial position and results of operations.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->F-18 <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)<BR>
NOTES TO FINANCIAL STATEMENTS<BR>
U.S. dollars in thousands
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 2
&#151; PROPERTY AND EQUIPMENT:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>a.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Composition of property and equipment grouped by major classifications, and
changes, is as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>In thousands</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Laboratory equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">766</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,039</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Furniture and computer equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">129</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Leasehold improvements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">988</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,342</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,844</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,510</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less &#150; accumulated depreciation
and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(164</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(475</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,680</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,035</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>b.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Depreciation and amortization in respect of property and equipment
totaled $62, $123, and $311, for the years ended December&nbsp;2003, 2004, and 2005,
respectively.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 3
&#151; LOANS:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>a.</B></TD>
    <TD width="1%"><B>&nbsp;</B></TD>
    <TD>In connection with a research and development services arrangement entered
into with a third party, as discussed in Note 1a, the Company issued a debenture to
the same third party with a face amount equal to $1,000. The debenture bore
interest at the annual rate of EURIBOR plus 0.75%, and matured on March&nbsp;31, 2004.
In the event of default upon the maturity of the loan, the debenture was convertible
into 127,690 convertible preferred A shares of the Company. However, the debenture
was not convertible at the third party&#146;s option at any time prior to an event of
default. The maturity date of the debenture was March&nbsp;31, 2004, which was
subsequently extended to December&nbsp;31, 2004, and later to January, 2006. In December
2005, the Company paid the loan in full.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>b.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Bridge loan</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In 2004, the Company signed a convertible bridge loan agreement
with a shareholder of the Company, with a principal amount of $800. The loan
bore interest at an annual rate of LIBOR plus 1%. The loan was convertible
into convertible preferred A shares until December&nbsp;31, 2004 at the same terms
and conditions of the first investment transaction by new investors after the
date of the loan. In the event that the Company did not close any new
investment transaction until December&nbsp;31, 2004, the convertible bridge loan
was convertible into convertible preferred A shares upon terms and conditions
that were to be settled on that date. In October&nbsp;2004, the Company entered
into a share purchase agreement with new investors and the convertible bridge
loan was converted into convertible preferred B shares. See Note 6d.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->F-19 <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)<BR>
NOTES TO FINANCIAL STATEMENTS<BR>
U.S. dollars in thousands
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 4
&#151; LIABILITY FOR EMPLOYEE RIGHTS UPON RETIREMENT</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Israeli labor laws and agreements require severance payments upon dismissal of an
employee or upon termination of employment in other circumstances. The
severance pay liability of the Company, which reflects the undiscounted amount
of the liability as if it were payable at each balance sheet date, is
calculated based upon length of service and the latest monthly salary (one
month&#146;s salary for each year worked). The Company&#146;s liability for severance
pay required by Israeli law is covered by the purchase of insurance policies
in the employees&#146; names, by deposits with financial institutions, and by
accrual. The accrued severance pay liability is presented as a long-term
liability. The amounts funded are presented separately as employee rights upon
retirement funded.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company contributed in fiscal years 2003, 2004, and 2005 to
the insurance companies, in respect to its severance obligations to employees,
$42, $48, and $83, respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company expects to contribute $128 to insurance companies for
the year ended December&nbsp;31, 2006 (includes $85 contributed in the nine months
ended September&nbsp;30, 2006), in respect to its severance obligations to
employees.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Severance expenses totaled $45, $72, and $104 for the fiscal years ended December
31, 2003, 2004, and 2005, respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Loss (gain)&nbsp;on employee severance pay funds in respect of employee
severance obligations totaled $0, $2, and $(4) for the fiscal years ended
December&nbsp;31, 2003, 2004, and 2005, respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>During the 10-year period following September&nbsp;30, 2006, the Company expects to pay
future benefits only to one of its employees upon his normal retirement age,
which is anticipated to amount to $41 during 2010. This amount was determined
based on the employee&#146;s current salary rates and the number of service years
that will be accumulated upon his retirement date. This expectation does not
include additional amounts that might be paid to employees that will cease
working with the Company before their normal retirement age.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 5
&#151; COMMITMENTS:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>a.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Royalty commitments:</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company is obligated to pay royalties to the Office of the
Chief Scientist on proceeds from the sale of products developed from research
and development activities for which the Office of the Chief Scientist
partially funded by way of grants. At the time the grants were received,
successful development of the related projects was not assured.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->F-20 <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)<BR>
NOTES TO FINANCIAL STATEMENTS<BR>
U.S. dollars in thousands
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 5
&#151; COMMITMENTS </B>(continued)<B>:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the case of failure of a project that was partly financed as described
above, the Company is not obligated to pay any such royalties or repay funding
from the Office of the Chief Scientist.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Under the terms of the Company&#146;s funding arrangements with the Office of the
Chief Scientist, royalties of 3% to 6% are payable on the sale of products
developed from projects funded by the Office of the Chief Scientist, which
payments shall not exceed, in the aggregate, 100% of the amount of the grant
received by the Company (dollar linked), since January&nbsp;1, 2001, with the
addition of an annual interest rate based on LIBOR. In addition, if the
Company receives approval to manufacture the products developed with government
grants outside of Israel, it will be required to pay an increased total amount
of royalties (possibly up to 300% of the grant amounts plus interest),
depending on the manufacturing volume that is performed outside of Israel, as
well as a possible increased royalty rate.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>At December&nbsp;31, 2005 and September&nbsp;30, 2006, the maximum royalty amount payable
by the Company under these funding arrangements is $3,200 and $4,200,
respectively (without interest). However, as of December&nbsp;31, 2005 and
September&nbsp;30, 2006, no royalty payments are accrued as the Company has not
earned any revenues from the sale of products.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company is obligated under several research and license
agreements to pay royalties at variable rates from its future revenues and
obligated to pay fees under certain milestone agreements.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>b.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company has entered into sub-contracting agreements with several
clinical and pre-clinical service providers, both in Israel and in the U.S., in
connection with its primary product development process. As of September&nbsp;30, 2006,
total liabilities under said agreements amount to approximately $1,600.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>c.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company entered into operating lease agreement for its facilities,
effective until 2010. The Company has the option to extend the agreement for
another five-year period. Under this lease, the monthly rental payment is
approximate $9. The future minimum lease payments required in each of the next
five years under the operating lease for premises are as follows: 2006 &#151; $108,
2007 &#151; $108, 2008 &#151; $108 and 2009 &#151; $27. Lease expenses totaled $19, $103, and
$101 for the fiscal years ended December&nbsp;31, 2003, 2004, and 2005, respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>d.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In July&nbsp;2004, the Company entered into three-year lease agreements in
connection with Company vehicles. The monthly lease fees aggregate approximately
$5. The expected lease payments for the three months ended December&nbsp;31, 2006 and
for the fiscal years 2007, 2008, and 2009 are $24, $102, $101, and $29,
respectively.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>e.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In March&nbsp;2005, the Company entered into an agreement with a consultant.
Pursuant to the agreement, the Company pays the consultant a monthly consulting fee
of $10 which will be increased to $20 upon the initiation of a Phase III study of
the Company&#146;s lead product candidate, prGCD. To date, the Company has completed
Phase I of a clinical study of prGCD. The agreement is for a period ending nine
months after the consummation of the study.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->F-21 <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)<BR>
NOTES TO FINANCIAL STATEMENTS<BR>
U.S. dollars in thousands
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 5
&#151; COMMITMENTS </B>(continued)<B>:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>f.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>On September, 14, 2006, the Company entered into a collaboration and
licensing agreement with Teva Pharmaceutical Industries Ltd. (&#147;Teva&#148;) for the
development and manufacturing of two proteins, using its plant cell system. Mr.
Hurvitz, the Chairman Board of Directors of the Company is the Chairman of Teva&#146;s
Board of Directors, and Dr.&nbsp;Frost, one the Company&#146;s directors, is the Vice
Chairman of Teva&#146;s Board of Directors. Pursuant to the agreement, the Company will
collaborate on the research and development of the two proteins utilizing its plant
cell expression system. The Company will grant to Teva an exclusive license to
commercialize the developed products in return for royalty and milestone payments
payable upon the achievement of certain pre-defined goals. The Company will retain
certain exclusive manufacturing rights with respect to the active pharmaceutical
ingredient of the proteins following the first commercial sale of a licensed
product under the agreement and other rights thereafter.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 6 &#151; SHARE CAPITAL:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>a.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Ordinary Shares</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each ordinary share is entitled to one vote. The holders of ordinary shares are also
entitled to receive dividends whenever funds are legally available and when and if
declared by the Board of Directors. Since inception, no dividends have been
declared. See b below with respect to the conversion of all
convertible preferred shares into ordinary shares.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>b.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Convertible Preferred Shares</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The convertible preferred shares conferred the following rights upon their holders:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The holders of the convertible preferred shares had the right
to convert the convertible preferred shares into ordinary shares on a 1:1 basis</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The conversion price for the preferred C shares was subject to adjustment.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In certain events, if the Company issued shares at a price per share less than
the original price per share of the convertible preferred stock, the conversion
price would have been reduced accordingly. In any event, the conversion ratio
will not be reduced below the par value of the shares, NIS 0.01.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Voting rights in shareholders&#146; meetings.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the event of any liquidation of the Company or in the event
of a deemed liquidation (as defined in the applicable share purchase
agreement), all assets and/or surplus funds of the Company legally available
for distribution to the shareholders by reason of their ownership of shares
would have been distributed among the shareholders in accordance with the terms
and conditions set forth in the Company&#146;s articles of association. In such
event, the convertible preferred shareholders would have been entitled to
receive in preference to the ordinary shareholders, the return of their
investment in addition to a 6% interest rate per annum and certain other
adjustments.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->F-22 <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)<BR>
NOTES TO FINANCIAL STATEMENTS<BR>
U.S. dollars in thousands
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 6 &#151; SHARE CAPITAL </B>(continued)<B>:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The convertible preferred shares were entitled to receive
dividends, on a pro rata, pari passu, as converted basis out of any assets
legally available, as and when declared by the Board of Directors.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As of September&nbsp;11, 2006, all of the preferred
shareholders have converted their convertible preferred shares into
ordinary shares on a 1:1 basis, thereby waiving any and all right and
privileges associated with the convertible preferred shares. In addition,
all outstanding warrants and options of the Company are exercisable into
ordinary shares.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>c.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The number of shares options and warrants as of December&nbsp;31, 2004 and
2005, and September&nbsp;30, 2006 (unaudited)&nbsp;is composed as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="23" style="border-bottom: 1px solid #000000"><B>Number of shares</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Authorized</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Issued</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>December 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(unaudited)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(unaudited)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ordinary shares of NIS 0.01 par value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,290,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,516,468</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,899,514</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">870,661</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">307,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">307,813</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total Ordinary shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,290,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,516,468</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,899,514</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">870,661</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">307,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">307,813</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Preferred A shares of NIS 0.01 par value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">190,486</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">190,486</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">190,486</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">190,486</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Preferred B shares of NIS 0.01 par value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">183,046</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">200,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,523</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,523</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Preferred C shares of NIS 0.01 par value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">400,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">107,218</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total convertible preferred shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">773,532</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">390,486</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">398,227</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">291,009</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Number of warrants and options</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>December 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">(unaudited)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ordinary shares of NIS 0.01 par value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">341,130</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">97,954</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74,219</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total Ordinary shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">341,130</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">97,954</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74,219</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Preferred A shares of NIS 0.01 par value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Preferred B shares of NIS 0.01 par value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,967</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,967</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Preferred C shares of NIS 0.01 par value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">116,399</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total convertible preferred shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">119,366</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,967</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->F-23 <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)<BR>
NOTES TO FINANCIAL STATEMENTS (continued)<BR>
U.S. dollars in thousands
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 6 &#151; SHARE CAPITAL </B>(continued)<B>:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>d.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In October&nbsp;2004, the Company entered into a share purchase agreement with
shareholders of the Company and other third parties for the issuance of 100,523
convertible preferred B shares for total consideration of approximately $3,300 (net
of issuance costs of $216). Pursuant to the agreement, the investors invested $2,700
in exchange for convertible preferred B shares of the Company. In addition, a
convertible bridge loan in the amount of $800 from a shareholder of the Company was
converted into convertible preferred B shares under the same terms and conditions as
the other investors.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>e.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In February&nbsp;2005, the Company entered into a share purchase agreement
with an investor pursuant to which 16,954 convertible preferred B shares were
issued for consideration of $900 (net of issuance costs of $71). In addition to the
convertible preferred B shares, the Company also granted to the investor fully
detachable warrants, which vested immediately and were exercisable over a period of
24&nbsp;months. The warrants entitled the investor to purchase an additional 13,563
convertible preferred B shares at a purchase price per share of $95.85.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company estimated the fair value of the warrants by using a Black-Scholes
option-pricing model to be $82.85. The fair value of the warrants was based on the
following assumptions: dividend yield of 0% for all years; expected volatility of
48%; risk-free interest rates of 3.4%; and expected life of two years. For
accounting purposes, the proceeds from the sale of the convertible preferred B
shares were allocated to the convertible preferred B shares and the warrants on a
pro rata basis, based on the relative fair values of the convertible preferred B
shares and the warrants. The portion of the proceeds allocated to the warrants has
been reflected as warrants.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The convertible preferred B shares and warrants were converted into convertible
preferred C shares and warrants on a 1:1 basis in July&nbsp;2005 together with a
subsequent financing as agreed with the investor in the share purchase agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>f.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In July&nbsp;2005, the Company entered into a share purchase agreement with
shareholders of the Company and third parties, pursuant to which 62,486 convertible
preferred C shares were issued for consideration of $5,200 (net of issuance costs
of $108).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In addition, each investor received warrants to purchase a number
of convertible preferred C shares equal to up to 50% of its original amount of
investment, at an exercise price of $100.76 per share (represents in aggregate
26,349 warrants). The first warrant is exercisable from the closing date until
14 business days after the date of commencement of the Company&#146;s Phase III
clinical study. In the event an investor exercises more than 50% of its first
warrant, such investor shall be granted an option to purchase a number of
convertible preferred C shares, with an aggregate exercise price equal to the
amount of exercise of such investor&#146;s first warrant, at a price of $100.76 per
share. The second warrant shall be exercisable from the date of the exercise of
the first warrant for four years.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->F-24 <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)<BR>
NOTES TO FINANCIAL STATEMENTS (continued)<BR>
U.S. dollars in thousands
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 6 &#151; SHARE CAPITAL </B>(continued)<B>:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company estimated the fair value of the warrants using the
Black-Scholes option-pricing model to be approximately $686. The fair value of
the warrants was based on the following weighted average assumptions: dividend
yield of 0% for all years; expected volatility of 45%; risk-free interest rates
of 3.6%; and expected life of 1.75 to 2.47&nbsp;years. For accounting purposes, the
proceeds from the sale of the convertible preferred C shares were allocated to
the convertible preferred C shares and the warrants on a pro rata basis, based
on the relative fair values of the convertible preferred C shares and the
warrants. The portion of the proceeds allocated to the warrants has been
reflected as warrants.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>g.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In December&nbsp;2005, the Company entered into a share purchase agreement
with shareholders of the Company and third parties, pursuant to which 27,778
convertible preferred C shares of NIS 0.01 par value each were issued for
consideration of $2,300 (net of issuance costs of $12.467).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Pursuant to the share purchase agreement, the investors were entitled to all of the
rights and preferences included in the share purchase agreement that was signed
in July&nbsp;2005. See f above.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>At the closing date, the Company granted the investors warrants,
on the same terms and conditions as mentioned in f above.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company estimated the fair value of the warrants using the
Black-Scholes option-pricing model to be approximately $279. The fair value of
the warrants was based on the following assumptions: dividend yield of 0% for
all years; expected volatility of 48%; risk-free interest rates of 4.4%; and
expected life of 0.48-1.97&nbsp;years. For accounting purposes, the proceeds from
the sale of the convertible preferred C shares were allocated to the
convertible preferred C shares and the warrants on a pro rata basis, based on
the relative fair values of the convertible preferred C shares and the
warrants. The portion of the proceeds allocated to the warrants has been
reflected as warrants.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>h.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In August&nbsp;2006, the Company entered into a share purchase agreement
with investors pursuant to which 163,774 ordinary shares were issued for
consideration of $15,000. In case of a merger as described in Note 1a, those shares
shall be converted into shares of Orthodontix so that, together with the
shareholders of Orthodontix prior to the merger, the investors shall hold 15% of
the issued and outstanding share capital of Orthodontix upon the closing of the
merger, calculated on a fully diluted basis immediately after the closing of the
merger.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In addition, the Company issued to the investors warrants to
purchase an additional 57,691 ordinary shares of the Company, at an exercise
price of $91.59 per share. The fair value of the warrants estimated using the
Black-Scholes option-pricing model is U.S.$ 356,000. The fair value of the
warrants was based on the following assumptions: dividend yield of 0% for all
years; expected volatility of 37%; risk-free interest rates of 5%; and expected
life of 0.25&nbsp;years. For accounting purposes, the proceeds from the sale of the
ordinary</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->F-25 <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)<BR>
NOTES TO FINANCIAL STATEMENTS (continued)<BR>
U.S. dollars in thousands
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 6 &#151; SHARE CAPITAL </B>(continued)<B>:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>shares were allocated to the ordinary shares and warrants on a pro rata basis, based
on the relative fair values of the ordinary shares and the warrants. The
portion of the proceeds allocated to the warrants has been reflected as
warrants.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The warrants, to the extent not exercised or expired prior to the closing of the
merger, shall be exchangeable into warrants to purchase, in the aggregate, a number
of ordinary shares equal to 5% of the shares of Orthodontix calculated on a
fully-diluted basis immediately after the closing of the merger. In the event that
the warrants are exercised prior to the closing of the merger, the holders of the
shares issued in connection therewith shall be entitled to receive a similar number
of a similar number of shares of common stock of Orthodontix.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Upon the closing of the merger, the warrants shall be terminated and Orthodontix
shall issue new warrants to the investors with an exercise price per share equal to
$106.67 divided by the aggregate number of outstanding shares of common stock of
Orthodontix, on a fully diluted basis, calculated immediately after the closing, and
will expire within one month.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Upon the closing of the merger, Orthodontix will issue to Dr.&nbsp;Frost and/or certain
of his associates or affiliated entities that have or will provide services to the
merged company options to acquire a number of shares equal to 3.5% of the issued and
outstanding shares of common stock of Orthodontix calculated on a fully diluted
basis immediately after the closing of the merger. The options shall vest ratably
over a period of 2.5&nbsp;years in connection with future services and are exercisable
until the end of 10&nbsp;years from the date of grant.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>i.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>See Note 10b with respect to the deposit of the consideration in
connection with the exercise of warrants.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>j.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Options to employees and consultants:</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In June&nbsp;2000, the Board of Directors approved the grant of
options to purchase 5,714 ordinary shares to a consultant in return for
consulting services provided. The exercise price is the par value of the
shares. According to the option agreement as amended, the options vested
immediately and are exercisable from the grant date until the end of 2005.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company estimated the fair value of the options on the date of grant using
the Black-Scholes option-pricing model to be approximately $35, and was based
on the following assumptions: dividend yield of 0%; expected volatility of 50%;
risk-free interest rates of 7%; and expected lives of four years.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In June&nbsp;2005, the Company&#146;s Board of Directors modified the terms of these
options by extending the life of the options, until the earlier of an IPO or
the end of 2008. At the date of modification all of the options were fully
vested.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->F-26 <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)<BR>
NOTES TO FINANCIAL STATEMENTS (continued)<BR>
U.S. dollars in thousands
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 6 &#151; SHARE CAPITAL </B>(continued)<B>:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Modifications to the terms of an award are treated as an exchange of the
original award for a new award, incurring additional compensation cost for
that incremental value. The incremental value is measured by the difference
between (a)&nbsp;the fair value of the modified option and (b)&nbsp;the value of the old
option immediately before its terms are modified. The modification had no
effect on the accounting records of the Company.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In July&nbsp;2001, the Company&#146;s Board of Directors approved the
grant of 4,000 options to an employee, which is also a related party of the
Company. Each option may be exercised into one ordinary share at par value. The
options vested immediately on the date of grant.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company estimated the fair value of the options on the date of grant using
the Black-Scholes option-pricing model to be approximately $42 and was based
on the following assumptions: dividend yield of 0%; expected volatility of
50%; risk-free interest rates of 5%; and expected lives of eight years.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In January&nbsp;1999, the Company&#146;s Board of Directors approved the
grant of 6,300 options to the former chairman of the Board of Directors at an
exercise price of $6.19 per share. Each option may be exercised into one
ordinary share par value. The options are fully vested and exercisable in three
equal parts until the end of 2006, 2007, and 2008.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company estimated the fair value of the options on the date of grant using
a Black-Scholes option-pricing model to be approximately $27 based on the
following assumptions: dividend yield of 0%; expected volatility of 50%;
risk-free interest rates of 3.5%; and expected lives of six years.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In March&nbsp;2005, the Company&#146;s Board of Directors modified the terms of the
options by extending the life of the options, until the earlier of an IPO or
the end of 2008. At the date of modification, all of the options were fully
vested.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Modification of the terms of an award are treated as an exchange of the
original award for a new award, incurring additional compensation cost for
that incremental value. The incremental value is measured by the difference
between (a)&nbsp;the fair value of the modified option and (b)&nbsp;the value of the old
option immediately before its terms are modified. The modification had no
effect on the accounting records of the Company.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In August&nbsp;2003, the Company&#146;s Board of Directors approved a
share option plan pursuant to which up to 60,307 ordinary shares are available
for options to be granted to the Company&#146;s employees, consultants, directors,
and service providers. With regard to employees, office holders, and directors
of the Company, the share option plan is subject to the terms stipulated by
Section&nbsp;102 of the Israeli Income</TD>
</TR>

</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->F-27 <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)<BR>
NOTES TO FINANCIAL STATEMENTS (continued)<BR>
U.S. dollars in thousands
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 6 &#151; SHARE CAPITAL </B>(continued)<B>:</B>
</DIV>


<DIV align="left" style="margin-left: 5%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">Tax Ordinance. For non-employees, the share option plan
is subject to Section 3(i) of the Israeli Income Tax Ordinance. In May
2005, the Company&#146;s Board of Directors approved the allotment of an
additional 59,693 ordinary shares under the share option plan.</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 5%">Under the share option plan, options were granted as follows:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In November&nbsp;2001, 13,715
options were granted to the former chairman of
the Company&#146;s Board of Directors, with an
exercise price of $10.499 per share. Each option
may be exercised into one ordinary share. The
options vest as follows:</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>11,428 options vest over 24&nbsp;months in equal tranches from the date of
grant.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>2,287 options vested according to
specified performance milestones which were achieved in September
2003.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each option is exercisable over a three-year period commencing on the
applicable vesting date.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company estimated the fair value of the options on the date of grant
using the Black-Scholes option-pricing model to be approximately $51
based on the following assumptions: dividend yield of 0%; expected
volatility of 50%; risk-free interest rates of 2%; and expected lives of
three years.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In March&nbsp;2005, the Company&#146;s Board of Directors modified the terms of
these options by extending the life of the options, until the earlier of
an IPO or the end of 2008. At the date of modification all of the said
options were fully vested.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Modifications of the terms of an award are treated as an exchange of the
original award for a new award, incurring additional compensation
cost for that incremental value. The incremental value amounting to
$24 is measured by the difference between (a)&nbsp;the fair value of the
modified option and (b)&nbsp;the value of the old option immediately
before its terms are modified.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In December&nbsp;2003, the
Company issued options to purchase 26,226
ordinary shares to the Chief Executive Officer of
the Company, with an exercise price of $7.35 per
share. The options vest as follows: 25% within
one year from the date of grant, with the
remainder vesting in 12 equal quarterly tranches
over 36&nbsp;months. Each option is exercisable over
a 10-year period commencing on the vesting date.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->F-28<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)<BR>
NOTES TO FINANCIAL STATEMENTS (continued)<BR>
U.S. dollars in thousands
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 6 &#151; SHARE CAPITAL </B>(continued)<B>:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company estimated the fair value of the options on the date of grant
using the Black-Scholes option-pricing model to be approximately $498,
and was based on the following assumptions: dividend yield of 0%;
expected volatility of 59.35%; risk-free interest rates of 3.28%; and
expected lives of 5.6&nbsp;years.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>On December&nbsp;8, 2003, the
Company issued options to purchase 20,366
ordinary shares to employees of the Company at an
exercise price of $7.35 per share; 9,987 of the
options vested immediately; and 10,379 options
vest in four equal yearly tranches commencing in
December&nbsp;2004.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each option is exercisable over a 10-year period commencing on the
vesting date.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company estimated the fair value of the options on the date of grant
using the Black-Scholes option-pricing model to be approximately $389 and
was based on the following weighted average assumptions: dividend yield
of 0%; expected volatility of 59%; risk-free interest rates of 3.28%; and
expected lives of six years.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In June&nbsp;2005, the Company
issued options to purchase 14,088 and 5,273
ordinary shares to employees, at an exercise
price of $.7.34 and $24.36 per share,
respectively. Each option is exercisable for one
ordinary share. The options are to be divided
into 13 batches, with the first batch
constituting 25% of the options and the balance
of the options being divided equally over the
remaining 12 batches. The vesting period differs
for each employee and some of the batches vested
on the grant date.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The options are exercisable over a 10-year period commencing on the date
of grant.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company estimasted the fair value of the options on the date of grant
using the Black- Scholes option-pricing model to be approximately $718
and $221, respectively, and was based on the following weighted average
assumptions: dividend yield of 0% for all years; expected volatility of
54%; risk-free interest rates of 3.83%; and expected life of 5.7&nbsp;years.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">e)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>On March&nbsp;27, 2005, the
Company issued options to purchase 8,238 ordinary shares to a consultant as consideration for
consulting services, exercisable for NIS 0.01.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The aggregate number of options granted to the consultant is equal to the
aggregate number of ordinary shares constituting 1% of the lower of (i)
the issued and outstanding share capital of the Company, on an as-converted
fully-diluted basis, on the date of the full exercise of the options; or
(ii)&nbsp;the issued</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->F-29<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)<BR>
NOTES TO FINANCIAL STATEMENTS (continued)<BR>
U.S. dollars in thousands
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 6 &#151; SHARE CAPITAL </B>(continued)<B>:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>and outstanding share capital of the Company, on an as-converted,
fully-diluted basis, on such date as the Company value equals $100,000.
As a consequence of the anti dilution effect of up to 1%, the Company has
reserved and additional 2,659 options to purchase ordinary shares at the
same terms and conditions.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>These options vest in 16 equal installments on a quarterly basis, over a
period of 45&nbsp;months, with the first installment vesting on the date of
grant. The options are exercisable over a 10-year period commencing on
the date of grant. The estimated fair value of these options, estimated
by the services to be rendered, is approximately $1,000.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">f)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In September&nbsp;2006, the
Company&#146;s shareholders approved the grant of
options to purchase 16,000 ordinary shares to the
Chief Executive Officer of the Company, at an
exercise price of $59.40 per share. Each option
may be exercised for one ordinary share.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The options vest in 16 equal installments on a quarterly basis, over a
four-year period, commencing on June&nbsp;1, 2006.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company estimated the fair value of the options on the date of grant
using the Black-Scholes option-pricing model to be approximately $856,
and was based on the following assumptions: dividend yield of 0%;
expected volatility of 43%; risk-free interest rates of 4.6%; and
expected lives of 5.8&nbsp;years.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In September&nbsp;2006, the Chief Executive Officer of the Company entered
into an employment agreement with the Company.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">g)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In August&nbsp;2006, the Company issued options to
purchase 9,900 ordinary shares to its employees at an exercise price of
$59.40 per share. The options vest in 16 equal quarterly tranches over a
four-year period.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The options are exercisable over a 10-year period commencing on the date
of grant. The Company estimated the fair value of the options on the date
of grant using the Black-Scholes option-pricing model to be approximately
$547, and was based on the following weighted average assumptions:
dividend yield of 0% for all years; expected volatility of 45%;
risk-free interest rates of 4.91%; and expected life of six years.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">h)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In September&nbsp;2006, the
Company issued to its Chief Financial Officer
options to purchase 10,150 ordinary shares with an
exercise price of $59.40 per share. The options
vest over a four-year period and are exercisable
for a seven-year period commencing on the date of
grant.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->F-30<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)<BR>
NOTES TO FINANCIAL STATEMENTS (continued)<BR>
U.S. dollars in thousands
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 6 &#151; SHARE CAPITAL </B>(continued)<B>:</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 8%">The Company estimated the fair value of the options, estimated using the
Black-Scholes option-pricing model to be approximately 560 and was based
on the following assumptions: dividend yield of 0% for all years;
expected volatility of 45%; risk-free interest rates of 4.91%;
and expected life of six years.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">5)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In January&nbsp;2005, the Company issued to service providers
options to purchase 1,063 and 1,904 convertible preferred B shares exercisable
from the day of the closing date of the transaction set forth in the share
purchase agreement entered into at such time with certain investors (see Note
6d) for periods of between 18 and 30&nbsp;months, respectively. The options are
exercisable at $.0348 per share. During 2006, 847 options were
exercised into shares.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company estimated fair value of said options on the date of the grant
using Black&#150;Scholes option pricing model to be approximately $5 and $16 for
the 1,063 and 1,904 options respectively, based on the following assumptions:
dividend yield 0%, expected volatility 29% and 37% respectively, risk free
interest 2.90% and 3.27% respectively and expected lives of 1.17 and 2.17
years.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The fair value of the options were charged against additional paid in capital
as issuance expenses.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">6)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In March&nbsp;2005 as part of a management services agreement with
the investor mentioned in Note 6e, the Company granted to the investor options
to purchase 26,710 convertible preferred C shares.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The options vest as follows: 12.5% on their grant date and additional 12.5% of
the options vest at the end of each three month period thereafter. The
exercise price of each option is NIS 0.01.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The estimated fair value of the options on the date of grant was approximately
$1,445.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In January&nbsp;2006, Mr.&nbsp;Eli Hurvitz was nominated as the
Chairman of the Board of Directors. In connection with the management
services agreement described above and with this nomination, the investor
was granted additional options to purchase an additional 28,700
convertible preferred B shares. The options are exercisable at par value
and vest as follows: 10% of the options vest at the date of the
appointment and an additional 10% of the options vest at the end of each
three month period thereafter. The exercise price of each option is NIS
0.01.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The estimated fair value of the options on the date of grant was approximately
$2,124.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->F-31<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)<BR>
NOTES TO FINANCIAL STATEMENTS (continued)<BR>
U.S. dollars in thousands
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 6 &#151; SHARE CAPITAL </B>(continued)<B>:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The options granted in connection with the appointment of
Mr.&nbsp;Hurvitz provide for full acceleration of vesting of these options
within 60&nbsp;days prior to a merger. Upon the acceleration of the vesting
provisions, unrecognized compensation costs related to these options shall
be recognized. As at September&nbsp;30, 2006, the unrecognized compensation
cost was approximately $2.0&nbsp;million. On September&nbsp;11, 2006, the Company
entered into a merger agreement with Orthodontix, see note 1a. However,
as of September&nbsp;30, 2006, the merger has not been closed and is still
subject to further approvals. Therefore, as of September&nbsp;30, 2006, the
Company had not accelerated the vesting provisions of Mr.&nbsp;Hurvitz&#146;s
options.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>On December&nbsp;12, 2006, the Company&#146;s Board of Directors
approved the cancellation of the acceleration and the expiration of these
options.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>k.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A summary of share option plans, shares of restricted shares and
related information, under all of the Company&#146;s equity incentive plans for the
fiscal years ended December&nbsp;31, 2003, 2004, and 2005, and for the nine months ended
September&nbsp;30, 2006 are as follows :</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Nine months ended</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="23" style="border-bottom: 1px solid #000000"><B>Year ended December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>September 30, 2006</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>(Unaudited)</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Average</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>average</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>average</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>average</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>exercise</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>options</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Price</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>options</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>price</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Options</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>price</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>options</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>price</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outstanding at beginning of
period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,729</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76,321</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.89</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77,186</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.95</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">127,631</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.40</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,592</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,967</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34.80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54,309</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67,409</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31.77</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Forfeited</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,102</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,864</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">443</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.19</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">847</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34.80</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outstanding at end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76,321</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.89</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77,186</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.95</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">127,631</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">193,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.06</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercisable at end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,782</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,757</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">86,055</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.86</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113,353</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.89</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->F-32<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)<BR>
NOTES TO FINANCIAL STATEMENTS (continued)<BR>
U.S. dollars in thousands
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 6 &#151; SHARE CAPITAL </B>(continued)<B>:</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">The following tables summarize information concerning outstanding and exercisable
options under share option plans as of December&nbsp;31, 2005 and September&nbsp;30, 2006:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="18%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" colspan="17" style="border-bottom: 1px solid #000000"><B>December 31, 2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" colspan="9" style="border-bottom: 1px solid #000000"><B>Options outstanding</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>Options exercisable</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>options</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>average</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>options</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>average</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>outstanding</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>remaining</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>outstanding</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>remaining</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>at end of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>contractual</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>at end of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>contractual</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>prices</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>year</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>life</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>year</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>life</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,662</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,614</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.73</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">$&nbsp;&nbsp;6.19</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">$&nbsp;&nbsp;7.35</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54,714</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,223</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.22</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">$10.50</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,715</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,715</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">$24.36</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,273</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.41</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,236</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.41</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">$34.80</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,967</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.93</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,967</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.93</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">127,631</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">86,055</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Represents an amount equal to less than $0.01.</TD>
</TR>

</TABLE>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="18%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" colspan="17" style="border-bottom: 1px solid #000000"><B>September 30, 2006</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" colspan="9" style="border-bottom: 1px solid #000000"><B>Options outstanding</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>Options exercisable</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" colspan="9" style="border-bottom: 1px solid #000000"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>(Unaudited)</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>options</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>average</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>options</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>average</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>outstanding</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>remaining</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>outstanding</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>remaining</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>at end of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>contractual</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>at end of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>contractual</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>prices</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>period</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>life</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>period</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>life</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76,021</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,785</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.06</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">$&nbsp;&nbsp;6.19</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.25</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">$&nbsp;&nbsp;7.35</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54,577</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.47</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,652</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.47</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">$10.50</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,715</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,715</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.25</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">$24.36</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,183</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.66</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,286</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.66</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">$34.80</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,904</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.54</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,904</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.54</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">$59.40</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,050</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.83</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">711</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.83</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">193,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113,353</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Represents an amount equal to less than $0.01.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->F-33<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)<BR>
NOTES TO FINANCIAL STATEMENTS (continued)<BR>
U.S. dollars in thousands
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 6 &#151; SHARE CAPITAL </B>(continued)<B>:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>l.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The following table illustrates the share-based compensation effect
on the statement of operations:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Period from</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Period from</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 27,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 27,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>1993</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Nine months</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>1993</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>through</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>ended</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>through</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Year ended December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>September 30,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>(Unaudited)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(Unaudited)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Research and development
expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">98</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">194</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">692</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,483</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">510</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">511</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,543</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">General and administrative
expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">124</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,195</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,032</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">827</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,784</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,267</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">222</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">297</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,887</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,515</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,337</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,295</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,810</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>m.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>See Note 10a for information regarding the exercise of options in
respect of employees and consultants after September&nbsp;30, 2006.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 7 &#151; TAXES ON INCOME:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>a.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Measurement of results for tax purposes under the Income Tax
(Inflationary Adjustments) Law, 1985 (hereafter &#151; the inflationary adjustments law)</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Under the Israeli Inflationary Adjustments Law, 1985, results for tax purposes are
measured in real terms, having regard to the changes in the consumer price index.
The Company is taxed under this law.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>b.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Tax rates</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The income of the Company (other than income from &#147;approved enterprises&#148; (see c.
below) is taxed in Israel at the regular rate. Through December&nbsp;31, 2003, the
corporate tax was 36%. In July&nbsp;2004, Amendment No.&nbsp;140 to the Income Tax Ordinance
was enacted. One of the provisions of this amendment is that the corporate tax
rate is to be gradually reduced from 36% to 30%. In August&nbsp;2005, a further
amendment (No.&nbsp;147) was published, which makes a further revision to the corporate
tax rates prescribed by Amendment No.&nbsp;140. As a result of the aforementioned
amendments, the corporate tax rates for 2004 and thereafter are as follows: 2004 &#150;
35%, 2005 &#150; 34%, 2006 &#150; 31%, 2007 &#150; 29%, 2008 &#150; 27%, 2009 &#150; 26% and for 2010 and
thereafter &#150; 25%.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->F-34<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)<BR>
NOTES TO FINANCIAL STATEMENTS (continued)<BR>
U.S. dollars in thousands
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 7 &#150; TAXES ON INCOME</B>(continued)<B>:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>c.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>The Law for the Encouragement of Capital Investments, 1959 (hereinafter
- - the law)</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company has been granted &#147;Approved Enterprise&#148; status under the Law for the
Encouragement of Capital Investments, 1959. Income derived from the Approved
Enterprise during a period of 10&nbsp;years from the year in which the enterprise first
realizes taxable income is tax exempt, provided that the maximum period to which it
is restricted by the law has not elapsed.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company has an &#147;Approved Enterprise&#148; plan from 2004. The plan expires in 2017.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If the Company subsequently pays a dividend out of income derived from the
&#147;Approved Enterprise&#148; during the tax exemption period, it will be subject to tax on
the amount distributed, including any company tax on these amounts, at the rate
which would have been applicable had such income not been exempted (25%).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The entitlement to the above benefits is conditional upon the Company fulfilling
the conditions stipulated by the law, regulations published thereunder, and the
instruments of approval for the specific investment in an approved enterprise. In
the event of failure of the Company to comply with these conditions, the benefits
may be cancelled and the Company may be required to refund the amount of the
benefits, in whole or in part, with the addition of interest. The Investment Center
is currently reviewing the Company&#146;s final implementation report and, as a result,
the Company has not yet received a final implementation approval with respect to
its &#147;Approved Enterprise&#148; from the investment Center. Additionally, given the
Company&#146;s significant amount of net operating losses and the limitation mentioned
above to the benefit period, the Company cannot predict when it would be able to
enjoy the tax benefits described above, if at all.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>d.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Tax losses carried forward to future years</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company has no current tax provision due to its accumulated losses, which result
in net operating loss carryforwards. At December&nbsp;31, 2005, the Company had
approximately $6,700 of net operating loss carryforwards that are available to
reduce future taxable income.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->F-35<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)<BR>
NOTES TO FINANCIAL STATEMENTS (continued)<BR>
U.S. dollars in thousands
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 7 &#150; TAXES ON INCOME </B>(continued)<B>:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>e.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Deferred income taxes:</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The components of the Company&#146;s net deferred tax asset at December&nbsp;31, 2005 and 2004
were as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>U.S. dollars in thousands</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">In respect of:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">R&#038;D expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">84</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">499</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Property and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Holiday and recreation pay</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Severance pay obligation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net operating loss carryforwards</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,368</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,669</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Valuation allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,551</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,293</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>f.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Reconciliation of the theoretical tax expense to actual tax expense</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The main reconciling item, between the statutory tax rate of the Company and the
effective rate is the non-recognition of tax benefits from carryforward tax losses
due to the uncertainty of the realization of such tax benefits (see above).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>g.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Tax assessments</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In accordance with the Income Tax Ordinance, as of December&nbsp;31, 2005, all of the
Company&#146;s tax assessments through tax year 2001 are considered final.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->F-36<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)<BR>
NOTES TO FINANCIAL STATEMENTS (continued)<BR>
U.S. dollars in thousands
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 8 &#151; SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION:</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Balance sheets:</B>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>U.S. dollars in thousands</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>a. Accounts receivable:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Institutions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">220</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">49</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">State of Israel (see note 5a)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">322</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">178</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Prepaid expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Sundry</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">666</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">254</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>b. Accounts payable and accruals &#150; other:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Payroll and related expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">112</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">118</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Provision for vacation and recreation pay</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">107</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accrued expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">191</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">In respect of purchase of property and
Equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">284</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">106</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">655</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">419</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->F-37<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)<BR>
NOTES TO FINANCIAL STATEMENTS (continued)<BR>
U.S. dollars in thousands
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 8 &#151; SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION </B>(continued):
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Statement of operations:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Period from</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 27,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>1993</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>through</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year ended December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14" style="border-bottom: 1px solid #000000"><B>U.S. dollars in thousands</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>c. Research and development expenses &#151; net</B>:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Payroll and related expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">940</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,602</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,378</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Subcontractors</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">714</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">926</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,769</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Materials and consumables</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">298</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">720</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,613</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Rent, insurance and maintenance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">188</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">325</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">675</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Professional fees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">81</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">473</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">814</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Patent registration</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">201</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">388</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Depreciation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*53</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">249</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">577</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">134</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">212</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">450</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">668</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,493</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,708</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,664</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Less &#150; grants (see Note 5a)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">429</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">573</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">935</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,365</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">239</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,920</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,773</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,299</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Including $28 in respect of impairment of leasehold improvement that are not expected to be used in the future.</TD>
</TR>

</TABLE>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>d. Administrative and general expenses:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Payroll and related expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">223</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">380</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,006</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Management and consulting fees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">321</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">326</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,327</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,102</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Rent, insurance and maintenance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">207</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Professional fees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">108</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">98</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">147</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">467</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Depreciation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">101</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">82</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">109</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">173</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">588</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">603</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">807</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,131</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,471</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Including $3 in respect of impairment of leasehold improvement that are not expected to be used in the future.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->F-38<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)<BR>
NOTES TO FINANCIAL STATEMENTS (continued)<BR>
U.S. dollars in thousands
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 9 &#151; RELATED PARTY &#151; TRANSACTIONS:</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Period from</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 27,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>1993*</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>through</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year ended December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10"><B>US $ in thousands</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>a. </B>Management and
consulting fees to
the chairman of the
Board</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">96</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">89</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">315</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>b. </B>capital raising
commission to the
chairman of the Board</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">33</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">33</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">

    <TD width="1%" nowrap align="left" colspan="2"><B>c.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>With respect as to options granted to the Chief Executive
Officer of the Company and to a shareholder, see Notes 6(j)4b,
6(j)4f and 6(j)2.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">

    <TD width="1%" nowrap align="left" colspan="2"><B>d.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In March&nbsp;2005, in addition to a share purchase agreement (see
Note 6e), the Company entered into a management services agreement
with the investor. The monthly management fees amount to $3. The
management agreement shall be in full force as long as Mr.&nbsp;Hurvitz
serves as a member of the Board of Directors. As to options
granted to the investor, see Note 6(j)6.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 10 &#151; SUBSEQUENT EVENTS:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>a.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>During the months of October through December&nbsp;2006, certain former
employees, consultants and an officer of the Company exercised options and
warrants for 38,004 ordinary shares for aggregate consideration of approximately
$367.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>b.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>After September&nbsp;30, 2006, certain warrant holders deposited
approximately $8,660 representing the total exercise price for warrants exercisable
for 86,613 ordinary shares, into a trustee account. Upon the closing of the merger,
these amounts shall be released from the trust account and transferred to the
Company in consideration for the issuance of the ordinary shares underlying the
warrants. See Note 1a.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>c.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>On December&nbsp;12, 2006, the Company&#146;s Board of Directors approved the
proposed merger transaction. See note 1a.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>d.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>See Note 6(j)6 with respect to the cancellation of the acceleration
and the expiration of options granted to the Chairman of the Board of Directors.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>e.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In connection with a tax ruling agreement granted by the Israeli tax
authorities after September&nbsp;30, 2006, the Company and certain of its shareholders
consented to restrictions, over specified periods after the closing of the merger,
on the sale of common stock of Orthodontix by the shareholders, the retention of
minimum percentages of the capital stock of Orthodontix by such shareholders, and
the retention of minimum percentages of the capital stock of Othodontix by the
Company Protalix.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->F-39<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX LTD.</B><BR>
(A development stage company)<BR>
NOTES TO FINANCIAL STATEMENTS (continued)<BR>
U.S. dollars in thousands
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 10 &#151; SUBSEQUENT EVENTS </B>(continued)<B>:</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">In addition, Orthodontix and the Company have agreed to limit the extent of issuance
of share capital to third parties after the closing of the merger. Orthodontix and
the Company have also agreed that, over a two-year period, most of the Company&#146;s
activities shall be directed towards research and development, and most of its
expenses would be incurred in Israel. Any consideration received and to be received
by Orthodontix and the Company in connection with share issuances shall be invested
in the research and development activities of the Company.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->F-40<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Orthodontix, Inc.<BR>
Pro Forma Unaudited Financial Statements<BR>
As of September&nbsp;30, 2006<BR>
and<BR>
For the Nine-Months Ended September&nbsp;30, 2006 and the Year Ended December&nbsp;31, 2005</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following unaudited pro forma consolidated financial statements (&#147;pro forma statements&#148;)
give effect to the reverse merger of Protalix Ltd. by Orthodontix, Inc. and are based on the
estimates and assumptions set forth herein and in the notes to such statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In August&nbsp;2006, Orthodontix, Inc. (&#147;Orthodontix&#148;), Protalix Acquisition Co. Ltd. (the
&#147;Acquisition Subsidiary&#148;), and Protalix Ltd. (&#147;Protalix&#148;) entered into a Merger Agreement and Plan
of Reorganization (the &#147;Agreement&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Agreement provides for the merger of the Acquisition Subsidiary with and into Protalix, with
Protalix remaining as the surviving entity after the merger (the &#147;Merger&#148;), whereby the
shareholders of Protalix will receive common stock of Orthodontix in exchange for their ordinary
shares of Protalix.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The transaction is being accounted for as a reverse acquisition and a recapitalization. Protalix
is the acquirer for accounting purposes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following unaudited pro forma financial information gives effect to the above. The unaudited
pro forma financial information was prepared from (1)&nbsp;Orthodontix&#146;s unaudited historical financial
statements included in its Quarterly Report on Form 10-QSB for quarterly period ended September&nbsp;30,
2006 and (2)&nbsp;Protalix&#146;s audited historical financial statements for the year ended December&nbsp;31,
2005 and Protalix&#146;s unaudited balance sheet as of
September&nbsp;30, 2006 and the unaudited statement of operations for
the nine months ended September&nbsp;30, 2006, attached to this
Current Report on Form 8-K. The unaudited pro forma consolidated
financial information and accompanying notes should be read in
conjunction with the historical financial statements and the related
notes thereto of Protalix and Orthodontix.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The
unaudited pro forma consolidated balance sheet at September&nbsp;30,
2006 gives effect to the Merger as of September&nbsp;30, 2006. The
unaudited pro forma consolidated statement of operations for the year
ended December&nbsp;31, 2005 and the nine months ended
September&nbsp;30, 2006 gives effect to the above transaction as of
January&nbsp;1, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The unaudited pro forma consolidated financial information is presented for illustrative purposes
only and is not necessarily indicative of the operating results or financial position that would
have occurred if the transaction had been consummated at the dates indicated, nor is it necessarily
indicative of the future operating results of financial position or the consolidated companies.
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->F-41<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Orthodontix, Inc.</B><BR>
(A development stage company)<BR>
<B>Unaudited Pro Forma Consolidated Balance Sheet<BR>
As of September&nbsp;30, 2006</B><BR>
U.S. dollars in thousands
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2">Adjustment</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" colspan="2" style="border-bottom: 1px solid #000000">Orthodontix</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Protalix</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">Consolidated</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD align="center"><DIV style="margin-left:15px; text-indent:-15px"><B>Assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center"><DIV style="margin-left:15px; text-indent:-15px"><B>Current Assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right">826</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right">15,621</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(400</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,660</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right">24,718</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Prepaid expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accounts Receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">822</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">822</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total Current Assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>838</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>16,454</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(400</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>8,660</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>25,563</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>FUNDS IN
RESPECT OF EMPLOYEE RIGHTS UPON RETIREMENT</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>268</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">268</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="top"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>PROPERTY AND EQUIPMENT, NET</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>2,285</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,285</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="top"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total Assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>838</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>19,007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(400</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>8,660</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>28,116</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000; border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000; border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="top"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center"><DIV style="margin-left:15px; text-indent:-15px"><B>Liabilities and Stockholders&#146; Equity</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Current Liabilities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accounts payable, Trade</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right">757</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right">768</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accounts payable &#151; related parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accounts payable, Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">544</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">544</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total Current Liabilities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>12</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,301</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>1,313</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>LIABILITY
FOR EMPLOYEE RIGHTS UPON RETIREMENT</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">388</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">388</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Stockholders&#146; Equity</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additional paid-in capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,727</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,985</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,370</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,687</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,040</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Warrants</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,379</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,027</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">352</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accumulated deficit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,902</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(17,048</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,902</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(17,048</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total Stockholders&#146; Equity</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>826</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>17,318</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>400</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>8,660</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>26,415</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total Liabilities and
Stockholders&#146; Equity</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>838</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>19,007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right"><B>(400</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>8,660</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>28,116</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000; border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000; border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%;  border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Adjustment to reflect the reclassification within equity to
present the exchange of shares in the Merger with a resulting
61,785,765 ordinary shares outstanding (Protalix stockholders
(61,198,679 ordinary shares) and Orthodontix stockholders (583,086
ordinary shares)). The adjustment also reflects the elimination of
Orthodontix&#146;s accumulated deficit. The transaction is accounted for as a reverse merger and recapitalization.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Adjustment to reflect the aggregate exercise of 86,613 of
Protalix warrants for
an aggregate amount of $8,660 which were exercised immediately prior
to giving effect to the merger with Orthodontix. Any remaining
unexercised warrants of Protalix were
forfeited by the holders, resulting in an adjustment of $1,027 to
additional paid-in capital. Protalix warrants that were granted to
certain investors led by Dr.&nbsp;Frost were exchanged into
warrants of Orthodontix, concurrent with the merger transaction.
</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->F-42<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Orthodontix, Inc.</B><BR>
(A development stage company)<BR>
<B>Unaudited Pro Forma Consolidated Statement of Operations<BR>
For the Nine-Months Ended September&nbsp;30, 2006</B><BR>
U.S. dollars in thousands
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>For the Nine</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Months Ended</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>September 30, 2006</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Orthodontix</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Protalix</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Adjustments (1)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Consolidated</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of Revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross Profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Research and Development expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,759</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,759</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less &#151; Grants</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,510</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,510</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,249</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,249</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">General and administrative expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">165</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,787</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">560</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,512</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Loss from Operations</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(165</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(6,036</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(560</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(6,761</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Financial income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">101</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other Income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net Loss Before change in
accounting principle</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(89</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(5,963</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(560</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(6,612</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" nowrap align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cumulative effect of change in
accounting principle</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net Loss for the period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(89</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(5,926</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(560</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(6,575</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" nowrap align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%;  border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Adjustment to reflect additional compensation costs
associated with stock options granted to directors, employees and
consultants in connection with the closing of the Merger Agreement.</TD>
</TR>
</table>

<P align="center" style="font-size: 10pt"><!-- Folio -->F-43<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Orthodontix, Inc.</B><BR>
(A development stage company)<BR>
<B>Unaudited Pro Forma Consolidated Statement of Operations<BR>
For the Year Ended December&nbsp;31, 2005</B><BR>
U.S. dollars in thousands
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Orthodontix</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Protalix</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Adjustments (1)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Consolidated</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">150</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of Revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross Profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>115</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>115</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Research and Development expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,708</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,708</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less &#151; Grants</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(935</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(935</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,773</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>3,773</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">General and administrative expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">93</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,131</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">747</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,971</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Loss from Operations</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(93</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(5,789</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(747</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right"><B>(6,629</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Financial income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other Income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net Loss Before change in
accounting principle</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(75</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(5,746</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(747</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(6,568</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" nowrap align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cumulative effect of change in
accounting principle</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net Loss for the period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(75</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(5,746</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(747</B></TD>
    <TD nowrap><B>)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>$</B></TD>
    <TD align="right"><B>(6,568</B></TD>
    <TD nowrap><B>)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="15" nowrap align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%;  border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>


<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Adjustment to reflect additional compensation costs
associated with stock options granted to directors, employees and
consultants in connection with the closing of the Merger Agreement.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->F-44<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="left" style="font-size: 10pt; margin-top: 12pt">(d)&nbsp;Exhibits
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="93%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Warrant.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">2006 U.S. Stock Incentive Plan.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Employment Agreement between Protalix Ltd. and Yoseph Shaaltiel, dated as of September&nbsp;1,
2004.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.3
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Employment Agreement between Protalix Ltd. and Einat Almon, dated as of December&nbsp;19, 2004.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.4
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Employment Agreement between Protalix Ltd. and David Aviezer, dated as of September&nbsp;11, 2006.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.5
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Employment Agreement between Protalix Ltd. and Yossi Maimon, dated as of October&nbsp;15, 2006.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.6
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">License Agreement entered into as of April&nbsp;12, 2005, by and between Icon Genetics AG and
Protalix Ltd.<SUP style="font-size: 85%; vertical-align: text-top">&#134;</SUP></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.7
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Research and License Agreement between Yeda Research and Development Company Limited and
Protalix Ltd. dated as of March&nbsp;15, 2006.<SUP style="font-size: 85%; vertical-align: text-top">&#134;</SUP></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.8
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Agreement between Teva Pharmaceutical Industries Ltd. and Protalix Ltd., dated September&nbsp;14,
2006.<SUP style="font-size: 85%; vertical-align: text-top">&#134;</SUP></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.9
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Lease Agreement between Protalix Ltd. and Angel Science Park (99)&nbsp;Ltd., dated as of October
28, 2003 as amended on April&nbsp;18, 2005.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.10
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Merger Agreement and Plan of Reorganization made and entered into as of August&nbsp;21, 2006, by
and among Orthodontix, Inc, Protalix Acquisition Co., Ltd. and Protalix Ltd.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">&#134; </SUP></TD>
    <TD>&nbsp;</TD>
    <TD> Portions of this exhibit were omitted and have been filed separately with the
Secretary of the Securities and Exchange Commission pursuant to the Registrant&#146;s application
requesting confidential treatment under Rule&nbsp;406 of the Securities Act.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->86<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">





<!-- link1 "SIGNATURES" -->
<DIV align="left"><A NAME="007"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SIGNATURES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">ORTHODONTIX, INC.<BR>
(Registrant)<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">Date: January&nbsp;4, 2007&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ David Aviezer
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top" colspan="2">Name:&nbsp;&nbsp;</TD>
    <TD align="left">David Aviezer, Ph.D.&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top" colspan="2">Title:&nbsp;&nbsp;</TD>
    <TD align="left">President and<BR>
Chief Executive Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt; margin-top: 10pt"><!-- Folio -->87<!-- /Folio -->
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.1
<SEQUENCE>2
<FILENAME>g04822exv4w1.htm
<DESCRIPTION>EX-4.1 FORM OF WARRANT
<TEXT>
<HTML>
<HEAD>
<TITLE>EX-4.1 Form of Warrant</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Exhibit&nbsp;4.1
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE ISRAELI SECURITIES LAW, 1968, AS AMENDED, THE U.S. SECURITIES ACT OF 1933, AS
AMENDED OR UNDER ANY APPLICABLE U.S. STATE SECURITIES LAWS (COLLECTIVELY, THE &#147;SECURITIES LAWS&#148;).
THEY MAY NOT BE OFFERED FOR SALE, SOLD, CONVEYED, TRANSFERRED, PLEDGED, GIFTED, ASSIGNED,
ENCUMBERED OR OTHERWISE DISPOSED OF UNLESS (1)&nbsp;REGISTERED UNDER SUCH SECURITIES LAWS, OR (2)
PURSUANT TO AVAILABLE EXEMPTIONS FROM REGISTRATION FROM SUCH SECURITIES LAWS AND THE RULES
PROMULGATED THEREUNDER, PROVIDED THAT THE HOLDER DELIVERS TO THE COMPANY AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY, CONFIRMING THE AVAILABILITY OF SUCH EXEMPTION. INVESTORS SHOULD BE
AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE
PERIOD OF TIME.</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">ORTHODONTIX, INC.
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>WARRANT</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">To purchase<BR>
<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> Shares of Common Stocks (subject to adjustment) of<BR>
<B>ORTHODONTIX, INC. </B>(the &#147;<B>Company</B>&#148;)<BR>
at a per share price and subject to the terms detailed below<BR>
VOID AFTER 17:00&nbsp;p.m. Eastern Standard Time<BR>
on the last day of the Warrant Period (as defined below)

</DIV>

<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>December __, 2006</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>THIS IS TO CERTIFY THAT</B>, Frost Gamma Investments Trust (the &#147;<B>Holder</B>&#148;), is entitled to purchase from
the Company, at an aggregate purchase price equal to US$<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, an aggregate of
<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> (subject to adjustment as set forth herein) fully paid and non-assessable shares of
Common Stock of the Company, nominal value US$.001 per share (the &#147;<B>Warrant Stock</B>&#148;), at an exercise
price equal to US$1.504 per Warrant Stock (the &#147;<B>Exercise Price</B>&#148;) as may be adjusted hereunder,
during the period (the &#147;<B>Warrant Period</B>&#148;) commencing the execution hereof and for one month
thereafter, all subject to the terms and conditions set forth herein. The Warrant Stock shall have
the same rights, preferences and privileges attached to the Common Stock of the Company, nominal
value US$.001 per stock (the &#147;<B>Common Stock</B>&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>1. </B><U><B>EXERCISE OF WARRANT</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Cash Exercise of Warrant</U>. This Warrant may be exercised from time to time or at
any time during the Warrant period by presentation and surrender thereof to the Company at
its principal office or at such other office or agency as it may designate from time to
time, accompanied by:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.1.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A duly executed notice of exercise, in the form attached hereto as <U>Exhibit
A</U> (the &#147;<B>Exercise Notice</B>&#148;); and</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.1.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Payment to the Company, for the account of the Company, of the aggregate Exercise
Price for the number of Warrant Stock specified in the applicable Exercise Notice,
payable in immediately available funds by wire transfer to the following bank
account at Bank Hapoalim, branch 615, account number 113323 or by banker&#146;s check or
by any other means of payment agreed upon between the Company and the Holder. The
Exercise Price will be paid in United States Dollars.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Partial Exercise, Etc</U>. If this Warrant should be exercised in part only, the
Company shall, upon surrender of this Warrant for cancellation, execute and deliver a new
Warrant evidencing the rights of the Holder to purchase the balance of the Warrant Stock
purchasable hereunder.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Issuance of Warrant Stock Upon Cash Exercise</U>. Upon presentation and surrender of
this Warrant accompanied by a duly executed Exercise Notice and the payment of the
applicable aggregate Exercise Price pursuant to Section&nbsp;1.1 above, the Company shall
promptly (i)&nbsp;issue to the Holder the Warrant Stock to which the Holder is entitled; and
(ii)&nbsp;deliver to the Holder the share certificate(s) evidencing such Warrant Stock. Upon
receipt by the Company of this Warrant, the applicable Exercise Notice and the applicable
aggregate Exercise Price, the Holder shall be deemed to be the holder of record of the
Warrant Stock issuable upon such exercise, notwithstanding that the stock transfer books
of the Company shall then be closed or that certificates representing such stock shall not
then be actually delivered to the Holder.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Fractional Stock</U>. No fractions of shares shall be issued in connection with the
exercise of this Warrant, and the number of shares issued shall be rounded up to the
nearest whole number.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Taxes</U>. The Holder acknowledges that the grant of the Warrant, the issue of the
Warrant Stock and the execution and/or performance of this Warrant may have tax
consequences to the Holder and that the Company is not able to ensure or represent to the
Holder the nature and extent of such tax consequences. The Company shall pay all of the
applicable taxes and other charges payable by the Company in connection with the issuance
of the Warrant Stock and the preparation and delivery of share certificates pursuant to
this Section&nbsp;1 in the name of the Holder (such as documentary stamp or similar issue or
transfer taxes in respect of the issue or delivery of shares of Common Stock on exercise
of this Warrant), but shall not pay any taxes payable by the Holder by virtue of the
holding, issuance, exercise or sale of this Warrant or the Warrant Stock by the Holder and
the Holder shall indemnify the Company, without derogating from the Holder&#146;s obligation to
pay such amounts, for any and all charges or payments as aforesaid, which may be deducted
at source or set-off from any amounts payable to the Holder (including, without
limitation, dividends, consideration for the sale of stock or from any other source), at
the Company&#146;s absolute and sole discretion, subject to applicable law.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Additional Documents</U>. The Holder will sign any and all documents required by
law, the Company&#146;s Articles of Association and/or any agreement
to which the Company is a</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->- 2 -<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">party or by which it bound, to facilitate the issuance of stock upon exercise of
this Warrant.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Loss or Destruction of Warrant</U>. Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and (in the case of loss, theft or destruction) of reasonably expenses
reimbursement and satisfactory indemnification, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will execute and deliver a new Warrant of like
tenor and date.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>2. </B><U><B>RESERVATION OF STOCK; PRESERVATION OF RIGHTS OF HOLDER</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Reservation of Stock</U>. The Company hereby agrees that, at all times prior to the
expiration or exercise of this Warrant, it will maintain and reserve, free from
pre-emptive or similar rights, such number of authorized but unissued Common Stock so that
this Warrant may be exercised without additional authorization of Common Stock after
giving effect to all other warrants, convertible securities and other rights to acquire
shares of the Company.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Preservation of Rights</U>. The Company will not, by amendment of its organizational
documents or through reorganization, recapitalization, consolidation, merger, dissolution,
transfer of assets, issue or sale of securities or any other voluntary act, avoid or seek
to avoid the observance or performance of any of the covenants, stipulations, conditions
or terms to be observed or performed hereunder, but will at all times in good faith assist
in the carrying out of all the provisions hereof and in taking of all such actions and
making all such adjustments as may be necessary or appropriate in order to fulfill the
provisions hereof.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>3. </B><U><B>ADJUSTMENT</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">3.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Adjustments</U>. The number of Warrant Stock purchasable upon the exercise of this
Warrant and the payment of the Exercise Price shall be subject to adjustment from time to
time or upon exercise as provided in this Section&nbsp;3.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">3.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Bonus Stock</U>. In the event that during the Warrant Period the Company shall
distribute a dividend or stock pursuant to a reclassification of its stock capital to all
of the stockholders of the Company (i.e., bonus shares), then this Warrant shall
represent the right to acquire, in addition to the number of Warrant Stock indicated in
the caption of this Warrant, the amount of such bonus shares and/or to receive the stock
dividends, without payment of any additional consideration therefor, to which the Holder
would have been entitled had this Warrant been exercised prior to the distribution of the
stock dividends or the bonus shares.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">3.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Consolidation and Division</U>. In the event that during the Warrant Period the
Company consolidates its stock capital into stock of greater par value, or subdivides them
into stock of lesser par value, then the number of Warrant Stock to be allotted on
exercise of this Warrant after such consolidation or subdivision shall be reduced or
increased accordingly, as the case may be, such increase or decrease, as the case may
be, to become effective immediately after the opening of business on the day following
the day
</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->- 3 -<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">upon which such subdivision or combination becomes effective, and in each case
the Exercise Price shall be adjusted appropriately such that the aggregate consideration
hereunder to the Company shall not change.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">3.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Capital Reorganization</U>. In the event that during the Warrant Period a
reorganization of the stock capital of the Company is effected (other than subdivision,
combination or reclassification provided for elsewhere in this Section&nbsp;3) and the Common
Stock are exchanged for other securities of the Company, then, as part of such
reorganization, provision shall be made so that the Holder shall be entitled to purchase
upon exercise of this Warrant such kind and number of stock or other securities of the
Company to which the Holder would have been entitled had this Warrant been exercised prior
to such reorganization, and such that the aggregate consideration to the Company hereunder
shall not change.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>4. </B><U><B>NOTICE OF CERTAIN EVENTS</B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If at any time during the Warrant Period (i)&nbsp;there shall be any capital reorganization or
reclassification of the stock capital of the Company or any other event set forth in Section&nbsp;3
above; or (ii)&nbsp;there shall be a voluntary or involuntary dissolution, liquidation or winding up of
the Company, then, in any one or more of said events, the Company shall deliver to the Holder prior
written notice thereof, including the date on which (a)&nbsp;a record shall be taken in connection with
such event and (b)&nbsp;the consummation date of such event. Such written notice shall be delivered to
the Holder at least thirty (30)&nbsp;days prior to the consummation of the applicable event and not less
than thirty (30)&nbsp;days prior to the record date in respect thereto (subject to the provisions of
Section&nbsp;7 herein).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>5. </B><U><B>NOTICE OF ADJUSTMENTS</B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Whenever an adjustment pursuant to Section&nbsp;3 above is effected, the Company shall promptly compute
such adjustment and deliver to the Holder a certificate setting forth the number of Warrant Stock
(or any other securities) for which this Warrant is exercisable and the Exercise Price as a result
of such adjustment, a brief statement of the facts requiring such adjustment and the computation
thereof and when such adjustment has or will become effective.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>6. </B><U><B>RIGHTS OF THE HOLDER</B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Holder acknowledges that the Warrant Stock shall be subject to such certain rights, privileges,
restrictions and limitations as set forth in this Warrant and the Articles of Association of the
Company, as may be amended from time to time, and that, as a result, <I>inter alia</I>, of such
limitations, it may be difficult or impossible for the Holder to realize his investment and/or to
sell or otherwise transfer the Warrant Stock. The Holder further acknowledges that the Company&#146;s
stock are not listed for trading and therefore the sale and transfer thereof may be subject to
further limitations. This Warrant shall not entitle the Holder, by virtue hereof, to any voting
rights or other rights as a stockholder of the Company, except for the rights expressly set forth
herein.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->- 4 -<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>7. </B><U><B>TERMINATION</B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Notwithstanding anything to the contrary, this Warrant and all the rights conferred hereby
shall terminate and expire upon the aforementioned time on the last day of the Warrant Period.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>8. </B><U><B>MISCELLANEOUS</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">8.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Entire Agreement; Amendment</U>. This Warrant sets forth the entire understanding of
the parties with respect to the subject matter hereof and supersedes all existing
agreements among them concerning such subject matter. All article and section headings
herein are inserted for convenience only and shall not modify or affect the construction
or interpretation of any provision of this Warrant. No modification or amendment of this
Warrant will be valid unless executed in writing by the Company and the Holder.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">8.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Waiver</U>. No failure or delay on the part of any of the parties in exercising any
right, power or privilege hereunder and/or under any applicable laws or the exercise of
such right or power in a manner inconsistent with the provisions of this Warrant or
applicable law shall operate as a waiver thereof. Any waiver must be evidenced in writing
signed by the party against whom the waiver is sought to be enforced.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">8.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Successors and Assigns; Assignment</U>. Except as otherwise expressly limited
herein, this Warrant shall inure to the benefit of, be binding upon, and be enforceable by
the Holder and its respective successors, assigns, and administrators. The Holder
represents and warrants to the Company that the Warrant Stock, if and when purchased by
the Holder, are for the Holder&#146;s own account and for investment purposes only and not with
a view for resale or transfer and that all the rights pertaining to the Warrant Stock, by
law or equity, shall be purchased and possessed by the Holder for the Holder exclusively.
Holder may not assign, transfer, pledge or otherwise encumber or dispose any of the
rights, privileges, or obligations set forth in, arising under, or created by this
Warrant, other than in accordance with the Articles of Association of the Company,
applicable law and any other contractual undertaking of the Holder, including any lock up
undertaking. In any event no assignment or transfer of the Warrant or the Warrant Stock
may be effected if any such assignment or transfer may render the Company a public company
or require, as a result thereof, the Company to file any registration statement,
prospectus reports or documents with the US Securites and Exchange Commission or any
Stock Exchange or other similar institution in any jurisdiction.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">8.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Notices</U>. Any notice required or permitted to be given to a party pursuant to the
provisions of this Warrant will be in writing and will be effective and deemed delivered
to such party on the earliest of the following: (a)&nbsp;all notices and other communications
delivered in person or by courier service shall be deemed to have been delivered as of
actual delivery thereof; or, (b)&nbsp;those given by facsimile transmission shall be deemed
delivered on the following business day after transmission, with confirmed transmission
thereof; or (c)&nbsp;all notices and other
communications sent by registered mail (or air mail if the posting is international)
shall be deemed given seven (7)&nbsp;days after posting.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->- 5 -<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">8.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Severability</U>. If any provision of this Warrant is held to be unenforceable, this
Warrant shall be considered divisible and such provision shall be deemed inoperative to
the extent it is deemed unenforceable, and in all other respects this Warrant shall remain
in full force and effect; <U>provided</U>, <U>however</U>, that if any such provision
may be made enforceable by limitation thereof, then such provision shall be deemed to be
so limited and shall be enforceable to the maximum extent permitted by applicable law.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">8.6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Counterparts</U>. This Warrant may be executed in any number of counterparts, each
of which shall be an original, but all of which together shall constitute one instrument.
Facsimile signatures of a party shall be binding as evidence of such party&#146;s agreement
hereto and acceptance hereof.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">&#091;THE REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK&#093;
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->- 6 -<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer
thereunto duly authorized.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">Dated: 31 December, 2006</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left"><B>ORTHODONTIX, INC.</B> &nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>By:&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="left" colspan="2" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" colspan="1" nowrap>Name:&nbsp;
</TD>
    <TD align="left" valign="top">David Aviezer, Ph.D.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" colspan="1" nowrap>Title:
</TD>
    <TD align="left" valign="top">Chief Executive Officer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->- 7 -<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>Exhibit&nbsp;A</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U>Exercise Notice</U>

</DIV>

<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Date: <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">To: ORTHODONTIX, INC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The undersigned, pursuant to the provisions set forth in the Warrant to which this Exercise Notice
is attached (the &#147;<B>Warrant</B>&#148;), hereby elects to purchase <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> of the Warrant Stock (as such
term is defined in the Warrant) pursuant to Section&nbsp;1.1 of the Warrant, and herewith makes payment
of <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, representing the full Exercise Price for such stock as provided for in such
Warrant.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Signature:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Address:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->- 8 -<!-- /Folio -->
</DIV>


</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>3
<FILENAME>g04822exv10w1.htm
<DESCRIPTION>EX-10.1 2006 STOCK INCENTIVE PLAN
<TEXT>
<HTML>
<HEAD>
<TITLE>EX-10.1 2006 Stock Incentive Plan</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Exhibit&nbsp;10.1
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PROTALIX BIOTHERAPEUTICS, INC.</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>2006 STOCK INCENTIVE PLAN</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;<U>Purposes of the Plan</U>. The purposes of this Plan are to attract and retain the best
available personnel, to provide additional incentives to Employees, Directors and Consultants and
to promote the success of the Company&#146;s business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;<U>Definitions</U>. The following definitions shall apply as used herein and in the
individual Award Agreements except as defined otherwise in an individual Award Agreement. In the
event a term is separately defined in an individual Award Agreement, such definition shall
supercede the definition contained in this Section&nbsp;2.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) &#147;<U>3(I) Option</U>&#148; means Award granted under Section&nbsp;3(I).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) &#147;<U>102 Option</U>&#148; means Award granted under Section&nbsp;102.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) &#147;<U>Administrator</U>&#148; means the Board or any of the Committees appointed to administer
the Plan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) &#147;<U>Affiliate</U>&#148; and &#147;<U>Associate</U>&#148; shall have the respective meanings ascribed to
such terms in Rule&nbsp;12b-2 promulgated under the Exchange Act.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) &#147;<U>Applicable Laws</U>&#148; means the legal requirements relating to the Plan and the Awards
under applicable provisions of federal securities laws, state corporate and securities laws, the
Code, the rules of any applicable stock exchange or national market system, and the rules of any
non-U.S. jurisdiction applicable to Awards granted to residents therein.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) &#147;<U>Assumed</U>&#148; means that pursuant to a Corporate Transaction either (i)&nbsp;the Award is
expressly affirmed by the Company or (ii)&nbsp;the contractual obligations represented by the Award are
expressly assumed (and not simply by operation of law) by the successor entity or its Parent in
connection with the Corporate Transaction with appropriate adjustments to the number and type of
securities of the successor entity or its Parent subject to the Award and the exercise or purchase
price thereof which at least preserves the compensation element of the Award existing at the time
of the Corporate Transaction as determined in accordance with the instruments evidencing the
agreement to assume the Award.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) &#147;<U>Award</U>&#148; means the grant of an Option, SAR, Dividend Equivalent Right, Restricted
Stock, Restricted Stock Unit or other right or benefit under the Plan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) &#147;<U>Award Agreement</U>&#148; means the written agreement evidencing the grant of an Award
executed by the Company and the Grantee, including any amendments thereto.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) &#147;<U>Board</U>&#148; means the Board of Directors of the Company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) &#147;<U>Cause</U>&#148; means, with respect to the termination by the Company or a Related Entity
of the Grantee&#146;s Continuous Service, that such termination is for &#147;Cause&#148; as such term (or word of
like import) is expressly defined in a then-effective written agreement between the

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</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Grantee and the Company or such Related Entity, or in the absence of such then-effective
written agreement and definition, is based on, in the determination of the Administrator, the
Grantee&#146;s: (i)&nbsp;performance of any act or failure to perform any act in bad faith which is
materially detrimental to the Company or a Related Entity as reasonably determined in good faith by
a unanimous decision of members of the Board entitled to vote thereon; (ii)&nbsp;dishonesty, intentional
misconduct or material breach of any agreement with the Company or a Related Entity; (iii)
commission of a crime involving dishonesty, breach of trust, or physical or emotional harm to any
person; (iv)&nbsp;embezzlement of funds of the Company or a Related Entity; (v)&nbsp;ownership, direct or
indirect (i.e., by means of a holding company or family member), of an interest in a person or
entity (other than a minority interest in a publicly traded company) in competition with the
products or services of the Company or a Related Entity, including those products or services
contemplated in a plan adopted by the Board; (vi)&nbsp;any breach of the Grantee&#146;s fiduciary duties or
duties of care to the Company or a Related Entity (except for conduct taken in good faith); (vii)
any material failure to carry out a reasonable and legitimate directive of the Board; or (viii)&nbsp;any
material breach of an Employee&#146;s undertakings of confidentiality and non competition.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) &#147;<U>Change in Control</U>&#148; means a change in ownership or control of the Company effected
through either of the following transactions:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;the direct or indirect acquisition by any person or related group of persons (other than
an acquisition from or by the Company or by a Company-sponsored employee benefit plan or by a
person that directly or indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule&nbsp;13d-3 of the Exchange Act) of
securities possessing more than fifty percent (50%) of the total combined voting power of the
Company&#146;s outstanding securities pursuant to a tender or exchange offer made directly to the
Company&#146;s stockholders which a majority of the Continuing Directors who are not Affiliates or
Associates of the offeror do not recommend such stockholders accept, or
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;a change in the composition of the Board over a period of twelve (12)&nbsp;months or less such
that a majority of the Board members (rounded up to the next whole number) ceases, by reason of one
or more contested elections for Board membership, to be comprised of individuals who are Continuing
Directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) &#147;<U>Code</U>&#148; means the Internal Revenue Code of 1986, as amended.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) &#147;<U>Committee</U>&#148; means any committee composed of members of the Board appointed by the
Board to administer the Plan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) &#147;<U>Common Stock</U>&#148; means the common stock of the Company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) &#147;<U>Company</U>&#148; means Protalix BioTherapeutics, Inc., a Florida corporation, or any
successor entity that adopts the Plan in connection with a Corporate Transaction.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) &#147;<U>Consultant</U>&#148; means any person (other than an Employee or a Director, solely with
respect to rendering services in such person&#146;s capacity as a Director) who is engaged by the
Company or any Related Entity to render consulting or advisory services to the Company or such
Related Entity.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) &#147;<U>Continuing Directors</U>&#148; means members of the Board who either (i)&nbsp;have been Board
members continuously for a period of at least twelve (12)&nbsp;months or (ii)&nbsp;have been Board members
for less than twelve (12)&nbsp;months and were elected or nominated for election as Board members by at
least a majority of the Board members described in clause (i)&nbsp;who were still in office at the time
such election or nomination was approved by the Board.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) &#147;<U>Continuous Service</U>&#148; means that the provision of services to the Company or a
Related Entity in any capacity of Employee, Director or Consultant is not interrupted or
terminated. In jurisdictions requiring notice in advance of an effective termination as an
Employee, Director or Consultant, Continuous Service shall be deemed terminated upon the actual
cessation of providing services to the Company or a Related Entity notwithstanding any required
notice period that must be fulfilled before a termination as an Employee, Director or Consultant
can be effective under Applicable Laws. A Grantee&#146;s Continuous Service shall be deemed to have
terminated either upon an actual termination of Continuous Service or upon the entity for which the
Grantee provides services ceasing to be a Related Entity. Continuous Service shall not be
considered interrupted in the case of (i)&nbsp;any approved leave of absence, (ii)&nbsp;transfers among the
Company, any Related Entity, or any successor, in any capacity of Employee, Director or Consultant,
or (iii)&nbsp;any change in status as long as the individual remains in the service of the Company or a
Related Entity in any capacity of Employee, Director or Consultant (except as otherwise provided in
the Award Agreement). An approved leave of absence shall include sick leave, military leave, or
any other authorized personal leave. For purposes of each Incentive Stock Option granted under the
Plan, if such leave exceeds three (3)&nbsp;months, and reemployment upon expiration of such leave is not
guaranteed by statute or contract, then the Incentive Stock Option shall be treated as a
Non-Qualified Stock Option on the day three (3)&nbsp;months and one (1)&nbsp;day following the expiration of
such three (3)&nbsp;month period.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) &#147;<U>Corporate Transaction</U>&#148; means any of the following transactions, provided,
however, that the Administrator shall determine under parts (iv)&nbsp;and (v)&nbsp;whether multiple
transactions are related, and its determination shall be final, binding and conclusive:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;a merger or consolidation in which the Company is not the surviving entity, except for a
transaction the principal purpose of which is to change the state in which the Company is
incorporated;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;the sale, transfer or other disposition of all or substantially all of the assets of the
Company;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;the complete liquidation or dissolution of the Company;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) any reverse merger or series of related transactions culminating in a reverse merger
(including, but not limited to, a tender offer followed by a reverse merger) in which the Company
is the surviving entity but (A)&nbsp;the shares of Common Stock outstanding immediately prior to such
merger are converted or exchanged by virtue of the merger into other property, whether in the form
of securities, cash or otherwise, or (B)&nbsp;in which securities possessing more than forty percent
(40%) of the total combined voting power of the Company&#146;s outstanding securities are transferred to
a person or persons different from those who held such
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">securities immediately prior to such merger or the initial transaction culminating in such
merger; or
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;acquisition in a single or series of related transactions by any person or related group
of persons (other than the Company or by a Company-sponsored employee benefit plan) of beneficial
ownership (within the meaning of Rule&nbsp;13d-3 of the Exchange Act) of securities possessing more than
fifty percent (50%) of the total combined voting power of the Company&#146;s outstanding securities but
excluding any such transaction or series of related transactions that the Administrator determines
shall not be a Corporate Transaction (provided however that the Administrator shall have no
discretion in connection with a Corporate Transaction for the purchase of all or substantially all
of the shares of the Company unless the principal purpose of such transaction is to change the
state in which the Company is incorporated).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) &#147;<U>Covered Employee</U>&#148; means an Employee who is a &#147;covered employee&#148; under Section
162(m)(3) of the Code.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) &#147;<U>Director</U>&#148; means a member of the Board or the board of directors of any Related
Entity.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) &#147;<U>Disability</U>&#148; means as defined under the long-term disability policy of the Company
or the Related Entity to which the Grantee provides services regardless of whether the Grantee is
covered by such policy. If the Company or the Related Entity to which the Grantee provides service
does not have a long-term disability plan in place, &#147;Disability&#148; means that a Grantee is unable to
carry out the responsibilities and functions of the position held by the Grantee by reason of any
medically determinable physical or mental impairment for a period of not less than ninety (90)
consecutive days. A Grantee will not be considered to have incurred a Disability unless he or she
furnishes proof of such impairment sufficient to satisfy the Administrator in its discretion.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w) &#147;<U>Dividend Equivalent Right</U>&#148; means a right entitling the Grantee to compensation
measured by dividends paid with respect to Common Stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) &#147;<U>Employee</U>&#148; means any person, including an Officer or Director, who is in the
employ of the Company or any Related Entity, subject to the control and direction of the Company or
any Related Entity as to both the work to be performed and the manner and method of performance.
The payment of a director&#146;s fee by the Company or a Related Entity shall not be sufficient to
constitute &#147;employment&#148; by the Company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y) &#147;<U>Exchange Act</U>&#148; means the Securities Exchange Act of 1934, as amended.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(z) &#147;<U>Fair Market Value</U>&#148; means, as of any date, the value of Common Stock determined as
follows:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) If the Common Stock is listed on one or more established stock exchanges or national
market systems, including without limitation the American Stock Exchange, its Fair Market Value
shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as
quoted on the principal exchange or system on which the
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Common Stock is listed (as determined by the Administrator) on the date of determination (or,
if no closing sales price or closing bid was reported on that date, as applicable, on the last
trading date such closing sales price or closing bid was reported), as reported in The Wall Street
Journal or such other source as the Administrator deems reliable;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;If the Common Stock is regularly quoted on an automated quotation system (including the
OTC Bulletin Board) or by a recognized securities dealer, its Fair Market Value shall be the
closing sales price for such stock as quoted on such system or by such securities dealer on the
date of determination, but if selling prices are not reported, the Fair Market Value of a share of
Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on
the date of determination (or, if no such prices were reported on that date, on the last date such
prices were reported), as reported in The Wall Street Journal or such other source as the
Administrator deems reliable; or
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;In the absence of an established market for the Common Stock of the type described in
(i)&nbsp;and (ii), above, the Fair Market Value thereof shall be determined by the Administrator in good
faith.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aa) &#147;<U>Grantee</U>&#148; means an Employee, Director or Consultant who receives an Award under
the Plan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(bb) &#147;<U>Incentive Stock Option</U>&#148; means an Option intended to qualify as an incentive
stock option within the meaning of Section&nbsp;422 of the Code.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(cc) &#147;<U>Israeli Employee&#148;</U> means Employees, office holders of the Company or a Related
Company (&#147;Nosei Misra&#148; &#151; as such term is defined in the Israeli Companies Law 1999) and Directors
(excluding those who are considered a &#147;Controlling Shareholder&#148; pursuant to Section&nbsp;32(9) of the
Tax Ordinance or otherwise excluded by the Tax Ordinance).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(dd) &#147;<U>Israeli Grantee</U>&#148; means Grantees who are residents of the State of Israel or
those who are deemed to be residents of the State of Israel for the payment of tax (whether such
grantee is entitled to the tax benefits under Section&nbsp;102 or not).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ee) &#147;<U>ITA</U>&#148; means Israeli Tax Authorities.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ff) &#147;<U>Non-Employee&#148;</U> means Consultants or any other person who is not an Israeli
Employee.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(gg) &#147;<U>Non-Qualified Stock Option</U>&#148; means an Option not intended to qualify as an
Incentive Stock Option.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(hh) &#147;<U>Non-Trustee 102 Option</U>&#148; shall mean a 102 Option granted pursuant to Section
102(c) of the Tax Ordinance and not held in trust by the Trustee.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) &#147;<U>Officer</U>&#148; means a person who is an officer of the Company or a Related Entity
within the meaning of Section&nbsp;16 of the Exchange Act and the rules and regulations promulgated
thereunder.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(jj) &#147;<U>Option</U>&#148; means an option to purchase Shares pursuant to an Award Agreement
granted under the Plan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(kk) &#147;<U>Parent</U>&#148; means a &#147;parent corporation&#148;, whether now or hereafter existing, as
defined in Section 424(e) of the Code.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ll) &#147;<U>Performance-Based Compensation</U>&#148; means compensation qualifying as
&#147;performance-based compensation&#148; under Section 162(m) of the Code.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(mm) &#147;<U>Plan</U>&#148; means this 2006 Stock Incentive Plan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(nn) &#147;<U>Related Entity</U>&#148; means any Parent or Subsidiary of the Company. With respect to
Israeli Grantees of 102 Options, the definition shall further include any entity permitted under
Section&nbsp;102 (a)&nbsp;of the Tax Ordinance.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(oo) &#147;<U>Replaced</U>&#148; means that pursuant to a Corporate Transaction the Award is replaced
with a comparable stock award or a cash incentive program of the Company, the successor entity (if
applicable) or Parent of either of them which preserves the compensation element of such Award
existing at the time of the Corporate Transaction and provides for subsequent payout in accordance
with the same (or a more favorable) vesting schedule applicable to such Award. The determination
of Award comparability shall be made by the Administrator and its determination shall be final,
binding and conclusive.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(pp) &#147;<U>Restricted Stock</U>&#148; means Shares issued under the Plan to the Grantee for such
consideration, if any, and subject to such restrictions on transfer, rights of first refusal,
repurchase provisions, forfeiture provisions, and other terms and conditions as established by the
Administrator.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(qq) &#147;<U>Restricted Stock Units</U>&#148; means an Award which may be earned in whole or in part
upon the passage of time or the attainment of performance criteria established by the Administrator
and which may be settled for cash, Shares or other securities or a combination of cash, Shares or
other securities as established by the Administrator.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(rr) &#147;<U>Rule&nbsp;16b-3</U>&#148; means Rule&nbsp;16b-3 promulgated under the Exchange Act or any successor
thereto.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ss) &#147;<U>SAR</U>&#148; means a stock appreciation right entitling the Grantee to Shares or cash
compensation, as established by the Administrator, measured by appreciation in the value of Common
Stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(tt) &#147;<U>Section&nbsp;3(I)</U>&#148; means section 3(I) of the Tax Ordinance as may be amended from
time to time.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(uu) &#147;<U>Section&nbsp;102</U>&#148; means section 102 of the Tax Ordinance as may be amended from time
to time.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vv) &#147;<U>Share</U>&#148; means a share of the Common Stock.
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ww) &#147;<U>Subsidiary</U>&#148; means a &#147;subsidiary corporation&#148;, whether now or hereafter existing,
as defined in Section 424(f) of the Code.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xx) &#147;<U>Tax Ordinance</U>&#148; means the Israeli Income Tax Ordinance &#091;New Version&#093;, 1961
(including as amended pursuant to Amendment 132 thereto) and to the extent not specifically
indicated hereunder also the rules, regulations and orders or procedures promulgated thereunder
from time to time, as amended or replaced from time to time.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(yy) &#147;<U>Trustee</U>&#148; means any individual appointed by the Company to serve as trustee and
approved by the ITA, in accordance with the provisions of Section 102(a) of the Tax Ordinance and
the regulations promulgated thereunder.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(zz) &#147;<U>Trustee 102 Option</U>&#148; means a 102 Option granted pursuant to Section 102(b) of the
Tax Ordinance and held in trust by the Trustee for the benefit of an Israeli Grantee.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;<U>Stock Subject to the Plan</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Subject
to the provisions of Section&nbsp;10, below, the maximum aggregate number of Shares
which may be issued pursuant to all Awards (including Incentive Stock Options) under the Plan is
9,233,798 Shares. The Shares to be issued pursuant to Awards may be authorized, but unissued, or
reacquired Common Stock.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Any Shares covered by an Award (or portion of an Award) which is forfeited, canceled or
expires (whether voluntarily or involuntarily) shall be deemed not to have been issued for purposes
of determining the maximum aggregate number of Shares which may be issued under the Plan. Shares
that actually have been issued under the Plan pursuant to an Award shall not be returned to the
Plan and shall not become available for future issuance under the Plan, except that if unvested
Shares are forfeited, or repurchased by the Company at the lower of their original purchase price
or their Fair Market Value at the time of repurchase, such Shares shall become available for future
grant under the Plan. To the extent not prohibited by the listing requirements of The American
Stock Exchange (or other established stock exchange or national market system on which the Common
Stock is traded) and Applicable Law, any Shares covered by an Award which are surrendered (i)&nbsp;in
payment of the Award exercise or purchase price (including pursuant to the &#147;net exercise&#148; of an
option pursuant to Section&nbsp;7(b)(v)) or (ii)&nbsp;in satisfaction of tax withholding obligations incident
to the exercise of an Award shall be deemed not to have been issued for purposes of determining the
maximum number of Shares which may be issued pursuant to all Awards under the Plan, unless
otherwise determined by the Administrator.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;<U>Administration of the Plan</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Plan Administrator</U>.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;<U>Administration with Respect to Directors and Officers</U>. With respect to grants of
Awards to Directors or Employees who are also Officers or Directors of the Company, the Plan shall
be administered by (A)&nbsp;the Board or (B)&nbsp;a Committee designated by the Board, which Committee shall
be constituted in such a manner as to satisfy the Applicable Laws
and to permit such grants and related transactions under the Plan to be exempt from
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Section
16(b) of the Exchange Act in accordance with Rule&nbsp;16b-3. Once appointed, such Committee shall
continue to serve in its designated capacity until otherwise directed by the Board.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;<U>Administration With Respect to Consultants and Other Employees</U>. With respect to
grants of Awards to Employees or Consultants who are neither Directors nor Officers of the Company,
the Plan shall be administered by (A)&nbsp;the Board or (B)&nbsp;a Committee designated by the Board, which
Committee shall be constituted in such a manner as to satisfy the Applicable Laws. Once appointed,
such Committee shall continue to serve in its designated capacity until otherwise directed by the
Board. The Board may authorize one or more Officers to grant such Awards and may limit such
authority as the Board determines from time to time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;<U>Administration With Respect to Covered Employees</U>. Notwithstanding the
foregoing, grants of Awards to any Covered Employee intended to qualify as Performance-Based
Compensation shall be made only by a Committee (or subcommittee of a Committee) which is comprised
solely of two or more Directors eligible to serve on a committee making Awards qualifying as
Performance-Based Compensation. In the case of such Awards granted to Covered Employees,
references to the &#147;Administrator&#148; or to a &#147;Committee&#148; shall be deemed to be references to such
Committee or subcommittee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;<U>Administration With Respect to Israeli Grantees</U>. With respect to grants of
Awards to Israeli Grantees, the Plan shall be administered by (A)&nbsp;the Board or (B)&nbsp;a Committee or
one or more Officers designated by the Board, which Committee or Officers shall be constituted or
appointed in such a manner as to satisfy the ITA and the Applicable Laws applicable to Awards for
Israeli Grantees. Once appointed, such Committee or Officer shall continue to serve in its/his/her
designated capacity until otherwise directed by the Board.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;<U>Administration Errors</U>. In the event an Award is granted in a manner inconsistent
with the provisions of this subsection (a), such Award shall be presumptively valid as of its grant
date to the extent permitted by the Applicable Laws.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Powers of the Administrator</U>. Subject to Applicable Laws and the provisions of the
Plan (including any other powers given to the Administrator hereunder), and except as otherwise
provided by the Board, the Administrator shall have the authority, in its discretion:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;to select the Employees, Directors and Consultants to whom Awards may be granted from time
to time hereunder;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;to determine whether and to what extent Awards are granted hereunder;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;to determine the number of Shares or the amount of other consideration to be covered by
each Award granted hereunder;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;to approve forms of Award Agreements for use under the Plan;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;to determine the terms and conditions of any Award granted hereunder;
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)&nbsp;to amend the terms of any outstanding Award granted under the Plan, provided that any
amendment that would adversely affect the Grantee&#146;s rights under an outstanding Award shall not be
made without the Grantee&#146;s written consent, provided, however, that an amendment or modification
that may cause an Incentive Stock Option to become a Non-Qualified Stock Option shall not be
treated as adversely affecting the rights of the Grantee. The reduction of the exercise price of
any Option awarded under the Plan and the base appreciation amount of any SAR awarded under the
Plan shall not be subject to stockholder approval and canceling an Option or SAR at a time when its
exercise price or base appreciation amount (as applicable) exceeds the Fair Market Value of the
underlying Shares, in exchange for another Option, SAR, Restricted Stock, or other Award shall not
be subject to stockholder approval and shall be at the discretion of the Administrator;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii)&nbsp;to construe and interpret the terms of the Plan and Awards, including without
limitation, any notice of award or Award Agreement, granted pursuant to the Plan;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii)&nbsp;to grant Awards to Employees, Directors and Consultants employed outside the United
States on such terms and conditions different from those specified in the Plan as may, in the
judgment of the Administrator, be necessary or desirable to further the purpose of the Plan; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix)&nbsp;to designate Awards as 102 Options (whether through a trustee or not) or 3(I) Options
subject to the limitations under the ITA or any other Applicable Law and to determine the type and
route of the Trustee 102 Options.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x)&nbsp;to take such other action, not inconsistent with the terms of the Plan, as the
Administrator deems appropriate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The express grant in the Plan of any specific power to the Administrator shall not be construed as
limiting any power or authority of the Administrator; provided that the Administrator may not
exercise any right or power reserved to the Board. Any decision made, or action taken, by the
Administrator or in connection with the administration of this Plan shall be final, conclusive and
binding on all persons having an interest in the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Indemnification</U>. In addition to such other rights of indemnification as they may
have as members of the Board or as Officers or Employees of the Company or a Related Entity,
members of the Board and any Officers or Employees of the Company or a Related Entity to whom
authority to act for the Board, the Administrator or the Company is delegated shall be defended and
indemnified by the Company to the extent permitted by law on an after-tax basis against all
reasonable expenses, including attorneys&#146; fees, actually and necessarily incurred in connection
with the defense of any claim, investigation, action, suit or proceeding, or in connection with any
appeal therein, to which they or any of them may be a party by reason of any action taken or
failure to act under or in connection with the Plan, or any Award granted hereunder, and against
all amounts paid by them in settlement thereof (provided such settlement
is approved by the Company) or paid by them in satisfaction of a judgment in any such claim,
investigation, action, suit or proceeding, except in relation to matters as to which it shall be
adjudged in such claim, investigation, action, suit or proceeding that such person is liable for</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">gross negligence, bad faith or intentional misconduct; provided, however, that within thirty (30)
days after the institution of such claim, investigation, action, suit or proceeding, such person
shall offer to the Company, in writing, the opportunity at the Company&#146;s expense to defend the
same.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;<U>Eligibility</U>. Awards other than Incentive Stock Options may be granted to
Employees, Directors and Consultants. Incentive Stock Options may be granted only to Employees of
the Company or a Parent or a Subsidiary of the Company. An Employee, Director or Consultant who
has been granted an Award may, if otherwise eligible, be granted additional Awards. Awards may be
granted to such Employees, Directors or Consultants who are residing in non-U.S. jurisdictions as
the Administrator may determine from time to time, provided however that Awards to Israeli Grantees
under Section&nbsp;102 or Section&nbsp;3(I) of the Tax Ordinance shall be subject to Section&nbsp;20 below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company does not warrant that the Plan will be recognized by the income tax authorities in
any jurisdiction or that future changes will not be made to the provisions of applicable laws or
rules or regulations which are promulgated from time to time thereunder, or that any exemption or
benefit currently available, whether by the ITA pursuant to Section&nbsp;102 or otherwise, will not be
abolished.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;<U>Terms and Conditions of Awards</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Types of Awards</U>. The Administrator is authorized under the Plan to award any type
of arrangement to an Employee, Director or Consultant that is not inconsistent with the provisions
of the Plan and that by its terms involves or might involve the issuance of (i)&nbsp;Shares, (ii)&nbsp;cash
or (iii)&nbsp;an Option, a SAR, or similar right with a fixed or variable price related to the Fair
Market Value of the Shares and with an exercise or conversion privilege related to the passage of
time, the occurrence of one or more events, or the satisfaction of performance criteria or other
conditions. Such awards include, without limitation, Options, SARs, sales or bonuses of Restricted
Stock, Restricted Stock Units or Dividend Equivalent Rights, and an Award may consist of one such
security or benefit, or two (2)&nbsp;or more of them in any combination or alternative.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Designation of Award</U>. Each Award shall be designated in the Award Agreement. In
the case of an Option, the Option shall be designated as either an Incentive Stock Option or a
Non-Qualified Stock Option and with respect to Israeli Grantees may be further designated as 102
Options or 3(I) Options under the Tax Ordinance subject to the qualifications described in Section
20 below. However, notwithstanding such designation, an Option will qualify as an Incentive Stock
Option under the Code only to the extent the $100,000 dollar limitation of Section 422(d) of the
Code is not exceeded. The $100,000 limitation of Section 422(d) of the Code is calculated based on
the aggregate Fair Market Value of the Shares subject to Options designated as Incentive Stock
Options which become exercisable for the first time by a Grantee during any calendar year (under
all plans of the Company or any Parent or Subsidiary of the Company). For purposes of this
calculation, Incentive Stock Options shall be
taken into account in the order in which they were granted, and the Fair Market Value of the
Shares shall be determined as of the grant date of the relevant Option.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Conditions of Award</U>. Subject to the terms of the Plan, the Administrator shall
determine the provisions, terms, and conditions of each Award including, but not limited to, the
Award vesting schedule, repurchase provisions, rights of first refusal, forfeiture provisions, form
of payment (cash, Shares, or other consideration) upon settlement of the Award, payment
contingencies, and satisfaction of any performance criteria. The performance criteria established
by the Administrator may be based on any one of, or combination of, the following: (i)&nbsp;increase in
share price, (ii)&nbsp;earnings per share, (iii)&nbsp;total stockholder return, (iv)&nbsp;operating margin, (v)
gross margin, (vi)&nbsp;return on equity, (vii)&nbsp;return on assets, (viii)&nbsp;return on investment, (ix)
operating income, (x)&nbsp;net operating income, (xi)&nbsp;pre-tax profit, (xii)&nbsp;cash flow, (xiii)&nbsp;revenue,
(xiv)&nbsp;expenses, (xv)&nbsp;earnings before interest, taxes and depreciation, (xvi)&nbsp;economic value added
and (xvii)&nbsp;market share. The performance criteria may be applicable to the Company, Related
Entities and/or any individual business units of the Company or any Related Entity. Partial
achievement of the specified criteria may result in a payment or vesting corresponding to the
degree of achievement as specified in the Award Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <U>Acquisitions and Other Transactions</U>. The Administrator may issue Awards under the
Plan in settlement, assumption or substitution for, outstanding awards or obligations to grant
future awards in connection with the Company or a Related Entity acquiring another entity, an
interest in another entity or an additional interest in a Related Entity whether by merger, stock
purchase, asset purchase or other form of transaction.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <U>Deferral of Award Payment</U>. The Administrator may establish one or more programs
under the Plan to permit selected Grantees the opportunity to elect to defer receipt of
consideration upon exercise of an Award, satisfaction of performance criteria, or other event that
absent the election would entitle the Grantee to payment or receipt of Shares or other
consideration under an Award. The Administrator may establish the election procedures, the timing
of such elections, the mechanisms for payments of, and accrual of interest or other earnings, if
any, on amounts, Shares or other consideration so deferred, and such other terms, conditions, rules
and procedures that the Administrator deems advisable for the administration of any such deferral
program.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <U>Separate Programs</U>. The Administrator may establish one or more separate programs
under the Plan for the purpose of issuing particular forms of Awards to one or more classes of
Grantees on such terms and conditions as determined by the Administrator from time to time.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <U>Individual Limitations on Awards</U>.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <U>Individual Limit for Options and SARs</U>. The maximum number of Shares with respect
to which Options and SARs may be granted to any Grantee in any calendar year shall be 9,233,798
Shares. Shares which shall not count against the limit set forth in the previous sentence. The
foregoing limitations shall be adjusted proportionately in connection with any change in the
Company&#146;s capitalization pursuant to Section&nbsp;10, below. To the extent required by Section 162(m) of
the Code or the
regulations thereunder, in applying the foregoing limitations with respect to a Grantee, if
any Option or SAR is canceled, the canceled Option or SAR shall continue to count against the
maximum number of Shares with respect to which Options and SARs may be granted to the Grantee. For
this purpose, the repricing of an Option
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(or in the case of a SAR, the base amount on which the
stock appreciation is calculated is reduced to reflect a reduction in the Fair Market Value of the
Common Stock) shall be treated as the cancellation of the existing Option or SAR and the grant of a
new Option or SAR.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;<U>Individual Limit for Restricted Stock and Restricted Stock Units</U>. For awards of
Restricted Stock and Restricted Stock Units that are intended to be Performance-Based Compensation,
the maximum number of Shares with respect to which such Awards may be granted to any Grantee in any
calendar year shall be 9,233,798 Shares. The foregoing limitation shall be adjusted
proportionately in connection with any change in the Company&#146;s capitalization pursuant to Section
10, below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;<U>Deferral</U>. If the vesting or receipt of Shares under an Award is deferred to a
later date, any amount (whether denominated in Shares or cash) paid in addition to the original
number of Shares subject to such Award will not be treated as an increase in the number of Shares
subject to the Award if the additional amount is based either on a reasonable rate of interest or
on one or more predetermined actual investments such that the amount payable by the Company at the
later date will be based on the actual rate of return of a specific investment (including any
decrease as well as any increase in the value of an investment).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <U>Early Exercise</U>. The Award Agreement may, but need not, include a provision
whereby the Grantee may elect at any time while an Employee, Director or Consultant to exercise any
part or all of the Award prior to full vesting of the Award. Any unvested Shares received pursuant
to such exercise may be subject to a repurchase right in favor of the Company or a Related Entity
or to any other restriction the Administrator determines to be appropriate.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <U>Term of Award</U>. The term of each Award shall be the term stated in the Award
Agreement, provided, however, that the term of an Incentive Stock Option shall be no more than ten
(10)&nbsp;years from the date of grant thereof. However, in the case of an Incentive Stock Option
granted to a Grantee who, at the time the Option is granted, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any Parent or
Subsidiary of the Company, the term of the Incentive Stock Option shall be five (5)&nbsp;years from the
date of grant thereof or such shorter term as may be provided in the Award Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) <U>Transferability of Awards</U>. Incentive Stock Options or Options to Israeli Grantees
may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised, during the lifetime of
the Grantee, only by the Grantee. Other Awards shall be transferable (i)&nbsp;by will and by the laws
of descent and distribution and (ii)&nbsp;during the lifetime of the Grantee, to the extent and in the
manner authorized by the Administrator. Notwithstanding the foregoing, the Grantee may designate
one or more beneficiaries of the Grantee&#146;s Award in the event of the Grantee&#146;s death on a
beneficiary designation form provided by the Administrator.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) <U>Time of Granting Awards</U>. The date of grant of an Award shall for all purposes be
the date on which the Administrator makes the determination to grant such Award, or such other date
as is determined by the Administrator.
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;<U>Award Exercise or Purchase Price, Consideration and Taxes</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Exercise or Purchase Price</U>. The exercise or purchase price, if any, for an Award
shall be as follows:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;In the case of an Incentive Stock Option:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)&nbsp;granted to an Employee who, at the time of the grant of such Incentive Stock Option owns
stock representing more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary of the Company, the per Share exercise price shall be not less
than one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant; or
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)&nbsp;granted to any Employee other than an Employee described in the preceding paragraph, the
per Share exercise price shall be not less than one hundred percent (100%) of the Fair Market Value
per Share on the date of grant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;In the case of Awards intended to qualify as Performance-Based Compensation, the exercise
or purchase price, if any, shall be not less than one hundred percent (100%) of the Fair Market
Value per Share on the date of grant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;In the case of other Awards, such price as is determined by the Administrator.
Notwithstanding the foregoing, with respect to Israeli Grantees, unless otherwise restricted or has
an adverse effect on the Company or a Related Company, such price shall be equal to the price per
share paid in the most recent financing round consummated prior to the date of grant of the
respective Award discounted by no less than 30%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;Notwithstanding
the foregoing provisions of this Section&nbsp;7(a), in the case of an Award
issued pursuant to Section&nbsp;6(d), above, the exercise or purchase price for the Award shall be
determined in accordance with the provisions of the relevant instrument evidencing the agreement to
issue such Award.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Consideration</U>. Subject to Applicable Laws, the consideration to be paid for the
Shares to be issued upon exercise or purchase of an Award including the method of payment, shall be
determined by the Administrator. In addition to any other types of consideration the Administrator
may determine, the Administrator is authorized to accept as consideration for Shares issued under
the Plan the following:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;cash;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;check;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;surrender of Shares or delivery of a properly executed form of attestation of ownership
of Shares as the Administrator may require which have a Fair Market Value on the date of surrender
or attestation equal to the aggregate exercise price of the Shares as to which said Award shall be
exercised;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;with respect to Options, payment through a broker-dealer sale and remittance procedure
pursuant to which the Grantee (A)&nbsp;shall provide written instructions to a Company designated
brokerage firm to effect the immediate sale of some or all of the purchased Shares and remit to the
Company sufficient funds to cover the aggregate exercise price payable for the purchased Shares and
(B)&nbsp;shall provide written directives to the Company to deliver the certificates for the purchased
Shares directly to such brokerage firm in order to complete the sale transaction; or
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;with respect to Options, payment through a &#147;net exercise&#148; such that, without the payment
of any funds, the Grantee may exercise the Option and receive the net number of Shares equal to (i)
the number of Shares as to which the Option is being exercised, multiplied by (ii)&nbsp;a fraction, the
numerator of which is the Fair Market Value per Share (on such date as is determined by the
Administrator) less the Exercise Price per Share, and the denominator of which is such Fair Market
Value per Share (the number of net Shares to be received shall be rounded down to the nearest whole
number of Shares);
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)&nbsp;any combination of the foregoing methods of payment.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Administrator may at any time or from time to time, by adoption of or by amendment to the
standard forms of Award Agreement described in Section&nbsp;4(b)(iv), or by other means, grant Awards
which do not permit all of the foregoing forms of consideration to be used in payment for the
Shares or which otherwise restrict one or more forms of consideration.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Taxes</U>. No Shares shall be delivered under the Plan to any Grantee or other person
until such Grantee or other person has made arrangements acceptable to the Administrator for the
satisfaction of any non-U.S., federal, state, or local income and employment tax withholding
obligations, including, without limitation, obligations incident to the receipt of Shares. Upon
exercise or vesting of an Award the Company shall withhold or collect from the Grantee an amount
sufficient to satisfy such tax obligations, including, but not limited to, by surrender of the
whole number of Shares covered by the Award sufficient to satisfy the minimum applicable tax
withholding obligations incident to the exercise or vesting of an Award.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;<U>Exercise of Award</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Procedure for Exercise; Rights as a Stockholder</U>.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;Any Award granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator under the terms of the Plan and specified in the Award Agreement
provided however that the standard vesting schedule for Israeli Grantees shall be as set forth in
Section&nbsp;20.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;An Award shall be deemed to be exercised when written notice of such exercise has been
given to the Company in accordance with the terms of the Award by the person entitled to exercise
the Award and full payment for the Shares with respect to which the Award is exercised has been
made, including, to the extent selected, use of the broker-dealer sale and remittance procedure to
pay the purchase price as provided in Section&nbsp;7(b).
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Exercise of Award Following Termination of Continuous Service</U>. In the event of
termination of a Grantee&#146;s Continuous Service for any reason other than Cause, Disability or death,
such Grantee may, but only within twelve (12)&nbsp;months from the date of such termination (or such
longer or shorter period as specified in the Award Agreement but in no event later than the
expiration date of the term of such Award as set forth in the Award Agreement), exercise the
portion of the Grantee&#146;s Award that was vested at the date of such termination or such other
portion of the Grantee&#146;s Award as may be determined by the Administrator. To the extent that the
Grantee&#146;s Award was unvested at the date of termination, or if Grantee does not exercise the vested
portion of the Grantee&#146;s Award within the time specified herein, the Award shall terminate.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Exercise of Award Following Termination of Continuous Service for Cause</U>. In the
event of termination of a Grantee&#146;s Continuous Service for Cause, such Grantee may, but only within
fourteen (14)&nbsp;days from the date of such termination (or such longer or shorter period as specified
in the Award Agreement but in no event later than the expiration date of the term of such Award as
set forth in the Award Agreement), exercise the portion of the Grantee&#146;s Award that was vested at
the date of such termination or such other portion of the Grantee&#146;s Award as may be determined by
the Administrator. To the extent that the Grantee&#146;s Award was unvested at the date of termination,
or if Grantee does not exercise the vested portion of the Grantee&#146;s Award within the time specified
herein, the Award shall terminate.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <U>Disability of Grantee</U>. In the event of termination of a Grantee&#146;s Continuous
Service as a result of his or her Disability, such Grantee may, but only within twelve (12)&nbsp;months
from the date of such termination (or such longer or shorter period as specified in the Award
Agreement but in no event later than the expiration date of the term of such Award as set forth in
the Award Agreement), exercise the portion of the Grantee&#146;s Award that was vested at the date of
such termination or such other portion of the Grantee&#146;s Award as may be determined by the
Administrator. To the extent that the Grantee&#146;s Award was unvested at the date of termination, or
if Grantee does not exercise the vested portion of the Grantee&#146;s Award within the time specified
herein, the Award shall terminate.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <U>Death of Grantee</U>. In the event of a termination of the Grantee&#146;s Continuous
Service as a result of his or her death, or in the event of the death of the Grantee during the
post-termination exercise periods following the Grantee&#146;s termination of Continuous Service
specified in this Section&nbsp;8, above, the Grantee&#146;s estate or a person who acquired the right to
exercise the Award by bequest or inheritance may exercise the portion of the Grantee&#146;s Award that
was vested as of the date of termination or such other portion of the Grantee&#146;s Award as may be
determined by the Administrator, within twelve (12)&nbsp;months from the date of death (or such longer
or shorter period as specified in the Award Agreement but in no event later than the expiration of
the term of such Award as set forth in the Award Agreement). To the extent that, at the time of
death, the Grantee&#146;s Award was unvested, or if the Grantee&#146;s estate or a person who
acquired the right to exercise the Award by bequest or inheritance does not exercise the
vested portion of the Grantee&#146;s Award within the time specified herein, the Award shall terminate.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;The holder of an Option shall have none of the rights of a stockholder with respect to the
Shares subject to the Option until such shares are transferred to the holder (or the Trustee, if
applicable) upon the exercise of the Option.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;<U>Conditions Upon Issuance of Shares</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;If at any time the Administrator determines that the delivery of Shares pursuant to the
exercise, vesting or any other provision of an Award is or may be unlawful under Applicable Laws,
the vesting or right to exercise an Award or to otherwise receive Shares pursuant to the terms of
an Award shall be suspended until the Administrator determines that such delivery is lawful and
shall be further subject to the approval of counsel for the Company with respect to such
compliance. The Company shall have no obligation to effect any registration or qualification of
the Shares under federal or state laws or other Applicable Laws.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;As a condition to the exercise of an Award, the Company may require the person exercising
such Award make such representations and warranties which, in the opinion of the Company, are
required to ensure that such exercise, or a subsequent sale or disposition of any Shares obtained
upon such exercise, does not contravene any Applicable Law, including <I>inter alia</I>, representations
and warranties at the time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such Shares if, in the opinion
of counsel for the Company, such a representation is required by any Applicable Laws.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Unless otherwise set forth in an Award Agreement, Shares issued to a Grantee or the
Trustee, as applicable, shall be subject to such restrictions as required by the appropriate
securities&#146; law and in the event that the Company&#146;s shares shall be registered for trading
in any public market, Grantee&#146;s rights to sell the Shares may be subject to certain
limitations (including a lock-up period), as will be requested by the Company or its
underwriters, and the Grantee by executing an Award Agreement unconditionally agrees and accepts
any such limitations and undertakes to further execute any agreement as may be requested by the
Company or its underwriters from time to time.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp;<U>Adjustments Upon Changes in Capitalization</U>. Subject to any required action by the
stockholders of the Company, the number of Shares covered by each outstanding Award, and the number
of Shares which have been authorized for issuance under the Plan but as to which no Awards have yet
been granted or which have been returned to the Plan, the exercise or purchase price of each such
outstanding Award, the maximum number of Shares with respect to which Options and SARs may be
granted to any Grantee in any calendar year, as well as any other terms that the Administrator
determines require adjustment shall be proportionately adjusted for (i)&nbsp;any increase or decrease in
the number of issued Shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Shares, or similar transaction affecting the Shares, (ii)
any other increase or decrease in the number of issued Shares effected without receipt of
consideration by the Company, or (iii)&nbsp;any other transaction with respect to Common Stock including
a corporate merger, consolidation, acquisition of property or stock,
separation (including a spin-off or other distribution of stock or property), reorganization,
liquidation (whether partial or complete) or any similar transaction; provided, however that
conversion of any convertible securities of the Company shall not be deemed to have been
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&#147;effected
without receipt of consideration.&#148; In connection with the foregoing adjustments, the Administrator
may, in its discretion, prohibit the exercise of Awards during certain periods of time. Except as
the Administrator determines, no issuance by the Company of shares of any class, or securities
convertible into shares of any class, shall affect, and no adjustment by reason hereof shall be
made with respect to, the number or price of Shares subject to an Award.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.&nbsp;<U>Corporate Transactions and Changes in Control</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Termination of Award to Extent Not Assumed in Corporate Transaction</U>. Effective
upon the consummation of a Corporate Transaction, all outstanding Awards under the Plan shall
terminate. However, all such Awards shall not terminate to the extent they are Assumed in
connection with the Corporate Transaction.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Acceleration of Award Upon Corporate Transaction or Change in Control</U>.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;<U>Corporate Transaction</U>. Except as provided otherwise in an individual Award
Agreement, in the event of a Corporate Transaction and:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)&nbsp;for the portion of each Award that is Assumed or Replaced, then such Award (if Assumed),
the replacement Award (if Replaced), or the cash incentive program (if Replaced) automatically
shall become fully vested, exercisable and payable and be released from any repurchase or
forfeiture rights (other than repurchase rights exercisable at Fair Market Value) for all of the
Shares (or other consideration) at the time represented by such Assumed or Replaced portion of the
Award, immediately upon termination of the Grantee&#146;s Continuous Service if such Continuous Service
is terminated by the successor company or the Company without Cause within twelve (12)&nbsp;months after
the Corporate Transaction; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)&nbsp;for the portion of each Award that is neither Assumed nor Replaced, such portion of the
Award shall automatically become fully vested and exercisable and be released from any repurchase
or forfeiture rights (other than repurchase rights exercisable at Fair Market Value) for all of the
Shares (or other consideration) at the time represented by such portion of the Award, immediately
prior to the specified effective date of such Corporate Transaction, provided that the Grantee&#146;s
Continuous Service has not terminated prior to such date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;<U>Change in Control</U>. Except as provided otherwise in an individual Award
Agreement, following a Change in Control (other than a Change in Control which also is a Corporate
Transaction) and upon the termination of the Continuous Service of a Grantee if such Continuous
Service is terminated by the Company or Related Entity without Cause within twelve (12)&nbsp;months
after a Change in Control, each Award of such Grantee which is at the time outstanding under the
Plan automatically shall become fully vested and exercisable and be released from any repurchase or
forfeiture rights (other than repurchase rights exercisable at Fair Market Value), immediately upon
the termination of such Continuous Service.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Effect of Acceleration on Incentive Stock Options</U>. Any Incentive Stock Option
accelerated under this Section&nbsp;11 in connection with a Corporate Transaction or Change in Control
shall remain exercisable as an Incentive Stock Option under the Code only to the extent the
$100,000 dollar limitation of Section 422(d) of the Code is not exceeded.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.&nbsp;<U>Effective Date and Term of Plan</U>. The Plan shall become effective upon the earlier
to occur of its adoption by the Board or its approval by the stockholders of the Company. It shall
continue in effect for a term of ten (10)&nbsp;years unless sooner
terminated. Subject to Section&nbsp;17,
below, and Applicable Laws, Awards may be granted under the Plan upon its becoming effective.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.&nbsp;<U>Amendment, Suspension or Termination of the Plan</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The Board may at any time amend, suspend or terminate the Plan; provided, however, that no
such amendment shall be made without the approval of the Company&#146;s stockholders to the extent such
approval is required by Applicable Laws<B>, </B>or if such amendment would lessen the stockholder approval
requirements of Section&nbsp;4(b)(vi) or this Section&nbsp;13(a).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;No Award may be granted during any suspension of the Plan or after termination of the
Plan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;No suspension or termination of the Plan (including termination of the Plan under Section
11, above) shall adversely affect any rights under Awards already granted to a Grantee.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.&nbsp;<U>Reservation of Shares</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The Company, during the term of the Plan, will at all times reserve and keep available
such number of Shares as shall be sufficient to satisfy the requirements of the Plan.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company&#146;s counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of
the failure to issue or sell such Shares as to which such requisite authority shall not have been
obtained.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.&nbsp;<U>No Effect on Terms of Employment/Consulting Relationship</U>. The Plan shall not
confer upon any Grantee any right with respect to the Grantee&#146;s Continuous Service, nor shall it
interfere in any way with his or her right or the right of the Company or any Related Entity to
terminate the Grantee&#146;s Continuous Service at any time, with or without Cause, and with or without
notice. The ability of the Company or any Related Entity to terminate the employment of a Grantee
who is employed at will is in no way affected by its determination that the Grantee&#146;s Continuous
Service has been terminated for Cause for the purposes of this Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.&nbsp;<U>No Effect on Retirement and Other Benefit Plans</U>. Except as specifically provided
in a retirement or other benefit plan of the Company or a Related Entity, Awards shall not be
deemed compensation for purposes of computing benefits or contributions under any retirement
plan of the Company or a Related Entity, and shall not affect any benefits under any other
benefit plan of any kind or any benefit plan subsequently instituted under which the availability
or amount of benefits is related to level of compensation. The Plan is not a &#147;Retirement Plan&#148; or
&#147;Welfare Plan&#148; under the Employee Retirement Income Security Act of 1974, as amended.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.&nbsp;<U>Stockholder Approval</U>. The grant of Incentive Stock Options under the Plan shall
be subject to approval by the stockholders of the Company within twelve (12)&nbsp;months before or after
the date the Plan is adopted excluding Incentive Stock Options issued in substitution for
outstanding Incentive Stock Options pursuant to Section 424(a) of the Code. Such stockholder
approval shall be obtained in the degree and manner required under Applicable Laws. The
Administrator may grant Incentive Stock Options under the Plan prior to approval by the
stockholders, but until such approval is obtained, no such Incentive Stock Option shall be
exercisable. In the event that stockholder approval is not obtained within the twelve (12)&nbsp;month
period provided above, all Incentive Stock Options previously granted under the Plan shall be
exercisable as Non-Qualified Stock Options.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.&nbsp;<U>Unfunded Obligation</U>. Grantees shall have the status of general unsecured
creditors of the Company. Any amounts payable to Grantees pursuant to the Plan shall be unfunded
and unsecured obligations for all purposes, including, without limitation, Title I of the Employee
Retirement Income Security Act of 1974, as amended. Neither the Company nor any Related Entity
shall be required to segregate any monies from its general funds, or to create any trusts, or
establish any special accounts with respect to such obligations. The Company shall retain at all
times beneficial ownership of any investments, including trust investments, which the Company may
make to fulfill its payment obligations hereunder. Any investments or the creation or maintenance
of any trust or any Grantee account shall not create or constitute a trust or fiduciary
relationship between the Administrator, the Company or any Related Entity and a Grantee, or
otherwise create any vested or beneficial interest in any Grantee or the Grantee&#146;s creditors in any
assets of the Company or a Related Entity. The Grantees shall have no claim against the Company or
any Related Entity for any changes in the value of any assets that may be invested or reinvested by
the Company with respect to the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19.&nbsp;<U>Construction</U>. Captions and titles contained herein are for convenience only and
shall not affect the meaning or interpretation of any provision of the Plan. Except when otherwise
indicated by the context, the singular shall include the plural and the plural shall include the
singular. Use of the term &#147;or&#148; is not intended to be exclusive, unless the context clearly
requires otherwise.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.&nbsp;<U>Israeli Grantees</U>. This Section shall apply only to Israeli Grantees and is
intended to enable the Company to grant Awards under the Plan pursuant and subject to Section&nbsp;102
and Section&nbsp;3(I) of the Tax Ordinance. Accordingly, the Plan is designated to comply with the Tax
Ordinance and the rules, regulations and orders or procedures promulgated thereunder from time to
time, as amended or replaced from time to time and shall be submitted to the ITA as required
thereunder.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In any case of contradiction, whether explicit or implied, between the provisions of this Section
and the Plan, the provisions set out in this Section shall prevail unless the Administrator decides
otherwise to ensure compliance with the Tax Ordinance and other Applicable Laws.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Eligibility</U>. 102 Options may be granted only to Israeli Employees. Non-Employees
may only be granted 3(I) Options. The grant of an Award hereunder shall neither entitle the Grantee
to participate nor disqualify the Israeli Grantee from participating in, any

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">other grant of Awards
pursuant to the Plan or any other option or stock plan of the Company or any Related Company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Grant of Awards in Trust</U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;<U>Grants Made Under Section&nbsp;102</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company may designate 102 Options as Trustee 102 Options or Non-Trustee 102
Options. The designation of Non-Trustee 102 Options and Trustee 102 Options shall be subject to
the terms and conditions set forth in Section&nbsp;102 of the Tax Ordinance and the regulations
promulgated thereunder.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;<U>Grant of Trustee 102 Options</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;The grant of the Trustee 102 Options shall be made under the Plan and shall be conditional
upon the approval of the Plan by the ITA. Trustee 102 Options may be granted at any time after the
passage of thirty (30)&nbsp;days following the delivery by the Company to the ITA of a notice pertaining
to the appointment of the Trustee and the adoption of the Plan, unless otherwise determined by the
ITA. Options which shall be granted pursuant to Section&nbsp;102 and/or any Shares issued upon exercise
of such Options and/or other shares received subsequently following any realization of rights,
shall be issued to the Trustee. Each Israeli Grantee in respect of whom a Trustee 102 Option is
granted and held in trust by the Trustee shall be referred to as a &#147;beneficial optionee&#148; hereunder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;Trustee 102 Option(s) may either be classified as Capital Gain Option(s) or Ordinary
Income Option(s):
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)&nbsp;Trustee 102 Option(s) elected and designated by the Company to qualify under the capital
gain tax treatment in accordance with the provisions of Section&nbsp;102(b)(2) shall be referred to
herein as &#147;Capital Gain Option(s)&#148; or &#147;CGO&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)&nbsp;Trustee 102 Option(s) elected and designated by the Company to qualify under the ordinary
income tax treatment in accordance with the provisions of Section&nbsp;102(b)(1) shall be referred to
herein as &#147;Ordinary Income Option(s)&#148; or &#147;OIO&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)&nbsp;The Company&#146;s election of the type of Trustee 102 Options as CGO or OIO granted to
Employees (the &#147;Election&#148;) shall be appropriately filed with the ITA 30&nbsp;days before the date of
grant of a Trustee 102 Option, unless otherwise determined by the ITA. Such Election shall become
effective beginning the first date of grant of a Trustee 102 Option under this Plan and shall
remain in effect until the end of the year following the year during which the Company first
granted Trustee 102 Options. The Election shall obligate the Company to grant only the type of
Trustee 102 Option it has elected, and shall apply to all Israeli Grantees who were granted Trustee
102 Options during the period indicated herein or therein, all in
accordance with the provisions of Section 102(g) of the Tax Ordinance. Notwithstanding, such
Election shall not prevent the Company from granting Non-Trustee 102 Options simultaneously.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4)&nbsp;All Trustee 102 Options must be held in trust by and issued on the name of the Trustee, as
described below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5)&nbsp;With respect to Trustee 102 Options, the provisions of the Plan and/or an Award Agreement
shall be subject to the provisions of Section&nbsp;102 and the ITA&#146;s permit, and the said provisions and
permit shall be deemed an integral part of this Section and of the Award Agreement for the
respective Grantees thereof. Any provision of Section&nbsp;102 and/or the said permit which is necessary
in order to receive and/or to keep any tax benefit pursuant to Section&nbsp;102, which is not expressly
specified in the Plan or the Award Agreement, shall be considered binding upon the Company and the
Israeli Grantee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;<U> Issuance to Trustee</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;All Trustee 102 Options granted under the Plan and/or any Shares allocated or
issued upon exercise of such Trustee 102 Options and/or other and all rights deriving from or in
connection therewith, including, without limitation, in accordance with Section&nbsp;10 above or any
bonus shares or stock dividends issued in connection therewith shall be granted by the Company to
the Trustee, and the Trustee shall hold each such Trustee 102 Option and the Shares issued upon
exercise thereof in trust for such period of time as required by Section&nbsp;102 or any regulations,
rules or orders or procedures promulgated thereunder (the &#147;Holding Period&#148;), for the benefit of the
Grantees in respect of whom such Trustee 102 Option was granted. All certificates representing
Shares issued to the Trustee under the Plan shall be deposited with the Trustee, and shall be held
by the Trustee until such time that such Shares are released from the Trust as herein provided.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;In event the requirements for Trustee 102 Options are not met for any reason whatsoever,
then the Trustee 102 Options may be treated as Non-Trustee 102 Options, all in accordance with the
provisions of Section&nbsp;102 and regulations promulgated thereunder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)&nbsp;With respect to any Trustee 102 Option, subject to the provisions of Section&nbsp;102 and any
rules or regulations or orders or procedures promulgated thereunder, an Israeli Grantee shall not
be entitled to sell or release from Trust the Trustee 102 Option, the Shares received upon the
exercise of such Option and/or any<U> </U>right deriving from or in connection therewith,
including, without limitation, in accordance with Section&nbsp;10 above or any bonus shares or stock
dividends issued in connection therewith, until the later of: (i)&nbsp;the lapse of the Holding Period
required under Section&nbsp;102, and (ii)&nbsp;the vesting of such Options set forth in the respective Award
Agreement (such later date being hereinafter referred to as the &#147;Release Date&#148;). Notwithstanding
the foregoing, if such sale or release occurs during the Holding period, the provisions of Section
102 and the rules or regulations promulgated thereunder shall apply and any expenses and/or tax
consequences therefrom shall be borne by the Israeli Grantee.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4)&nbsp;Subject to the terms hereof, at any time after the Release Date with respect to any
Trustee 102 Options or Shares the following shall apply:
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)&nbsp;Trustee 102 Options granted, and/or Shares or rights issued to the Trustee shall continue
to be held by the Trustee, on behalf of the beneficial optionee. From and after the Release Date,
upon the written request of any beneficial optionee, the Trustee shall release from the Trust the
Trustee 102 Options granted, and/or the Shares or rights issued, on behalf of such beneficial
optionee, by executing and delivering to the Company such instrument(s) as the Company may require,
giving due notice of such release to such beneficial optionee, provided, however, that the Trustee
shall not so release any such Trustee 102 Options and/or Shares and/or rights to such beneficial
optionee unless the latter, prior to, or concurrently with, such release, provides the Trustee with
evidence, satisfactory in form and substance to the Trustee, that all taxes, if any, required to be
paid upon such release have, in fact, been paid.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)&nbsp;Alternatively, from and after the Release Date, upon the written instructions of the
beneficial optionee to sell any Shares and rights issued upon exercise of Trustee 102 Options, the
Trustee shall use its best efforts to effect such sale and shall transfer such Shares to the
purchaser thereof concurrently with the receipt, or after having made suitable arrangements to
secure the payment, of the purchase price in such transactions. The Trustee shall withhold from
such proceeds any and all taxes required to be paid in respect of such sale, shall remit the amount
so withheld to the appropriate tax authorities and shall pay the balance thereof directly to the
beneficial optionee, reporting to such beneficial optionee and to the Company the amount so
withheld and paid to said authorities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C)&nbsp;Notwithstanding the foregoing, in the event the underwriters of securities of the Company
impose restrictions on the transferability of the Shares during a lock-up period, the beneficial
optionee shall not be entitled to release from Trust the Trustee 102 Options granted and/or the
Shares issued and/or to instruct the Trustee to effect a sale of same, for as long as the
restrictions are in effect. In the event the Trustee 102 Options granted and/or the Shares issued
have been released from trust the restrictions imposed on the transferability of same shall
nevertheless apply to said optionee&#146;s Trustee 102 Options and/or Shares in the same manner.
Consequently, the Israeli Grantee shall sign any documents required in order to effect the
restrictions, for as long as the restrictions are in effect.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D)&nbsp;Upon receipt of the Award, the Israeli Grantee will sign an undertaking to release the
Trustee from any liability in respect of any action or decision duly taken and bona fide executed
in relation with the Plan, or any Option or Share or rights granted to same thereunder. The Trustee
may establish additional terms and conditions in connection with Awards held in trust by the
Trustee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;<U>Grant of Non-Trustee 102 Options</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;Awards granted pursuant to this subsection are intended to constitute Non-Trustee 102
Options and shall be subject to the general terms and conditions of
the Plan and Section&nbsp;20, except for provisions of the Plan applying to Trustee 102 Awards or
Options under a different tax law or regulation.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;With respect to Non-Trustee 102 Options, if the Grantee ceases to be employed by or of
service to the Company or a Related Company, the Grantee may be required to extend to the Company a
security or guarantee for the payment of tax due at the time of sale of Shares or other rights, all
in accordance with the provisions of Section&nbsp;102 and the rules, regulation or orders promulgated
thereunder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;<U>Grants Made Under Section&nbsp;3(I)</U>. Awards granted pursuant to this subsection are
intended to constitute 3(I) Options and shall be subject to the general terms and conditions of the
Plan and Section&nbsp;20 thereof, except for said provisions of the Plan applying to Awards under a
different tax law or regulation. The Administrator may choose to deposit the Awards granted
pursuant to Section&nbsp;3(I) of the Tax Ordinance with a trustee. In such event, said trustee shall
hold such Option in trust, until exercised by the Grantee, pursuant to the Company&#146;s instructions
from time to time. If determined by the Administrator, the trustee shall be responsible for
withholding any taxes to which a Grantee become liable upon the exercise of Options.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Award Agreement</U>. Without derogating from the powers of the Administrator under the
Plan, the Administrator shall adopt the form of Award Agreement for Israeli Grantees in form
acceptable by the ITA and in compliance with the Tax Ordinance. The Award Agreement shall further
indicate the type of Options (102, 3(I), Trustee, Non-Trustee etc.) granted thereunder.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <U>Vesting</U>. Without derogating from the terms of any Award Agreement or the
discretionary authority of the Administrator, the standard vesting for Options to Israeli Grantees
shall be as follows:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;Twenty five percent (25%) of the Options granted under each Award Agreement shall vest on
the end of the first year of Continuous Service following the vesting commencement date determined
by the Administrator and if not specified the date of the grant of an Option (the &#147;First
Anniversary&#148;); and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;The remaining 75% of the Options shall vest on a quarterly basis over a period of three
years commencing as of the First Anniversary in twelve (12)&nbsp;equal portions subject to Continuous
Service of the Grantee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;With respect to all Shares (in contrast to unexercised Options) allocated or issued upon
the exercise of Options by the Israeli Grantee, the Grantee shall be entitled to receive dividends
in accordance with the quantity of such Shares, subject however to any applicable taxation on
distribution of dividends. Subject to the Tax Ordinance and any restrictions imposed by the Trustee
or the ITA, during the period in which Shares are held by the Trustee on behalf of the Israeli
Grantee, the cash dividends paid with respect thereto shall be paid directly to the Grantee after
deduction of withholding tax applicable thereto.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;Without derogating from anything in the Plan, to the extent permitted by Applicable Laws,
any tax consequences, attributable to the Israeli Grantee, arising from the grant
or exercise of any Option, from the payment for Shares covered thereby or from any other event
or act (of the Company, a Related Company, the Trustee or the Grantee), hereunder, shall be

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</DIV>

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</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">borne
solely by the Grantee. The Company and/or or a Related Company and/or the Trustee shall withhold
taxes according to the requirements under the Applicable Laws, rules, and regulations, including
withholding taxes at source. Furthermore, to the extent permitted by Applicable Law, the Grantee
shall agree to indemnify the Company and/or a Related Company and/or the Trustee and hold them
harmless against and from any and all liability for any such tax or interest or penalty thereon,
including without limitation, liabilities relating to the necessity to withhold, or to have
withheld, any such tax from any payment made to the Grantee. The Administrator and/or the Trustee
shall not be required to release any Share certificate to a Grantee until all required payments
have been fully made.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;The Plan, to the extent applicable to Israeli Grantees, shall be governed by and construed
and enforced in accordance with the laws of the State of Israel applicable to contracts made and to
be performed therein, without giving effect to the principles of conflict of laws. The competent
courts of Tel-Aviv, Israel shall have sole jurisdiction in any matters pertaining to Israeli
Grantees.
</DIV>



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</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>4
<FILENAME>g04822exv10w2.htm
<DESCRIPTION>EX-10.2 EMPLOYMENT AGREEMENT W/YOSEPH SHAALTIEL
<TEXT>
<HTML>
<HEAD>
<TITLE>EX-10.2 Employment Agreement w/Yoseph Shaaltiel</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Exhibit&nbsp;10.2
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">[Translation from Hebrew]</DIV>
<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>EMPLOYMENT AGREEMENT </B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>Made and executed in Tel Aviv, this 1st day of September, 2001</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>BETWEEN:</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Metabogal Ltd. (corporate no. 51-190328-8)</B><br>
Of the Kiryat Shmona Industrial Zone<br>
(hereinafter: &#147;<B>the Company</B>&#148;)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><u>of the one part</u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>AND:</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Dr.&nbsp;Yoseph Shaaltiel (I.D. 05174848-1)</B><br>
Of: Beit Hillel<br>
(hereinafter: &#147;<B>the Employee</B>&#148; or &#147;<B>the R&#038;D Director</B>&#148;)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><u>of the other part</u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">WHEREAS
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Company is engaged in biotechnology; and</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">WHEREAS
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Employee is desirous of working for the Company in the
position of the Company&#146;s R&#038;D Director; and</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">WHEREAS
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Company is desirous of employing the Employee in the position
of the Company&#146;s R&#038;D Director, all pursuant and subject to the
provisions hereinafter contained;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>It is therefore declared, stipulated and agreed between the parties as follows:</B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Preamble, Appendices and interpretation </B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%" nowrap align="left">1.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The preamble and the Appendices hereto constitute an integral part thereof and
are to be read as one with the remaining clauses thereof.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%">&nbsp;</TD>
    <TD width="1%" nowrap align="left">1.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The headings to the clauses are for ease of reference only and are not to be
applied in the interpretation of this Agreement.</TD>
</TR>

</TABLE>
</DIV>
<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">

    <TD width="1%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Declarations of the parties </B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The parties declare and acknowledge as follows:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Agreement is personal and special, and regulates the relationship between
the Company and the Employee and no general or special collective agreement will
therefore apply to the Employee.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Agreement encompasses all the payments and/or benefits and/or other
conditions of any kind whatsoever to which the Employee is entitled from the Company.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>No custom between the Company and other employees (if any) or practice will apply
to the relationship between the Employee and the Company unless expressly adopted by
this Agreement and to the extent so adopted. If the Company grants the Employee in a
certain case or cases, any benefit or payment that has not been specified in this
Agreement &#150; the grant thereof will not create a custom between the parties or obligate
the Company in any other or additional cases.</TD>
</TR>

</TABLE>
</DIV></DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->2<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Description of the position</B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>It is hereby agreed that the Employee will work at and be employed by the Company in the
position of the Company&#146;s R&#038;D Director.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Undertakings of the Employee </B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee undertakes to devote all his working time, energies, skills,
knowledge and experience to his work in the Company, to work loyally for the Company and
use his best efforts to advance the Company&#146;s business and affairs.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee undertakes not, for the duration of his employment with the Company,
to engage, directly or indirectly, in any other or additional work or employment, either
during or after working hours, for consideration or otherwise, unless he receives the
prior written consent of the Company and approval thereto.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee will not accept in connection with his employment at the Company any
consideration or benefit whatsoever from any party, including from customers or
suppliers of the Company, either directly or indirectly.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee undertakes to notify the Company immediately of any matter or thing
in which he has a personal interest or that could constitute a conflict of interest with
his work at the Company.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Salary</B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee&#146;s salary will be $7,000 (seven thousand dollars) gross per
month<SUP style="font-size: 85%; vertical-align: text-top">1</SUP> which will be paid to him by the 9<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> of each month in
respect of the preceding month (hereinafter: &#147;<B>the Salary</B>&#148;).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Salary will be linked, without any capped limit, to the Cost of Living Index
(&#147;Tosefet Hayoker&#148;) that will be fixed from time to time pursuant to the provisions of
the general agreements in the economy regarding the Cost of Living Index (hereinafter:
&#147;<B>the Updated Salary</B>&#148;).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Board of Directors of the Company will discuss the terms of the Employee&#146;s
Salary once a year.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U> <B>Manager&#146;s Insurance </B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">6.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company will preserve the continuity of the Employee&#146;s managers insurance
policy (or &#150; the Company will acquire manager&#146;s insurance for the Employee), as it did,
immediately prior to the execution of this Agreement. Calculation of the contributions
to the pension insurance plan will be made based on the gross monthly Salary.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The contributions to the pension insurance plan will be as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="93%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="55%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">8.3% for severance compensation &#150;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">to be contributed by and at the expense of the Company.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">1</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>$7,000 will be translated into new Israeli
shekels on the date of the execution of this Agreement.</TD>
</TR>

</TABLE>

</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->3<!-- /Folio -->




<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="93%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="55%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">5% for provident payments &#150;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">to be contributed by and at the expense of
the Company.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">5% for provident payments &#150;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">to be deducted, with the consent of the R&#038;D
Director, from the monthly Salary and contributed at his expense.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2.5% for working disability allowance -
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">to be contributed by and at the expense of the Company.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">6.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The manager&#146;s insurance policy will be owned by the Company from the date of the
Employee commencing his employment, and will pass to the Employee&#146;s ownership in the
event of a termination of the employer-employee relationship between the Company and the
Employee, provided such termination has not occurred in the circumstances set out in
clause 13.2 hereof.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">6.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Should the working relationship between the Employee and the Company come to an
end in the circumstances set out in clause 13.2 hereof, all the sums accrued according
to the manager&#146;s insurance policy before the commencement of his employment with the
Company, will be transferred to the Employee from the manager&#146;s insurance save that out
of the sums that have accrued from the date of the commencement of his employment with
the Company there will be transferred to the Employee from the manager&#146;s insurance, the
sums that have accrued in respect of the Employee&#146;s contributions only, and the amounts
that have accrued on account of severance pay only, will be refunded to the Company.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Study fund </B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employer will set aside for the Employee&#146;s benefit in a Clal <B>Study </B>fund (hereinafter:
&#147;<B>the Study Fund</B>&#148;) on account of the Employer 7.5% of the amount of the monthly Salary as
existing from time to time (hereinafter: &#147;<B>the Employer&#146;s Contribution</B>&#148;), up to the ceiling
recognized by the income tax authorities. The Employee will contribute to the <B>Study </B>Fund, in
addition to the Employer&#146;s contributions, 2.5% of his monthly Salary as existing from time to
time (hereinafter: &#147;<B>the Employee&#146;s Contributions to the StudyFund</B>&#148;).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee hereby agrees to the Employer deducting from his monthly Salary, the Employee&#146;s
contribution to the Study Fund. The Employee&#146;s signature on this Employment Agreement will be
tantamount to the giving of irrevocable instructions to the Employer.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">8.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Working hours </B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">8.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee hereby declares and acknowledges that he is employed by the Company
in management positions, that his work and position in the Company require a special
method of personal trust and that the terms of his employment do not allow the Company
to supervise his work and rest hours, and, therefore, the Work and Rest Hours Law,
5711-1951 does not apply to him.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">8.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee hereby declares and acknowledges that he is aware and agrees that
his employment with the Company will require him to work also at hours outside the usual
working hours and he undertakes to work overtime in accordance with the Company&#146;s
requirements and pursuant to the needs of the work. The</TD>
</TR>

</TABLE>
</DIV></DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->4<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Employee&#146;s Salary has been set taking into account that stated above, and he will not
be entitled to any additional payment for working overtime.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">9.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Fringe Benefits</B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">9.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Vacation leave</U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The R&#038;D Director will be entitled to 24 vacation days per year, and proportionately for
part of the year. In reckoning the vacation days, Saturdays and Festivals will not be
taken into account. The date of the vacation will be arranged between the R&#038;D Director
and the Company&#146;s management. The Company will pay the R&#038;D Director on the annual
vacation days his Salary in full and all the benefits and ancillary fringe benefits.
The vacation days may be accumulated up to a maximum of 48&nbsp;days or may be encashed, at
the discretion of the R&#038;D Director.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">9.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Sick leave </U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee will be entitled to 30 calendar days sick leave per year. The sick leave
may be accumulated in accordance with the law. For the duration of the Employee&#146;s
sickness &#150; until the expiration of the sick leave to which the Employee is entitled,
the Company will pay the R&#038;D Director the monthly Salary in full and all the benefits
and accompanying fringe benefits from the first day of sickness, less disability
allowance payments that will be paid by the insurance company in respect of the sick
leave to which the Employee is entitled. Sick leave may not be redeemed in cash.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">9.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Vacation allowance </U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee will be entitled to payment of vacation allowance pursuant to the
provisions of the Extension Order regarding the Employee&#146;s participation in vacation
costs and holiday, according to the Collective Agreements Law, 5717-1957 or any other
law in substitution therefor, for 12 vacation days per year.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">10.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Cellular telephone </B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee is entitled to a cellular telephone of the Company and the maintenance and user
expenses will be borne by the Company.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">11.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Company Vehicle </B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">11.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company will provide the Employee with a suitable vehicle matching the
requirements of his position (<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>), in which an automatic fuelling device
will be installed (of the type prescribed by the Company). The class of the vehicle,
engine capacity and year of manufacture will be at the Company&#146;s absolute discretion.
The Company may change the vehicle in the Employee&#146;s possession from time to time, at
its discretion.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">11.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The vehicle will be owned by the Company and the Company will bear all the
maintenance and user costs thereof. The Employee&#146;s family members will be entitled to
use the vehicle after working hours, and at weekends.</TD>
</TR>

</TABLE>
</DIV></DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->5<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">12.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Expenses </B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee will be entitled to reimbursement of expenses incurred by him in connection with
his position in the Company pursuant to the Company&#146;s procedures as set from time to time,
against appropriate receipts being furnished. Reimbursement of the expenses will be made on
the payment date of the Salary in respect of receipts provided by the Employee to Accounts by
the 20<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> of each preceding month, for the month in which the Salary will be paid.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">13.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Term of the Agreement </B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">13.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Agreement will enter into effect as of the execution hereof, and is made for
an indefinite period and may be brought to an end by the Company&#146;s Board of Directors,
by prior notice of not less than 90&nbsp;days. Notwithstanding the foregoing it is hereby
agreed, that the Employee will not be entitled to give a notice of the termination of
his employment according to this Agreement before 33&nbsp;months have elapsed from the date
of the execution thereof. It is hereby further agreed that notwithstanding the
foregoing, the Company reserves the right to dismiss the Employee immediately, provided
that the Company pays him prior notice redemption monies.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">13.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding the foregoing the Company will be entitled to terminate this
Agreement, without any prior notice, upon the occurrence of one or more of the following
events:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">13.2.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee has been convicted of an infamous offence;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">13.2.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee has betrayed his position with the Company or has breached his
fiduciary duty towards it;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">13.2.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee has breached his Confidentiality duty towards the Company;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">13.2.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee has wilfully caused or wilfully assisted others to cause damage to
the Company or its property.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">13.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Where the Employee has been dismissed by the Company in the circumstances set out
in clause 13.2 above, the Company may immediately terminate payment of the Employee&#146;s
Salary and payment of the fringe benefits and immediately cease providing a vehicle and
cellular telephone to the Employee&#146;s use, in which case the Employee will not be
entitled to receive any sum from the Company except as stated in clause 6.3 above.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">13.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee undertakes, upon the termination of his employment with the Company,
for any reason whatsoever, to hand over his position in an orderly fashion and fully
co-operate with such person as the Company will instruct, and hand over to the Company
all the documents, information, equipment and material that has reached him or that has
been prepared by him in connection with his employment at the Company.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">14.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Confidentiality </B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">14.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee hereby declares and acknowledges that he is aware that the
information and knowledge of any kind whatsoever that has been or will be conveyed to
him and/or which has or will reach his knowledge during the course</TD>
</TR>

</TABLE>
</DIV></DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->6<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>of and/or consequent upon his employment with the Company, and in particular the
information relating to the Company&#146;s business, its know-how, technology, suppliers,
customers and the like are highly confidential and of great value to the Company, and
constitute professional and trade secrets of the Company and the disclosure thereof
could cause damages and losses to the Company.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">14.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee undertakes to keep absolutely secret all the information and
knowledge that has been or will be given to him and/or which will reach his knowledge
during the course of and/or in consequence of his employment with the Company and which
pertain to the Company in any manner or form, including technical or professional
knowledge of the Company, trading and financial know-how, its engagements with
suppliers, customers, contractors for its business, its plans, etc., and not to disclose
the same to any other person or persons, nor enable the disclosure thereof by others,
directly or indirectly, except in the scope of, or for the sake of, his employment in
the Company, either during the period of his employment with the Company as well as
after the termination, for any reason whatsoever, of his employment with the Company,
without any limitation in time, with the exception of information which he is under a
duty to disclose by law and information that has fallen into the public domain,
otherwise than by reason of any act or omission of the Employee.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">15.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Non-competition </B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee undertakes that unless he receives the prior written consent of the Company,
during the entire term of the existence of the employer-employee relationship between him and
the Company and for a period of 24&nbsp;months thereafter, for any reason whatsoever, he will not
work for nor take part in the position of R&#038;D Director or in a like position, directly or
indirectly, in any business, whether incorporated or unincorporated, that competes with the
Company or its business, all within the area of the State of Israel.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In addition the Employee undertakes that for a period of 24&nbsp;months after the date of
expiration of his employment with the Company, not to turn to or have any business connection
whatsoever with any person or entity who, on the date of the termination of the Employee&#146;s
employment, were customers and/or suppliers of the Company, or were in negotiations with the
Company in connection with the carrying out of any business with it and/or the Company&#146;s
employees and/or contractors and/or advisors, all this with the object of carrying out,
directly or indirectly, any act which could interfere with the relationship between the
Company and any of the parties mentioned above.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the avoidance of any doubt the Employee&#146;s undertaking for non-competition contained in
this clause is in addition to the Employee&#146;s undertaking to keep confidentiality mentioned in
clause 14 above, and the amount of the Employee&#146;s Salary has, <I>inter alia</I>, been set on
reliance on this undertaking and constitutes appropriate consideration for such undertaking.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the purpose of this clause 15 &#150; &#147;directly or indirectly&#148; includes engaging as an
independent owner, shareholder, partner, manager, agent, employee, clerk or advisor.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">16.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Intellectual property </B></U></TD>
</TR>

</TABLE>
</DIV></DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->7<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">16.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In this Agreement, the expression &#147;development&#148; means, any idea and/or invention
and/or design and/or plan and/or document and/or software and/or computer programs of
any kind whatsoever and/or process and/or system and/or procedure, all these including
all and any accompanying documentation or annexed thereto, on any media whatsoever and
including all the versions and copies thereof and everything stated and pertaining
thereto or resulting therefrom, that have been developed and/or written and/or created
by the Employee during the period of the employment, whether alone or together with
others, in their entirety or in part.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">16.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>It is agreed and declared that the developments are the Company&#146;s full and
exclusive property and that the Employee has no right therein whatsoever. For the
avoidance of any doubt, the Employee hereby transfers and assigns to the Company all of
his rights, including, but without derogating from the generality of that stated, the
right of ownership which he has or will have, alone or jointly with others, in all the
developments, whether they are registrable as a patent or protectable as copyright, or
protectable as intellectual or material property in any other way.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">16.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the avoidance of any doubt it is stated that the Company will be entitled to
use and market the developments and also make changes and/or translations and/or
derivative works thereof without the need of the Employee&#146;s licence and without his
being entitled by reason thereof to any consideration and the Company will further be
entitled not to distribute any such developments and/or not to name the Employee as the
originator of such development, if it is generally publicized.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">16.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee will not be entitled to any payment or other consideration in
respect of the developments in addition to regular Salary in respect of the period of
his employment in the Company. This undertaking serves an agreement with respect to
section 134 of the Patents Law, 5727-1967.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">16.5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In connection with any one of the developments which are the Company&#146;s property
and/or which has been conferred upon it as stated above, the Employee undertakes to
convey all information and particulars and also, at the Company&#146;s request, to promptly
sign any document, including a specific transfer of ownership to the Company and effect
any act that is reasonably required in order to enable the Company to register a patent,
copyright or other protection, in any country whatsoever, or to realize its rights in
any other way.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This undertaking is in addition to and does not derogate from any other right of the Company
by law.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">17.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Miscellaneous</B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">17.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Agreement is subject to the approval by the Board of Directors of the
Company and be of no binding effect on the Company until such approval has been
received.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">17.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Agreement encompasses the agreement between the parties and no negotiations,
statement, representation, undertaking or agreement, if at all, whether in writing or by
word of mouth, expressly or impliedly between the parties prior to the signature of this
Agreement, will be of any effect.</TD>
</TR>

</TABLE>
</DIV></DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->8<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">17.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>With the exception of the matters for which it has been expressly provided that
the Company will gross up the tax payments, it is hereby agreed that the Employee will
bear all taxes and other compulsory payments that will apply to him in respect of all
the amounts that will be paid to him under this Agreement and in respect of all the
benefits and/or advantages that will be conferred upon him, and the Company will deduct
from his Salary the amount of any tax and/or other compulsory payment the deduction of
which is required by any law.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">17.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>No conduct by any of the parties will be deemed to be a waiver of any of that
party&#146;s rights hereunder or under any law and/or as a waiver or consent on its part to
any breach or non-performance of any condition whatsoever unless such waiver, consent,
delay, variation, cancellation or addition has been made or given expressly and in
writing.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">17.5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>No modification to this Agreement will be of any effect nor may any of the
conditions thereof be varied without a written document bearing the signature of the
parties. For the avoidance of any doubt it is clarified that none of the conditions of
this Agreement may be varied by way of conduct, custom, and the like.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">17.6</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The addresses of the parties for the purposes of this Agreement are as set out
below:</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company &#150;<br>
The Employee &#150;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any notice that will be sent by registered mail by one party to the other according to
the above address will be deemed to have been received by the addressee from the time
of being posted in an Israeli Post Office, and if served personally &#150; from the time of
its service and, if despatched by fax, at the end of the transmission thereof.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>In witness whereof the parties have set their hands:</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="18%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="38%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Zeev Bronfeld<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
The Company
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Yoseph Shaaltiel
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
The Employee
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Metabogal Ltd.</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>5
<FILENAME>g04822exv10w3.htm
<DESCRIPTION>EX-10.3 EMPLOYMENT AGREEMENT W/EINAT ALMON
<TEXT>
<HTML>
<HEAD>
<TITLE>EX-10.3 Employment Agreement w/Einat Almon</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Exhibit&nbsp;10.3
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">[Translation from Hebrew]</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>EMPLOYMENT AGREEMENT </B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>Made and executed this 19th day of December, 2004</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>BETWEEN:</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Protalix Ltd.</B><br>
Of 2 Snonit Road, Science Park, P.O.B. 455, Carmiel 20100<br>
(hereinafter: &#147;<B>the Company</B>&#148;)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><u>of the one part</u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>AND:</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Dr.&nbsp;Einat Almon (I.D. 55614481)</B><br>
Of: 10 Hadass St., Timrat,<br>
(hereinafter: &#147;<B>the Employee</B>&#148;)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><u>of the other part</u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">WHEREAS
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Company is engaged in biotechnology; and</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">WHEREAS
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Employee is desirous of working in the position of Senior
Director of Product Development in the field of biotechnology
(&#147;<B>the Position</B>&#148;); and</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">WHEREAS
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Employee declares that she has the know-how, skills and
experience required in order to fulfill the Position pursuant to
the terms of this Agreement; and</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">WHEREAS
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">On reliance on the Employee&#146;s declarations and undertakings
contained in this Agreement, the Company is desirous of employing
the Employee, and the Employee is desirous of being employed by
the Company in the Position, pursuant to the terms contained in
this Agreement;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>It is therefore declared, stipulated and agreed between the parties as follows:</B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Preamble, Appendices and interpretation </B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The preamble and the Appendices hereto constitute an integral part thereof and
are to be read as one with the remaining clauses thereof.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The headings to the clauses are for ease of reference only and are not to be
applied in the interpretation of this Agreement.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Declarations of the parties </B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The parties declare and acknowledge as follows:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Agreement is personal and special, and regulates the relationship between
the Company and the Employee and no general or special collective agreement will
therefore apply to the Employee.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Agreement encompasses all the payments and/or benefits and/or other
conditions of any kind whatsoever to which the Employee is entitled from the Company in
connection with her employment.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>No custom between the Company and other employees (if any) or practice will apply
to the relationship between the Employee and the Company unless</TD>
</TR>

</TABLE>
</DIV></DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->2<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>expressly adopted by this Agreement and to the extent so adopted. If the Company grants
the Employee in a certain case or cases, any benefit or payment that has not been
specified in this Agreement &#150; the grant thereof will not create a custom between the
parties or obligate the Company in any other or additional cases.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Description of the position</B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>It is hereby agreed that the Employee will work at and be employed by the Company
in the position of Senior Director of Product Development in the field of biotechnology,
on a full-time basis; the Position will include:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.1.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The identification, absorption and development of new protein to be
used as products in and by the Company;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.1.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Pre-clinical and clinical development of enzymes to treat Gaucher
disease;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.1.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Working with the FDA and clinical researchers;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.1.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Responsibility for managing the Company&#146;s patents portfolio with the
patent editor; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.1.5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The carrying out of any other task or assignment required in
connection with the performance of the Position by the Employee, in accordance
with the CEO&#146;s decision.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee will, in her work in the Company, be subordinate to the CEO of the
Company; participate at the discretion of the CEO, in discussions pertaining to tracking
the methods of operating in the Company, to the extent they pertain to her Position and
acting in accordance with the Company policy and procedures, as prevailing from time to
time.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Undertakings of the Employee </B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee undertakes to devote all her working time for the purpose of
performing the Position, to the extent of the work stated in clause 3.1 above, and will
apply all her energies, skills, knowledge and experience to her employment in the
Company, carry out her work in the Company professionally, devotedly and diligently,
faithfully act vis-&#224;-vis the Company and use her best endeavours to promote the business
and affairs of the Company.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee undertakes not, for the duration of her employment with the Company,
to engage, directly or indirectly, in any other or additional work or employment, either
during or after working hours, for consideration or otherwise, unless she receives the
prior written consent and approval of the CEO at his discretion.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee will not accept in connection with her employment at the Company any
consideration or benefit whatsoever from any party, including from customers or
suppliers of the Company, either directly or indirectly.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee undertakes to notify the Company immediately of any matter or thing
in which she has a personal interest or that could constitute a conflict of interest
with her work at the Company.</TD>
</TR>

</TABLE>
</DIV></DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->3<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Salary and bonuses</B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee&#146;s salary during the period of her employment with the Company will
be NIS. 28,000 (twenty-eight thousand shekels) (gross)&nbsp;per month that will be paid to
her by the 10<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> of each month in respect of the preceding month (hereinafter:
&#147;<B>the Salary</B>&#148;). The Salary consists of any increment that it is obligatory or usually
paid to employees at the Employee&#146;s grade and status. It is clarified that any benefit,
contribution or bonus to which the Employee will be entitled pursuant to the terms of
this Agreement will be computed on the basis of the Salary only, without any benefit,
contribution or bonus being taken into account or included in, the Salary.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In addition, if (and only if) any of the circumstances set out in clauses 5.2.1
and 5.2.3 hereof apply, will the Employee receive bonuses as prescribed in those
clauses, as follows:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.2.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A bonus in the sum of US$15,000 for each new protein that will,
after passing initial and successful due diligence investigation, be integrated
by means of the Employee in the Company&#146;s development program (if at all);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.2.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A bonus in the sum of US$10,000 upon commencement of Phase III of
the development of the enzyme to treat Gaucher disease (if at all);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.2.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A bonus in the sum of US$30,000 for approval as a medication by the
FDA of the protein developed by the Company to treat Gaucher disease (if at all).</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Discussion of Grade and Salary</B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">6.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Six months after the date of the commencement of the Employee&#146;s employment a
discussion will be held with the Employee pertaining to her appointment as
Vice-President of the Company, including the terms of her employment derivative
therefrom (VP).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">6.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As from the second year of the Employee&#146;s employment, at the end of each year
during the term of this Agreement, a discussion will be held on the amount of the
Employee&#146;s salary, and the possibility of the Employee&#146;s advancement in salary by the
Company will be considered, that promotion, <I>inter alia</I>, to be weighed in light of the
Company&#146;s condition, compliance with the Company&#146;s goals, employee&#146;s skills, performance
and devotion to the work.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">6.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>It is hereby clarified that notwithstanding the stated in this clause 6, the
definition of the Employee as Vice-President and/or change in the terms of her
employment as stated in clause 6.1 and/or the advancement of the Employee in her salary
as stated in clause 6.2 will be at the sole discretion of the Company, and the Company
assumes no obligation whatsoever to promote the Employee in the Position and/or in
Salary as stated in these clauses.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Manager&#146;s and work disability insurance </B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">7.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company will contribute in respect of a manager&#146;s insurance policy for the
benefit of the Employee amounts to the extent of 8.3% of the monthly salary in respect
of severance compensation and 5% of the monthly salary in respect of provident savings
payments. The Employee hereby agrees that the Company will deduct from her monthly
salary and remit to the above policy contributions in the</TD>
</TR>

</TABLE>
</DIV></DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->4<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>sum of 5% of the monthly salary on account of the Employee, in respect of provident
pay. It is further agreed that the Company will make contributions at its expense to
the Employee&#146;s work disability insurance policy, in the sum of 2.5% of the Salary.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">7.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The manager&#146;s insurance policy will be owned by the Company from the date of the
Employee commencing her employment. In the event of a severance of the employer-employee
relationship between the Company and the Employee, the Employee will be entitled to
assign such insurance policy, including the severance pay fund therein, into her name,
provided such termination has not occurred in the circumstances set out in clause 15.2
hereof, in which case and subject to any law, the Company will be exempt from releasing
to the Employee the monies that have been contributed at the expense of the Company to
such insurance policy, and it will not be bound to instruct the insurance company or the
severance compensation fund, as appropriate, to pay the Employee such monies.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">8.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Study fund </B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employer will contribute to a Study fund in favour of the Employee 7.5% of the amount of
the monthly Salary at the expense of the Company and 2.5% of the amount of the monthly
salary at the expense of the Employee. The Employee hereby agrees to the making of the
contributions from her salary by the Company as stated for purposes of the Study fund.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">9.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Granting of options </B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Subject to the conditions contained in this clause 9, the Company will grant the Employee
options to acquire ordinary shares of the Company at the rate of 0.5% (half a percent) of the
issued share capital of the Company as of the date of this Agreement, pursuant to the
Company&#146;s option plan as applicable from time to time. Notwithstanding that stated, the
allotment will be subject to the approval of the Board of Directors of the Company, and the
signature of an option agreement between the Employee and the Company, to the Company&#146;s
satisfaction. If such options are granted, the exercise price thereof will be as determined
by the Board of Directors, and they will vest gradually over a four (4)&nbsp;year vesting period,
pursuant to the conditions that will be set in the option agreement or such option plan, and
will be subject to all the remaining conditions of the option plan, option agreement and the
law.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">10.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Working hours </B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">10.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee hereby declares and acknowledges that she is employed by the Company
in an executive position, that her work and position in the Company require a special
method of personal trust and that the terms of her employment do not allow the Company
to supervise her work and rest hours, and, therefore, the Work and Rest Hours Law,
5711-1951 does not apply to her.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">10.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee hereby declares and acknowledges that she is aware and agrees that
her employment with the Company will require her to work also at hours outside the usual
working hours and may include trips inside and out of Israel, and she undertakes to work
overtime and take such trips in accordance with the Company&#146;s requirements and pursuant
to the needs of the work. It is agreed and stated that the Employee&#146;s salary has been
set taking into account that stated</TD>
</TR>

</TABLE>
</DIV></DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->5<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>above, and she will not be entitled to any additional payment beyond that expressly
provided in this Agreement for working overtime and for such trips.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">11.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Fringe Benefits</B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">11.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Vacation leave</U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee will be entitled to 22 vacation days per year, and proportionately for
part of the year. In reckoning the vacation days, Saturdays and Festivals will not be
taken into account. The date of the vacation will be arranged between the Employee and
the Company&#146;s CEO. The Company will pay the Employee on the annual vacation days her
Salary in full and all the benefits and ancillary fringe benefits. The vacation days
may be accumulated up to a maximum of 44&nbsp;days, but may not be redeemed in cash by the
Employee except (and without derogating from any of the Company&#146;s rights pursuant to
this Agreement and/or at law) in the case of termination of the employer-employee
relationship (in which case the Employee will be entitled to encash the vacation days
that have accrued in her favor, but in no event for more than such period of 44&nbsp;days).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">11.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Vacation allowance </U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee will be entitled to payment of vacation allowance pursuant to the
provisions of law.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">12.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Vehicle </B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">12.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company will provide the Employee with a vehicle during the course of her
employment, such vehicle having an engine capacity of 1600cc., like a <I>Toyota Corolla,
Mazda 3 </I>or like vehicle, at the discretion of the Company (&#147;<B>the Vehicle</B>&#148;). The expenses
of using the Vehicle will be borne and paid by the Company.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">12.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding that stated, it is hereby clarified that (1)&nbsp;without derogating
from the generality of that stated in clause 19.2 hereof, any tax liability in respect
of providing vehicle to the Employee as stated and the use thereof will be borne solely
by the Employee, who will also bear every such expense, and (2)&nbsp;the Company will bear no
responsibility (a)&nbsp;to pay fines that will be imposed in respect of the Vehicle and/or
(b)&nbsp;for the unlawful or unreasonable use of the Vehicle, and any such liability will
attach exclusively to the Employee.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">13.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Expenses </B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company will reimburse the Employee for her expenses in connection with performance of
the Position, up to the monthly sum of NIS. 500, against receipts and in accordance with the
Company&#146;s procedures existing from time to time. Notwithstanding the foregoing, the amount of
the reimbursement in respect of traveling and staying abroad within the scope of the
Employee&#146;s Position in the Company will be in accordance with the Company&#146;s procedures, as
existing from time to time. The reimbursement of additional expenses beyond the above amount
will only be paid to the extent approved in advance by the CEO of the Company.</TD>
</TR>

</TABLE>
</DIV></DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->6<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">14.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Telephone </B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>During the term of this Agreement, the Company will provide the Employee with a cellular
telephone. The expenses of using the cellular telephone up to the sum of NIS. 1,000 will be
borne and paid by the Company. The expenses of using the cellular telephone that exceed the
sum of NIS. 1,000 per month will be borne by the Employee. In addition, the Company will
reimburse the Employee for further telephone expenses for calls made within the course of the
work, if any.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The cellular telephone will at all times remain in the ownership of the Company and be
returned to the Company immediately upon the termination of this Agreement, for any reason
whatsoever.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">15.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Term of the Agreement </B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">15.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Agreement will enter into effect on 19<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> December, 2004, and is
made for an indefinite period and may be brought to an end by the parties by 60&nbsp;days
prior notice in writing. It is further hereby agreed that notwithstanding the foregoing,
the Company reserves the right not to use the Employee&#146;s services during the period of
the prior notice mentioned or part thereof, provided that the Company pays her for the
equivalent of the prior notice.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">15.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding the foregoing the Company will be entitled to bring this
Agreement to an end immediately, upon the occurrence of one or more of the following
events:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">15.2.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee has committed a fundamental breach of this Agreement and has failed
to rectify the same within 5&nbsp;days of receiving notice to do so.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">15.2.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee has been convicted of an infamous;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">15.2.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee has betrayed her position with the Company or has breached her
fiduciary duty towards it;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">15.2.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee has breached the provisions contained in clauses 16, 17 and/or 18
hereof.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">15.2.5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee has wilfully caused or with gross negligence or assisted others
wilfully or with gross negligence, to cause damage to the Company or its property.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">15.2.6</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In any case where full or partial payment of severance pay to the Employee may
be denied, in accordance with the law customary in Israel.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">15.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Without derogating from any of the Company&#146;s rights pursuant to this Agreement
and/or under the law, where the Employee has been dismissed by the Company in the
circumstances set out in clause 15.2 above, the Company may immediately terminate
payment of the Employee&#146;s Salary and payment of the fringe benefits and immediately
cease providing a vehicle for the Employee&#146;s use.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">15.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee undertakes, upon the termination of her employment with the Company,
for any reason whatsoever, to hand over her position in an orderly fashion and fully
co-operate with such person as the Company will instruct. The Employee further
undertakes that upon the termination of her work in the Company, for any reason
whatsoever, or at the Company&#146;s first request, whichever is the earlier, she will hand
over to the Company all the documents, information, equipment and material in any form
whatsoever, that has reached her</TD>
</TR>

</TABLE>
</DIV></DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->7<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>or that has been prepared by her in connection with her employment at the Company.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">16.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Confidentiality </B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">16.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee hereby declares and acknowledges that she is aware that the
information and knowledge of any kind whatsoever that has been or will be conveyed to
her and/or which has or will reach her knowledge during the course of and/or consequent
upon her employment with the Company, including, and without derogating from the
generality of the foregoing, information relating to the Company&#146;s business, its
know-how, (including technical, professional, trading and/or economic know-how),
technology, suppliers, products, plans, customers, contractors, employees and the like
(hereinafter: &#147;<B>the Information</B>&#148;) are highly confidential and of great value to the
Company, and constitute professional and trade secrets of the Company and the disclosure
thereof could cause damages and losses to the Company.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">16.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee undertakes to keep absolutely secret all the Information, and not to
disclose the same to any other person or entity, nor enable the disclosure thereof by
others, directly or indirectly, (except as required in order to perform her Position,
pursuant to this Agreement), either during the period of her employment with the Company
as well as after the termination, for any reason whatsoever, of her employment with the
Company, without any limitation in time. The foregoing will not apply to Information for
which there is a duty to disclose by order of the court (subject to the Employee
notifying the Company a reasonable time in advance of the duty to disclose the
Information according to the order, and only disclose that part of the Information the
disclosure of which is required by the order) and information that has fallen into the
public domain, otherwise than by reason of any act or omission of the Employee.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Pursuant to the Company&#146;s demand, from time to time, the Employee will sign a letter of
undertaking to maintain confidentiality and prevent a conflict of interest, such letter
to be in the form acceptable for the time being in the Company.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">16.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee undertakes not to effect with the Information any use of whatsoever
kind (directly or indirectly) otherwise than for the purpose of performing her Position,
pursuant to this Agreement, both during and after the termination, for any reason
whatsoever, of her employment with the Company, without limitation in time.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">16.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee declares and acknowledges that the Company is not granting to her by
virtue of this Agreement and/or her employment in the Company and/or otherwise, any
right of any kind whatsoever, in or in connection with the Information, and that the
Information is the Company&#146;s exclusive property and will remain the Company&#146;s exclusive
property at all times, and without limitation in time.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">16.5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee declares and acknowledges that irreversible damages will be caused
the Company, that cannot be remedied and/or compensated for financially, in the event of
the Employee failing to meet her commitments under this Agreement, and that the Company
could find itself in a situation in which it will have no suitable remedy by virtue of
the law in the event of a breach by the</TD>
</TR>

</TABLE>
</DIV></DIV>
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->8<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Employee of such undertakings. In light of the foregoing, the parties hereby agree that
the Company will be entitled to apply for and obtain an injunction or such other relief
as it may request, in the event of a breach or reasonable concern of a breach of the
Employee&#146;s undertakings under this Agreement.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">17.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Non-competition </B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">17.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee undertakes that unless she receives the prior written consent of the
Company, during the entire term of the existence of the employer-employee relationship
between her and the Company and for a period of 12&nbsp;months thereafter, for any reason
whatsoever, she will not work for nor take part, directly or indirectly, in any
business, whether incorporated or unincorporated, that competes with the Company or its
business directly, all whether within the area of the State of Israel or abroad.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">17.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In addition the Employee undertakes that for a period of 24&nbsp;months after the date
of expiration of her employment with the Company, not to turn to or have any business
connection whatsoever with any person or entity who, on or around the date of the
termination of the Employee&#146;s employment, were customers and/or suppliers of the
Company, or were in negotiations with the Company in connection with the carrying out of
any business with it and/or were the Company&#146;s employees and/or contractors and/or
advisors and/or with any person or entity who, on such date was in any other business
contact with the Company, all this in order to carry out directly or indirectly any act
which might interfere with the relationship between the Company and any of the parties
mentioned above, and/or damage the Company in any form or manner whatsoever.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">17.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the avoidance of any doubt, the Employee&#146;s undertakings according to this
clause 17 are in addition to all the Employee&#146;s undertakings under this Agreement,
including, but without derogating from the generality of the foregoing, her undertaking
according to clauses 16 and 18 of this Agreement. The Employee hereby declares and
acknowledges that her undertakings according to this clause 17 are reasonable in the
circumstances and that the amount of her salary has, <I>inter alia</I>, been set on reliance on
these undertakings and constitutes proper consideration for such undertakings.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">17.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the purpose of this clause 17 &#150; &#147;directly or indirectly&#148; includes, without
derogating from the generality of the foregoing, by means of engaging in business as an
owner, self-employed person, shareholder, partner, director, manager, agent,
distributor, supplier, contractor, sub-contractor, employee, clerk or advisor.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">18.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Inventions and Developments </B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">18.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In this Agreement, the expression &#147;development&#148; means, any idea and/or invention
and/or design and/or patent and/or copyright and/or document and/or software and/or
computer programs of any kind whatsoever and/or process and/or system and/or procedure,
all these including all and any accompanying documentation or annexed thereto, on any
media whatsoever and including all the versions and copies thereof and everything
pertaining thereto or resulting therefrom, including, and without derogating from the
generality of the foregoing, any intellectual property right in connection therewith,
all that has been developed and/or invented and/or written and/or created by the
Employee during the period</TD>
</TR>

</TABLE>
</DIV></DIV>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->9<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>of the employment in the Company and/or as a result of her work in the Company, whether
alone or together with others, in their entirety or in part.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">18.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>It is agreed and declared that the developments are and will be the Company&#146;s
full and exclusive property and that the Employee has and will have any right therein
whatsoever. For the removal of any doubt the Employee hereby transfers and assigns to
the Company all of her rights, including, but without derogating from the generality of
that stated, the right of ownership which she has or will have, alone or jointly with
others, in all the developments, whether they are registrable as a patent or protectable
as copyright, or protectable as intellectual or material property in any other way, or
not.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">18.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the avoidance of any doubt it is clarified that the Company will be entitled
to use and market the developments and/or protect the same with registration by law or
by any other method and also make changes and/or translations and/or derivative works
thereof and/or translations thereof and/or exploit or use the same in any other way, for
any purpose whatsoever, and on such terms as the Company will deem fit, at its sole
discretion, without the need of the Employee&#146;s consent and without derogating from the
generality of that stated in clause 18.4 hereof, without the Employee being entitled by
reason thereof to any consideration whatsoever.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">18.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee will have no claim of any kind whatsoever against the Company in
connection with any development. Without derogating from the foregoing, the Employee
will not be entitled to receive any payment or other consideration in respect of the
developments in addition to regular salary in respect of the period of her employment in
the Company.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">18.5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In connection with any one of the developments, the Employee undertakes to convey
all information and particulars and, at the Company&#146;s request, to co-operate and
promptly sign any document, including a specific transfer of ownership or any other
right to the Company and effect any act that is required in order to enable the Company
to register a patent, copyright or any protection, in any country whatsoever, or to
realize its rights in any other way.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">18.6</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee&#146;s undertakings and the rights of the Company by virtue of this
clause 18 are unlimited in time and are in addition to and does not derogate from any
other right of the Company by law.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">19.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Miscellaneous</B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">19.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Agreement encompasses the agreement between the parties and no agreement,
memorandum, negotiations, statement, representation, undertaking or accord, whether made
in writing or by word of mouth, expressly or impliedly between the parties prior to the
signature of this Agreement, will be of any effect.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">19.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>It is hereby agreed that the Employee will bear all taxes and other compulsory
payments that will apply to her in respect of all the amounts that will be paid to her
under this Agreement and in respect of all the benefits and/or advantages that will be
conferred upon her, and the Company will deduct from her Salary the amount of any tax
and/or other compulsory payment the deduction of which is required by any law.</TD>
</TR>

</TABLE>
</DIV></DIV>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->10<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">19.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>No conduct by any of the parties will be deemed to be a waiver of any of that
party&#146;s rights hereunder or under any law and/or as a waiver or consent on its part to
any breach or non-performance of any condition whatsoever unless such waiver or consent
(as appropriate) has been approved by that party in writing.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">19.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Insofar as any of the undertakings of any party to this Agreement as set out
herein are declared to be void or unenforceable this will not derogate from any of the
other undertakings of that party, which will remain in full force and effect. Insofar as
such undertaking is found to be void or unenforceable by reason of the extent or period
thereof or like limitations, such unenforceable undertaking will be restricted so as to
be enforceable in the extent and for the maximum period permitted by law, and which do
not exceed the extent and period specified in this undertaking.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">19.5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Agreement is subject to Israeli law and any dispute relating thereto will be
disposed of in the authorized court in Tel Aviv &#151; Yafo.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">19.6</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Agreement may not be assigned or transferred by the Employee in any manner
or to any person or body.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">19.7</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>No modification to this Agreement will be of any effect nor may any of the
conditions thereof may be amended without a written document bearing the signature of
the parties. For the avoidance of any doubt it is clarified that none of the conditions
of this Agreement may be amended by way of conduct, custom, and etc.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">19.8</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The addresses of the parties for the purposes of this Agreement are as set out at
the head of this Agreement. Any notice (1)&nbsp;which will be sent by registered mail by one
party to the other according to such address will be deemed to have been received by the
addressee within 72 hours of the time of posting in Israel; (2)&nbsp;which has been delivered
personally &#150; will be deemed to have been received by the addressee at the time of
service and, (3)&nbsp;if despatched by fax, will be deemed to have been received by the
addressee at the end of the transmission thereof and the receipt of a confirmation of
despatch by the fax device from which the notice was sent.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">19.9</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The provisions of clauses 2.2, 7.2 and 12.2, the second paragraph of clause 14,
15.3, 15.4, 16, 17, 18, 19.2, 19.3, 19.5, 19.6, 19.8 and 19.9 will remain in force even
after the termination of this Agreement for any reason whatsoever.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>In witness whereof the parties have set their hands:</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ David Aviezer
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
The Company
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Einat Almon
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
The Employee
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">David Aviezer
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>

</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR>    <TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Protalix Ltd.</B><BR>
<B>Corporate no. 511903288</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>6
<FILENAME>g04822exv10w4.htm
<DESCRIPTION>EX-10.4 EMPLOYMENT AGREEMENT W/DAVID AVIEZER
<TEXT>
<HTML>
<HEAD>
<TITLE>EX-10.4 Employment Agreement w/David Aviezer</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Exhibit&nbsp;10.4
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>EMPLOYMENT AGREEMENT</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This EMPLOYMENT AGREEMENT (this &#147;<B>Agreement</B>&#148;) is made effective as of <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, 2006 (the
&#147;<B>Effective Date</B>&#148;), by and between Protalix Ltd., a company organized under the laws of the State of
Israel (the &#147;<B>Company</B>&#148;) and Dr.&nbsp;David Aviezer, Israel Identification No.&nbsp;0-2603079-1 (the &#147;<B>Employee</B>&#148;
or &#147;<B>David</B>&#148;) (each of the Company and Employee shall be referred to herein, as a &#147;<B>Party</B>&#148; and
collectively, the &#147;<B>Parties</B>&#148;).
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="95%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>WHEREAS</B>,
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">the Company is engaged, inter alia, in the research and
development of proteins and expression thereof in plant cells
cultures; and</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>WHEREAS</B>,
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">the Company desires to engage David as an employee of the Company
in the position of Company&#146;s Chief Executive Officer (&#147;<B>CEO</B>&#148;) and
the Employee desires to serve the Company as an employee in such
position, on the terms and conditions hereinafter set forth;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>NOW, THEREFORE</B>, based on the representations contained herein and in consideration of the mutual
promises and covenants set forth herein, the Parties agree as follows:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Employment</B></U><B>.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">1.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Commencing as of the Effective Date, the Company shall engage David as an employee in the
position of CEO, reporting to the Board of Directors of the Company.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">1.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee&#146;s duties and responsibilities shall be those duties and responsibilities
customarily performed by a Chief Executive Officer of a company.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">1.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee shall be employed on a full-time basis. The Employee shall devote his full and
undivided attention and full working time to the business and affairs of the Company and the
fulfillment of his duties and responsibilities under this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Without derogating from the generality of the above, during the term of this Agreement the
Employee shall not be engaged in any other employment nor engage in any other business
activity or render any services, with or without compensation, for any other person or
entity. Notwithstanding the foregoing, it is agreed that (i)&nbsp;Employee shall be entitled to
engage in academic activity and teaching during no more than two (2)&nbsp;hours per week and
provided that such activity does not derogate from or hinder the performance of his
obligations hereunder, as may be determined by the Board of Directors; and (ii)&nbsp;Employee
shall be entitled to render limited consulting services to customers for up to a limited
number of hours per month, <I>provided however </I>that (a)&nbsp;the provision of such services does not
derogate from, or impair or hinder Employee&#146;s performance of, any of Employee&#146;s obligations
hereunder; (b)&nbsp;the provision of such services is not against the Company&#146;s interests; and (c)
the written consent of the Chairman of the Board for the provision of such services has been
obtained in advance. The Chairman of the Board shall be entitled to withdraw or revoke his
consent.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee shall notify the Company immediately of any event or circumstance which may
hinder the performance of his obligations hereunder or result in the Employee having a
conflict of interest with his position with the Company.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->1<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">1.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee acknowledges that the Company&#146;s facilities are located in Carmiel and that he
will be required to attend such facilities at least two (2)&nbsp;working days per week. Employee
further acknowledges and agrees that the performance of his duties hereunder may require
significant domestic and international travel at the Company&#146;s needs.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">1.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>It is agreed between the Parties that the position that Employee holds within the Company is
a management position, which demands a special level of loyalty and accordingly the Work Hours
and Rest Law (1951)&nbsp;shall not apply to Employee&#146;s employment by the Company and this
Agreement. The Employee further acknowledges and agrees that his duties and responsibilities
may entail irregular work hours and extensive traveling in Israel and abroad, for which he is
adequately rewarded by the compensations provided for in this Agreement. The Parties confirm
that this is a personal services contract and that the relationship between the Parties shall
not be subject to any general or special collective bargaining agreement or any custom or
practice of the Company in respect of any of its other employees or contractors.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Salary and Employee Benefits</B></U><B>.</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In full consideration of Employee&#146;s employment with the Company, commencing as of the Effective
Date (unless otherwise expressly provided in this Section&nbsp;2), the Employee shall be entitled to the
following payments and benefits, it being understood and agreed that any Salary-based benefits
shall be calculated exclusively on the basis of the base Salary (without consideration to any other
benefit):
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">2.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Salary</U>. Effective as of January&nbsp;1, 2006, the Company shall pay the Employee a gross
salary of NIS 80,000 per month (the &#147;<B>Salary</B>&#148;). The Salary will be adjusted from time to time
in accordance with the Cost of Living Index (&#147;Tosefet Yoker&#148;) as may be required by law. The
Salary shall be payable monthly in arrears, and shall be paid to the Employee in accordance
with Company&#146;s policy. A Salary increase shall be considered by Board annually. Without
limiting the generality of the last paragraph of Section&nbsp;2, the Employee confirms the receipt
of the entire Salary in respect of the period commencing on January&nbsp;1, 2006 and expiring on
the Effective Date.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">2.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><u>Bonuses.</u></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.2.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><u>Annual Bonus</u>.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">Employee shall be entitled to an annual bonus based on multiples of Employee&#146;s base monthly
Salary, subject to the Board&#146;s approval and at the Board&#146;s discretion. Board&#146;s determination
shall be made following the end of each calendar year during the term hereof. Employee&#146;s
contribution to Company&#146;s fund raising, generation of income through material strategic
agreements and general achievements shall serve as a significant factor in Board&#146;s
determination as aforesaid. Employee hereby confirms the receipt of an annual bonus for the
year 2005 in the amount of NIS 400,000 less the bonus for IND approval of the Company&#146;s GCD
product set forth in Subsection 2.2.3(a) below<I>.</I>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.2.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Bonus upon a Public Offering or Sale</U>.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">Employee shall be entitled to a significant bonus subject to the Board&#146;s approval and at
Board&#146;s discretion, upon consummation of (i)&nbsp;a public offering of the Company&#146;s or a
Company&#146;s parent company&#146;s securities on the NYSE, NASDAQ, AMEX or any equivalent stock
exchnage but excluding the OTCBB, or (ii)&nbsp;an acquisition of all or substantially all of the
Company&#146;s assets or shares by, or merger of the Company with or into, any other company other
than a company who&#146;s shares are listed on the OTCBB
and/or a wholly-owned subsidiary of the Company and excluding a transaction (or a
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->2<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">series of
related transactions) in which shareholders of the Company (&#147;<B>Shareholders</B>&#148;) prior to such
transaction (or a series of related transactions) will own a majority of the voting power of
the entity surviving the transaction.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><U>2.2.3</u></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><u>Bonus Upon Achievement of Certain Clinical Development Milestones</U>.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Employee hereby confirms the receipt of a bonus in the amount of US$25,000 for IND
approval of the Company&#146;s GCD product.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Employee hereby confirms the receipt of a bonus in the amount of US$25,000 for the
completion of the Company&#146;s Phase I &#151; Clinical Trial for the Company&#146;s GCD product</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Employee shall be entitled to a bonus in the amount of US$200,000 conditional upon the
obtaining from the FDA or EMEA of a marketing approval of the Company&#146;s GCD product.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">It is agreed that the terms of this Subsection 2.2.3 shall apply to any drug product other
than the GCD product, independently developed by the Company.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">2.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Options</U>. Employee shall be entitled to options to purchase Ordinary Shares of the
Company (&#147;<B>Ordinary Shares</B>&#148;), as follows:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an option under the Company&#146;s 2003 Israeli Stock Option Plan (the &#147;<B>Plan</B>&#148;) to purchase
26,226 Ordinary Shares, pursuant to the terms of the Option Agreement attached hereto as
<U><B>Exhibit&nbsp;B</B></U>; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an option under the Plan to purchase additional 16,000 Ordinary Shares (the &#147;<B>Additional
Option</B>&#148;), subject to the following terms and conditions:</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">(i)&nbsp;vesting over a period of four (4)&nbsp;years on a quarterly basis (1,000 shares per
quarter), commencing on June&nbsp;1, 2006;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">(ii)&nbsp;a purchase price per Ordinary Share of US$59.40; and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">(iii)&nbsp;the entering by the Employee into an Option Agreement covering such Additional
Option, acceptable to the Board of Directors.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">2.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Manager&#146;s Insurance</U>. The Company shall insure the Employee under a Manager&#146;s
Insurance Policy, including insurance in the event of illness or loss of capacity for work
(the &#147;<B>Policy</B>&#148;), and shall pay a sum of up to an aggregate of 15.83% of the Salary towards the
Policy, of which (i)&nbsp;8.33% shall be on account of severance compensation, which shall be
payable to the Employee upon severance, in accordance with the provisions of this Agreement;
(ii)&nbsp;5% of the Salary on account of pension fund payments; and (iii)&nbsp;up to 2.5% of the Salary
on account of disability pension payments. The Company shall deduct 5% from the Salary to be
paid on behalf of the Employee towards the Policy. The Employee may extend an existing policy
or plan and incorporate it into the Policy, at his discretion.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">The Company and the Employee agree and acknowledge that in the event the Company transfers
ownership of the Policy or the right to receive such policy to the Employee, then such
transfer shall be credited against any obligation that the Company may have to pay severance
pay to the Employee pursuant to the Severance Pay Law &#151; 1963 (the &#147;<B>Severance Pay Law</B>&#148;).
Employee agrees that the payments by the Company to the Policy in accordance with the terms
hereof, shall be instead of any statutory obligation of the Company to pay severance pay to
the Employee, and not in addition thereto, all in accordance with Section&nbsp;14 of the Severance
Pay Law. The Parties hereby adopt the
General Approval of the Minister of Labor and Welfare, <I>on Employers&#146; Payments to</I>
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->3<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><I>Pension
Funds and Insurance Policies Instead of Severance Pay According to Section&nbsp;14 of the
Severance Pay Law</I>, attached hereto as <U><B>Exhibit&nbsp;C</B></U>.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">The Company hereby waives its right to a refund of payments it made to the Policy, except:
(i)&nbsp;in the event that Employee&#146;s right to severance pay was denied by a final judgment
pursuant to Section&nbsp;16 or 17 of the Severance Pay Law (in which case Company shall only be
entitled to a refund of such funds to the extent that severance pay was denied); or (ii)&nbsp;in
the event that the Employee withdrew monies from the Policy (other than by reason of an
&#147;Entitling Event&#148;, i.e. death, disability or retirement at or after the age of sixty (60)).
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">2.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Vocational Studies</U>. The Company shall open and maintain a &#147;Keren Hishtalmut&#148; Fund for
the benefit of the Employee (the &#147;<B>Fund</B>&#148;). The Company shall contribute to such Fund an amount
equal to 7-1/2% of the Salary and the Employee shall contribute to the Fund an amount equal to
2-1/2% of the Salary. The Employee hereby instructs the Company to transfer to the Fund
Employee&#146;s contribution from the Salary.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">2.6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Vacation</U>. The Employee shall be entitled to annual paid vacation of 24 working days.
Subject to applicable law, up to two (2)&nbsp;years&#146; equivalent of vacation days may be accumulated
and may, at the Employee&#146;s option, upon thirty (30)&nbsp;days&#146; prior written notice to the Company,
be converted into cash payments in an amount equal to the proportionate part of the Salary for
such days. Without limiting the generality of the last paragraph of Section&nbsp;2, the Employee
confirms that neither he nor Agenda is entitled to any vacation and/or vacation pay with
respect to the services provided by any of them to the Company through the Effective Date or
activities conducted under the Services Agreement (as defined in Section&nbsp;7 below) or
otherwise, prior to the Effective Date.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">It is agreed that, without limiting the annual paid vacation to which Employee is entitled in
accordance with the first two sentences of this Section&nbsp;2.6, it shall not be deemed a breach
of this Agreement by the Employee in case Employee is absent from work for an aggregate
period of up to forty eight (48)&nbsp;working days during the entire term of this Agreement,
provided that Employee shall not be entitled to any payment, compensation or benefit
(including without limitation the Salary) in respect of such days, but shall be entitled to
use the Company Car during such days (the &#147;<B>Approved Absence</B>&#148;).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%">Employee shall coordinate in advance with the Chairman of the Board the dates of the vacation
and Approved Absence hereunder.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">2.7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Sick Leave</U>. The Employee shall be entitled to fully paid sick leave pursuant to the
Sick Pay Law (1976).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">2.8.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Annual Recreation Allowance (Dme&#146;i Havra&#146;a)</U>. The Employee shall be entitled to annual
recreation allowance according to applicable law.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">2.9.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Company Car</U>.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company shall provide the Employee with a Company car (the &#147;<B>Company Car</B>&#148;), as
determined by the Board of Directors of the Company (the &#147;<B>Board of Directors</B>&#148; or &#147;<B>Board</B>&#148;),
at its discretion, which car shall be categorized &#147;Group 4&#148;. The Company Car shall be
placed with the Employee for his business and personal use. Employee shall take good care
of the Company Car and ensure that the provisions of the insurance policy and the Company&#146;s
rules relating to the Company Car are strictly, lawfully and carefully observed.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Subject to applicable law, the Company shall bear all fixed and ongoing expenses
relating to the Company Car and to the use and maintenance thereof, excluding expenses
incurred in connection with any violations of law, which shall be paid</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->4<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>solely by Employee.
The Employee shall bear any and all taxes applicable to him in connection with said Company
Car and the use thereof, in accordance with income tax regulations applicable thereto.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Upon the termination of employment hereunder, the Employee shall return the Company Car
(together with its keys and any other equipment supplied and/or installed therein by
Company and any documents relating to the Company Car) to the Company&#146;s principal office.
Employee shall have no rights of lien with respect to the Company Car and/or any of said
equipment and documents.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">2.10.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Telephone</U>. The Company shall furnish, for the use of the Employee, a cellular
telephone (the &#147;<B>Company Phone</B>&#148;), and shall bear all the costs and expenses associated with the
use of the Company Phone. The Company will bear the tax applicable to the use of the Company
Phone by the Employee, according to applicable law. All such costs, expenses and tax payments
borne and payable by the Company pursuant to this Section&nbsp;2.10 are included in the Salary. The
provisions of Section&nbsp;2.9(c) above shall apply to the Company Phone, <I>mutatis mutandis</I>.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">2.11.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Certain Reimbursements</U>. The Employee shall be entitled to full reimbursement from
the Company for reasonable expenses incurred during the performance of his duties hereunder
upon submission of substantiating documents, according to the Company&#146;s policy.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">2.12.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Taxes</U>. The Employee will bear any tax applicable on the payment or grant of any of
the above Salary and/or benefits, according to the then applicable law. The Company shall be
entitled to and shall deduct and withhold from any amount or benefit payable to the Employee,
any and all taxes, withholdings or other payments as required under any applicable law.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Employee and Agenda (as defined in Section&nbsp;7 below) hereby represent and warrant that they have
been paid in full for all services provided by any of them to the Company through the Effective
Date, and that the Company does not owe to any of them or is liable to pay to any of them any
amount or compensation in respect of such past services rendered or any activities conducted under
the Services Agreement (as defined in Section&nbsp;7 below) or otherwise, prior to the Effective Date<I>.</I>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>3.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Confidentiality</B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">3.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee hereby agrees that he shall not, directly or indirectly, disclose or use at any
time any trade secrets or other confidential information of any type or nature, whether
patentable or not, of the Company, its subsidiaries or affiliates now or hereafter existing,
including but not limited to, any (i)&nbsp;processes, formulas, trade secrets, copyrights,
innovations, inventions, discoveries, improvements, research or development and test results,
specifications, data, patents, patent applications and know-how of any type or nature; (ii)
marketing plans, business plans, strategies, forecasts, financial information, budgets,
projections, product plans and pricing; (iii)&nbsp;personnel information, salary, and
qualifications of employees; (iv)&nbsp;agreements, customer and supplier information, including
identities and product sales forecasts; and (v)&nbsp;any other information of a confidential or
proprietary nature (collectively, &#147;<B>Confidential Information</B>&#148;), of which the Employee is or
becomes informed or aware during the employment, whether or not
developed by the Employee, it being agreed that for purposes of this Section&nbsp;3.1, the term
Confidential Information shall not include information that has entered into the public domain
through no wrongful act by Employee. Upon termination of this Agreement, or at any other time
upon request of the Company, the Employee shall promptly deliver to the</TD>
</TR>



</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->5<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Company all physical and
electronic copies and other embodiments of Confidential Information and all memoranda, notes,
notebooks, records, reports, manuals, drawings, blueprints and any other documents or things
belonging to the Company, and all copies thereof, in all cases, which are in the possession or
under the control of the Employee.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">3.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Employee hereby acknowledges and that all Confidential Information and any other rights in
connection therewith are and shall at all times remain the sole property of the Company.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>4.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Non-Competition and Non-Solicitation</B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">4.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee agrees and undertakes that he will not, for so long as (i)&nbsp;this Agreement is in
effect, or (ii)&nbsp;he serves as a member of the Board of Directors and for a period of two (2)
years after the later of the above lapses for whatever reason (the &#147;<B>Non-Competition Period</B>&#148;),
compete or to assist others to compete, whether directly or indirectly, with the business of
the Company, as currently conducted and as conducted and/or proposed to be conducted during
the Non-Competition Period.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">4.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee further agrees and undertakes that during the Non-Competition Period, he will
not directly or indirectly solicit any business which is similar to the Company&#146;s business
from individuals or entities that are customers, suppliers or contractors of the Company, any
of its subsidiaries or affiliates during the Non-Competition Period, without the prior written
consent of the Company&#146;s Board of Directors.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">4.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee further agrees and undertakes that during the Non-Competition Period, without
the prior written consent of the Company&#146;s Board of Directors, he will not offer to employ, in
any way directly or indirectly solicit or seek to obtain or achieve the employment by any
business or entity of, and/or during the term hereof, employ, any person employed by either
the Company, its subsidiaries, affiliates, or any successors or assigns thereof during the
Non-Competition Period.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">4.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Parties hereto agree that the duration and area for which the covenants set forth in this
Section&nbsp;4 are to be effective are necessary to protect the legitimate interests of the Company
and its development efforts and accordingly are reasonable, in terms of their geographical and
temporal scope. In the event that any court determines that the time period and/or area are
unreasonable and that such covenants are to that extent unenforceable, the Parties hereto
agree that such covenants shall remain in full force and effect for the greatest period of
time and in the greatest geographical area that would not render them unenforceable. In
addition, the Employee acknowledges and agrees that a breach of Sections&nbsp;3, 4 or 5 hereof,
shall cause irreparable harm to the Company, its subsidiaries, and/or affiliates and that the
Company shall be entitled to specific performance of this Agreement or an injunction without
proof of special damages, together with the costs and reasonable attorney&#146;s fees and
disbursements incurred by the Company in enforcing its rights under Sections&nbsp;3, 4 or 5. The
Employee acknowledges that the compensation and benefits he receives hereunder are paid, inter
alia, as consideration for his undertakings contained in Sections&nbsp;3, 4 and 5.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>5.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Creations and Inventions </B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">5.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company shall be the sole and exclusive owner of any Inventions (as defined below), and
Employee hereby assigns to the Company any and all of his rights, title and interest in such
intellectual property free and clear of any third parties rights. The Employee shall inform
the Company of any Invention relating to the Company&#146;s technology, its applications components
or any intellectual property relating thereto, and shall execute any necessary assignments,
patent forms and the like and will assist in the drafting of any</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->6<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>description or specification
of the Invention as may be required for the Company&#146;s records and in connection with any
application for patents or other forms of legal protection that may be sought by the Company.
The Employee shall treat all information relating to any Invention as Confidential Information
according to Section&nbsp;3 above.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">5.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Without limiting the foregoing, &#147;Inventions&#148; shall include any and all intellectual property,
including without limitation, ideas, inventions, processes, formulas, source and object codes,
data, programs, know how, improvements, discoveries, designs, techniques, trade secrets,
patents and patents applications, copyrights, mask work and any other intellectual property
rights throughout the world, generated, produced, reduced to practice, or developed by
Employee during or in connection with his employment by the Company.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">5.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company&#146;s rights under this Section&nbsp;5 shall be worldwide, and shall apply to any such
Invention notwithstanding that it is perfected or reduced to specific form after the Employee
has ceased his services hereunder.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>6.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Term and Termination</B></U><B>.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">6.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Agreement shall be in effect commencing as of the Effective Date and shall continue in
full force and effect for an undefined period, unless and until terminated by either Party by
ninety (90)&nbsp;days prior written notice to the other Party. Each of such prior notice periods
shall be referred to as the &#147;<B>Notice Period</B>&#148;, as applicable.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">6.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding anything to the contrary herein, the Company may terminate this Agreement in
the event of the inability of the Employee to perform his duties hereunder, whether by reason
of injury (mental or physical), illness or otherwise, incapacitating the Employee for a period
exceeding 90&nbsp;days.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">6.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding anything to the contrary herein, the Company may terminate this Agreement at
any time, effective immediately and without need for prior written notice, and without
derogating from any other remedy to which the Company may be entitled, for Cause.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the purposes of this Agreement, the term &#147;<B>Cause</B>&#148; shall mean: (i)&nbsp;a material breach by
Employee of this Agreement; (ii)&nbsp;any breach by Employee of his fiduciary duties or duties of
care to the Company; (iii)&nbsp;Employee&#146;s dishonesty or fraud or felonious conduct; (iv)
Employee&#146;s embezzlement of funds of the Company; (v)&nbsp;any conduct by Employee, alone or
together with others, which is materially injurious to the Company, monetary or otherwise;
(vi)&nbsp;Employee&#146;s gross negligence or willful misconduct in performance of his duties and/or
responsibilities hereunder; (vii)&nbsp;Employee&#146;s disregard or insubordination of any lawful
resolution and/or instruction of the Board of Directors with respect to Employee&#146;s duties
and/or responsibilities towards the Company; (viii)&nbsp;the occurrence of an event or
circumstance which may result in the Employee having a conflict of interest with his position
with the Company, without Employee having
notified the Company thereof, as provided herein; (ix)&nbsp;any breach by Employee of his
confidentiality undertakings to the Company; or (x)&nbsp;any consequences which would entitle the
Company to terminate Employee&#146;s employment without severance payments under the Severance Pay
Law.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">6.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee shall cooperate with the Company and assist the integration into the Company&#146;s
organization of the person or persons who will assume the Employee&#146;s responsibilities,
pursuant to Company&#146;s instructions. At the option of the Company, the Employee shall, during
such period, either continue with his duties or remain absent from the premises of the
Company, subject to applicable law. At any time during the</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->7<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notice Period, the Company may
elect to terminate this Agreement and the relationship with the Employee immediately,
<U>provided</U>, <U>that</U> Employee shall be entitled to all payments and other benefits
due to him hereunder as he would have been entitled to receive for the remaining period of the
Notice Period.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">6.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Upon termination of Employee&#146;s employment with the Company hereunder, for any reason
whatsoever, the Company shall have no further obligation or liability towards the Employee in
connection with his employment as aforesaid. The Company may set-off any outstanding amounts
due to it by Employee against any payment due by the Company to the Employee, subject to
applicable law. Without limiting the generality of the foregoing, in the event that Employee
fails to comply with his prior notice or other obligations hereunder or under applicable law,
the Company shall be entitled to set-off any amount to which Employee would have been entitled
during the Notice Period, from any payment due by the Company to the Employee, all without
prejudice to any other remedy to which the Company may be entitled pursuant to this Agreement
or applicable law.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">6.6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The provisions of Sections&nbsp;2.9(c), last sentence of Section&nbsp;2.10, 3, 4, 5, 6.5, 6.6 and 9.4
shall survive the termination or expiration of this Agreement for any reason whatsoever.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>7.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Termination of Services Agreement</B></U><B>.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">7.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company and Agenda Biotechnology Ltd., a company wholly owned by David (&#147;<B>Agenda</B>&#148;), hereby
terminate the Advisory and Consultancy Services Agreement between the Company and Agenda dated
February&nbsp;11, 2003, as amended on May&nbsp;24, 2004 (the &#147;<B>Services Agreement</B>&#148;), and agree that, as
from the Effective Date, David&#146;s engagement by the Company shall be governed solely by this
Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>8.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Notices</B></U><B>.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">8.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any and all notices and communications in connection with this Agreement shall be in writing,
addressed to the parties as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="white-space: nowrap">If to the Company:</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Protalix Ltd.</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">2 Snunit Street, POB 455, Carmiel, 20100, Israel</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="white-space: nowrap">It to the Employee:</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>David Aviezer</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">4 Hatena St., POB 1914, Hashmonaim, 73127, Israel</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">8.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>All notices shall be given by registered mail (postage prepaid), by facsimile or email or
otherwise delivered by hand or by messenger to the Parties&#146; respective addresses as above or
such other address as may be designated by notice. Any notice sent in accordance with this
Section&nbsp;8 shall be deemed received upon the earlier of: (i)&nbsp;if sent
by facsimile or email, upon transmission and electronic confirmation of transmission or (if
transmitted and received on a non-business day) on the first business day following
transmission and electronic confirmation of transmission, (ii)&nbsp;if sent by registered mail,
upon 3 (three)&nbsp;days of mailing, (iii)&nbsp;if sent be messenger, upon delivery; and (iv)&nbsp;the
actual receipt thereof.</TD>
</TR>

</TABLE>
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><B>9.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Miscellaneous</B></U><B>.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">9.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Headings; Interpretation</U>. Section and Subsection headings contained herein are for
reference and convenience purposes only and shall not in any way be used for the
interpretation of this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">9.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Entire Agreement</U>. This Agreement constitutes the entire agreement between the Parties
with respect to the subject matters hereof and cancels and supersedes all prior agreements,
understandings and arrangements, oral or written, between the Parties with respect to such
subject matters.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">9.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Amendment; Waiver</U>. No provision of this Agreement may be modified or amended unless
such modification or amendment is agreed to in writing and signed by the Employee and the
Company. The observance of any term hereof may be waived (either prospectively or
retroactively and either generally or in a particular instance) only with the written consent
of the Party against which/whom such waiver is sought. No waiver by either Party at any time
to act with respect to any breach or default by the other Party of, or compliance with, any
condition or provision of this Agreement to be performed by such other Party shall be deemed a
waiver of similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">9.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Governing Law; Dispute Resolution</U>. This Agreement shall be governed by and construed
in accordance with the laws of the State of Israel. Any dispute arising out of or relating to
this Agreement shall be resolved by a single arbitrator to be appointed by the Parties, or in
the event the Parties fail to agree on the identity of the arbitrator within ten (10)&nbsp;days of
a Party&#146;s request to appoint same, the arbitrator shall be appointed by the Chairman of the
Israeli Bar Association.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Arbitration proceedings shall be conducted for no longer than forty-five (45)&nbsp;days. The
proceedings shall be conducted in Hebrew and according to the rules of substantive law. The
arbitrator will not be bound by rules of evidence or procedure and will give a reasoned
decision, in writing. The arbitrator&#146;s decision shall be final and binding in any court.
Unless otherwise determined by the arbitrator, each party to the proceedings shall bear its
own expenses and the arbitrator&#146;s fees and expenses shall be borne in equal parts by the
parties to the proceedings.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Section shall constitute an arbitration agreement between the Parties.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">9.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Severability</U>. The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof. If any part of this Agreement is determined to
be invalid, illegal or unenforceable, such determination shall not affect the validity,
legality or enforceability of any other part of this Agreement; and the remaining parts shall
be enforced as if such invalid, illegal, or unenforceable part were not contained herein,
<U>provided</U>, <U>however</U>, that in such event this Agreement shall be interpreted so
as to give effect, to the greatest extent consistent with and permitted by applicable law, to
the meaning and intention of the excluded provision as determined by such court of competent
jurisdiction.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">9.6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Assignment</U>. Neither this Agreement or any of the Employee&#146;s rights, privileges, or
obligations set forth in, arising under, or created by this Agreement may be assigned or
transferred by the Employee without the prior consent in writing of the Company. The Company
shall be entitled to assign its rights and obligations hereunder to any entity</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->9<!-- /Folio -->
</DIV>

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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>acquiring a
material part of its assets or to a subsidiary or affiliate thereof (as such terms are defined
in the Israeli Securities Law-1968).</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>&#091;Signature Page to Protalix Ltd. Employment Agreement&#093;</I>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">IN WITNESS WHEREOF, the Parties hereto have executed this Employment Agreement as of the date
first above-mentioned.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Eli Hurvitz
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
<FONT style="font-variant: SMALL-CAPS"><B>PROTALIX LTD.</B></FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">/s/ David Aviezer
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
<B>DR. DAVID AVIEZER</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By: Eli Hurvitz</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Agreed as applicable to it:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ David Aviezer
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
<B>AGENDA BIOTECHNOLOGY LTD.</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By: David Aviezer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->10<!-- /Folio -->
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>7
<FILENAME>g04822exv10w5.htm
<DESCRIPTION>EX-10.5 EMPLOYMENT AGREEMENT W/YOSSI MAIMON
<TEXT>
<HTML>
<HEAD>
<TITLE>EX-10.4 Employment Agreement w/Yossi Maimon</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Exhibit&nbsp;10.5
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>EMPLOYMENT AGREEMENT</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This EMPLOYMENT AGREEMENT (this &#147;<B>Agreement</B>&#148;) is made effective as of October&nbsp;15, 2006 (the
&#147;<B>Effective Date</B>&#148;), by and between Protalix Ltd., a company organized under the laws of the State of
Israel (the &#147;<B>Company</B>&#148;) and Yossef Maimon, Israel Identification No.&nbsp;24821233 (the &#147;<B>Employee</B>&#148;) (each
of the Company and Employee shall be referred to herein, as a &#147;<B>Party</B>&#148; and collectively, the
&#147;<B>Parties</B>&#148;).
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>WHEREAS</B>,</TD>
    <TD>&nbsp;</TD>
    <TD>the Company is engaged, inter alia, in the research and
development of proteins and expression thereof in plant cells
cultures; and</TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>WHEREAS</B>,</TD>
    <TD>&nbsp;</TD>
    <TD>the Company desires to employ the Employee in the position of
Company&#146;s Chief Financial Officer (&#147;<B>CFO</B>&#148;) and the Employee
desires to be employed by the Company in such position, on the
terms and conditions hereinafter set forth;</TD>
</TR>
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>NOW, THEREFORE</B>, based on the representations contained herein and in consideration of the mutual
promises and covenants set forth herein, the Parties agree as follows:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Employment</B></U><B>.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Commencing as of the Effective Date, the Company shall employ the Employee in the position of
CFO, reporting to the Chief Executive Officer of the Company (&#147;<B>CEO</B>&#148;).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee&#146;s duties and responsibilities shall be those duties and responsibilities
customarily performed by a Chief Financial Officer of a company, as may be determined from
time to time by the CEO. These will include, inter alia, the following:</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>General -</I>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Supervision of recording of transactions and balances</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Supervision of administrative accounting staff</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Management of tax and related payments</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Banking relations</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Systems and policies &#150;</I>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Ensuring overall integrity of accounting systems</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Ensuring that applicable data is standardized and systems are well structured for proper
and easily accessible reporting</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Acting as Chief Accounting Officer (CAO)&nbsp;to determine accounting policies and assist
others in accounting related matters</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Working with others in the company to determine financial policies and reporting
practices</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Identifying emerging tax and reporting issues and coordinating policies with outside
accountants and lawyers</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Implementation of internal control procedures</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Internal reporting -</I>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Preparing cash flow projections</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Preparing monthly financial summaries and key performance indicators</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Preparing and implementing budget and financial portion of business plan</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->1<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>External Reporting</I>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Preparing quarterly and annual financial statements, notes and related information, and
any other information as may be required according to US GAAP, tax, securities and other
applicable statutes and regulations, SEC reports, etc.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Working with public and private investors to explain financial information and verify
integrity of systems.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee shall be employed on a full-time basis. The Employee shall devote his full and
undivided attention and full working time to the business and affairs of the Company and the
fulfillment of his duties and responsibilities under this Agreement, it being agreed that
during the period from the Effective Date until the end of calendar year 2006 (the &#147;<B>Assistance
Period</B>&#148;) Employee shall be entitled to assist his immediately prior employer in the
integration into such employer&#146;s organization of the person who will assume the Employee&#146;s
position therein, <I>provided however </I>that (i)&nbsp;such assistance is given up to a limited amount of
hours per month during the Assistance Period, (ii)&nbsp;the provision of such assistance is
coordinated promptly in advance with the CEO, and (iii)&nbsp;is the provision of such assistance
does not derogate from any of Employee&#146;s obligations hereunder or the performance of any of
its duties or responsibilities hereunder.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Without derogating from the generality of the above, during the term of this Agreement the
Employee shall not be engaged in any other employment nor engage in any other business
activity or render any services, with or without compensation, for any other person or
entity.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee shall notify the Company immediately of any event or circumstance which may
hinder the performance of his obligations hereunder or result in the Employee having a
conflict of interest with his position with the Company.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee acknowledges that the Company&#146;s facilities are located in Carmiel and that he
will be required to attend such facilities at least three (3)&nbsp;working days per week, unless
coordinated otherwise with the CEO. Employee further acknowledges and agrees that the
performance of his duties hereunder may require significant domestic and international travel
at the Company&#146;s request.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>It is agreed between the Parties that the position that Employee holds within the Company is
a management position, which demands a special level of loyalty and accordingly the Work Hours
and Rest Law (1951)&nbsp;shall not apply to Employee&#146;s employment by the Company and this
Agreement. The Employee further acknowledges and agrees that his duties and responsibilities
may entail irregular work hours and extensive traveling in Israel and abroad, for which he is
adequately rewarded by the compensations provided for in this Agreement. The Parties confirm
that this is a personal services contract and that the relationship between the Parties shall
not be subject to any general or special collective bargaining agreement or any custom or
practice of the Company in respect of any of its other employees or contractors.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Salary and Employee Benefits</B></U><B>.</B></TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In full consideration of Employee&#146;s employment with the Company, commencing as of the Effective
Date, the Employee shall be entitled to the following payments and benefits, it being understood
and agreed that any Salary-based benefits shall be calculated exclusively on the basis of the base
Salary (without consideration to any other benefit):
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Salary</U>. The Company shall pay the Employee a gross salary of NIS 45,000 per month
(the &#147;<B>Salary</B>&#148;). The Salary will be adjusted from time to time in accordance with the</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->2<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Cost of Living Index (&#147;Tosefet Yoker&#148;) as may be required by law. The Salary shall be payable monthly
in arrears, and shall be paid to the Employee in accordance with Company&#146;s policy.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Bonuses</U>.

</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>2.2.1&nbsp;<U>Annual Bonus</U>.</TD>
</TR>


<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>At the end of each calendar year, the Company shall consider granting the Employee an annual
bonus, at the Company&#146;s sole discretion and without any obligation on Company&#146;s part to grant
such bonus. Without limiting such Company&#146;s sole discretion, Employee&#146;s skills, performance
of, and dedication to, his duties hereunder shall serve as a factor in Company&#146;s
determination as aforesaid.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>2.2.2&nbsp;<U>Bonus upon Achievement of Significant Milestones</U>.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company shall consider granting the Employee a bonus upon achievement of a significant
milestone by the Company, at the Company&#146;s sole discretion and without any obligation on
Company&#146;s part to grant such bonus. Without limiting such Company&#146;s sole discretion,
Employee&#146;s contribution to the achievement of such a significant milestone shall serve as a
key factor in Company&#146;s determination as aforesaid.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Options</U>. Employee shall be entitled to an option (the &#147;<B>Option</B>&#148;) to purchase 9,300
Ordinary Shares of the Company (&#147;<B>Ordinary Shares</B>&#148;) under the Company&#146;s 2003 Israeli Stock
Option Plan, subject to the approval of the Board of Directors of the Company (the &#147;<B>Board</B>&#148;)
and the following additional terms and conditions:</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">(i)&nbsp;vesting over a period of four (4)&nbsp;years as follows: one fourth of the Option (i.e. an
option to purchase 2,325 Ordinary Shares) shall vest upon the lapse of one year from the
date of grant of the Option (the &#147;<B>Initial Vesting Date</B>&#148;). The remainder of the Option
(i.e. an option purchase 6,975 Ordinary Shares) shall vest on a quarterly basis in twelve
equal installments, commencing on the Initial Vesting Date;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">(ii)&nbsp;a purchase price per Ordinary Share of US$24.36; and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">(iii)&nbsp;the entering by the Employee into an Option Agreement covering such Option,
acceptable to the Board and similar in all material respects to the Option Agreements
between the Company and its other executive officers.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Manager&#146;s Insurance</U>. The Company shall insure the Employee under a Manager&#146;s
Insurance Policy, including insurance in the event of illness or loss of capacity for work
(the &#147;<B>Policy</B>&#148;), and shall pay a sum of up to an aggregate of 15.83% of the Salary towards the
Policy, of which (i)&nbsp;8.33% shall be on account of severance compensation, which shall be
payable to the Employee upon severance, in accordance with the provisions of this Agreement;
(ii)&nbsp;5% of the Salary on account of pension fund payments; and (iii)&nbsp;up to 2.5% of the Salary
on account of disability pension payments. The Company shall deduct 5% from the Salary to be
paid on behalf of the Employee towards the Policy. The Employee may extend an existing policy
or plan and incorporate it into the Policy, at his discretion.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company and the Employee agree and acknowledge that in the event the Company transfers
ownership of the Policy or the right to receive such policy to the Employee, then such
transfer shall be credited against any obligation that the Company may have to pay severance
pay to the Employee pursuant to the Severance Pay Law &#151; 1963 (the &#147;<B>Severance Pay Law</B>&#148;).
Employee agrees that the payments by the Company to the
Policy in accordance with the terms hereof, shall be instead of any statutory obligation of
the Company to pay severance pay to the Employee, and not in addition thereto, all</TD>
</TR>


</TABLE>
</DIV>
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<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>in&nbsp;accordance with Section&nbsp;14 of the Severance Pay Law. The Parties hereby adopt the General
Approval of the Minister of Labor and Welfare, <I>on Employers&#146; Payments to Pension Funds and
Insurance Policies Instead of Severance Pay According to Section&nbsp;14 of the Severance Pay Law</I>,
attached hereto as <U><B>Exhibit&nbsp;A</B></U>.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company hereby waives its right to a refund of payments it made to the Policy, except:
(i)&nbsp;in the event that Employee&#146;s right to severance pay was denied by a final judgment
pursuant to Section&nbsp;16 or 17 of the Severance Pay Law (in which case Company shall only be
entitled to a refund of such funds to the extent that severance pay was denied); or (ii)&nbsp;in
the event that the Employee withdrew monies from the Policy (other than by reason of an
&#147;Entitling Event&#148;, i.e. death, disability or retirement at or after the age of sixty (60)).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Vocational Studies</U>. The Company shall open and maintain a &#147;Keren Hishtalmut&#148; Fund for
the benefit of the Employee (the &#147;<B>Fund</B>&#148;). The Company shall contribute to such Fund an amount
equal to 7-1/2% of the Salary and the Employee shall contribute to the Fund an amount equal to
2-1/2% of the Salary. The Employee hereby instructs the Company to transfer to the Fund
Employee&#146;s contribution from the Salary. Upon termination of this Agreement by either Party,
other than termination by the Company for Cause, the Company shall assign and transfer to the
Employee the ownership in the Fund.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Vacation</U>. The Employee shall be entitled to annual paid vacation of 24 working days.
Subject to applicable law, up to two (2)&nbsp;years&#146; equivalent of vacation days may be accumulated
and may, at the Employee&#146;s option, upon thirty (30)&nbsp;days&#146; prior written notice to the Company,
be converted into cash payments in an amount equal to the proportionate part of the Salary for
such days.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Employee shall coordinate in advance with the CEO the dates of the vacation hereunder.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Sick Leave</U>. The Employee shall be entitled to fully paid sick leave pursuant to the
Sick Pay Law (1976).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.8.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Annual Recreation Allowance (Dme&#146;i Havra&#146;a)</U>. The Employee shall be entitled to annual
recreation allowance according to applicable law.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.9.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Company Car</U>.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company shall provide the Employee with a Company car (the &#147;<B>Company Car</B>&#148;), as
determined by the CEO, at his discretion, which car shall be categorized &#147;Group 4&#148;. The
Company Car shall be placed with the Employee for his business and personal use. Employee
shall take good care of the Company Car and ensure that the provisions of the insurance
policy and the Company&#146;s rules relating to the Company Car are strictly, lawfully and
carefully observed.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Subject to applicable law, the Company shall bear all fixed and ongoing expenses
relating to the Company Car and to the use and maintenance thereof, excluding expenses
incurred in connection with any violations of law, which shall be paid solely by Employee.
The Company shall gross-up any and all taxes applicable in connection with said Company Car
and the use thereof, in accordance with applicable income tax regulations. All such
expenses borne, and tax payments grossed-up, by the Company pursuant to this Section&nbsp;2.9(b)
are included in the Salary.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Upon the termination of employment hereunder, the Employee shall return the Company Car
(together with its keys and any other equipment supplied and/or </TD>
</TR>

</TABLE>
</DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>installed therein by
Company and any documents relating to the Company Car) to the Company&#146;s principal office.
Employee shall have no rights of lien with respect to the Company Car and/or any of said
equipment and documents.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.10.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Telephone</U>. The Company shall furnish, for the use of the Employee, a cellular
telephone (the &#147;<B>Company Phone</B>&#148;), and shall bear all the costs and expenses associated with the
use of the Company Phone. The Company will bear the tax applicable to the use of the Company
Phone by the Employee, according to applicable law. All such costs, expenses and tax payments
borne and payable by the Company pursuant to this Section&nbsp;2.10 are included in the Salary. The
provisions of Section&nbsp;2.9(c) above shall apply to the Company Phone, <I>mutatis mutandis</I>.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.11.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Certain Reimbursements</U>. The Employee shall be entitled to full reimbursement from
the Company for reasonable expenses incurred during the performance of his duties hereunder up
to a limit of NIS 1,500 per month, upon submission of substantiating documents, according to
the Company&#146;s policy. The reimbursement of any expenses in excess of the foregoing limit shall
require the prior approval of the CEO.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.12.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Taxes</U>. The Employee will bear any tax applicable on the payment or grant of any of
the above Salary and/or benefits, according to the then applicable law. The Company shall be
entitled to and shall deduct and withhold from any amount or benefit payable to the Employee,
any and all taxes, withholdings or other payments as required under any applicable law.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>3.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Confidentiality</B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">3.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee hereby agrees that he shall not, directly or indirectly, disclose or use at any
time any trade secrets or other confidential information of any type or nature, whether
patentable or not, of the Company, its subsidiaries, affiliates or parent company now or
hereafter existing, including but not limited to, any (i)&nbsp;processes, formulas, trade secrets,
copyrights, innovations, inventions, discoveries, improvements, research or development and
test results, specifications, data, patents, patent applications and know-how of any type or
nature; (ii)&nbsp;marketing plans, business plans, strategies, forecasts, financial information,
budgets, projections, product plans and pricing; (iii)&nbsp;personnel information, salary, and
qualifications of employees; (iv)&nbsp;agreements, customer and supplier information, including
identities and product sales forecasts; and (v)&nbsp;any other information of a confidential or
proprietary nature (collectively, &#147;<B>Confidential Information</B>&#148;), of which the Employee is or
becomes informed or aware during the employment, whether or not developed by the Employee, it
being agreed that for purposes of this Section&nbsp;3.1, the term Confidential Information shall
not include information that has entered into the public domain through no wrongful act by
Employee. Upon termination of this Agreement, or at any other time upon request of the
Company, the Employee shall promptly deliver to the Company all physical and electronic copies
and other embodiments of Confidential Information and all memoranda, notes, notebooks,
records, reports, manuals, drawings, blueprints and any other documents or things belonging to
the Company, and all copies thereof, in all cases, which are in the possession or under the
control of the Employee.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">3.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Employee hereby acknowledges and that all Confidential Information and any other rights in
connection therewith are and shall at all times remain the sole property of the Company.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>4.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Non-Competition and Non-Solicitation</B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">4.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee agrees and undertakes that he will not, for so long as this Agreement is in
effect and for a period of two (2)&nbsp;years thereafter (the &#147;<B>Non-Competition Period</B>&#148;),</TD>
</TR>


</TABLE>
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</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>compete or to assist others to compete, whether directly or indirectly, with the business of the Company,
as currently conducted and as conducted and/or proposed to be conducted during the
Non-Competition Period.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">4.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee further agrees and undertakes that during the Non-Competition Period, he will
not directly or indirectly solicit any business which is similar to the Company&#146;s business
from individuals or entities that are customers, suppliers or contractors of the Company, any
of its subsidiaries, affiliates or parent company during the Non-Competition Period, without
the prior written consent of the CEO.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">4.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee further agrees and undertakes that during the Non-Competition Period, without
the prior written consent of the CEO, he will not employ, offer to employ, or in any way
directly or indirectly solicit or seek to obtain or achieve the employment by any business or
entity of any person employed by either the Company, its subsidiaries, affiliates, parent
company or any successors or assigns thereof during the Non-Competition Period.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">4.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Parties hereto agree that the duration and area for which the covenants set forth in this
Section&nbsp;4 are to be effective are necessary to protect the legitimate interests of the Company
and its development efforts and accordingly are reasonable, in terms of their geographical and
temporal scope. In the event that any court determines that the time period and/or area are
unreasonable and that such covenants are to that extent unenforceable, the Parties hereto
agree that such covenants shall remain in full force and effect for the greatest period of
time and in the greatest geographical area that would not render them unenforceable. In
addition, the Employee acknowledges and agrees that a breach of Sections&nbsp;3, 4 or 5 hereof,
shall cause irreparable harm to the Company, its subsidiaries, affiliates and/or parent
company and that the Company shall be entitled to specific performance of this Agreement or an
injunction without proof of special damages, together with the costs and reasonable attorney&#146;s
fees and disbursements incurred by the Company in enforcing its rights under Sections&nbsp;3, 4 or
5. The Employee acknowledges that the compensation and benefits he receives hereunder are
paid, inter alia, as consideration for his undertakings contained in Sections&nbsp;3, 4 and 5.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>5.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Creations and Inventions </B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">5.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company shall be the sole and exclusive owner of any Inventions (as defined below), and
Employee hereby assigns to the Company any and all of his rights, title and interest in such
intellectual property free and clear of any third parties rights. The Employee shall inform
the Company of any Invention relating to the Company&#146;s technology, its applications components
or any intellectual property relating thereto, and shall execute any necessary assignments,
patent forms and the like and will assist in the drafting of any description or specification
of the Invention as may be required for the Company&#146;s records and in connection with any
application for patents or other forms of legal protection that may be sought by the Company.
The Employee shall treat all information relating to any Invention as Confidential Information
according to Section&nbsp;3 above.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">5.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Without limiting the foregoing, &#147;Inventions&#148; shall include any and all intellectual property,
including without limitation, ideas, inventions, processes, formulas, source and object codes,
data, programs, know how, improvements, discoveries, designs,
techniques, trade secrets, patents and patents applications, copyrights, mask work and any
other intellectual property rights throughout the world, generated, produced, reduced to
practice, or developed by Employee during or in connection with his employment by the
Company.</TD>
</TR>


</TABLE>
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</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">5.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company&#146;s rights under this Section&nbsp;5 shall be worldwide, and shall apply to any such
Invention notwithstanding that it is perfected or reduced to specific form after the Employee
has ceased his services hereunder.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>6.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Term and Termination</B></U><B>.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">6.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Agreement shall be in effect commencing as of the Effective Date and shall continue in
full force and effect for an undefined period, unless and until terminated by either Party by
sixty (60)&nbsp;days prior written notice to the other Party. Each of such prior notice periods
shall be referred to as the &#147;<B>Notice Period</B>&#148;, as applicable.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">6.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding anything to the contrary herein, the Company may terminate this Agreement in
the event of the inability of the Employee to perform his duties hereunder, whether by reason
of injury (mental or physical), illness or otherwise, incapacitating the Employee for a period
exceeding 90&nbsp;days.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">6.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding anything to the contrary herein, the Company may terminate this Agreement at
any time, effective immediately and without need for prior written notice, and without
derogating from any other remedy to which the Company may be entitled, for Cause.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the purposes of this Agreement, the term &#147;<B>Cause</B>&#148; shall mean: (i)&nbsp;a material breach by
Employee of this Agreement; (ii)&nbsp;any breach by Employee of his fiduciary duties or duties of
care to the Company; (iii)&nbsp;Employee&#146;s dishonesty or fraud or felonious conduct; (iv)
Employee&#146;s embezzlement of funds of the Company; (v)&nbsp;any conduct by Employee, alone or
together with others, which is materially injurious to the Company, monetary or otherwise;
(vi)&nbsp;Employee&#146;s gross negligence or willful misconduct in performance of his duties and/or
responsibilities hereunder; (vii)&nbsp;Employee&#146;s disregard or insubordination of any lawful
resolution and/or instruction of the CEO with respect to Employee&#146;s duties and/or
responsibilities towards the Company; (viii)&nbsp;the occurrence of an event or circumstance which
may result in the Employee having a conflict of interest with his position with the Company,
without Employee having notified the Company thereof, as provided herein; (ix)&nbsp;any breach by
Employee of his confidentiality undertakings to the Company; or (x)&nbsp;any consequences which
would entitle the Company to terminate Employee&#146;s employment without severance payments under
the Severance Pay Law.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">6.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Employee shall cooperate with the Company and assist the integration into the Company&#146;s
organization of the person or persons who will assume the Employee&#146;s responsibilities,
pursuant to Company&#146;s instructions. At the option of the Company, the Employee shall, during
such period, either continue with his duties or remain absent from the premises of the
Company, subject to applicable law. At any time during the Notice Period, the Company may
elect to terminate this Agreement and the relationship with the Employee immediately,
<U>provided</U>, <U>that</U> Employee shall be entitled to all payments and other benefits
due to him hereunder as he would have been entitled to receive for the remaining period of the
Notice Period.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">6.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Upon termination of Employee&#146;s employment with the Company hereunder, for any reason
whatsoever, the Company shall have no further obligation or liability towards the
Employee in connection with his employment as aforesaid. The Company may set-off any
outstanding amounts due to it by Employee against any payment due by the Company to the
Employee, subject to applicable law. Without limiting the generality of the foregoing, in the
event that Employee fails to comply with his prior notice or other obligations hereunder or
under applicable law, the Company shall be entitled to set-off</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->7<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any amount to which Employee
would have been entitled during the Notice Period, from any payment due by the Company to the
Employee, all without prejudice to any other remedy to which the Company may be entitled
pursuant to this Agreement or applicable law.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">6.6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The provisions of Sections&nbsp;2.9(c), last sentence of Section&nbsp;2.10, Sections&nbsp;3, 4, 5, 6.5, 6.6
and 8.4 shall survive the termination or expiration of this Agreement for any reason
whatsoever. The provisions of the last sentence of Section&nbsp;2.5 shall survive the termination
of this Agreement subject to the terms set forth in such sentence.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>7.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Notices</B></U><B>.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">7.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any and all notices and communications in connection with this Agreement shall be in writing,
addressed to the parties as follows:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="26%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="70%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">If to the Company:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Protalix Ltd.</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">2 Snunit Street, POB 455, Carmiel, 20100, Israel</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">It to the Employee:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Yossef Maimon</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">10 Feinstein St., Tel Aviv</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">7.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>All notices shall be given by registered mail (postage prepaid), by facsimile or email or
otherwise delivered by hand or by messenger to the Parties&#146; respective addresses as above or
such other address as may be designated by notice. Any notice sent in accordance with this
Section&nbsp;7 shall be deemed received upon the earlier of: (i)&nbsp;if sent by facsimile or email,
upon transmission and electronic confirmation of transmission or (if transmitted and received
on a non-business day) on the first business day following transmission and electronic
confirmation of transmission, (ii)&nbsp;if sent by registered mail, upon 3 (three)&nbsp;days of mailing,
(iii)&nbsp;if sent by messenger, upon delivery; and (iv)&nbsp;the actual receipt thereof.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>8.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Miscellaneous</B></U><B>.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">8.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Headings; Interpretation</U>. Section and Subsection headings contained herein are for
reference and convenience purposes only and shall not in any way be used for the
interpretation of this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">8.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Entire Agreement</U>. This Agreement constitutes the entire agreement between the Parties
with respect to the subject matters hereof and cancels and supersedes all prior agreements,
understandings and arrangements, oral or written, between the Parties with respect to such
subject matters.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">8.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Amendment; Waiver</U>. No provision of this Agreement may be modified or amended unless
such modification or amendment is agreed to in writing and signed by the Employee and the
Company. The observance of any term hereof may be waived (either prospectively or
retroactively and either generally or in a particular instance) only with the written consent
of the Party against which/whom such waiver is sought. No waiver
by either Party at any time to act with respect to any breach or default by the other Party
of, or compliance with, any condition or provision of this Agreement to be performed by such
other Party shall be deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">8.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Governing Law; Dispute Resolution</U>. This Agreement shall be governed by and construed
in accordance with the laws of the State of Israel. Any dispute arising out of or relating to
this Agreement shall be exclusively resolved by the competent court in Tel-Aviv Jaffa.</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->8<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">8.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Severability</U>. The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof. If any part of this Agreement is determined to
be invalid, illegal or unenforceable, such determination shall not affect the validity,
legality or enforceability of any other part of this Agreement; and the remaining parts shall
be enforced as if such invalid, illegal, or unenforceable part were not contained herein,
<U>provided</U>, <U>however</U>, that in such event this Agreement shall be interpreted so
as to give effect, to the greatest extent consistent with and permitted by applicable law, to
the meaning and intention of the excluded provision as determined by such court of competent
jurisdiction.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">8.6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U>Assignment</U>. Neither this Agreement or any of the Employee&#146;s rights, privileges, or
obligations set forth in, arising under, or created by this Agreement may be assigned or
transferred by the Employee without the prior consent in writing of the Company. The Company
shall be entitled to assign its rights and obligations hereunder to any entity acquiring a
material part of its assets or to a subsidiary, affiliate or parent company thereof (as such
terms are defined in the Israeli Securities Law-1968).</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>&#091;Signature Page to Protalix Ltd. Employment Agreement&#093;</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">IN WITNESS WHEREOF, the Parties hereto have executed this Employment Agreement as of the date
first above-mentioned.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ David Aviezer
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
<B>PROTALIX LTD.</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Yossef Maimon
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
<B>YOSSEF MAIMON</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">By: David Aviezer
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->9<!-- /Folio -->
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.6
<SEQUENCE>8
<FILENAME>g04822exv10w6.htm
<DESCRIPTION>EX-10.6 LICENSE AGREEMENT
<TEXT>
<HTML>
<HEAD>
<TITLE>EX-10.6 License Agreement</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Exhibit&nbsp;10.6
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Portions of this exhibit have been omitted pursuant to a request for confidential treatment. The
omitted portions, marked by &#091;***&#093;, have been separately filed with the Securities and Exchange
Commission.</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>LICENSE AGREEMENT</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">This
License Agreement (this &#147;<B>Agreement</B>&#148;) is entered into
as of this &#95;&#95;&#95; day of <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, 2005,
by and between Icon Genetics AG, a company incorporated under the laws of Germany (&#147;<B>Icon</B>&#148;) of
Weinbergweg 23, D-06120 Halle/Saale, Germany, on its own behalf and on behalf of its Affiliates,
and Protalix Ltd., a company incorporated under the laws of Israel (&#147;<B>Protalix</B>&#148;) of 2 Snunit Street,
Industrial Park, Carmiel, Israel (Protalix and Icon may be referred to individually as a &#147;<B>Party</B>&#148;
and collectively as the &#147;<B>Parties</B>&#148;).
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PREMISES</B>
</DIV>


<DIV align="left" style="margin-left: 10%; text-indent: -10%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B>WHEREAS, </B>Icon is engaged in the development and commercialization of plant
transformation and gene expression technologies and has developed
and owns or controls (with rights sufficient to grant the
licenses herein granted) a proprietary platform technology known
as &#147;Transgene Operating Systems&#148; (&#147;<B>Icon&#146;s Technology</B>&#148;), the
patents pertaining to which are listed in <B><U>Annex A</U> </B>attached hereto
(together with all divisions, continuations or
continuations-in-part, reissues, re-examinations, renewals,
extensions, supplementary protection certificates, or the like,
as well as any certificates of inventions or applications
therefore, and all foreign counterparts with respect to Icon&#146;s
Technology, being collectively referred to as &#147;<B>Patents</B>&#148;); and</DIV>


<DIV align="left" style="margin-left: 10%; text-indent: -10%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B>WHEREAS, </B>Protalix is engaged in research, development, production and
commercialization of pharmaceutical proteins and the expression
thereof in plant cell culture systems (the &#147;<B>Protalix Field</B>&#148;); and</DIV>


<DIV align="left" style="margin-left: 10%; text-indent: -10%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B>WHEREAS, </B>pursuant to the Collaborative Research Agreement entered into
between the Parties on April&nbsp;30, 2004 (the &#147;<B>Research Agreement</B>&#148;),
an agreed research program (the &#147;<B>Research Program</B>&#148;) directed
towards expressing the cDNA encoding of the 4 (four)&nbsp;proteins
listed in <B><U>Annex B</U> </B>attached hereto (the &#147;<B>Research Proteins</B>&#148;) in
plant cells grown in Protalix&#146;s bio-reactor systems with the use
of Icon&#146;s Technology is currently underway; and</DIV>


<DIV align="left" style="margin-left: 10%; text-indent: -10%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B>WHEREAS, </B>pursuant to the Research Agreement<B>, </B>the Parties have entered into an
Option Agreement effective as of April&nbsp;30, 2004 (the &#147;<B>Option
Agreement</B>&#148;, attached hereto as <B><U>Annex C</U></B>), whereby Protalix was granted an Option
to acquire certain Licenses (as such terms are defined in the Option
Agreement); and</DIV>


<DIV align="left" style="margin-left: 10%; text-indent: -10%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B>WHEREAS, </B>the Parties are entering into this Agreement to
record the understandings</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->1<!-- /Folio -->
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">





<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 8%">reached between them to
govern such Licenses, should they become operative
pursuant to the terms and conditions of the Option
Agreement.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>NOW THEREFORE, </B>in consideration of the mutual undertakings and covenants set forth herein, the
sufficiency of which is hereby acknowledged, the Parties hereby agree as follows:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>DEFINITIONS</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Terms defined in this Section&nbsp;1 and elsewhere, parenthetically, in this
Agreement, shall have the same meaning throughout this Agreement.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.1.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#147;Affiliate&#148; </B>when used with respect to any person or entity, shall mean
any individual, firm, partnership, corporation, trust, joint venture or
other entity, whether <I>de jure </I>or <I>de facto, </I>which, directly or indirectly,
controls, is controlled by or is under common control with such person or
entity. As used in this definition, &#147;control&#148; shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of
the policies and management of a person or entity, whether by the ownership
of stock, by contract or otherwise.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.1.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#147;Confidential Information</B>&#148; shall mean any technical, business or other
information in any form whatsoever, with respect to a Party&#146;s technology,
its applications, business and operations, including but not limited to any
materials, know-how, inventions, data, software programs and their sources,
processes, methods and formula, all whether or not covered by patents,
patent applications, copyrights or other proprietary rights protection, and
any financial information, trade secrets, agreements, documents, names of
potential suppliers, customers, partners or investors, proposed business
deals, reports, plans, market studies, surveys and projections, and any
other information which is confidential or proprietary in nature.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.1.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#147;Effective Date&#148; </B>shall mean the date upon which the Licenses may go into
force and effect as provided in Section&nbsp;2.1 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.1.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>[***].</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.1.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#147;Icon&#146;s Technology&#148; </B>shall have the meaning set out in the Premises to
this Agreement.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->2<!-- /Folio -->
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.1.6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#147;Indemnitee&#148; </B>shall have the meaning set out in Section&nbsp;9.1 of this
Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.1.7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#147;Indemnitor&#148; </B>shall have the meaning set out in Section&nbsp;9.1 of this
Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.1.8.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Improvement</B>&#148; shall mean any invention, discovery or further development
of Icon Technology&#146;s Patents generated by Protalix.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.1.9.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#147;Licensed Product(s)&#148; </B>shall mean any pharmaceutical Research Protein and
each additional pharmaceutical Protein expressed by Protalix or its
Affiliates or sub-licensees using Icon&#146;s Technology. For the avoidance of
doubt, active ingredients for drugs developed by Protalix with the use of
Icon&#146;s Technology and sold as such, shall be deemed as Licensed Product(s).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.1.10.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#147;Licenses&#148; </B>shall have the meaning set out in Section&nbsp;2.1 of this
Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.1.11.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#147;Net Sales&#148; </B>shall mean amounts received by Protalix or any of its
Affiliates or sub-licensees for the sale of Licensed Products, less:</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%">1.1.11.1 discounts, refunds, rebates, charge-backs and any other
retroactive price adjustments reducing the consideration thereby
received;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%">1.1.11.2 amounts returned on account of product returns and
allowances;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%">1.1.11.3 charges for insurance, freight, and other transportation
costs; and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%">1.1.11.4 sales, tariff duties and any other taxes directly imposed
on the particular sale, but excluding federal, state or local taxes
based on income.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%">For the avoidance of doubt, Net Sales of any Licensed Products
constituting a pharmaceutical drug active ingredient shall be
determined as the industry net sales of the finished dosage form
(i.e. the sales of the pharmaceutical manufacturer or distributor to
wholesalers,
pharmacies, hospitals, physicians or medical care organizations)
less the amounts as specified under Sections 1.1.11.1. to 1.1.11.4
above.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.1.12.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#147;Owner&#148; </B>shall have the meaning set out in Section&nbsp;10.1 of this
Agreement.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->3<!-- /Folio -->
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.1.13.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Patents</B>&#148; shall mean the Patents listed in <U><B>Annex A</B></U> that are
owned or controlled (with rights sufficient to grant the licenses herein
granted) by Icon or its Affiliates, together with all divisions,
continuations or continuations-in-part, reissues, re-examinations,
renewals, extensions, supplementary protection certificates, or the like of
any such Patents, as well as any certificates of invention or applications
therefore, and all foreign counterparts, with respect to any of the
foregoing.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.1.14.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#147;Protalix Field&#148; </B>shall have the meaning set out in the Premises to this
Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.1.15.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Protein</B>&#148; shall mean any protein, protein fragment, peptide or
polypeptide regardless of formation or structure.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.1.16.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#147;Recipient&#148; </B>shall have the meaning set out in Section&nbsp;10.1 of this
Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.1.17.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#147;Research Proteins&#148; </B>shall have the meaning set out in the Premises to
this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.1.18.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#147;Research Program&#148; </B>shall have the meaning set out in the Premises to
this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.1.19.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#147;Research Agreement&#148; </B>shall have the meaning set out in the Premises to
this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.1.20.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#147;Royalties&#148; </B>shall have the meaning set out in Section&nbsp;5.1 of this
Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.1.21.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#147;Royalty Period&#148; </B>shall have the meaning set out in Section&nbsp;5.4 of this
Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.1.22.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#147;Semi-Annual Payment&#148; </B>shall have the meaning set out in Section&nbsp;5.4 of
this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.1.23.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#147;Term&#148; </B>shall have the meaning set out in Section&nbsp;12.1 of this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.1.24.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Third Party</B>&#148; shall mean any person or entity other than Icon, Icon
Affiliates, Protalix and Protalix&#146; Affiliates.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.1.25.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#147;Third Party Claim&#148; </B>shall have the meaning set out in
Section&nbsp;9.3 of this Agreement.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The following terms shall have the meanings ascribed to them in the
Option Agreement: &#147;<B>Option</B>&#148;, &#147;<B>Option Period</B>&#148;, &#147;<B>Exercise Fee</B>&#148;.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->4<!-- /Folio -->
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The headings in this Agreement are intended solely for convenience or
reference and shall be given no effect in the interpretation of this Agreement.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>THE LICENSE; IMPROVEMENTS</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Immediately upon and subject to the exercise of the Option by Protalix
during the Option Period or any longer period agreed upon between the Parties in
writing, and to the receipt by Icon of the Exercise Fee determined pursuant to
Section&nbsp;1.5 of the Option Agreement, the following licenses (&#147;<B>Licenses</B>&#148;) shall be
deemed as having been granted by Icon to Protalix and to be in full force and
effect:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.1.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a non-exclusive worldwide license under the Patents listed in <U><B>Annex
A</B></U> to develop, test, use and commercialize Icon&#146;s Technology in the
Protalix Field and to make and have made Proteins expressed by using Icon&#146;s
Technology in the Protalix Field; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.1.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an exclusive worldwide license under the Patents listed in <U><B>Annex
A</B></U> to develop, test, use and commercialize Icon&#146;s Technology to make
and have made Research Proteins in the Protalix Field for the following
Protein products: [***]. For the avoidance of doubt, the license in
respect to any [***] shall be non-exclusive, pursuant to Section
2.1.1 above.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.1.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding the above said, the scope of the Licenses granted under
Sections&nbsp;2.1.1. and 2.1.2. of this Agreement in case of each specific
Patent is further limited as specified in <U><B>Annex A</B></U>.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.1.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the avoidance of doubt, the exclusivity under
Section&nbsp;2.1.2. of this
Agreement and any section of the Option Agreement is granted only in the
Protalix Field, and nothing in the legal relationship between the Parties
implies any limitation imposed on Icon&#146;s business activity and
relationships with any Third Party outside the granted exclusivity area.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Protalix shall be permitted to sublicense its rights under the Licenses,
for the purpose of its sub-licensee(s) further developing, testing, using,
making and having made, marketing and selling Licensed Products, and for no
other purpose whatsoever.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the avoidance of doubt, Protalix shall be entitled to market and
sell Licensed Products through distributors.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>


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<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Protalix shall use commercially reasonable efforts to exploit the rights
licensed under this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Protalix may register the License with the appropriate patent offices
if necessary or desirable under any applicable law, at its own expense. Icon
shall cooperate with Protalix for such purpose, sign all papers in support of
such registration, and execute a formal license that reflects the terms of this
Agreement, for such registration purposes.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Improvement License to Icon</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Subject to the terms and conditions set forth in this Agreement, if Protalix
creates any Improvements of Icon&#146;s Patents licensed to Protalix under Section
2.1 herein, Protalix grants Icon a non-exclusive, worldwide, royalty-free
fully paid up license (with the right to grant sublicenses) under Protalix
intellectual property arising from such Improvements of Icon&#146;s Patents to
make, have made, use, sell, and import any products other than research,
development, production and commercialization of (i)&nbsp;pharmaceutical proteins
and the expression thereof in plant cell culture systems or (ii)
commercialization of Research Proteins.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Limited research license. As from the signing this Agreement and
throughout the Research Program (ending no later than May&nbsp;1, 2006), Protalix is
granted a non-transferable research license to practice Icon Patents listed in
Annex A solely for its internal research and development efforts, said research
license being limited to research activities not involving production of material
for clinical testing.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>TECHNOLOGY TRANSFER/ASSISTANCE</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Icon shall provide Protalix with copies of all of the Icon Patents
listed in <U><B>Annex A</B></U> within 10 (ten)&nbsp;days of the Effective Date.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Icon shall provide Protalix with training in the use of the Icon
Technology and Confidential Information which Icon is free to divulge in relation
to the Icon Technology, at Protalix&#146;s reasonable request, from time to time
during the Term, so as to facilitate Protalix&#146;s exploitation of the License.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>LUMP SUM PAYMENTS.</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Protalix will make the following lump sum payments to Icon upon
achievement of each of the following development milestones in respect of each
Licensed Product:</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->6<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.1.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#091;***&#093;; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.1.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#091;***&#093;.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Sections&nbsp;5.7 and 5.8 of this Agreement shall apply mutatis mutandis to
lump sum payments made under this Section&nbsp;4.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>5.</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>ROYALTIES.</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As from the first commercial sale by Protalix, its Affiliates and/or
sub-licensees of any Licensed Product, Protalix shall pay Icon royalties
(&#147;<B>Royalties</B>&#148;) on Net Sales of such Licensed Product at the rate of &#091;***&#093; of such
Net Sales, until such time as Net Sales in respect of such Licensed Product reach
an aggregate amount of &#091;***&#093;. Thereafter, and for the remainder of the Royalty
Period (as defined below), Protalix shall pay Royalties to Icon with respect to
such Licensed Product at a rate of &#091;***&#093; on Net Sales of such Licensed Product,
unless otherwise provided hereunder.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding the provisions of the preceding Section&nbsp;5.1 of this
Agreement:</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 8%">Should the &#091;***&#093; in any Licensed Product exceed &#091;***&#093; grown in Protalix&#146;s
plant cells bio-reactor systems, the Royalties payable with respect to such
Licensed Product shall be increased to &#091;***&#093; of the Net Sales of such
Licensed Product, for as long as aggregate Net Sales of such Licensed
Product are below &#091;***&#093;. Once aggregate Net Sales of such Licensed Product
exceed &#091;***&#093;, the Royalty rate payable in respect of such Licensed Product
shall be increased to &#091;***&#093; of Net Sales of such Licensed Product, for the
remainder of the Royalty Period.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the avoidance of doubt, it is hereby clarified that sales of one
Licensed Product shall not be taken into consideration for purposes of
calculation of the Royalties required to be paid in connection with any other
Licensed Product. It is hereby further clarified that Protalix or its
licensee have to pay royalties once only, on &#147;Licensed Product&#148; sold in the form
of a pharmaceutical, and not on sales of an active ingredient.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>



<P align="center" style="font-size: 10pt"><!-- Folio -->7<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Protalix&#146;s obligation to pay Royalties to Icon in respect of Licensed Products
shall remain in force and effect until the first to occur of the following (the
&#147;<B>Royalty Period</B>&#148;): (i)&nbsp;the expiration of the [***] period commencing as
from the first commercial sale of the first US Food and Drug Administration &#151; or
European Medicines Agency &#151; approved Licensed Product or (ii)&nbsp;until the expiration
of [***]&nbsp;years from the first commercial sale of any Licensed Product not
requiring FDA or similar approval as a active drug ingredient.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Royalties shall be payable on a &#091;***&#093; basis with respect to the Net Sales of
the preceding &#091;***&#093;. Each &#091;***&#093; shall be made no later than &#091;***&#093;as from the lapse
of the &#091;***&#093; period for which the payment is due and shall be accompanied by a
report specifying the Net Sales during such &#091;***&#093; along with a calculation of the
Royalties owed to Icon.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the avoidance of doubt, it is hereby recorded and agreed that
following the expiry of the Royalty Period by reason of the passage of time pursuant
to Section&nbsp;5.4 of this Agreement, then notwithstanding such expiry, Protalix shall
be entitled to continue to utilize the Icon Patents, to make commercial use of the
Icon Technology in the Protalix Field, without having to pay royalties to Icon in
respect of such activities.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>All payments to be made to Icon pursuant to this Agreement shall be made
in United States Dollars to such bank account as Icon may direct from time to time
during the Term.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.8.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>All payments are quoted net and are made by adding the statutory value
added tax, if any.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.9.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Protalix shall withhold and pay to the appropriate authorities in
respect of any amount due to Icon, any and all withholding and other taxes as may
be imposed by any taxing authority. In such event, Protalix shall provide Icon with
evidence of such withholding and payment.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.10.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Foreign currency shall be converted into United States Dollars using an
exchange rate equal to the exchange rate for the purchase of United States Dollars,
as reported by <I>The Wall Street Journal</I>, on the last business day of the &#091;***&#093;
period for which the payment is due.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.11.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Protalix shall endeavor to prepare accurate and complete records
relating to the Net Sales of the Licensed Products during each
accounting period. Icon or its duly authorized representatives may during the
Term of this Agreement and for up to 6 (six)&nbsp;months thereafter upon giving
reasonable notice &#150; in any event of not less than 14 (fourteen)&nbsp;days &#150; to
Protalix within the premises of Protalix during</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio -->8<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">normal business hours and not
more frequently then once in any 12 (twelve)&nbsp;months period to inspect and make
copies of all such records in respect of the period of 1 (one)&nbsp;year immediately
proceeding the date of such inspection.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">Icon&#146;s right referred to in this Section shall be exercised by Icon at its own
expense save that in the event that any such inspection discloses that the total
amount which should have been accounted for hereunder by Protalix during the
period covered by the inspection exceeds by &#091;***&#093;or more the total amount that
was so accounted for by Protalix during such a period and that Protalix auditors
shall certify in writing such error exists that Protalix shall forthwith
reimburse Icon for reasonable costs of Icon&#146;s inspection.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">If any inspection reveals that Protalix has under-reported the amount payable to
Icon Protalix agrees to make immediate payment to Icon of the proper amount due.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>REPRESENTATIONS, WARRANTIES AND RELATED UNDERTAKINGS OF THE PARTIES.</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">6.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each Party hereby represents, warrants, and covenants to the other Party
as of the date hereof and as of the Effective Date, as follows:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">6.1.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>such Party (i)&nbsp;has the power and authority and the legal right to
enter into this Agreement and to perform its obligations hereunder,
and (ii)&nbsp;has taken all necessary action on its part required to
authorize the execution and delivery of this Agreement and the
performance of its obligations hereunder,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">6.1.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Agreement has been duly executed and delivered on behalf of such
Party and constitutes a legal, valid, binding obligation of such Party
and is enforceable against it in accordance with its terms subject to
the effects of bankruptcy, insolvency, or other laws of general
application affecting the enforcement of creditor rights; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">6.1.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the execution and delivery of this Agreement and the performance of
such Party&#146;s obligations hereunder; (i)&nbsp;do not conflict with or
violate any requirement of applicable law or regulation or any
provision of articles of
incorporation of such Party, in any material way, and (ii)&nbsp;do not
conflict with, violate, or breach or constitute a default or
require any consent under, any contractual obligation or court or
administrative order by which such Party is bound.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio -->9<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">6.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Other than the representations and warranties contained in this
Agreement, neither Icon nor Protalix makes any representations or warranties of any
type or nature, whether express or implied.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>ADDITIONAL REPRESENTATIONS AND WARRANTIES OF ICON.</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">7.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Icon hereby represents, warrants and covenants that it is together with
its Affiliates the sole owner and possesses all rights, title and interest to the
Icon Technology and the Icon Patents, subject to certain licenses that have already
been granted in respect to those Patents and divulged to Protalix under to the
Research Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">7.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Icon hereby further represents, warrants and covenants that it has not
transferred any ownership interest in the Icon Technology or the Icon Patents or
granted any license to a Third Party that would be inconsistent with the Licenses
and that it will not do so as of the date hereof and during the Term. Moreover,
Icon shall not, whether directly or indirectly, by itself or through third parties,
compete with Protalix by commercializing the Icon Technology to make or have made
Research Proteins in the Protalix Field.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">7.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Icon and its Affiliates have no knowledge, having conducted such
inquiries and diligence as is generally exercised by bio-pharmaceutical companies
with respect to their own inventions and patenting thereof of any: (i)&nbsp;material
legal deficiencies of any Icon Patents, including any prior act that could
reasonably be determined to invalidate or prevent the issuance of the Icon Patents;
(ii)&nbsp;Third Party&#146;s prior rights to use; (iii)&nbsp;dependency of any inventions under
any Icon Patent on a Third Party&#146;s patents or intellectual property; (iv)&nbsp;technical
deficiencies of the invention on which any Icon Patent licensed hereunder is based;
or (v)&nbsp;allegations, claims or other statements made by a Third Party prior to the
Effective Date of any of the foregoing. For the avoidance of doubt, the foregoing
representations and warranties are limited to the actual knowledge as of the
Effective Date of Icon, its Affiliates, and their respective officers and
directors, together with knowledge that such entities or persons should have after
having conducted such inquiries and diligence as is generally exercised by
bio-pharmaceutical companies with respect to their own inventions and patenting
thereof.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">7.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Icon will use its reasonable efforts to obtain issuance of the Icon
Patents under the patent applications as set forth on <U><B>Annex A</B></U> to this
Agreement; however, Icon makes no warranty that any or all claims of the patent
applications set forth on <U><B>Annex A</B></U> will ultimately be</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->10<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>approved and issued by
the relevant governmental patenting agencies. Except as provided above, Icon
guarantees neither the patentability and validity of the Icon Patents nor the
commercial exploitability and/or readiness for plant use of the inventions, and
shall not be liable accordingly. Except as provided above, Icon does not guarantee
the commercial applicability of granted rights, nor is Icon responsible for any
financial or legal consequences resulting from the application of the licensed Icon
Technology and Icon Patents, which exclusion of liability does not apply in case of
intent or gross negligence.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">7.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As from the date hereof, Icon shall not take any action or assist or
facilitate any Third Party to take any such action that would materially impair
the ability of Protalix, its Affiliates or sub-licensees to practice and exploit
the Icon Technology and Icon Patents that may be licensed under this Agreement.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">8.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>MAINTENANCE AND PROTECTION OF PATENT RIGHTS; INFRINGEMENT.</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">8.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Icon shall notify Protalix on a current basis, of any matter which may
affect the scope or validity of an Icon Patent.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">8.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the event that Icon should fail to prosecute and/or maintain any of
the Icon Patents by the date being 60 (sixty)&nbsp;days prior to the date prescribed by
the relevant patent office or by applicable law for the taking of action with
respect to the prosecution and/or maintenance of such Icon Patents, and if no such
date is prescribed as aforesaid, within 30 (thirty)&nbsp;days of a request by Protalix
to take such action, then Protalix may assume sole control over the prosecution
and/or the maintenance of such Icon Patent at its own cost and expense and at its
sole discretion, and Icon shall render Protalix all documents and assistance that
may be required by Protalix therefore. In such event, for as long as Protalix
continues to prosecute and maintain an Icon Patent, then, in respect of such
jurisdiction, Protalix shall not be obligated to pay Icon any Royalties or other
consideration whatsoever with respect to utilizing such Icon Patent in such
jurisdiction. Protalix shall notify Icon in writing of Protalix&#146;s election as
aforesaid. For the avoidance of doubt, it is hereby clarified that should Protalix
assume control over the filing, prosecution and maintenance of such Icon Patent(s)
as aforesaid, then at any time thereafter Protalix may, in its sole and
absolute discretion, cease the filing, prosecution and maintenance of such Icon
Patent, upon prior written notice to Icon. Icon hereby irrevocably waives any
claim it may have against Protalix regarding
</TD>
</TR>
</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->11<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the filing, prosecution and
maintenance of any such Icon Patent or the cessation of any such action by
Protalix.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">8.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If either Party acquires knowledge of any infringement of a claim of an
Icon Patent in the Protalix Field, the Party having such knowledge shall promptly
inform the other Party thereof. The Parties shall thereafter discuss the action, if
any, which should be taken, including whether any legal proceedings should be
instituted. If the Parties mutually agree on the course of action to be taken, they
shall jointly select counsel and equally share any expenses, and in such event, any
settlement or recovery shall be shared equally by the Parties. If the Parties do
not agree on the course of action to be taken as aforesaid, then Protalix shall
have the right, at its own expense, to initiate a suit or take other appropriate
action that it believes is reasonably required to provide full protection against a
Third Party&#146;s infringement of such Icon Patent(s). Protalix shall have the sole and
exclusive right to select counsel for any suit initiated by it. Any settlement or
recovery as a result of any such action initiated by Protalix, shall belong solely
to Protalix. If Protalix fails to initiate a suit or take such other appropriate
action within 90 (ninety)&nbsp;days after becoming aware of the alleged infringement of
an Icon Patent in the Protalix Field, then Icon shall have the right, upon
sufficient advance notice to Protalix of its intent to do so, to take action at
Icon&#146;s expense and through counsel of Icon&#146;s choice, and in such event, any
settlement or recovery shall belong solely to Icon.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">8.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#091;***&#093; undertakes that it shall fully cooperate with &#091;***&#093;in the
preparation and prosecution of any litigation duly initiated by [***] and, to
the extent required by the relevant law, &#091;***&#093; shall consent to being joined to
such suit and to being named as a party in any such litigation; provided that: (a)
any reasonable expenses or costs incurred in connection therewith and with such
litigation (including attorneys&#146; fees, costs and other sums awarded to the
counterparty in such action) shall be borne by &#091;***&#093;.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">8.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#091;***&#093; shall have no obligation to defend any claim or suit, or to hold
harmless or immune or to indemnify against any loss, cost, expense, payment or
damage, arising from any allegation of infringement or violation of any alleged or
actual patent or intellectual property right of a Third Party by reason of &#091;***&#093;
development, commercialization, use or sale of the Licensed Products, provided
however &#091;***&#093; shall fully cooperate with &#091;***&#093; in the preparation and prosecution
of any defense
against any claim of infringement or violation of any alleged or actual patent
or intellectual property right of a Third Party by reason of &#091;***&#093; development,
use or sale of a Licensed Product and/or the Icon
</TD>
</TR>
</TABLE>
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio -->12<!-- /Folio -->
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">Technology and/or the &#091;***&#093;
Patents. Any and all Royalties or other consideration owed to &#091;***&#093; hereunder,
shall be reduced by the amount of costs and expenses (including reasonable
attorneys&#146; fees) incurred by &#091;***&#093; in defending such action, claim or demand and
by any amounts that &#091;***&#093;shall be obligated to pay to any Third Party in
connection with such infringement claim, action or demand, whether in the form
of damages, royalties or otherwise, provided that the claimed infringement
relates to the [***].
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">9.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>MUTUAL INDEMNIFICATION.</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">9.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each Party (an &#147;<B>Indemnitor</B>&#148;) agrees to indemnify, hold harmless and
defend the other Party, its officers, employees, and agents (each an &#147;<B>Indemnitee</B>&#148;),
against any and all claims, suits, losses, damages, costs, fees, and expenses
asserted by third parties, both government and non-government, against such
Indemnitee to the extent resulting from or arising out of: (a)&nbsp;the Indemnitor&#146;s
gross negligence or intentional misconduct, (b)&nbsp;any breach of a representation,
warranty or covenant made by the Indemnitor in this Agreement. No indemnity shall
be provided to an Indemnitee for any such claims, suits, losses, damages, costs,
fees provided to an Indemnitee for any such claims, suits, losses, damages, costs,
fees of expenses to the extent resulting from such Indemnitee&#146;s use of technology
licensed under this Agreement in violation of applicable governmental laws,
regulations and requirements (it being understood that such laws, regulations and
requirements do not include violation of private Third Party rights even though
enforceable under applicable law, such as intellectual property rights, as to which
indemnity shall be provided if such violation is due to a breach of a
representation, warranty or covenant in this Agreement).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">9.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In order for an Indemnitee to be entitled to any indemnification
provided for under this Section&nbsp;9, such Indemnitee must notify the Indemnitor in
writing, and in reasonable detail, of the claim as promptly as reasonably possible
after receipt by such Indemnitee of notice of such claim; provided, however, that
failure to give such notification on a timely basis shall not affect the
indemnification provided hereunder except to the extent the Indemnitor shall not
have had knowledge of the facts on which such claim is based and shall have been
actually materially prejudiced as a result of such failure. Thereafter, the
Indemnitee shall, promptly after the Indemnitee&#146;s
receipt thereof deliver to Indemnitor copies of all notices and documents
(including court papers) received by the Indemnitee relating to the claim.
</TD>
</TR>
</TABLE>
</DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio -->13<!-- /Folio -->
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">9.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If one of more Indemnitees makes a claim for indemnification relating to
losses, damages, costs, fees or expenses arising in connection with any claim
asserted by a Third Party against one or more Indemnitees (a &#147;<B>Third Party Claim</B>&#148;),
the Indemnitor shall be entitled to assume the defense thereof and, if it so
chooses and acknowledges in writing its obligation to indemnify the Indemnitees
therefor, to assume the defense thereof with counsel selected by Indemnitor and
reasonably satisfactory to the Indemnitees, and to settle such suit, action, claim
or proceeding in its discretion with a full release of the Indemnitees and no
admission of criminal liability; provided, that the written consent of the
Indemnitees (which shall not be unreasonably withheld) shall be required for any
settlement if as a result thereof the Indemnitees would become subject to
injunctive relief or any remedy other than the payment of money by Indemnitor.
Should Indemnitor so elect to assume the defense of a Third Party Claim, Indemnitor
shall not be liable to the Indemnitees for legal expenses subsequently incurred by
the Indemnitees in connection with the defense thereof unless (i)&nbsp;Indemnitor has
failed to defend, contest or otherwise protest in a timely manner against Third
Party Claims or (ii)&nbsp;a conflict of interest exists such that separate
representation of the Indemnitees is appropriate. If Indemnitor assumes such
defense, the Indemnitees shall have the right to participate in the defense thereof
and to employ counsel, at their own expense, separate from the counsel employed by
Indemnitor. Indemnitor shall be liable for the reasonable fees and expenses of
counsel employed by the Indemnitees for any period during which Indemnitor has not
assumed the defense thereof and for any period in which a conflict of interest
exists such that separate representation of one or more of the Indemnitees is
appropriate. If Indemnitor chooses to defend any Third Party Claim, both Parties
hereto shall cooperate in the defense or prosecution of such Third Party Claim.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">9.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Protalix will take out a liability insurance coverage appropriate to the
risk involved in commercializing the Licensed Products if Protalix or any of its
sublicenses commences any clinical trials of the Licensed Products. Such insurance
shall list Icon and the inventors of the patents as additional insureds if
possible. Protalix shall provide Icon with at least 30 (thirty)&nbsp;days prior written
notice of the commencement of clinical trials. Within 30 (thirty)&nbsp;days after the
start of the clinical trials and thereafter annually between January 1 and January
31 of each
year, Protalix will present evidence to Icon that the coverage is be maintained.
In addition, Protalix shall provide Icon with at leas 30 (thirty)&nbsp;days prior
written notice of any change in or cancellation of the insurance coverage.
</TD>
</TR>
</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->14<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">10.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>CONFIDENTIALITY.</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">10.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each Party (a &#147;<B>Recipient</B>&#148;) shall, at all times during the term of this
Agreement and for a 5 (five)&nbsp;year period following termination or expiration
hereof, keep, and shall use reasonable best efforts to ensure that its officers,
directors, employees, subcontractors and agents keep, confidential and shall not
publish or otherwise disclose and shall not use, directly or indirectly, for any
purpose, any Confidential Information furnished to it by the other Party (the
&#147;<B>Owner</B>&#148;), except to the extent such disclosure or use is expressly permitted by the
terms of this Agreement or is reasonably necessary for the performance of this
Agreement, including without limitation, for the practice and exercise of the
licenses or other rights granted pursuant to this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">10.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each Party may disclose Confidential Information to the extent that
such disclosure is:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">10.2.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>made in response to a valid order of a court of competent
jurisdiction or other governmental body of a country or any political
subdivision thereof of competent jurisdiction; provided, however, that
the Recipient shall first have given notice to the Owner of the
Confidential Information and given the Owner a reasonable opportunity
to quash such order and to obtain a protective order requiring that
the Confidential Information that is the subject of such order be held
in confidence by such court or agency or, if disclosed, be used only
for the purposes for which the order was issued; and provided further
that if a disclosure order is not quashed or a protective order is not
obtained, the Confidential Information disclosed in response to such
court or governmental order shall be limited to that information which
is legally required to be disclosed in such response to such court or
governmental order;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">10.2.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>otherwise required by law (subject to seeking confidential
treatment where available and to providing prior notification to the
Owner);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">10.2.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>as required in connection with any filings made with, or by the
disclosure policies of a major stock exchange (subject to seeking
confidential treatment where available and to
providing prior notification to the Owner);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">10.2.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>made by the Recipient to governmental regulatory authorities as
required in connection with applications for regulatory approvals
(such as an NDA or ANDA);
</TD>
</TR>
</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->15<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>provided, however, that reasonable measures
shall be taken to assure confidential treatment of such information;
or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="10%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">10.2.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>made by the Recipient to third-parties as may be necessary in
connection with (i)&nbsp;the development and commercialization of the
Licenses as contemplated by this Agreement, including, without
limitation, subcontracting transactions in connection therewith, or
(ii)&nbsp;the proposed sale of all or substantially all of the Recipient&#146;s
assets, or to its proposed successor or acquirer through merger,
consolidation or change of control; provided, however, that the
Recipient shall in each case obtain from the proposed Third Party
recipient a written confidentiality undertaking containing
confidentiality obligations no less onerous than those set forth
herein.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">11.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>NON-CONTESTATION CLAUSE</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Parties shall not contest any rights of the other Party, in particular patent,
license or any other property rights that are subject to this Agreement nor support
any Third Party in any attempt to destroy property rights of the other Party. However,
each Party remains entitled to file a claim against the other Party in the case of a
disagreement arising from this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">12.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>TERM AND TERMINATION</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">12.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Save for the provisions of Sections&nbsp;6, 7.1, 7.2, 7.4 and 7.5 of this
Agreement which shall be binding upon the Parties in accordance with their terms as
of the date hereof, this Agreement shall enter into force and effect on the
Effective Date and, unless earlier terminated pursuant to the provisions hereof,
shall remain in full force and effect until the last to expire of the Icon Patents
or, should all of the patent applications listed in <U><B>Annex A</B></U> be finally
rejected, until [***] after the first commercial sale of any Licensed
Product. (the <B>&#147;Term&#148;</B>).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">12.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Without limiting from Section&nbsp;12.1 of this Agreement above, Icon may
terminate this Agreement by written notice to Protalix:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">12.2.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the event of a material breach of the Protalix obligations hereunder,
which breach is not cured within 30 (thirty)&nbsp;days following delivery
thereto of a written notice to that effect;
and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">12.2.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Upon the occurrence of any of the following events: (i)&nbsp;a request for
the liquidation and/or dissolution and/or winding up is filed against
Protalix, which request is not</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->16<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 16%">dismissed or otherwise set aside within 60
(sixty)&nbsp;days thereafter; (ii)&nbsp;a request for the appointment of a receiver
over a material asset of Protalix is filed against Protalix with a
competent court of jurisdiction (or execution office), which request is not
dismissed or otherwise set aside within 60 (sixty)&nbsp;days thereafter; (iii)
Protalix makes a general assignment for the benefit of its creditors; and
(iv)&nbsp;Protalix ceases to conduct its operations for a period of 120
(one-hundred and twenty) days or more.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">12.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Without limiting from Section&nbsp;12.1 of this Agreement above, Protalix
may terminate this Agreement by written notice to Icon in case of serious
material breach of this Agreement by Icon if such breach is not cured within 30
(thirty)&nbsp;days.</TD>
</TR>

</TABLE>
</DIV>



<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">12.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Without limiting from Section&nbsp;12.1 of this Agreement above, Icon may terminate the
exclusivity granted under this Agreement by written notice to Protalix, should
Protalix fail to reach the following development milestones with respect to such
Research Protein(s):</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#091;***&#093;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#091;***&#093;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">12.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the avoidance of doubt, and without derogating from the
provisions of Section&nbsp;5.6 above, upon expiration of the Term by reason of the
passage of time pursuant to Section&nbsp;12.1 of this Agreement, then notwithstanding
such expiry, Protalix shall be entitled to continue to utilize the Icon Patents,
to make commercial use of the Icon Technology in the Protalix Field, without
having to pay royalties to Icon in respect of such activities.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio -->17<!-- /Folio -->
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">13.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>RELATIONSHIP OF PARTIES.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Nothing contained in this Agreement shall be deemed to establish any partnership, joint
venture or agency relationship and the Parties shall act at all times as independent
contractors.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">14.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>GOVERNING LAW AND ARBITRATION.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Agreement shall be governed by and construed in accordance with English law. All
disputes between the Parties shall be finally settled under the Rules of Arbitration of the
International Chamber of Commerce (&#147;<B>ICC</B>&#148;) by a single arbitrator appointed in accordance
with said Rules. The seat of arbitration shall be London, England and the language to be
used in the arbitration shall be English. Notwithstanding the foregoing, neither Party
shall be precluded from bringing an action in any court of competent jurisdiction for
injunctive or other provisional relief as necessary or appropriate. The arbitrator shall
have the power to award the costs of the arbitration and the prevailing Party&#146;s attorneys&#146;
fees and costs. The arbitrator&#146;s award shall be based on a reasoned written opinion to be
delivered to the Parties.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">15.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>NOTICES.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>All notices and other communications required or desired to be given or sent by one Party
to the other Party shall be in writing and shall be deemed to have been given: (a)&nbsp;on the
date of delivery, if personally delivered, (b)&nbsp;3 (three)&nbsp;business days after mailing if
mailed by certified or registered mail, postage prepaid, return receipt requested, to the
address of the applicable Party set forth in the preamble of this Agreement, or (c)&nbsp;on the
date of transmission if sent by a confirmed facsimile delivery to the number set forth
below:</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Protalix: &#043;972-4-9889489</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Icon: &#043;49-345-555-9884</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Either Party may change the address or facsimile number for giving notice from time to time
by written instructions to the other Party of such change, conveyed pursuant to the terms
of this Section&nbsp;15.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">16.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>ASSIGNMENT.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The rights and obligations of a Party hereto may not be assigned or delegated by such Party
to any person or entity, save an entity to which all or substantially all</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->18<!-- /Folio -->
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%">of the business operations of such Party have been transferred (whether by means of an
acquisition by, or a merger or consolidation of the Party with or into, such entity). Icon
is entitled to transfer this Agreement to any of its affiliates, provided that Icon remains
responsible for the performance by such Affiliate of the terms and conditions of this
Agreement.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">17.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>PARTIES IN INTEREST.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Agreement is binding upon and is for the benefit of the Parties hereto and their
respective successors and permitted assigns. This Agreement is not made for the benefit of
any person or entity not a party hereto, and no person or entity (including without
limitation any sub-contractors, vendors, suppliers or customers) other than the Parties
hereto or their respective successors and permitted assigns will acquire, have or be
entitled to any benefit, right, remedy or claim under or by reason of or may otherwise rely
on any provision of this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">18.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>WAVIER; REMEDIES.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>No failure or delay on the part of a Party hereto in exercising any right, power or
privilege under this Agreement will operate as a waiver thereof, nor will any single or
partial exercise of any right, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege hereunder. The
rights and remedies herein provided are cumulative and are not exclusive of any rights or
remedies which the Parties hereto may otherwise have at law or in equity.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">19.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SEVERABILITY.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The provisions of this Agreement are severable and, in the event that any court of
competent jurisdiction determines that any one or more of the provisions or part of a
provision contained in this Agreement shall, for any reason, be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability shall not
affect any other provision or part of a provision of this Agreement; but this Agreement
shall be reformed and construed to the maximum extent possible as if such invalid, illegal
or unenforceable provision, or part of a provision, had never been contained herein.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">20.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>ORDER OF PRECEDENCE.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Unless otherwise provided herein, all terms and conditions of the Option Agreement and
Research Agreement shall remain in force and effect and continue to apply in accordance
with their terms, to the extent consistent with the terms of this Agreement. In the event
of any contradiction or discrepancy</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->19<!-- /Folio -->
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>between the provisions of this Agreement on one hand and the provisions of the Option
Agreement and/or Research Agreement on the other hand, the provisions of this Agreement
shall take precedence and prevail. Once the Licenses become operative pursuant to Section
2.1 of this Agreement above they shall remain in full force and effect in accordance with
the terms hereof, notwithstanding the termination or expiration of any of the Option
Agreement and/or Research Agreement for any reason whatsoever.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">21.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>AMENDMENT.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Agreement may not be amended, modified, altered, or supplemented except by a written
agreement executed by both Parties hereto.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">22.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>SURVIVAL.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The provisions of Sections&nbsp;5.6, 6, 7.1, 7.3, 8, 9, 10, 11, 13, 14, 15, 16, 17, 18, 20, 21
of this Agreement and this Section&nbsp;22 shall survive the termination or expiration of this
Agreement for any reason whatsoever.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">23.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>FURTHER ACTION.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each Party agrees to execute and deliver such further documents and instruments and perform
any further acts, from time to time, as may be reasonably necessary, to effectuate the
purposes of this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">24.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>ENTIRE AGREEMENT.</B></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Agreement, together with all Annexes and attachments hereto, sets forth the entire
understanding between the Parties hereto with respect to the License and supersedes all
prior agreements, arrangements and communications, whether oral or written, with respect
thereto.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><I>&#091;Intentionally left blank&#093;</I>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->20<!-- /Folio -->
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>IN WITNESS WHEREOF </B>the Parties have executed this Agreement by their respective authorized
representatives as of the date first above written:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left"><B>Protalix Ltd.</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ David Aviezer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Title:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">CEO</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April&nbsp;12, 2005</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left"><B>Icon Genetics AG</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Yuri Gleba</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Title:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">CEO</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April&nbsp;12, 2005</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->21<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Annex A &#150; List of Icon&#146;s Patents and specific Patent License limitations</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&#091;***&#093;
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD align="left" valign="top">&nbsp;</TD></TR>
<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio -->22<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Annex B &#150; List of Research Proteins</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&#091;***&#093;
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR><TD align="left" valign="top">&nbsp;</TD></TR>
<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio -->23<!-- /Folio -->
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.7
<SEQUENCE>9
<FILENAME>g04822exv10w7.htm
<DESCRIPTION>EX-10.7 RESEARCH AND LICENSE AGREEMENT
<TEXT>
<HTML>
<HEAD>
<TITLE>EX-10.7 Research and License Agreement</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Exhibit&nbsp;10.7
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Portions of this exhibit have been omitted pursuant to a request for confidential treatment.
The omitted portions, marked by &#091;***&#093;, have been separately filed with the Securities and Exchange
Commission.</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>RESEARCH AND LICENCE AGREEMENT</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">Between

</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>YEDA RESEARCH AND DEVELOPMENT COMPANY LIMITED</B></U>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 35%">a
company duly registered under the laws of Israel of <BR>P O Box 95,
Rehovot 76100, Israel
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">(hereinafter, <B>&#147;Yeda&#148;</B>)
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">and
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>PROTALIX BIOTHERAPEUTICS LIMITED</B></U>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 35%">a
company duly registered under the laws of Israel, <BR>having its
principal place of business at 2 Snunit St, <BR>Science Park, POB 455,
Carmiel 20100, Israel
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">(hereinafter, <B>&#147;the Company&#148;</B>)
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>PREAMBLE:</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="9%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="82%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">WHEREAS:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(A)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">in the course of research conducted at the Weizmann Institute of Science (<B>&#147;the
Institute&#148;</B>), under the supervision of Professor Anthony H. Futerman of the Department of
Biological Chemistry, Professor Joel L. Sussman of the Department of Structural Biology and
Professor Israel Silman of the Department of Neurobiology (<B>&#147;the Scientists&#148;</B>), the Scientists
together with other scientists of the Institute, all of the aforementioned persons,
collectively <B>&#147;the Inventors&#148; </B>arrived at an invention entitled &#091;***&#093;(<B>&#147;the Invention&#148;</B>), being
the subject of and more fully described in PCT patent application number &#091;***&#093; and the other
patent applications listed in <B>Appendix&nbsp;A </B>hereto &#091;***&#093;(<B>&#147;the Existing Patent Applications&#148;</B>) and
created and/or generated the know-</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

</DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 2 -<!-- /Folio -->
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="9%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="82%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">how and other information relating to the Invention as described in
<B>Appendix&nbsp;B </B>hereto (<B>&#147;the Know-How&#148;</B>); and</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(B)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">the Company is: (i)&nbsp;interested in the performance of
further research at the Institute under the supervision of the Scientists
in the field of the Invention, as specified in the research program
attached hereto, marked <B>Appendix&nbsp;C </B>(<B>&#147;the Research Program&#148; </B>and <B>&#147;the
Research&#148;</B>); and (ii)&nbsp;willing, subject to and in accordance with the terms
and conditions of this Agreement, to finance the performance of the
Research in accordance with the budget attached hereto and marked <B>Appendix
D </B>(<B>&#147;the Research Budget&#148;</B>); and</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(C)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Yeda is willing, subject to and in accordance with
the terms and conditions of this Agreement, to procure the performance of
the Research at the Institute as aforesaid; and</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(D)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">by operation of Israeli law and/or under the terms of
employment of the Inventors at the Institute and pursuant to an agreement
between the Institute, Yeda and the Inventors, all right, title and
interest of the Inventors and/or the Institute in and to the Invention, in
any results deriving from the performance of the Research at the Institute
and in the Existing Patent Applications vests and shall vest in Yeda; and</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(E)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">subject to and in accordance with the terms of this
Agreement, the Company wishes to receive, and Yeda is willing to grant to
the Company, a worldwide exclusive licence in respect of the Licensed
Information (as hereinafter defined) and under the Patents (as hereinafter
defined), for the development, manufacture, production, and sale of
enzymatically active mutants of glococerebrosidase and derivatives
therefrom for the treatment of Gaucher disease and/or any other indication
(<B>&#147;Products&#148;</B>), all subject to and in accordance with the terms and
conditions of this Agreement below; and</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(F)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">the Company declares that on 12 January&nbsp;2006 the
Magneton Committee (appointed by the General Manager of the Ministry of
Industry, Trade and Employment (&#147;<B>MITE</B>&#148;)) approved the application filed by
the Company</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 3 -<!-- /Folio -->
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="9%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="82%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">for the receipt of government grants within the framework of the Magneton
Program (as hereinafter defined) for the performance of the Research and
for research and development activities by the Company in respect of the
Products, pursuant to a letter dated 15 January&nbsp;2006 from the manager of
the Magneton Program, a copy of which is annexed hereto as <B>Appendix&nbsp;E</B>
(&#147;<B>the Magneton Approval</B>&#148;),</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOW THEREFORE IT IS AGREED BETWEEN THE PARTIES HERETO AS FOLLOWS:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">1. <U><B>PREAMBLE, APPENDICES AND INTERPRETATION</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left">1.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Preamble and Appendices hereto form an integral part of this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left">1.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In this Agreement the terms below shall bear the meanings assigned to them below, unless the
context shall indicate a contrary intention:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="55%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">1.2.1.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#147;Affiliated Entity&#148;</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">shall mean, with respect to
any party hereto, any
company, corporation, other
entity or person
(hereinafter, collectively,
<B>&#147;entity&#148;</B>), which directly or
indirectly, is controlled by,
or controls, or is under
common control with, such
party. For the purposes of
this definition, <B>&#147;control&#148;</B>
shall mean the ability,
directly or indirectly, to
direct the activities of the
relevant entity (save for an
ability flowing solely from
the fulfilment of the office
of director or another
office) and shall include,
without limitation, the
holding, directly or
indirectly, of more than 30%
(thirty percent) of the
issued share capital or of
the voting power of the
relevant entity or the
holding, directly or
indirectly, of a right to
appoint more than 30% (thirty
percent) of the directors of
such entity or of a right to
appoint the chief executive
officer of such entity;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 4 -<!-- /Folio -->
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="55%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">1.2.2.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#147;Development Program&#148;</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">shall mean, with respect to
any Product or Products, a
development program
specifying the activities and
timetable necessary to
develop such Products to
commercialisation, including
the performance of steps
required for obtaining
regulatory approvals from all
relevant authorities for such
Products and/or the sale of
such Products ;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">1.2.3.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#147;Exchange Rate&#148;</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">shall mean, with respect to
any amount to be calculated,
or which is paid or received
in a currency other than US
Dollars, the average of the
selling and buying exchange
rates of such currency (in
respect of cheques and
remittances) and the US
Dollar prevailing at Bank
Hapoalim B.M. at the end of
business on the date of
calculation, payment or
receipt, as the case may be;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">1.2.4.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#147;First Commercial Sale&#148;</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">shall mean, with respect to
any Product in any country,
the first commercial sale of
such Product in such country
after U.S. Food and Drug
Administration (&#147;<B>FDA</B>&#148;) New
Drug Approval, European
Medicines Agency (&#147;<B>EMEA</B>&#148;) or
national medicinal agency
marketing approval or
equivalent approval in such
country has been obtained for
such Product;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">1.2.5.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#147;Licence&#148;</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">shall mean an exclusive
worldwide licence under the
Licensed Information and the
Patents, for the development,
manufacture, production, use,
marketing, distribution and
sale of the Products, subject
to the provisions of clause
7.1 below and the other terms
and conditions of this
Agreement;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">1.2.6.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#147;Licensed Information&#148;</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">shall mean: (i)&nbsp;the
Invention; (ii)&nbsp;the Know-How;
and (iii)&nbsp;all and any
inventions, products,</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 5 -<!-- /Folio -->
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="55%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">materials, compounds, compositions,
substances, methods, processes, techniques,
know-how, data, information, discoveries
and other results of whatsoever nature
discovered or occurring in the course of,
or arising from, the performance of the
Research;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">1.2.7.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#147;Magneton Directive&#148;</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">shall mean Directive 8.6 of the
General Manager of MITE dated 22
August&nbsp;2001 entitled &#147;The
Encouragement of Technology
Transfer from Academia to
Industry &#150; Magneton&#148;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">1.2.8.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#147;Magneton Program&#148;</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">shall mean the program for the
encouragement of the transfer of
generic technology from academic
to commercial bodies
administered by MITE, as
described in the Magneton
Directive;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">1.2.9.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#147;Net Sales&#148;</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">shall mean the total amount
invoiced by the Company and the
total amount invoiced by each
Sublicensee (and, subject to
clause 7.4.4.6 below, each
Further Sublicensee (as
hereinafter defined)) in
connection with the sale of
Products (for the removal of
doubt, whether such sales are
made before or after the First
Commercial Sale of any Product
in any country); provided that,
with respect to sales which are
not at arms-length and/or are
not in the ordinary course of
business and/or are not
according to then current market
conditions for such a sale, the
term <B>&#147;Net Sales&#148; </B>shall mean the
total amount that would have
been due in an arms-length sale
made in the ordinary course of
business and according to the
then current market conditions
for such sale or, in the absence
of such current market
conditions, according to market
conditions for</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 6 -<!-- /Folio -->
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">sale of products similar to the Products,
in all cases after deduction of:</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(i)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">sales taxes (including value added
taxes) or customs duties to the extent
applicable to such sale and included
in the invoice in respect of such
sale;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(ii)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">credits or allowances, if any,
actually granted on account of price
adjustments, recalls, rejections or
returns of Products previously sold;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(iii)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">freight and insurance charges to the
extent such items are applicable to
such sale and are separately itemised
on invoices; and</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(iv)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">bad debts (as determined in
accordance with relevant GAAP rules)
deriving from Net Sales in respect of
which royalties were paid by the
Company pursuant hereunder;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">and provided further that, with respect to
sales by the Company and/or a Sublicensee
and/or a Further Sublicensee, as
applicable, to any Affiliated Entity of the
Company or of such Sublicensee or Further
Sublicensee, as the case may be, the term,
<B>&#147;Net Sales&#148; </B>shall mean the higher of (but
for the avoidance of doubt, not both of):
(a) &#147;Net Sales&#148;, as defined above, with
respect to sales which are not at
arms-length and/or in the ordinary course
of business and/or according to current
market conditions; and (b)&nbsp;the total amount
invoiced by such Affiliated Entity on
resale to an independent third party
purchaser after the</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 7 -<!-- /Folio -->


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="55%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">deductions specified in subparagraphs (i)
and (ii)&nbsp;above, to the extent applicable;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">1.2.10.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#147;<B>OCS</B>&#148;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">shall mean the Office of the Chief
Scientist at MITE;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">1.2.11.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#147;Patents&#148;</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">shall mean: (i)&nbsp;the Existing Patent
Applications and all patents which may be
granted thereon; and (ii)&nbsp;all other patent
applications or applications for
certificates of invention covering
portions of the Licensed Information and
all patents or certificates of invention
which may be granted thereon; as well as
all continuations, continuations-in-part,
patents of addition, divisions, renewals,
reissues and extensions (including any
patent term extension) of any of the
aforegoing patents, but excluding: (a)
patents that have been invalidated or
cancelled pursuant to the final (<I>i.e.,</I>
unappealed or unappealable) judgment of a
competent court; and (b)&nbsp;patent
applications that have been withdrawn or
have expired, in each case such exclusion
to be effective only from the date of such
invalidation, cancellation, withdrawal or
expiry, as the case may be.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">For the purposes of this Agreement, the
term <B>&#147;Patent&#148; </B>shall also mean a
Supplementary Protection Certificate
(within the meaning of such term under
Council Regulation (EU)&nbsp;No. 1768/92) or
any other similar statutory or
supplementary protection;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">1.2.12.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#147;Research Period&#148;</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">shall mean the &#091;***&#093;period
commencing on the date of
signature of this Agreement,
as may be extended in
accordance with clause 2.1
below;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 8 -<!-- /Folio -->
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">1.2.13.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#147;Sublicence&#148; </B>and<BR>
<B>&#147;Sublicensee&#148;</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>&#147;Sublicence&#148; </B>shall mean any
right granted, licence
given, or agreement entered
into, by the Company (or,
but without derogating from
clause 7.4.4.6 below, a
Sublicensee) to or with any
other person or entity,
permitting any use of the
Licensed Information and/or
the Patents (or any part
thereof) for the independent
development and/or
manufacture and/or
production and/or marketing
and/or distribution and/or
sale of Products (whether or
not such grant of rights,
licence given or agreement
entered into is described as
a sublicence or as an
agreement with respect to
the development and/or
manufacture and/or
production and/or
distribution and/or
marketing and/or sale of
Products or otherwise) and
the term <B>&#147;Sublicensee&#148; </B>shall
be construed accordingly;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">1.2.14.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>&#147;Sublicensing Receipts&#148;</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">shall mean consideration,
whether monetary or
otherwise, received (for the
removal of doubt, whether
received before or after the
First Commercial Sale in any
country) by the Company for
or from the grant of
Sublicences or Further
Sublicences and/or pursuant
thereto, or in connection
with the grant of an option
for a Sublicence, except
for:</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(i)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">amounts received by the Company which
constitute royalties based on sales of
the Products by Sublicensees in
respect of which the Company has paid
royalties to Yeda; and</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(ii)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">amounts received by the Company from
a Sublicensee and actually</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 9 -<!-- /Folio -->
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">expended by the Company (as
evidenced by invoices, receipts or
other appropriate documentation) in
respect of Product-related research
and/or development activities to be
performed by the Company for such
Sublicensee after the date of
signature of the relevant Sublicence
(or, as the case may be, option for
a Sublicence), provided that:</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(a)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">any such amounts constitute
research and/or development
funding only and not payment
for Products nor any other type
of grant or benefit,</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(b)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">such research and/or
development activities are
performed pursuant to a defined
research and development
program and research and
development budget agreed with
the relevant Sublicensee, a
copy of which is provided to
Yeda; and</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(c)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">the Company submits to Yeda a
written expense report,
confirmed by the Company&#146;s
independent accountant or chief
financial officer, setting out
the time and materials
utilised, and reasonable
overhead costs and other
expenses actually incurred by
the Company in the conduct of
the said research and</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 10 -<!-- /Folio -->


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">development activities, which
report demonstrates that such
amounts have actually been
expended by the Company in
the conduct of such research
and/or development activities
in accordance with such work
program and budget,</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">it being agreed, for the removal of
doubt, that any amounts received by
the Company as aforesaid, but not
expended as set out above, shall be
deemed to be Sublicensing Receipts.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">1.2.15.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">the terms: <B>&#147;Yeda&#148;</B>, <B>&#147;the
Company&#148;</B>, <B>&#147;the Institute&#148;</B>,
<B>&#147;the Scientist&#148;</B>, <B>&#147;the
Inventors&#148;</B>, <B>&#147;the Invention&#148;</B>,
<B>&#147;the Existing Patent
Applications&#148;</B>, <B>&#147;the
Know-How&#148;</B>, &#147;<B>the Magneton
Approval"</B>, &#147;<B>the Magneton
Directive</B>&#148;, <B>&#147;the Magneton
Program&#148;, </B>"<B>MITE</B>&#148;, <B>&#147;the
Research Program&#148;</B>, <B>&#147;the
Research&#148;</B>, <B>&#147;the Research
Budget&#148; </B>and <B>&#147;Products&#148;</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left">shall bear the definitions assigned to them respectively in the heading or the preamble hereto, as the case may be.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="11" valign="top" align="left">1.3. In this Agreement:</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">1.3.1.</TD>
    <TD>&nbsp;</TD>
    <TD colspan="9" valign="top" align="left">words importing the singular shall include the plural and <I>vice-versa </I>and words importing any
gender shall include all other genders and references to persons shall include partnerships,
corporations and unincorporated associations;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">1.3.2.</TD>
    <TD>&nbsp;</TD>
    <TD colspan="9" valign="top" align="left">any reference in this Agreement to the term &#147;patent&#148; shall also include any re-issues,
divisions, continuations or extensions thereof (including measures having equivalent effect);</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 11 -<!-- /Folio -->

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left">1.3.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any reference in this Agreement to the term &#147;patent applications&#148; shall include any
provisional patent applications, PCT, national or regional patent applications, applications
for continuations, continuations-in-part, divisions, patents of addition or renewals, as well
as any other applications or filings for similar statutory protection;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left">1.3.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any reference in this Agreement to the term &#147;sale&#148; shall include the sale, lease, rental or
other disposal of any Product with the exception of disposition, without charge, for
demonstration and/or testing purposes; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left">1.3.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#147;including&#148; </B>and <B>&#147;includes&#148; </B>means including, without limiting the generality of any
description preceding such terms.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">2. <U><B>PERFORMANCE OF THE RESEARCH</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">2.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In consideration of the sums to be paid by the Company to Yeda pursuant to clause 3.1 below
and, subject to the execution of such payments and to clause 3.2 below, Yeda undertakes,
subject to clause 2.2 below, to procure the performance of the Research at the Institute under
the supervision of the Scientists during the Research Period. By written agreement of the
parties, the Research Period may be extended by such period and upon such terms and conditions
as the parties shall so agree.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">2.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If all of the Scientists shall cease to be available for the supervision of the performance
of the Research, such cessation shall not constitute a breach of this Agreement by Yeda. In
the event that all of the Scientists shall cease to be available as aforesaid, Yeda shall use
its reasonable efforts to find from amongst the scientists of the Institute a replacement
scientist or scientists acceptable to the Company (such acceptance to be in writing, and not
to be unreasonably withheld), but no undertaking to find such a replacement is given by Yeda.
If all of the Scientists cease to be available and no acceptable replacement scientists can be
found within 60 (sixty)&nbsp;days of all of the Scientists becoming unavailable as aforesaid, then
the Company shall be entitled, by written notice to Yeda, to terminate the Research Period, in
which event the Research Period and the performance of Research hereunder shall cease at the
end of a further period of 60 (sixty)&nbsp;days from the date of receipt by Yeda of such written
notice. In the event of such termination, Yeda shall be released from any obligation to
procure the</TD>
</TR>

</TABLE>
</DIV></DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 12 -<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>performance of the Research during the period after such termination, and the Company
shall be released from any obligation to finance the Research in respect of the period
commencing after such termination, but without affecting the Licence and all the other
terms and conditions of this Agreement which shall remain in full force and effect
(save for those relating to the performance and financing of the Research).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">2.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>It is agreed that if the performance of the Research shall involve the conduct of experiments
on and/or using animals, the performance of the Research and the Research Program shall be
subject to the Israeli Anti-Cruelty Law, 1994 and to the approval of, and any modifications
requested by, the Institutional Animal Care and Use Committee and the Safety Committee of the
Institute, in order to ensure compliance with the above law. It is agreed that, in view of
the fact that the performance of the Research may involve the conduct of experiments using
human material (such as cells, blood, tissue, DNA, RNA, lysates, or body fluids) the
performance of the Research and the Research Program shall be subject to the approval of, and
any modifications requested by the Safety Committee of the Institute and the Institutional
Review Board for Human Experimentation.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">2.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the avoidance of doubt, it is agreed that nothing in this Agreement shall constitute a
representation or warranty by Yeda, express or implied, that any results will be achieved by
the Research or that the Licensed Information or any part thereof or any results achieved by
the Research are or will be commercially exploitable or of any other value and Yeda
furthermore makes no warranties and representations, express or implied, whatsoever as to the
Research, any results of the Research, the Patents or the Licensed Information.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">3. <U><B>FUNDING THE RESEARCH</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">3.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Subject only to clause 3.2 below, the Company undertakes to pay to Yeda the total amount (in
US Dollars) of the Research Budget (being &#091;***&#093;per year for each year of the Research Period)
in &#091;***&#093; equal &#091;***&#093; instalments, payable in advance at the beginning of each &#091;***&#093; period
during the Research Period, the first such payment to be made on the date &#091;***&#093; following the
signature of this Agreement. An invoice in respect of an instalment paid as aforesaid shall
be issued by Yeda promptly after the receipt by Yeda of such instalment. All payments of the
Research Budget shall be made by direct wire transfer to Yeda&#146;s bank account, the details of
which are set out in clause 17.7</TD>
</TR>

</TABLE>
</DIV></DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 13 -<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>below. For the removal of doubt, nothing contained in this Agreement shall prevent
Yeda and/or the Institute from obtaining further finance for the Research from other
entities (subject to the approval of the OCS should such approval be required pursuant
to the Magneton Program and/or the Magneton Directive), provided that such other
entities are not granted any rights in respect of the Research and/or the Licensed
Information which prejudice any rights granted to the Company under the Licence.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">3.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If funding approved pursuant to the Magneton Program is withheld or delayed by the OCS solely
due to a delay by Yeda in fulfilling its reporting obligations as required by such Program,
then the Company shall be entitled, by written notice to Yeda, to suspend further payments to
Yeda pursuant to clause 3.1 above until such time as such reporting obligations are fulfilled
by Yeda (and such suspension shall cease immediately upon the fulfilment by Yeda of such
reporting obligations). In the event of such suspension of payment, Yeda shall be entitled to
discontinue the performance of the Research and its reporting obligations pursuant to section
4 below until funding recommences.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">4. <U><B>REPORTING BY YEDA</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">4.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Yeda will procure the preparation by the Scientists of, and shall submit to the Company: (i)
during the time that funding is provided pursuant to the Magneton Program, interim written
reports on the progress of the Research during the Research Period on a quarterly basis, and,
after such time, on a yearly basis, in both cases within 60 (sixty)&nbsp;days of the end of the
period covered by such report, (ii)&nbsp;a written report summarising the results of the Research
within 60 (sixty)&nbsp;days of the end of the Research Period; and (iii)&nbsp;reports of any significant
findings in the Research promptly upon such findings being made.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">4.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Yeda shall submit to the Company financial reports setting forth the monies received and
expended in connection with the Research on a quarterly basis in accordance with the
requirements of the Magneton Directive. A financial report as aforesaid shall be submitted to
the Company during the Research Period on a quarterly basis, and, after such time on a yearly
basis, in both cases within 60 (sixty)&nbsp;days after the end of the period covered by such
report. Charges in respect of Research expenditures shall be made in accordance with the
procedures prevailing at the Institute for charging research expenditures to individual
projects of applied research and in</TD>
</TR>

</TABLE>
</DIV></DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 14 -<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>accordance with the Magneton Directive and/or the directives of the OCS.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">5. <U><B>TITLE</B></U>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">Subject only to the Licence, all right, title and interest in and to the Licensed Information
and the Patents and all right, title and interest in and to any drawings, plans, diagrams,
specifications, other documents, models, or any other physical matter in any way containing,
representing or embodying any of the aforegoing, vest and shall vest in Yeda.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">6. <U><B>PATENTS; PATENT INFRINGEMENTS</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left">6.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left">6.1.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Subject to clauses 6.3 and 6.4 below, &#091;***&#093;shall prosecute the Existing Patent Applications
using the outside patent counsel retained by &#091;***&#093; for such purpose prior to the execution of
this Agreement, unless otherwise agreed by the parties in writing, and shall maintain at the
applicable patent office any patents issuing from the Existing Patent Applications. The
Company and Yeda shall consult with one another and cooperate fully with regard to the
prosecution of the Existing Patent Applications and in maintenance of such patents.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left">6.1.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>At the initiative of either party, the parties shall consult with one another regarding the
filing of patent applications in respect of any portion of the Licensed Information and/or
corresponding to the Existing Patent Applications, including the jurisdictions in which such
applications should be filed, the timing of the filing of such applications and the contents
thereof. Following such consultations, and subject to clauses 6.3 and 6.4 below, &#091;***&#093; shall
retain outside patent counsel to prepare, file and prosecute patent applications as aforesaid
in such jurisdiction or jurisdictions as shall be determined by the parties in consultation as
aforesaid. Subject to clauses 6.3 and 6.4 below, &#091;***&#093;shall also maintain at the applicable
patent office any patents granted as a result of any of the above patent applications. The
parties agree that their joint policy will be to seek comprehensive patent protection for all
Licensed Information licensed to the Company hereunder. The Company
and Yeda shall cooperate
fully in the preparation, filing, prosecution and maintenance of such patent applications and
patents. &#091;***&#093; shall: (i)&nbsp;deliver to &#091;***&#093;, promptly, copies of all documentation prepared in
connection with the maintenance or</TD>
</TR>

</TABLE>
</DIV></DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 15 -<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>prosecution of the Existing Patent Applications; and (ii)&nbsp;procure that &#091;***&#093;
receives a copy of correspondence between &#091;***&#093; and any patent attorney or
other professional or any competent authority (where the Patents may be filed,
maintained or made) all, in each case, relating to the prosecution and/or
maintenance of the Patents.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left">6.1.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Without derogating from the aforegoing, &#091;***&#093; shall, at its expense, take all necessary
steps as commercially feasible in order to obtain, or, at &#091;***&#093; election, assist &#091;***&#093; to
obtain, the extension of each patent referred to in this clause 6.1 above, or, in the case of
a patent in any member state of the European Union, a Supplementary Protection Certificate as
referred to in clause 1.2.11 above (including the preparation and filing of applications for
such extensions and Supplementary Protection Certificates), within the period prescribed
therefor under applicable law and, if applicable, take all necessary steps as commercially
feasible in order to obtain &#147;Orphan Drug&#148; status (within the meaning of such term under the US
Orphan Drug Act or under Council Regulation (EU)&nbsp;No.&nbsp;141/2000, as the case may be), or any
other form of protection that affords exclusivity, within the period prescribed therefor under
applicable law. &#091;***&#093; shall notify &#091;***&#093; promptly in writing and shall provide a copy to [***]
of each marketing authorisation granted in respect of each Product in each country and, if
applicable, of &#147;Orphan Drug&#148; or other form of protection affording exclusivity granted in
respect of a Product and shall keep &#091;***&#093; informed and shall provide copies to &#091;***&#093; of all
documents regarding all applications, activities and/or proceedings regarding such extensions
and/or any Supplementary Protection Certificates and/or &#147;Orphan Drug&#148; or other form of
protection affording exclusivity, as aforesaid.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">6.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>All applications to be filed in accordance with the provisions of clauses 6.1.2 and 6.1.3
above, shall be filed in the name of [***] or, should the law of the relevant jurisdiction so
require, in the name of the relevant inventors and then assigned to [***].</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">6.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the event that, following such consultations between the parties regarding the filing,
prosecuting and/or maintenance (as applicable) of patent applications and/or patents pursuant
to clauses 6.1.1 and 6.1.2 above, &#091;***&#093;shall not wish to file and/or continue to prosecute a
patent application and/or maintain a patent in any country in relation to any part of the
Licensed Information (including any of the Existing</TD>
</TR>

</TABLE>
</DIV></DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 16 -<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Patent Applications), then &#091;***&#093;, in its discretion, may elect to file and/or continue
to prosecute such patent application and/or maintain such patent in such country at
its own cost and expense. &#091;***&#093; shall notify &#091;***&#093; in writing of &#091;***&#093; election to
file and/or continue to prosecute such patent application and/or maintain such patent
in such country as aforesaid, at &#091;***&#093; expense (such notice, <B>&#147;</B>&#091;***&#093;<B>&#148;</B>), and, in the
event that &#091;***&#093; shall not, within 30 (thirty)&nbsp;days of receipt of the &#091;***&#093; Notice:
(i)&nbsp;reimburse &#091;***&#093; for all out-of-pocket costs and fees incurred by &#091;***&#093; until the
date of the &#091;***&#093; (the &#091;***&#093; to be supported by receipts or other appropriate
documents evidencing such costs and fees) in connection with the said patent
application (in the preparation and/or filing and/or prosecution and/or maintenance of
such application) and/or such patent, such costs and fees to be expressed in the
currency in which paid by &#091;***&#093; and to be reimbursed or paid (as the case may be) by
&#091;***&#093; to &#091;***&#093; in US Dollars in accordance with the Exchange Rate of such currency on
the date of reimbursement or payment; and (ii)&nbsp;undertake in writing to &#091;***&#093; to bear
all additional and future expenses relating to such patent application and/or patent,
then &#091;***&#093; shall be entitled, at any time after the expiry of the said 30 (thirty)&nbsp;day
period after such notice, to terminate the Licence granted to &#091;***&#093; under this
Agreement in respect of such patent application and/or patent in such country, and to
take whatever action it deems fit (in its sole discretion) with respect to such patent
application and/or patent.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left">6.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&nbsp;&nbsp;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left">6.4.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company shall, on the date of signature of this Agreement, reimburse Yeda the sum of US
&#091;***&#093;, constituting the costs and fees paid by Yeda prior to March&nbsp;14, 2006 in connection with
the Existing Patent Applications, and shall pay to Yeda all additional amounts incurred, but
not as yet paid, by Yeda prior to the date of signature of this Agreement, within 30 (thirty)
days of Yeda&#146;s first written request.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left">6.4.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#091;***&#093; shall bear and pay all
costs and fees incurred in the preparation, filing, prosecution and the like of the Existing
Patent Applications and of all patent applications filed in accordance with the provisions of
clauses 6.1.2 and 6.1.3 above (including patent applications corresponding to the Existing
Patent Applications), and the maintenance at the appropriate patent office and the like of
all patents issuing from the Existing Patent Applications and all patent applications</TD>
</TR>

</TABLE>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 17 -<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">referred to above, and all costs and fees incurred in undertaking any
activities referred to in clause 6.1.3 above.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">6.4.3.</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Unless otherwise instructed by &#091;***&#093; in writing, &#091;***&#093; shall pay directly to &#091;***&#093; relevant
outside patent counsel amounts payable by &#091;***&#093; pursuant to this clause 6.4 above or clause
6.3 above.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">6.5.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">6.5.1.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(i)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Should the Company determine that a third party is
infringing one or more of the Patents, then the Company
shall notify Yeda promptly in writing, giving full
particulars thereof and the Company shall, after first
having consulted Yeda, be entitled to sue for such
infringement.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(ii)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Yeda may elect, at its own initiative, to join as a
party to such action, or Yeda may consent to being named as a party to
such action (such consent by Yeda may for the removal of doubt, be
conditional upon, <I>inter alia</I>, the provision by the Company of security,
satisfactory to Yeda, for the payment of the expenses or costs referred to
in subparagraph (a)&nbsp;below).</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(iii)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Yeda shall cooperate and shall use its reasonable
efforts to cause the Scientists to cooperate with the Company in
prosecuting such litigation.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">The provisions of paragraphs (i)&nbsp;and (iii)&nbsp;above shall be subject to the
following:</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(a)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">any expenses or costs or other liabilities incurred
in connection with such litigation (including attorneys&#146; fees, costs and
other sums awarded to the counterparty in such action) shall be borne by
the Company, which shall indemnify Yeda against any such expenses or costs
or other liabilities, the above without derogating from the provisions of
clause 12 below;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(b)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">in the event that Yeda shall be named as a party in
any such litigation then Yeda shall be entitled to select its own legal
counsel in such litigation, at the Company&#146;s expense and, if Yeda elects
not to do so, the selection of the legal counsel representing the Company
and Yeda in such litigation shall be subject to the prior written approval
of</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

</DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 18 -<!-- /Folio -->


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Yeda, which approval shall not be withheld unreasonably; and</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(c)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">no settlement, consent order, consent judgment or
other voluntary final disposition of such action may be entered into
without the prior written consent of Yeda.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">6.5.2.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(i)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Should the Company discover any allegation by a third party that, or be sued on the
grounds that, the manufacture, use or sale of a Product by it or by a Sublicensee or a Further
Sublicensee under any of the Patents or using the Licensed Information or any portion thereof
infringes upon the patent rights of a third party, then the Company shall notify Yeda promptly
in writing, giving full particulars thereof, and the Company shall, after first having
consulted Yeda, be entitled to defend such action.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(ii)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Yeda may elect, at its own initiative, to join as a
party to such action.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(iii)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Yeda shall cooperate and shall use its reasonable
efforts to cause the Scientists to cooperate with the Company in defending
such litigation.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(iv)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">If an action is brought against the Company alleging
the invalidity of any of the Patents, Yeda shall have the right to take
over the sole defence of the action and the Company shall cooperate fully
with Yeda in connection with any such action. In such event, no
settlement, consent order, consent judgment or other voluntary final
disposition of such action may be entered into without the prior written
consent of the Company, which consent shall not be unreasonably withheld
or delayed.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(v)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">All expenses, costs and/or other liabilities incurred
in connection with such litigation (including attorneys&#146; fees, costs and
other sums awarded to the counterparty in such action) shall be borne by
the Company.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(vi)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The provisions of clause 6.5.1(c) above shall apply,
<I>mutatis mutandis</I>.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 19 -<!-- /Folio -->



<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left">6.5.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any recovery in any litigation relating to an infringement as aforesaid in clauses 6.5.1 and
6.5.2 above shall first be applied to cover costs and thereafter divided &#091;***&#093;to the Company
and &#091;***&#093; to Yeda.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left">6.5.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the removal of doubt, Yeda shall not itself be obliged to take any action to sue for any
infringement or to defend any action as referred to in this clause 6.5 above.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">6.6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If the Company fails to take action to abate any alleged infringement of a Patent, or to
defend any action as aforesaid, within 60 (sixty)&nbsp;days of a request by Yeda to do so (or
within a shorter period, if required to preserve the legal rights of Yeda under applicable
law), then Yeda shall have the right (but not the obligation) to take such action at its
expense and the Company shall cooperate in such action at the Company&#146;s expense and, if
required under applicable law or contract, consent to be named as a party to any such action.
Yeda shall have full control of such action and shall have full authority to settle such
action on such terms as Yeda shall determine. Any recovery in any such litigation shall be
for the account of Yeda only.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">6.7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each party shall promptly keep the other informed and provide copies to the other of all
documents regarding all such actions or proceedings instituted by or against either party as
contemplated under any of the provisions of clause 6.5 above.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">7. <U><B>LICENCE</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">7.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Yeda hereby grants the Licence to the Company, and the Company hereby accepts the Licence
from Yeda, during the period, for the consideration and subject to the terms and conditions
set out in this Agreement. For the removal of doubt, no licence is granted hereunder with
regard to the Licensed Information and/or the Patents and/or any portion of any of the
aforegoing, with respect to any exploitation or activities (including the activities referred
to in clause 1.2.5 above) relating to any product or services, other than Products).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">7.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the removal of doubt, nothing contained in this Agreement shall prevent Yeda or the
Institute from using the Licensed Information and the Patents for academic research or other
scholarly purposes, or from applying for or receiving grants to finance such activities
(provided that such grants do not prejudice the Licence granted to</TD>
</TR>

</TABLE>
</DIV></DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 20 -<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Company hereunder), or from transferring any materials created in the course of
the performance of the Research financed by the Company in accordance with the
provisions of this Agreement, to scientists at the Institute or to other scientists at
other institutions for academic research purposes, provided that any such transfer of
materials shall be in accordance with a material transfer agreement substantially in
the form of the specimen agreement annexed hereto as <B>Appendix&nbsp;F</B>. For the avoidance of
doubt, the materials transferable pursuant to this clause 7.2 shall not include any
derivatives of the human acid-beta-glucosidase developed and produced by the Company.
Should Yeda obtain rights to any invention or application deriving from such academic
research in connection with the materials transferred under any such material transfer
agreement, as contemplated by such agreement, Yeda shall immediately grant Protalix a
licence (or sublicence, as the case may be) in respect of such rights upon the terms
of the Licence, <I>mutatis mutandis </I>(subject to any restrictions upon the rights obtained
by Yeda).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">7.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left">7.3.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Licence shall remain in force in each of Israel and the United States of America, with
respect to each Product (if not previously terminated in accordance with the provisions of
this Agreement) until the later of:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left">7.3.1.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the date of expiry of the last of any Patent (including, for the removal of doubt, any
patent application, as referred to in the definition of &#147;Patents&#148; in clause 1.2.11 above) in
such country covering such Product to expire; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left">7.3.1.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>if there is any Licensed Information that is identifiable, secret and of value relating to
such Product, the date of expiry of a period of &#091;***&#093;commencing on the date that FDA, EMEA
marketing approval or equivalent approval is obtained in respect of such Product in such
country, provided that and for so long as such Licensed Information remains secret and of
value.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left">7.3.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Licence shall remain in force in each country in the world (other than Israel and the
United States of America) with respect to each Product (if not previously terminated in
accordance with the provisions of this Agreement) until the later of:</TD>
</TR>

</TABLE>
</DIV></DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 21 -<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left">7.3.2.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the date of expiry in such country of the last of any Patent (including, for the removal
of doubt, any patent application, as referred to in the definition of &#147;Patents&#148; in clause
1.2.11 above) in such country covering such Product to expire; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left">7.3.2.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>if there is any Licensed Information that is identifiable, secret and of value relating to
such Product, the date of expiry of a period of &#091;***&#093; commencing on the date that FDA, EMEA
marketing approval or equivalent approval is obtained in respect of such Product in such
country.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the purposes of clauses 7.3.1.1 and 7.3.2.1 above and clause 9. 2 (<I>Royalties)</I>
below, a Product shall be deemed to be covered by a Patent in any country even after
the Patent in such country covering such Product has expired, in the event that, and
for so long as, such Product is protected and/or covered by &#147;Orphan Drug&#148; status as
referred to in clause 6.1.3 above, and/or by any type of data exclusivity or data
protection or by any other regulations and/or provisions granting similar statutory or
regulatory protection of such Product in such country. The Company shall notify Yeda
in writing immediately upon the obtaining of FDA, EMEA or equivalent approval in any
country, as referred to in clauses 7.3.1.2 and 7.3.2.2 above, specifying the date
thereof, the country and the type of Product in respect of which such approval was
granted.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">7.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Except as provided in clause 7.5 below, a Sublicence under the Licence may be granted by the
Company only with the prior written consent of Yeda, which shall not be withheld unreasonably,
and Yeda&#146;s response to a request for consent as aforesaid shall not be delayed unreasonably.
The Company shall only be entitled to request Yeda&#146;s consent if:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left">7.4.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the proposed Sublicence is for monetary consideration only or other valuable consideration
that can reasonably be assessed in monetary terms;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left">7.4.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the proposed Sublicence is to be granted in a <I>bona fide </I>arms-length commercial transaction;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left">7.4.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the terms of the proposed Sublicence are submitted to Yeda prior to the signature thereof;</TD>
</TR>

</TABLE>
</DIV></DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 22 -<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left">7.4.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the proposed Sublicence is made by written agreement, the provisions of which are consistent
with the terms of the Licence and contains, <I>inter alia</I>, the following terms and conditions:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left">7.4.4.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Sublicence shall expire automatically on the termination of the Licence for any
reason;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left">7.4.4.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Sublicensee shall be bound by provisions substantially similar to those in clause 10
below relating to confidentiality binding the Company (the obligations of the Sublicensee so
arising being addressed also to Yeda directly);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left">7.4.4.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an exclusion of liability and indemnification undertaking in the same form, <I>mutatis
mutandis</I>, as the provisions of clause 12 below (the indemnification obligations of the
Sublicensee to be given also in favour of, and shall be actionable by Yeda, the Institute, any
director, officer or employee of Yeda or of the Institute, or by the Inventors);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left">7.4.4.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>all terms necessary to enable performance by the Company of its obligations hereunder;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left">7.4.4.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>that the Sublicence shall not be assignable or otherwise transferable, save as set out in
clause 7.4.4.6 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left">7.4.4.6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>that the Sublicence shall not be further sublicenseable other than with Yeda&#146;s prior
written consent, which consent: (i)&nbsp;shall not be unreasonably withheld (and Yeda&#146;s response to
a request for consent to a further sublicence shall not be unreasonably delayed), and (ii)&nbsp;may
be conditioned by Yeda on, <I>inter alia</I>, the payment to Yeda of:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>royalties based on the sales of the
further sublicensee (&#147;<B>the Further Sublicensee</B>&#148;), in accordance with
the provisions of clause 9.2 below; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>royalties on all consideration received
(whether monetary or otherwise) by the Company or the Sublicensee
from the Further Sublicensee (except for amounts received by such
Sublicensee which constitute royalties based on sales of the
Products</TD>
</TR>

</TABLE>
</DIV></DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 23 -<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>by such Further Sublicensee in respect of which the Sublicensee
has paid royalties to Yeda), in accordance with the provisions of
clause 9.3 below, which consideration shall be deemed to be
Sublicensing Receipts received by the Company.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 9%">For the removal of doubt, the Company may seek Yeda&#146;s consent to a
further sublicence (<B>&#147;the Further Sublicence"</B>) only if:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">A)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the proposed Further Sublicence shall be
in writing;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">B)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the proposed Further Sublicence shall be
consistent with the terms of this Agreement;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">C)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the proposed Further Sublicence shall be
for monetary consideration only or other valuable consideration that
can reasonably be assessed in monetary terms;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">D)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the proposed Further Sublicence shall be
granted in a <I>bona fide </I>arms-length commercial transaction;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">E)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the terms of the proposed Further
Sublicence shall be submitted to Yeda prior to the signature
thereof;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">F)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the proposed Further Sublicence shall
contain, <I>inter alia, </I>the terms and conditions set out in clauses
7.4.4.2 and, 7.4.4.3 above and clauses 7.4.4.7, 7.4.4.8 and 7.4.4.9
below (and the references in such clauses to &#147;Sublicence&#148; or
&#147;Sublicensee&#148; shall, for the purposes of this clause, be deemed to
refer to the Further Sublicence or the Further Sublicensee, as the
case may be; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" nowrap align="left">7.4.4.6.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Further Sublicence shall not be assignable, otherwise transferable or further
sublicenseable; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" nowrap align="left">7.4.4.6.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Further Sublicence shall expire automatically upon the termination of this Agreement
or of the Sublicence;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left">7.4.4.7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>that: (i)&nbsp;a copy of the agreement granting the Sublicence shall be made available to Yeda,
promptly upon its</TD>
</TR>

</TABLE>
</DIV></DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 24 -<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>execution; (ii)&nbsp;all amendments to any such Sublicence agreement shall be
subject to Yeda&#146;s prior written consent; and (iii)&nbsp;the Company shall
submit to Yeda copies of all such amendments (as approved by Yeda),
promptly upon execution thereof;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left">7.4.4.8.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>that the Sublicensee shall grant to Yeda the right, at reasonable times and upon
reasonable notice to the Sublicensee, to send representatives in order to examine those books
of accounts, records and other documentation of the Sublicensee as may be necessary in order
to determine the correctness or completeness of any payment made by the Company to Yeda under
this Agreement, all without derogating from clause 9.7 below; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left">7.4.4.9.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>that the Sublicensee shall, forthwith upon written request by the Company and/or Yeda, pay
directly to Yeda all royalties and/or other payments that Yeda is entitled to receive in
respect of sales by or on behalf of such Sublicensee pursuant to clause 9.2 below and the
percentage of Sublicensing Receipts as provided in clause 9.3 below and, in such event, the
last 2 (two)&nbsp;sentences of clause 9.7 below shall apply to the Sublicensee as if it were the
Company, <I>mutatis mutandis</I>;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="left">7.4.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any act or omission by the Sublicensee or the Further Sublicensee which would have
constituted a breach of this Agreement by the Company had it been the act or omission of the
Company and which is not cured within the applicable cure period, shall constitute a breach of
the Sublicence agreement with the Company entitling the Company to terminate the Sublicence,
and the Company hereby undertakes to inform Yeda forthwith upon receipt of knowledge by the
Company of such breach and, at the request of Yeda, and at the Company&#146;s cost and expense, to
exercise such right of termination.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">7.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the removal of doubt, the Company shall not be entitled to grant, directly or indirectly,
to any person or entity any right of whatsoever nature to exploit or use in any way the
Licensed Information or the Patents or to develop, manufacture, produce and/or sell the
Products or any part of any of the aforegoing, save by way of Sublicence</TD>
</TR>

</TABLE>
</DIV></DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 25 -<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>within the meaning of such term in clause 1.2.11 above and subject to the conditions
of this clause 7 relating to any such grant.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">7.6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Nothing contained in this Agreement shall be deemed to be a representation or warranty,
express or implied, by Yeda that the Existing Patent Applications or any of them or any patent
applications relating to the Licensed Information or any portion thereof will be granted or
that patents obtained on any of the said patent applications are or will be valid or will
afford proper protection or that the Invention or any other portion of the Licensed
Information are or will be commercially exploitable or of any other value or that the
exploitation of the Patents, the Invention or the Licensed Information will not infringe the
rights of any third party.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">7.7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding the aforesaid in this clause 7, the Company may grant Sublicences to
subcontractors solely to manufacture the Products or solely to perform research and
development services related to the Products on its behalf without obtaining Yeda&#146;s consent,
provided that: (i)&nbsp;the terms of clauses 7.4.2, 7.4.4.1, 7.4.4.2, 7.4.4.3 (to the extent
relating to clauses 12.2 and 12.3 (but not 12.1)), 7.4.4.4 and 7.4.5 above are observed; (ii)
the proposed Sublicence is made by written agreement, the provisions of which are consistent
with the terms of the Licence; (iii)&nbsp;the Company is jointly and severally liable with the
subcontractor to Yeda for any obligations owed to or damage caused to Yeda in connection with
or resulting from the grant of such Sublicence; (iv)&nbsp;such Sublicence shall not be assignable,
further sublicenseable or otherwise transferable without the prior written consent of Yeda;
and (v)&nbsp;such subcontractor is not granted any additional right under the Licence other than
the right solely to manufacture the Products or solely to perform the research and development
services, in both cases as subcontractor for the Company.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">8. <U><B>DEVELOPMENT AND COMMERCIALIZATION</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">8.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Within &#091;***&#093;of the date of signature of this Agreement, the Company shall submit to Yeda a
Development Program for the development of Products (such Development Program, as approved by
Yeda, <B>&#147;the Initial Development Program&#148;</B>).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">8.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company undertakes, &#091;***&#093; to take all necessary steps to develop and commercialise the
Products and, without derogating from the generality of the foregoing, to use its best efforts
to expedite the commencement of the commercial sale of the Products. For</TD>
</TR>

</TABLE>
</DIV></DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 26 -<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>such purpose and without derogating from the generality of the aforegoing, the Company
shall carry out and/or have a third party carry out on its behalf the performance of
the trials, tests and other works and activities detailed in the Initial Development
Program and in all further Development Programs (if any) submitted pursuant to clause
8.5 below, in accordance with the respective timetables included therein. The Company
further undertakes to continue with commercialisation of the Products diligently
throughout the period of the Licence. Without prejudice to the foregoing, the Company
undertakes to comply with all the requirements of the Magneton Approval, including
that it will perform all development activities necessary in order to meet any
milestones set out therein.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">8.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company shall provide Yeda on December&nbsp;31 of each calendar year with written progress
reports (<B>&#147;Progress Reports&#148;</B>) which shall include detailed descriptions of the progress and
results, if any, of: (i)&nbsp;the tests and trials (if applicable) conducted and all other actions
taken by the Company pursuant to the Initial Development Program or any other Development
Program delivered and approved pursuant to clause 8.5 below; (ii)&nbsp;manufacturing, sublicensing,
marketing and sales during the preceding 12 (twelve)&nbsp;months; (iii)&nbsp;the Company&#146;s plans in
respect of the testing, undertaking of trials (if applicable) or commercialisation of Products
for the following 12 (twelve)&nbsp;months; (iv)&nbsp;projections of sales and marketing efforts; and (v)
a summary of all protocols or minutes of meetings with the FDA, EMEA or any other regulatory
authority in connection with any Product and copies of any opinions, decisions, and approvals
issued by any of the aforementioned authorities. If the Company has provided a Development
Program for more than 1 (one)&nbsp;Product, then such Progress Report shall provide such
information separately for each such Product. If progress in respect of a Product differs
from that anticipated in its Development Program or preceding Progress Report, then the
Company shall explain, in its Progress Report, the reason therefor and prepare a modified
Development Program for Yeda&#146;s review. The Company shall also provide any reasonable
additional data that Yeda requires to evaluate the performance of the Company hereunder.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">8.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the removal of doubt, without derogating from the remaining provisions of this clause 8
or of clause 13.2 below, nothing contained in this Agreement shall be construed as a warranty
by the Company that any Development Program to be carried out by it as aforesaid will actually
achieve its aims and the Company makes no warranties</TD>
</TR>

</TABLE>
</DIV></DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 27 -<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>whatsoever as to any results to be achieved in consequence of the carrying out of any
such Development Program.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">8.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Without derogating from the obligations of the Company pursuant to this clause 8 or from the
provisions of clause 13.2 below, in the event that the Company shall wish to develop and/or
commercialise Products in addition to those specified in the Initial Development Program or to
update the Initial Development Program, the Company shall submit to Yeda a further Development
Program in respect of such additional Products or updates and the provisions of this clause 8
shall apply also with respect to such further Development Program and to the development and
commercialisation of such additional Products, <I>mutatis mutandis</I>.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">8.6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company agrees to supply to Yeda and/or the Institute, for (and in quantities customary
for) academic research purposes, any Products developed and/or manufactured and/or produced
under this Agreement at no cost to Yeda, the Institute or the Scientists.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">8.7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company shall mark, and cause all its Sublicensees and Further Sublicensees to mark, all
Products that are manufactured or sold under this Agreement with the number or numbers of each
Patent applicable to such Product.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">9. <U><B>ROYALTIES</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">9.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In consideration for the grant of the Licence, the Company shall pay Yeda a non-refundable
licence fee of US $&#091;***&#093; per year (or part thereof) during the term of this Agreement (<B>&#147;the
Annual Licence Fee&#148;</B>) to be paid in advance at the beginning of each 1 (one)&nbsp;year period during
the term of this Agreement, commencing on the fifth (5<SUP style="font-size: 85%; vertical-align: text-top">th</SUP>) anniversary of the date
of signature of this Agreement and until (and including) the nineteenth (19<SUP style="font-size: 85%; vertical-align: text-top">th</SUP>)
anniversary thereof. For the removal of doubt, the first Annual Licence Fee shall be paid on
the fifth (5<SUP style="font-size: 85%; vertical-align: text-top">th</SUP>) anniversary of the date of signature of this Agreement and
thereafter on each anniversary of the date of signature of this Agreement until (and
including) the nineteenth (19<SUP style="font-size: 85%; vertical-align: text-top">th</SUP>) anniversary thereof. The amount of the Annual
Licence Fee paid by the Company as aforesaid shall be credited against royalties and/or other
payments due and payable by the Company pursuant to clause 9.2 below during the 1 (one)&nbsp;year
period in respect of which the Company shall have paid such Annual Licence Fee provided that
the total amount of such royalties and other payments so payable during such 1 (one)&nbsp;year
period exceeds US&#091;***&#093;. For the removal of</TD>
</TR>

</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>
<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">- 28 -
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>doubt the amount of the Annual Licence Fee paid for a particular 1 (one)&nbsp;year period
cannot be credited against royalties payable during another 1 (one)&nbsp;year period.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">9.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In addition to the above, the Company shall pay Yeda royalties at the rate of:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left">9.2.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#091;***&#093; of Net Sales of Products used to treat Gaucher disease and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left">9.2.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#091;***&#093; of Net Sales of Products used for other indications; provided that in the event that
there are any sales of a Product in any country that are not, at the time of such sales,
covered by a Valid Patent Claim (as defined below) in such country, then the royalty rate
referred to in this clause 9.2 shall, with respect to Net Sales of such Product made in such
country during the period such Product is not so covered by a Valid Patent Claim as aforesaid,
be reduced to &#091;***&#093;for Products used to treat Gaucher disease and &#091;***&#093; for Products used for
other indications. For the purposes of this clause 9.2, &#147;<B>Valid Patent Claim</B>&#148; shall mean (i)&nbsp;a
claim under an issued and unexpired patent which is included in the Patents; (ii)&nbsp;a claim in a
pending patent application (including a provisional application) which is included in the
Patents; (iii)&nbsp;any protection for such Product due to &#147;Orphan Drug&#148; status (as referred to in
clause 6.1.3 above); or (iv)&nbsp;data exclusivity or data protection or by any other regulations
and/or provisions granting similar statutory or regulatory protection of such Product in such
country.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">9.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company shall additionally pay Yeda the following royalty in respect of the Sublicensing
Receipts:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left">9.3.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#091;***&#093; of all Sublicensing Receipts received pursuant to or in connection with Sublicences
(or options for a Sublicence) signed prior to the date of submission by the Company of an
Investigational New Drug Application (IND)&nbsp;to the FDA or equivalent EMEA approval with respect
to any Product;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left">9.3.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#091;***&#093; of all Sublicensing Receipts received pursuant to or in connection with Sublicences
(or options for a Sublicence) signed on or after the date of the submission of an IND
application as aforesaid but prior to the date of commencement of phase III clinical trials
with respect to any Product;</TD>
</TR>

</TABLE>
</DIV></DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 29 -<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left">9.3.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#091;***&#093; of all Sublicensing Receipts received pursuant to or in connection with Sublicences
(or options for a Sublicence) signed on or after the date of commencement of phase III
clinical trials as aforesaid but prior to the date of FDA or EMEA approval of any Product; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left">9.3.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#091;***&#093; of all Sublicensing Receipts received pursuant to or in connection with Sublicences
(or options for a Sublicence) signed on or after the date of FDA or EMEA approval.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">9.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the removal of doubt, the Company undertakes that all sales (within the meaning of such
term in clause 1.3.4 above) of Products by the Company and each Sublicensee or Further
Sublicensee (as the case may be) shall be for cash consideration only.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">9.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In calculating Net Sales and Sublicensing Receipts, all amounts shall be expressed in US
Dollars and any amount received or invoiced in a currency other than US Dollars shall be
translated into US Dollars, for the purposes of calculation, in accordance with the Exchange
Rate between the US Dollar and such currency on the date of such receipt or invoice, as the
case may be. For the removal of doubt, in calculating amounts received by the Company,
whether by way of Net Sales or Sublicensing Receipts, any amount deducted or withheld in
connection with any such payment on account of taxes on net income (including income taxes,
capital gains tax, taxes on profits or taxes of a similar nature) payable by the Company in
any jurisdiction, shall be deemed, notwithstanding such deduction or withholding, to have been
received by the Company. In the event that the Sublicensing Receipts comprise, in whole or in
part, non-cash consideration (including shares or other securities of the Sublicensee or
Further Sublicensee or any other entity), then the Company agrees, promptly upon Yeda&#146;s
request, to execute and deliver such documents and instruments and do any other acts as may be
necessary, so that Yeda receives the percentage share of such non-cash consideration as
provided in clause 9.2.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">9.6.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left">9.6.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Amounts payable to Yeda in terms of this clause 9 shall be paid to Yeda in US Dollars: (i)
in the case of Net Sales, on a &#091;***&#093;and no later than &#091;***&#093; after the end of each &#091;***&#093;,
commencing with the first &#091;***&#093; in which any Net Sales are made by the Company; or (ii)&nbsp;in the
case of Sublicensing Receipts, no later than &#091;***&#093; after any such Sublicensing Receipts are
received by the Company from any Sublicensees or Further Sublicensees.</TD>
</TR>

</TABLE>
</DIV></DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 30 -<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left">9.6.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company shall submit to Yeda: (i)&nbsp;no later than &#091;***&#093; days after the end of each &#091;***&#093;,
commencing with the first &#091;***&#093; in which any Net Sales are made; and (ii)&nbsp;no later than &#091;***&#093;
after any Sublicensing Receipts are received, an interim written report setting out amounts
owing to Yeda in respect of such Sublicensing Receipts, a full and detailed report, in a form
acceptable to Yeda, certified as being correct by the chief financial officer of the Company,
setting out all amounts owing to Yeda in respect of such previous &#091;***&#093;to which the report
refers, and with full details of:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="86%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">9.6.2.1.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(i)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">the sales made by the Company, Sublicensees and, if applicable, Further Sublicensees,
including a breakdown of Net Sales according to country, identity of seller, currency of
sales, dates of invoices, number and type of Products sold;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(ii)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">the Sublicensing Receipts, including a
breakdown of Sublicensing Receipts according to identity of
Sublicensees and, if applicable, Further Sublicensees, countries,
the currency of the payment and date of receipt thereof;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(iii)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">deductions applicable, as provided in the definition of &#147;Net Sales&#148;; and</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left">9.6.2.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any other matter necessary to enable the determination of the amounts of royalties payable
hereunder.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">9.7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company shall keep and shall cause Sublicensees (and, if applicable, Further
Sublicensees) to keep complete, accurate and correct books of account and records consistent
with sound business and accounting principles and practices and in such form and in such
details as to enable the determination of the amounts due to Yeda in terms hereof. The
Company shall supply Yeda at the end of each calendar year, commencing with the first calendar
year in which any amount is payable by the Company to Yeda under this clause 9, a report
signed by the Company&#146;s independent auditors in respect of the amounts due to Yeda pursuant to
this clause 9 in respect of the year covered by the said report and containing details in
accordance with clause 9.6 above in respect of the quarterly reports. The Company shall
retain and shall require and cause its Sublicensees (and, if applicable, Further Sublicensees)
to retain the aforegoing</TD>
</TR>

</TABLE>
</DIV></DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 31 -<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="6%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>books of account for 6 (six)&nbsp;years after the end of each calendar year during the
period of this Agreement, and, if this Agreement is terminated for any reason
whatsoever, for 6 (six)&nbsp;years after the end of the calendar year in which such
termination becomes effective.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">9.8.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>At Yeda&#146;s expense, Yeda shall be entitled to appoint representatives to inspect during normal
business hours and to make copies of the Company&#146;s and Sublicensees&#146; (and, if applicable,
Further Sublicensees&#146;) books of account, records and other documentation (including technical
data and lab books) to the extent relevant or necessary for the ascertainment or verification
of the amounts due to Yeda under this clause 9, provided however that Yeda shall coordinate
such inspection with the Company or Sublicensee or such Further Sublicensee (as the case may
be) in advance. The Company shall take all steps necessary (or in the case of its
Sublicensees or, if applicable, Further Sublicensees, use its best efforts) to ensure that all
such books of account, records and other documentation of the Company and its Sublicensees
(and, if applicable, Further Sublicensees) are available for inspection as aforesaid at a
single location for each of the Company and its Sublicensees (and, if applicable, Further
Sublicensees). In the event that any inspection as aforesaid reveals any underpayment by the
Company to Yeda in respect of any year of the Agreement in an amount exceeding &#091;***&#093;of the
amount actually paid by the Company to Yeda in respect of such year then the Company shall (in
addition to paying Yeda the shortfall together with interest thereon in accordance with clause
13.4 below), bear the costs of such inspection. The parties agree that the inspection of
technical data and lab books as aforesaid may only be conducted for the purposes of
determining whether the product developed, manufactured, sold, marketed, distributed and/or
used by the Company and/or Sublicensee or Further Sublicensee is a Product, such inspection to
be carried out by a representative of Yeda who is bound by an obligation of confidentiality.
The provisions of this clause 9 shall survive the termination of this Agreement for whatsoever
reason.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">10.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>CONFIDENTIALITY</B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">10.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company shall maintain in confidence all information or data relating to the Patents,
the Licensed Information, this Agreement and the terms hereof (hereinafter, collectively
referred to as <B>&#147;the Confidential Information&#148;</B>), except and to the extent that the Company can
prove that any such information or data is in the public domain at the date of the signing
hereof or becomes part of the</TD>
</TR>

</TABLE>
</DIV></DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 32 -<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="6%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>public domain thereafter (other than through a violation by the Company or a
Sublicensee or Further Sublicensee of this obligation of confidentiality) and except
with regard to that portion, if any, of the Confidential Information expressly
released by Yeda from this obligation of confidentiality by notice in writing to the
Company to such effect. Notwithstanding the foregoing, the Company may disclose to
its personnel and Sublicensees the Confidential Information to the extent necessary
for the exercise by it of its rights hereunder or in the fulfilment of its obligations
hereunder, provided that it shall bind such personnel and such Sublicensees with a
similar undertaking of confidentiality in writing. The Company shall be responsible
and liable to Yeda for any breach by its personnel or any Sublicensee of such
undertakings of confidentiality as if such breach were a breach by the Company itself.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">10.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In addition to and without derogating from the aforegoing, the Company undertakes not to
make mention of the names of Yeda, the Inventors, the Institute or any scientists or other
employees of the Institute or any employee of Yeda in any manner or for any purpose whatsoever
in relation to this Agreement, its subject-matter and any matter arising from this Agreement
or otherwise, other than as set out in clause 10.3 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">10.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding the provisions of clauses 10.1 and 10.2 above, the Company shall not be
prevented from mentioning the name of Yeda, the Inventors, the Institute and/or any scientists
or other employees of the Institute or any employee of Yeda or from disclosing any information
(i)&nbsp;if, and to the extent that, such mention or disclosure is to competent authorities for the
purposes of obtaining approval or permission for the exercise of the Licence, or in the
fulfilment of any legal duty owed to any competent authority (including a duty to make
regulatory filings); provided that any mention in a private placement memorandum or a public
offering registration statement shall not be deemed fulfilment of a legal duty to a competent
authority, and any such mention shall be subject to Yeda&#146;s consent, which consent shall not be
withheld unreasonably, or (ii)&nbsp;provided that such disclosure is in the form attached hereto as
<B>Appendix&nbsp;G</B>.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">10.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>No termination of this Agreement, for whatever reason, shall release the Company from any of
its obligations under this clause 10 and such obligations shall survive any termination as
aforesaid.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">10.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Yeda shall maintain in confidence all information received by Yeda from the Company which
has been designated by the Company in</TD>
</TR>

</TABLE>
</DIV></DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 33 -<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="6%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>writing and in advance as confidential, except and to the extent that: (i)&nbsp;any such
information or data is in the public domain at the date of the signing hereof or
becomes part of the public domain thereafter (other than through a violation by Yeda
of this obligation of confidentiality) or is released by the Company from this
obligation of confidentiality by notice in writing; (ii)&nbsp;Yeda is required to disclose
such information in order to fulfil its obligations under this Agreement (including in
connection with the filing and prosecution of patent applications in accordance with
the provisions of clause 6 above); or (iii)&nbsp;Yeda is required to disclose such
information in fulfilment of any legal duty owed to any competent authority (the
Company hereby acknowledging that it is aware that such competent authority may not be
bound by any confidentiality obligations and may disclose or be required to disclose
such information to a third party, whether by order of court or by law or otherwise).
For the removal of doubt, the provisions of this clause 10.5 shall not apply in
respect of any information (not being Licensed Information) independently developed at
the Institute without reference to the confidential information received from the
Company.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">10.6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In addition to but without derogating from the aforegoing, Yeda undertakes not to make
mention of the names of the Company or any employees thereof in any manner or for any purpose
whatsoever in relation to this Agreement, its subject-matter and any matter arising from this
Agreement or otherwise, unless the prior written approval of the Company thereto has been
obtained. The aforegoing notwithstanding, Yeda shall not be prevented from mentioning the
names of the Company or any employees thereof if and to the extent that such mention is to any
competent authority in the fulfilment of any duty owed to such authority or that such mention
is required for the purpose of fulfilling Yeda&#146;s obligations hereunder.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">10.7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the removal of doubt, Yeda shall have the right to allow the scientists of the Institute
to publish articles relating to the Licensed Information in scientific journals or posters or
to give lectures or seminars to third parties relating to the Licensed Information, on the
condition that, to the extent that the information to be published or disclosed is Licensed
Information which is not in the public domain, a draft copy of the said contemplated
publication or disclosure shall have been furnished to the Company at least 45 (forty-five)
days before the making of any such publication or disclosure and the Company shall have failed
to notify Yeda in writing, within 21 (twenty one) days from receipt of the said draft
publication or disclosure, of its opposition to the making of the contemplated publication or</TD>
</TR>

</TABLE>
</DIV></DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 34 -<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="6%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>disclosure. Should the Company notify Yeda in writing within 21 (twenty one) days
from the receipt of the draft contemplated publication or disclosure that it opposes
the making of such publication or disclosure because it includes material (which has
been specified in said notice) in respect of which there are reasonable grounds (which
have also been specified in said notice) requiring the postponement of such
publication or disclosure so as not adversely to affect the Company&#146;s interests under
the Licence because such Licensed Information is patentable subject-matter for which
patent protection pursuant to clause 6.1 above should be sought, then Yeda shall not
permit such publication or disclosure unless and until there shall first have been
filed an appropriate patent application in respect of the material to be published or
disclosed as aforesaid. The Company acknowledges that it is aware of the importance
to the researchers of publishing their work and, accordingly, the Company will use its
best efforts not to oppose such publications.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">10.8.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Yeda&#146;s obligations under this clause 10 (other than this clause 10.8) shall terminate upon
termination of this Agreement; provided, however, that any transfer by Yeda following such
termination of information received from the Company which it was previously required to keep
confidential pursuant to clause 10.5 above shall only be made following the signature by the
potential transferee thereof of a non-disclosure agreement with Yeda substantially in the form
of the specimen agreement attached hereto as <B>Appendix&nbsp;H</B>.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">11.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>NO ASSIGNMENT</B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">11.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company shall not be entitled to assign or encumber all or any of its rights or
obligations under this Agreement or arising therefrom, unless it shall have received the prior
written consent of Yeda to such assignment or encumbrance, which consent shall not be
unreasonably withheld, and Yeda&#146;s response to a request for consent as aforesaid shall not be
unreasonably delayed, and which consent, if given, may be conditioned by Yeda on, <I>inter alia</I>,
the payment of a fee or other consideration in relation thereto (including, if so conditioned
by Yeda, that any consideration received by the Company in respect of an assignment to which
Yeda consents as aforesaid shall be deemed to be Sublicensing Receipts and the provisions of
clause 9 above shall apply with respect thereto, <I>mutatis mutandis</I>). For the purposes of this
clause 11, the merger of the Company with another entity, in the event that the Company is not
the surviving entity, and the sale of all or substantially all of the</TD>
</TR>

</TABLE>
</DIV></DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 35 -<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="6%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Company&#146;s assets or business to a third party shall be deemed to be an assignment.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">11.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding the aforegoing, the merger of the Company with another entity as described
in clause 11.1 above or the sale of all or substantially all of the assets or the business of
the Company to a third party (collectively <B>&#147;the M&#038;A&#148;</B>) will not require the written consent of
Yeda as aforesaid if all of the following conditions are met: (i)&nbsp;the Company
provides written notice of the M&#038;A to Yeda at least 20 (twenty)&nbsp;days prior to the effective
date of the M&#038;A; (ii)&nbsp;Yeda receives from the assignee (or purchaser or surviving entity in a
merger, as the case may be), in writing, at least 10 (ten)&nbsp;days prior to the effective date of
the M&#038;A: (a)&nbsp;an undertaking to be bound by the terms of this Agreement; and (b)&nbsp;an undertaking
to perform the obligations of the Company under this Agreement; and (iii)&nbsp;that the Company is
not, as at the effective date of the M&#038;A, in breach of any of its obligations hereunder.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">12.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>EXCLUSION OF LIABILITY AND INDEMNIFICATION</B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">12.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Yeda, the Inventors, the Institute and the directors, officers and employees of Yeda and/or
of the Institute (hereinafter collectively <B>&#147;the Indemnitees&#148;</B>) shall not be liable for any
claims, demands, liabilities, costs, losses, damages or expenses (including legal costs and
attorneys&#146; fees) of whatever kind or nature (all of the aforegoing, collectively,
<B>&#147;Liabilities&#148;</B>) caused to or suffered by any person or entity (including the Company or any
Sublicensee or Further Sublicensee) that directly or indirectly arise out of or result from or
are encountered in connection with this Agreement, the exercise of the Licence or the conduct
of the Research, including directly or indirectly arising out of or resulting from or
encountered in connection with: (i)&nbsp;the development, manufacture, sale or use of any of the
Products by the Company, any Sublicensee or Further Sublicensee or any person acting in the
name of or on behalf of any of the aforegoing, or acquiring, directly or indirectly, any of
the Products from any of the aforegoing; or (ii)&nbsp;the exploitation or use by the Company or any
Sublicensee or Further Sublicensee of the Licensed Information or any part thereof, including
of any data or information given, if given, in accordance with this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">12.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the event that any of the Indemnitees should incur or suffer any Liabilities that
directly or indirectly arise out of or result from or are encountered in connection with this
Agreement or the exercise of the Licence as aforesaid in clause 12.1 above, or shall be
requested or</TD>
</TR>

</TABLE>
</DIV></DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 36 -<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="6%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>obliged to pay to any person or entity any amount whatsoever as compensation for any
Liabilities as aforesaid in clause 12.1 above, then the Company shall indemnify and
hold harmless such Indemnitees from and against any and all such Liabilities. Without
limiting the generality of the aforegoing, the Company&#146;s indemnification as aforesaid
and the exclusion of liability in clause 12.1 above shall extend to product liability
claims and to damages, claims, demands, liabilities, losses, costs and expenses
attributable to death, personal injury or property damage or to penalties imposed on
account of the violation of any law, regulation or governmental requirement.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If an action as contemplated by this clause 12 is brought against any Indemnitee, Yeda
shall, or shall procure that such Indemnitee shall, notify the Company promptly in
writing of such claim. Yeda may, at its sole option, allow the Company, at the
Company&#146;s expense, to assume control over defending such claim, in which case it will
provide the Company with reasonable assistance and any information reasonably required
for such defence, at the Company&#146;s expense; provided that if the Company shall assume
control over the defence of such claim, no settlement, consent order, consent judgment
or other voluntary final disposition of such action may be entered into without the
prior written consent of Yeda.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">12.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company shall at its own expense insure its liability pursuant to clause 12.2 above
during the period beginning not later than the date of the commencement of the first clinical
studies or clinical trials of any Product in humans and continuing during the entire period
that the Licence is in force in any country, plus an additional period of 7 (seven)&nbsp;years.
Such insurance shall be in reasonable amounts and on reasonable terms in the circumstances,
having regard, in particular, to the nature of the Products, and shall be subscribed for from
a reputable insurance company. The named insured under such insurances shall be the Company,
the Inventors, Yeda and the Institute and the beneficiaries thereof shall include also the
respective employees, officers and directors of Yeda and the Institute. The policy or
policies so issued shall include a &#147;cross-liability&#148; provision pursuant to which the insurance
is deemed to be separate insurance for each named insured (without right of subrogation as
against any of the insured under the policy, or any of their representatives, employees,
officers, directors or anyone in their name) and shall further provide that the insurer will
be obliged to notify each insured in writing at least 30 (thirty)&nbsp;days in advance of the
expiry or cancellation of the policy or policies. The Company</TD>
</TR>

</TABLE>
</DIV></DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 37 -<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="6%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>hereby undertakes to comply punctually with all obligations imposed upon it under such
policy or policies and in particular, without limiting the generality of the
aforegoing, to pay in full and punctually all premiums and other payments for which it
is liable pursuant to such policy or policies. The Company shall be obliged to submit
to Yeda copies of the aforesaid insurance policy or policies within 14 (fourteen)&nbsp;days
of the date of issue of each such policy.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">12.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The provisions of this clause 12 shall survive the termination of this Agreement for
whatsoever reason.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">13.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>TERM AND TERMINATION</B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">13.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Unless otherwise agreed to in writing, this Agreement shall terminate upon the occurrence of
the later of the following:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left">13.1.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the date of expiry of the last of the Patents; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left">13.1.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the expiry of a continuous period of &#091;***&#093;during which there shall not have been a First
Commercial Sale of any Product in any country.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">13.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding anything to the contrary contained in this Agreement:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left">13.2.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Yeda shall be entitled, at its option: (i)&nbsp;to modify the Licence hereunder so that it is
non-exclusive only, by written notice to the Company (any such amendment of this Agreement by
Yeda as aforesaid, being effective immediately, the Company&#146;s consent thereto (written or
otherwise) not being required, notwithstanding the provisions of clause 17.2 below); or (ii)
to terminate this Agreement, including the Licence hereunder, with respect to any Product, by
written notice to the Company, if the Company shall fail to achieve any one of the following
milestones, in each case in respect of at least one Product, by the dates specified therefor:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="11%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>within &#091;***&#093; of the signature of this
Agreement, to have commenced required Good Laboratory Practice (GLP)
pre-clinical development;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="11%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>within &#091;***&#093; of the signature of this
Agreement, to have commenced phase I clinical trials;</TD>
</TR>

</TABLE>
</DIV>
</DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 38 -<!-- /Folio -->

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="11%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>within &#091;***&#093; of the signature of this
Agreement, to have commenced phase II clinical trials;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="11%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>within &#091;***&#093;of the signature of this
Agreement, to have commenced phase III clinical trials;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="11%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(5)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>within &#091;***&#093; of the date of signature of
this Agreement, to have submitted a New Drug Application to the FDA
or a Marketing Authorisation Application (MAA)&nbsp;to the EMEA;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="11%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(6)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>First Commercial Sale of at least one
Product shall not have commenced within &#091;***&#093; of the first Product
approval obtained as a result of an application submitted pursuant
to clause 13.2.1(a)(5); and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="11%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(7)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>commercial sale of any Product having
commenced, there shall be a period of &#091;***&#093; or more during which no
sales of any Product shall take place (except as a result of force
majeure or other factors beyond the control of the Company)</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 11%">and shall fail to cure such delay within &#091;***&#093; of receipt of notice from
Yeda; provided that Yeda shall not be entitled to exercise its rights
pursuant to this clause 13.2.1 if 1) the Company shall demonstrate to the
satisfaction of Yeda that it is making all necessary efforts to achieve
such milestone and that such delay is due to factors beyond the control
of the Company; and 2) the total delay in respect of any one milestone
shall not under any circumstances exceed or have exceeded twelve months
and the cumulative total delay in respect of all milestones shall not
under any circumstances exceed or have exceeded thirty months.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="left">13.2.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Without derogating from the aforegoing, Yeda shall be entitled to terminate this Agreement
(unless previously terminated in accordance with the provisions of this Agreement), by written
notice to the Company (effective immediately), if the Company contests the validity of any of
the Patents.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">13.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Without derogating from the parties&#146; rights hereunder or by law to any other or additional
remedy or relief, it is agreed that either Yeda or the Company may terminate this Agreement
and the Licence</TD>
</TR>

</TABLE>
</DIV></DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 39 -<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="6%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>hereunder by serving a written notice to that effect on the other upon or after: (i)
the commitment of a material breach hereof by the other party, which material breach
cannot be cured or, if curable, which has not been cured by the party in breach within
21 (twenty-one) days (or, in the case of failure by the Company to pay any amount due
from the Company to Yeda pursuant to or in connection with this Agreement on or before
the due date of payment, 10 (ten)&nbsp;days) after receipt of a written notice from the
other party in respect of such breach, or (ii)&nbsp;the granting of a winding-up order in
respect of the other party, or upon an order being granted against the other party for
the appointment of a receiver, or if such other party passes a resolution for its
voluntary winding-up, or if a temporary or permanent liquidator or receiver is
appointed in respect of such other party, or if a temporary or permanent attachment
order is granted on such other party&#146;s assets, or a substantial portion thereof, or if
such other party shall seek protection under any laws or regulations, the effect of
which is to suspend or impair the rights of any or all of its creditors, or to impose
a moratorium on such creditors, or if anything analogous to any of the aforegoing in
this clause 13.3(ii) above under the laws of any jurisdiction occurs in respect of
such other party; provided that in the case that any such order or act is initiated by
any third party, the right of termination shall apply only if such order or act as
aforesaid is not cancelled within 60 (sixty)&nbsp;days of the grant of such order or the
performance of such act.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">13.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any amount payable hereunder by one of the parties to the other, that has not been paid by
its due date of payment, shall bear interest from its due date of payment until the date of
actual payment, at the rate of &#091;***&#093;per month and pro rata for part of a month.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">13.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Upon the termination of this Agreement for whatever reason (other than the passage of time),
all rights in and to the Licensed Information and the Patents shall revert to Yeda and the
Company shall not be entitled to make any further use thereof and the Company shall deliver to
Yeda all drawings, plans, diagrams, specifications, other documentation, models or any other
physical matter in the Company&#146;s possession in any way containing, representing or embodying
the Licensed Information; and (ii)&nbsp;the Company shall grant to Yeda a non-exclusive,
irrevocable, perpetual, worldwide licence, with the right to sublicense (subject to the
provisions of clause 13.7 below), in respect of the Development Results. In this clause 13.5,
the term <B>&#147;the Development Results&#148; </B>shall mean any invention, product, material, method,
process, technique, know-how, data, information or other result which does</TD>
</TR>

</TABLE>
</DIV></DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 40 -<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="6%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>not form part of the Licensed Information, discovered or occurring in the course of or
arising from the performance by the Company of the development work pursuant to clause
8 above, including any regulatory filing or approval, filed or obtained by the Company
in respect of the Products, all communications with the regulatory authorities, the
drug master file and any data, information or document covered by data protection or
data exclusivity.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">13.6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The termination of this Agreement for any reason shall not relieve the Company or Yeda of
any obligations which shall have accrued prior to such termination.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">13.7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the event that this Agreement shall be terminated, other than by way of termination by
Yeda pursuant to clause 13.2.2 or 13.3 above, and that, subject to the Magneton Directive
and/or the directives of the OCS, at any time within 5 (five)&nbsp;years following such
termination, Yeda shall grant to a third party a licence in respect of the Development Results
or any part thereof (alone or together with any part of the Licensed Information) and Yeda
shall receive in respect of such licence consideration, then Yeda shall pay to the Company
&#091;***&#093;of the Net Proceeds actually received by Yeda in respect of such a licence, provided
however that Yeda shall be entitled to set off against such amounts sums owed or which become
owed by the Company to Yeda, until such time as the Company shall have received an amount
equal to &#091;***&#093; of the Company&#146;s direct expenditure incurred in respect of the process of
obtaining the Development Results (excluding any Magneton or other OCS or other non-commercial
funding), as confirmed in writing by the Company&#146;s independent accountants. Yeda shall pay to
the Company amounts, if any, payable under this clause 13.7 above, within 90 (ninety)&nbsp;days of
receipt of the relevant Net Proceeds.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the purpose of this clause 13.7, <B>&#147;Net Proceeds&#148; </B>means royalties and all other
monetary consideration actually received by Yeda in respect of such licence (excluding
funds for research and/or development at the Institute or payments for the supply of
services) after deduction of all costs, fees and expenses incurred by Yeda in
connection with such licence (including, without limitation, patent related costs, and
all attorneys fees and expenses and other costs and expenses in connection with the
negotiation, conclusion and administration of such licence).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">13.8</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the avoidance of doubt, it is hereby agreed that following the expiry of the Licence in
any country pursuant to clause 7.3 above,</TD>
</TR>

</TABLE>
</DIV></DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 41 -<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="6%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Company and its Sublicensees shall be entitled to continue to produce,
manufacture, use, market, distribute and/or sell Products in the said country without
having to pay royalties or any other consideration to Yeda in respect of such
activities subsequent to such expiry date.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">14.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>NOTICES</B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any notice or other communication required to be given by one party to the other under this
Agreement shall be in writing and shall be deemed to have been served: (i)&nbsp;if personally
delivered, when actually delivered; or (ii)&nbsp;if sent by facsimile, the next business day after
receipt of confirmation of transmission; or (iii)&nbsp;10 (ten)&nbsp;days after being mailed by
certified or registered mail, postage prepaid (for the purposes of proving such service&#151;it
being sufficient to prove that such notice was properly addressed and posted) to the
respective addresses of the parties set out below, or to such other address or addresses as
any of the parties hereto may from time to time in writing designate to the other party
hereto pursuant to this clause 14:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="64%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">14.1.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">to Yeda at:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">P.O. Box 95</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Rehovot 76100</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Attention: the CEO</I></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Facsimile: (08)&nbsp;9470739</I></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">14.2.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">to the Company at:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">2 Snunit St, Science Park</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">P.O. Box 455</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Carmiel 20100</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Attention: the CEO</I></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Facsimile: (04)&nbsp;988 9489</I></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">15.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>VALUE ADDED TAX</B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company shall pay to Yeda all amounts of Value Added Tax imposed on Yeda in connection
with the transactions under this Agreement. All amounts referred to in this Agreement shall
be exclusive of Value Added Tax.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">16.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>GOVERNING LAW AND JURISDICTION</B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Agreement shall be governed in all respects by the laws of Israel and the parties hereby
submit to the exclusive jurisdiction of the competent Israeli courts, except that Yeda may
bring suit against the Company in any other jurisdiction outside Israel in which the Company
has assets or a place of business.</TD>
</TR>

</TABLE>
</DIV>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 42 -<!-- /Folio -->

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">17.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>MISCELLANEOUS</B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">17.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The headings in this Agreement are intended solely for convenience or reference and shall be
given no effect in the interpretation of this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">17.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Agreement constitutes the entire agreement between the parties hereto in respect of the
subject-matter hereof, and supersedes all prior agreements or understandings between the
parties relating to the subject-matter hereof (including the Memorandum of Understanding
between Yeda and the Company dated 29 November&nbsp;2005) and, subject to clause 13.2.1(i) above,
this Agreement may be amended only by a written document signed by both parties hereto. No
party has, in entering into this Agreement, relied on any warranty, representation or
undertaking, except as may be expressly set out herein.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">17.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Agreement may be executed in any number of counterparts (including counterparts
transmitted by telecopier or fax), each of which shall be deemed to be an original, but all of
which taken together shall be deemed to constitute one and the same instrument.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">17.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>No waiver by any party hereto, whether express or implied, of its rights under any provision
of this Agreement shall constitute a waiver of such party&#146;s rights under such provisions at
any other time or a waiver of such party&#146;s rights under any other provision of this Agreement.
No failure by any party hereto to take any action against any breach of this Agreement or
default by another party hereto shall constitute a waiver of the former party&#146;s rights to
enforce any provision of this Agreement or to take action against such breach or default or
any subsequent breach or default by such other party.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">17.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If any provision of this Agreement is held to be unenforceable under applicable law, then
such provision shall be modified as set out below and the balance of this Agreement shall be
interpreted as if such provision were so modified and shall be enforceable in accordance with
its terms. The parties shall negotiate in good faith in order to agree on the terms of an
alternative provision which complies with applicable law and achieves, to the greatest extent
possible, the same effect as would have been achieved by the invalid or unenforceable
provision.</TD>
</TR>

</TABLE>
</DIV>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 43 -<!-- /Folio -->

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">17.6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Nothing contained in this Agreement shall be construed to place the parties in a
relationship of partners or parties to a joint venture or to constitute either party an agent,
employee or a legal representative of the other party and neither party shall have power or
authority to act on behalf of the other party or to bind the other party in any manner
whatsoever.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">17.7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>All payments to be made to Yeda hereunder shall be made in US Dollars (save that payments
received by the Company in New Israeli Sheqels may be made in that currency) by banker&#146;s
cheque or by bank transfer to Yeda&#146;s bank account, the details of which are as follows: Bank
Hapoalim B.M. Rehovot branch #615, account no. &#091;***&#093;; swift: &#091;***&#093;.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">17.8.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>All payments to be made to Yeda hereunder shall be made free and clear of, and without any
deduction for or on account of, any set-off, counterclaim or tax (except any deductions that
the Company is required to make from the payments to be made to Yeda on account of income tax,
tax on profit or any other taxes of a similar nature imposed on Yeda by law, (<B>&#147;withholding
tax&#148;</B>), provided that: (a)&nbsp;the Company shall immediately notify Yeda of such requirement and
the Company shall deduct the withholding tax from the payments referred to above, as
prescribed by applicable law, and pay such withholding tax to the tax authorities, unless Yeda
provides the Company with evidence of an exemption from such tax; and (b)&nbsp;any such deduction
(if any) made by the Company does not exceed the minimum amount legally required and is
supported by an official receipt of the applicable taxation authority for all amounts deducted
as aforesaid).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">17.9.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each party agrees to execute, acknowledge and deliver such further documents and instruments
and do any other acts, from time to time, as may be reasonably necessary, to effectuate the
purposes of this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">17.10.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>None of the provisions of this Agreement shall be for the benefit of, or enforceable by, any
person who is not a party to this Agreement, save for clauses 10 and 12 above.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>IN WITNESS WHEREOF the parties hereto have set their signatures as of this 15&nbsp;day of March&nbsp;2006.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">for&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <B>YEDA RESEARCH AND</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
for&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <B>PROTALIX</B>
</DIV>

</DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 44 -<!-- /Folio -->
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD colspan="3" valign="top" align="center"><B>DEVELOPMENT COMPANY LIMITED</B><BR></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="center"><B>BIOTHERAPEUTICS LIMITED</B><BR></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT style="white-space: nowrap">Signature:</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Illegible</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="white-space: nowrap">Signature:</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ David Aviezer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Name
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Title
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Date:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 45 -<!-- /Folio -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>APPENDIX A</B></U>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>The Existing Patent Applications</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt">&#091;***&#093;
</DIV>

</DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 46 -<!-- /Folio -->



<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>APPENDIX B</B></U>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>The Know-How</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt">&#091;***&#093;
</DIV>

</DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 47 -<!-- /Folio -->



<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>APPENDIX C</B></U>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>The Research Program</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt">&#091;***&#093;
</DIV>

</DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 48 -<!-- /Folio -->



<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>APPENDIX D</B></U>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>The Research Budget</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt">&#091;***&#093;
</DIV>

</DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 49 -<!-- /Folio -->



<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>APPENDIX E</B></U>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>The Magneton Approval</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt">&#091;***&#093;
</DIV>

</DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 50 -<!-- /Folio -->



<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>APPENDIX F</B></U>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Specimen Material Transfer Agreement</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">Date:<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top:6pt"><U>&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top:6pt"><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top:6pt"><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top:6pt"><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">(the &#147;RECIPIENT&#148;)
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Dear Sir/Madam,
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Further to the RECIPIENT&#146;s request to receive
<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, (the Material and any
fragment, derivative, progeny and modifications thereof shall hereinafter be termed the &#147;MATERIAL&#148;)
from Professor <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, (the &#147;SCIENTIST&#148;) for the purpose of:
<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> (the &#147;RESEARCH&#148;), as more fully described in Annex A attached
hereto, please be advised that as the rights and title in and to the Material vest in the Weizmann
Institute of Science (the &#147;PROVIDER&#148;) and thus constitute a valuable asset of the PROVIDER, the
PROVIDER requires that the Material shall be provided to you under the following terms:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The RECIPIENT agrees that the MATERIAL:</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>is to be used solely for the purpose of the RESEARCH ;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>will not be used for any commercial purposes;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>will not be used in human subjects, in clinical trials, or for diagnostic purposes involving
human subjects.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>is to be used only at the RECIPIENT organization and only in.<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&#146;s laboratory (the
&#147;RECIPIENT SCIENTIST&#148;) under the direction of RECIPIENT SCIENTIST or others working under
his/her direct supervision; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>will not be transferred to anyone else including within the RECIPIENT organization at
<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
<I>(please complete address) </I>without the prior written consent of the PROVIDER.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The RECIPIENT acknowledges that the MATERIAL is or may be the subject of a patent
application. No expressed or implied licenses or other rights are provided to the RECIPIENT
under any patents, patent</TD>
</TR>

</TABLE>
</DIV></DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 51 -<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>applications, trade secrets or other proprietary rights of the PROVIDER, including any
altered forms of the MATERIAL made by the PROVIDER. In particular, no expressed or implied
licenses or other rights are provided to use the MATERIAL, or any related patents of the
PROVIDER for COMMERCIAL PURPOSES.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any MATERIAL delivered pursuant to this Agreement is understood to be experimental in nature
and may have hazardous properties. The PROVIDER MAKES NO REPRESENTATIONS AND EXTENDS NO
WARRANTIES OF ANY KIND, EITHER EXPRESSED OR IMPLIED. WITHOUT DEROGATING FROM THE
AFOREMENTIONED, THERE ARE NO EXPRESSED OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE, OR THAT THE USE OF THE MATERIAL WILL NOT INFRINGE ANY PATENT, COPYRIGHT,
TRADEMARK, OR OTHER PROPRIETARY RIGHTS.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The RECIPIENT assumes all liability for damages which may arise from its use, storage or
disposal of the MATERIAL. The Scientist, the PROVIDER and any of its employees will not be
liable to the RECIPIENT for any loss, claim or demand made by the RECIPIENT, or made against
the RECIPIENT by any other party, due to or arising from the use of the MATERIAL by the
RECIPIENT.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The RECIPIENT agrees to use the MATERIAL in compliance with all applicable statutes, laws,
treaties, regulations and guidelines such as, for example, those relating to research
involving the use of animals or recombinant DNA.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Agreement will terminate on the earliest of the following dates: (a)&nbsp;on completion of
the RECIPIENT&#146;s Research with the MATERIAL, or (b)&nbsp;on thirty (30)&nbsp;days written notice by
either party to the other.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">6.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If termination should occur under clause 6 above, the RECIPIENT will discontinue its use of
the MATERIAL and will, upon direction of the PROVIDER, return or destroy any remaining
MATERIAL.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The RECIPIENT obligates to treat in confidence any information related to the Material
including RESEARCH results, except for information the RECIPIENT can prove was previously
known to him or that is or becomes publicly available not as a result of a breach of this
Agreement. Any disclosure of such confidential information shall be presented for the
Scientist&#146;s approval, at least 30 (thirty)&nbsp;days prior to the proposed disclosure.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">8.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Paragraphs 2, 3, 4, 7, 10 and 11 shall survive termination.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">9.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The RECIPIENT shall provide the PROVIDER with the results of the RESEARCH.</TD>
</TR>

</TABLE>
</DIV>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 52 -<!-- /Folio -->

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">10.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>EITHER: &#091;Should any useful invention, or application arise as a result of the performance of
the RESEARCH, RECIPIENT hereby agrees to inform the undersigned, and the right and title to
such invention or application shall vest in Yeda Research and Development Company Ltd.
(&#147;YEDA&#148;), the PROVIDER&#146;s technology transfer office. The RECIPIENT undertakes, upon YEDA&#146;s
request from time to time, to execute and deliver to YEDA all documents, including, without
limitation, instruments of conveyance, transfer, assignment and confirmation and to take such
other steps and render such assistance as YEDA may deem necessary, in order effectively to
transfer, assign, convey, vest and confirm in and to YEDA the ownership of such invention.&#093;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>OR: &#091;The Weizmann Institute, or any of its designees, is hereby granted an
option to obtain a worldwide, exclusive, royalty-bearing license, with the right to
grant sublicenses, of any patentable invention arising from the Research outside the
scope of the Material. Such license shall include terms and conditions to be
negotiated in good faith between your institution and the Institute.&#093;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">11.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the event that RECIPIENT conceives an invention related to the MATERIAL in the course of
activities that are in breach of RECIPIENT&#146;s obligations under this Agreement, YEDA shall be
the sole and exclusive owner of such invention and all intellectual property rights therein,
and RECIPIENT shall execute and deliver any documents of assignment or conveyance to
effectuate the ownership rights of YEDA in such invention and related intellectual property
rights.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">12.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The PROVIDER shall be given advance notice of any intent to publish any information relating
to the results of the RESEARCH, not being in the public domain, and shall be furnished with a
copy of the contemplated publication at least 30&nbsp;days before making any such disclosure, in
order to allow YEDA to evaluate patent protection in respect thereof and implement a decision
to file a patent application. The RECIPIENT agrees to provide appropriate acknowledgment of
the source of the MATERIAL in all written and oral publications.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">13.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>RECIPIENT shall pay stamp duty as required by law.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Please indicate the RECIPIENT&#146;s acceptance of the above terms by signing and returning one copy of
this letter to the undersigned.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">Sincerely yours,
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">Prof. <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Agreed and accepted:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Recipient Scientist&#146;s Name:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Recipient&#146;s Name:</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 53 -<!-- /Folio -->
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
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    <TD width="7%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="5" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
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    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
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    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="left">Authorized Person&#146;s Name and Title:</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Signature:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
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    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
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</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
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    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
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    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
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    <TD colspan="7" align="left">Signature and Date:</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Date:</DIV></TD>
    <TD>&nbsp;</TD>
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</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
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</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
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    <TD colspan="7" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">For queries, please contact: Ann Dvorin
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 9%; margin-top: 1pt">e-mail: <U>annie.dvorin@weizmann.ac.il</U><BR>
Tel: 972 8 9344093<BR>
Fax: 972 8 9470739
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">cc: Yeda Research and Development Co. Ltd. at the Weizmann Institute of Science.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>ANNEX A</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">The Research
</DIV>

</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 54 -<!-- /Folio -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>APPENDIX G</B></U>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Approved Form of Disclosure</B>
</DIV>

</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 55 -<!-- /Folio -->



<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>APPENDIX H</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>Specimen Non-Disclosure Agreement</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">Effective as of <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>, 200

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">BETWEEN

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><DIV align="center"><DIV style="font-size: 3pt; margin-top: 16pt; width: 10%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><DIV align="center"><DIV style="font-size: 3pt; margin-top: 16pt; width: 10%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">(&#147;<B>Recipient</B>&#148;)

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">and

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">YEDA RESEARCH AND DEVELOPMENT CO. LTD.,<BR>
at the Weizmann Institute of Science, Rehovot, Israel<BR>
(&#147;<B>YEDA</B>&#148;).

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Recipient is interested in obtaining information from YEDA relating to &#091;Enter technology name&#093;
(Yeda&#146;s Ref.: &#091;Enter technology Number&#093;) including {patents &#091;Enter connected patent title/s and
numbers&#093;}, {patent applications &#091;Enter connected patent title and application number)} (Yeda&#146;s
docket/s no. &#091;Enter Yeda patent code&#093; (&#147;<B>the Confidential Information</B>&#148;), for the sole purpose of
studying the Confidential Information internally in order to &#091;chose the relevant option:&#093; &#091;1.
evaluate a possible business transaction with Yeda&#093; &#091;2. consult Yeda regarding commercialization of
the technology&#093; &#091;3. other&#093; ; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">YEDA is entitled and willing to make the Confidential Information available to Recipient solely for
the said purpose and under the terms and conditions hereinafter set forth:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;Confidential Information&#148; shall include any documents, patent applications, materials,
models, marketing, financial and investment plans, contacts, advice, recommendations,
drawings, plans, diagrams, specifications, technical material, techniques, compounds,
compositions, substances, seeds or any other physical matter in any way containing,
representing or embodying any of the aforegoing or any other information given, whether
verbally, in written or other form, by or on behalf of YEDA to Recipient.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Recipient undertakes to use the Confidential Information only for the purpose of this
Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Recipient undertakes to treat and maintain in strict confidence and secrecy, the
Confidential Information including any aspect thereof that may have been disclosed prior to
the signature hereof, and to make such information available only to those of its employees
and/or consultants who need to have access to it for the purpose of this</TD>
</TR>

</TABLE>
</DIV></DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 56 -<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="6%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Agreement, provided that such employees and/or consultants are bound by a confidentiality
undertaking not less stringent than this Agreement.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Recipient&#146;s undertakings and obligations under clause 3 above shall not apply to any part of
the Confidential Information for which the Recipient proves:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">4.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>that it was known to Recipient prior to disclosure thereof by YEDA;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">4.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>that it was generally available to the public prior to disclosure by YEDA, or
becomes generally available to the public after such disclosure (other than as a result
of the breach by the Recipient of its obligations hereunder).</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Agreement shall not by implication or otherwise be construed as a grant of a license or
as an obligation to grant a license or any other right to the Recipient.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>No warranty of any kind is being provided with respect to the Confidential Information
including any warranty of accuracy, completeness and/or non-infringement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Agreement shall be terminated upon the expiry of the earlier of:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">7.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>12&nbsp;months from the effective date of this Agreement; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">7.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Receipt of 14&nbsp;days&#146; written notice by YEDA to Recipient, at any time.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Upon termination, Recipient will cease all study, evaluation or other
examination of YEDA&#146;s Confidential Information and the Confidential Information
shall be returned to YEDA or destroyed upon YEDA&#146;s request.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">8.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding termination of this Agreement Recipient&#146;s confidentiality obligations under
this Agreement will continue for 5&nbsp;years from the date of disclosure of the Confidential
Information.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">9.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The rights of the parties shall inure to, and the obligations hereunder shall be binding on
the legal successors and assigns of the parties to this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">10.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The law of Israel shall govern this Agreement for all purposes excluding the choice of law
provisions.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">11.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>All notices or demands of any kind which either party may be required or desire to serve upon
the other shall be in writing and shall be delivered by (i)&nbsp;personal service, or (ii)&nbsp;by mail
at the address of the receiving party set forth above (or at such different address as may be
designated by such party by written notice to the other party) and by fax.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">12.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Agreement contains the entire agreement of the parties relating to its subject matter
and supersedes all prior or contemporaneous oral or written agreements.</TD>
</TR>

</TABLE>
</DIV>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->- 57 -<!-- /Folio -->

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="left">13.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Agreement may not be amended except by mutual written agreement of the parties.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left">Protalix Biotherapeutics Ltd.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Yeda Research and Development Co. Ltd.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Signature:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Signature:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Name:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
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    <TD>&nbsp;</TD>
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    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
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</TD>
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</TD>
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</DIV></TD>
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<TR valign="bottom">
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</DIV></TD>
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</DIV></TD>
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.8
<SEQUENCE>10
<FILENAME>g04822exv10w8.htm
<DESCRIPTION>EX-10.8 AGREEMENT BETWEEN TEVA AND PROTALIX
<TEXT>
<HTML>
<HEAD>
<TITLE>EX-10.8 Agreement between Teva and Protalix</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Exhibit&nbsp;10.8
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%"><B>Portions of this exhibit have been omitted pursuant to a request for confidential treatment.
The omitted portions, marked by &#091;***&#093;, have been separately filed with the Securities and Exchange
Commission.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>AGREEMENT</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">made and signed on this 14&nbsp;day of September, 2006
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">Between

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>Teva Pharmaceutical Industries Ltd.</B><BR>
a limited liability company incorporated under the laws of Israel, of 5 Basel Street, Petach Tiqva<BR>
49131, Israel<BR>
(&#147;<B>Teva</B>&#148;)

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">and

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>Protalix Biopharmaceuticals Ltd.</B><BR>
a limited liability company incorporated under the laws of Israel, of 2 Snunit St., Science Park<BR>
P.O. Box 455, Carmiel 20100 , Israel<BR>
(&#147;<B>Protalix</B>&#148;)

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Teva and Protalix may be individually referred to as a &#147;<B>Party</B>&#148; and collectively as the &#147;<B>Parties</B>&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>WHEREAS</B>, the Parties wish to carry out a Feasibility Program (as defined herein) to evaluate their
potential collaboration in the development and manufacturing of two Proteins (as such term is
defined below) on the basis of Protalix&#146;s proprietary plant culture process, as more fully
described herein;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>WHEREAS</B>, the Parties agree, that following the completion of such Feasibility Program, Teva shall
have the option, but not the obligation, to enter into further collaboration with Protalix
regarding the development of Licensed Products (as defined herein), all as more fully set forth
herein and in accordance with the terms and conditions of this Agreement;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>WHEREAS</B>, the Parties agree that in the event that Teva shall exercise the aforementioned option to
enter into the collaboration regarding the development of Licensed Products, Protalix shall grant
to Teva and Teva shall acquire from Protalix, the License (as defined herein), all subject to and
in accordance with the terms and conditions of this Agreement; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>WHEREAS</B>, Protalix agrees to grant Teva a right of first look at Protalix&#146;s proprietary product(s)
for the treatment of Gauchers Disease, to enable Teva to evaluate its interest in negotiating and
obtaining the GCD License (as such term is defined herein), all subject to and in accordance with
the terms and conditions set out hereinbelow.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>NOW, THEREFORE</B>, the Parties, agree as follows:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Preamble and Definitions</B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Preamble and Annexes hereto form an integral part of this Agreement.</TD>
</TR>


</TABLE>
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>



<P align="center" style="font-size: 10pt"><!-- Folio --> - 1 - <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In this Agreement the terms below shall bear the meanings assigned to them
below and other capitalized terms shall bear the meaning assigned to them in their
parenthetical definition, unless specifically stated otherwise:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#147;Additional Patents&#148; </B>- shall mean the patents and patent
applications listed in Annex 1.2.1, which constitute all of the patents and
patent applications that are proprietary to Protalix and existing on the
Effective Date, other than the Platform Patents and patent application number
&#091;***&#093;entitled &#091;***&#093;, and any patent that may be issued thereon.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#147;Affiliate&#148; </B>shall mean, with respect to any Party, any person,
organization or entity directly or indirectly controlling, controlled by or
under common control with, such Party. For purposes of this definition only,
&#147;control&#148; of another person, organization or entity shall mean the ability,
directly or indirectly, to direct the activities of the relevant entity, and
shall include, without limitation (i)&nbsp;ownership or direct control of fifty
percent (50%) or more of the outstanding voting stock or other ownership
interest of the other organization or entity, or (ii)&nbsp;direct or indirect
possession, of the power to elect or appoint fifty percent (50%) or more of
the members of the governing body of the organization or other entity.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#147;Annual Protalix Payment</B>&#148; shall bear the meaning assigned to such
term in Section&nbsp;10.5 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>API</B>&#148; shall mean the bulk Proteins&#146; active pharmaceutical
ingredient.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>API COGS</B>&#148; shall bear the meaning assigned to such term in Section
10.4 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Backup Manufacturing File</B>&#148; shall bear the meaning assigned to
such term in Section&nbsp;10.7 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Breakthrough Technology</B>&#148; shall bear the meaning assigned to such
term in Section&nbsp;13.2 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.8.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Budget</B>&#148; shall bear the meaning assigned to such term in Section
4.14 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.9.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Combination Product</B>&#148; shall mean a product which comprises (a)&nbsp;a
Licensed Product and (b)&nbsp;at least one other active ingredient, which, if
administered independently of the Licensed Product, would have a clinical
effect.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.10.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Change of Control</B>&#148; shall bear the meaning assigned to such term
in Section&nbsp;11.5 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.11.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Commercial GCD Services</B>&#148; shall bear the meaning assigned to such
term in Section&nbsp;14A.6 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.12.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#147;Development Plan&#148; </B>shall bear the meaning assigned to such term
in Section&nbsp;4.4 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.13.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Effective Date</B>&#148; shall bear the meaning assigned to such term in
Section&nbsp;15.1 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.14.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>EU</B>&#148; shall mean the member countries of the European Union, from
time to time.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.15.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>EU Market</B>&#148; shall mean all of Spain, the UK, Italy, Germany and
France.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>




<P align="center" style="font-size: 10pt"><!-- Folio --> - 2 - <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.16.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Evaluation Period</B>&#148; shall bear the meaning assigned to such term
in Section&nbsp;14.2 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.17.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>External Development Expenses</B>&#148; shall bear the meaning assigned
to such term in Section&nbsp;4.14.2 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.18.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>External Manufacturing Expenses</B>&#148; shall bear the meaning assigned
to such term in Section&nbsp;10.4 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.19.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Exclusive Manufacturing Term</B>&#148; shall bear the meaning assigned to
such term in Section&nbsp;10.1 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.20.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Escrow Agent</B>&#148; shall bear the meaning assigned to such term in
Section&nbsp;10.7(A) below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.21.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Feasibility Program(s)</B>&#148; shall bear the meaning assigned to such
term in Section&nbsp;3.1.1 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.22.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#147;Final Feasibility Report&#148; </B>shall bear the meaning assigned to
such term in Section&nbsp;3.1.7 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.23.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#147;First Commercial Sale&#148; </B>shall mean, with respect to any Licensed
Product the first commercial sale to a third party, in exchange for cash or
some equivalent to which value can be assigned, after the obtaining of all
necessary regulatory and other approvals required in order to commercially
sell and market the Licensed Product in the country in which the sale is made,
other than the sale of the Licensed Product for experimental, testing,
compassionate or promotional purposes.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.24.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Further Sublicense</B>&#148; and &#147;<B>Further Sublicensee</B>&#148; shall bear the
meaning assigned to such terms in Section&nbsp;6.3 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.25.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>GCD License</B>&#148; shall bear the meaning assigned to such term in
Section&nbsp;14.1 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.26.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>GCD Product</B>&#148; shall bear the meaning assigned to such term in
Section&nbsp;14.1 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.27.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>GCD Services</B>&#148; shall bear the meaning assigned to such term in
Section&nbsp;14A.1 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.28.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Innovator</B>&#148; shall mean the first to market with a specific
proprietary Product.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.29.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Internal Expenses</B>&#148; shall bear the meaning assigned to such term
in Section&nbsp;4.14.1 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.30.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>IP</B>&#148; shall mean (i)&nbsp;all inventions, materials, compounds,
compositions, substances, methods, processes, techniques, know-how,
technology, data, information, discoveries and other results of whatsoever
nature, and any patents, copyrights, proprietary intellectual or industrial
rights directly or indirectly deriving therefrom, as well as provisionals,
patent applications (whether pending or not), and patent disclosures together
with all reissuances, continuations, continuations in part, revisions,
extensions, and reexaminations thereof; (ii)&nbsp;all trademarks, service marks,
copyrights, designs, trade styles, logos, trade dress, and corporate names,
including all goodwill associated therewith; (iii)&nbsp;any work of authorship,
regardless of copyrightability, all</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio --> - 3 - <!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>compilations, all copyrights; and (iv)&nbsp;all
trade secrets, confidential information and proprietary processes.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.31.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>License&#148; </B>shall bear the meaning assigned to such term in Section
6.1 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.32.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#147;Licensed Information</B>&#148; shall bear the meaning assigned to such
term in Section&nbsp;6.1 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.33.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Licensed Product(s)</B>&#148; shall bear the meaning assigned to such
term in Section&nbsp;6.1 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.34.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Major Countries</B>&#148; shall mean the United States of America,
Canada, the EU Market, China, Japan, Israel, Mexico, India, Australia and New
Zealand.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.35.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Manufacturing Know-how</B>&#148; shall bear the meaning assigned to such
term in Section&nbsp;10.7 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.36.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Market Advantage</B>&#148; shall [***]</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.37.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Milestone</B>&#148; shall bear the meaning assigned to such term in
Section&nbsp;8.1 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.38.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Milestone Payments</B>&#148; shall bear the meaning assigned to such term
in Section&nbsp;8.1 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.39.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Net Sales</B>&#148; shall mean with respect to a Licensed Product, the
total gross amounts [***] in respect of such Licensed Product, as established in a
<I>bona fide </I>arms-length transaction with an unrelated third party, less the
following items (as they apply to such Licensed Product): (i)&nbsp;quantity and/or
cash discounts actually allowed or taken; (ii)&nbsp;customs, duties, sales and
similar taxes, if any, imposed on the Licensed Product, to the extent
applicable to such sale and included in the invoice in respect of such sale;
(iii)&nbsp;amounts actually allowed or credited by reason of rejections, return of
goods (including as a result of recalls), any retroactive price reductions or
allowances specifically identifiable as relating to the Licensed Product; (iv)
amounts incurred resulting from government mandated rebate programs (or any
agency thereof); (v)&nbsp;third party (a)&nbsp;rebates, (b)&nbsp;freight, postage, shipping
and applicable insurance charges, to the extent the same are separately</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio --> - 4 - <!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>itemized on invoices and actually paid as evidenced by invoices or other
appropriate supporting documentation, and (c)&nbsp;chargebacks or similar price
concessions related to the sale of the Licensed Product; (vi)&nbsp;bad debts
deriving from Net Sales in respect of which Royalty Payments were paid to
Protalix pursuant hereto, (vii)&nbsp;royalties paid to third parties
[***] in respect of the use of such third party&#146;s
intellectual property rights (provided that in no event shall the amounts
deducted in respect of such third party royalties under (vii)&nbsp;result in the
reduction of the Royalty Payments to Protalix to less than &#091;***&#093;of the Net
Sales attributable to any particular Licensed Product, (without derogating
from any lower royalty rates as determined by Sections&nbsp;8.2(a) or 8.2(b)
below), and (vi)&nbsp;reasonable quantities of samples, provided the quantity of
Licensed Product actually utilized for purposes of such samples shall not
exceed &#091;***&#093; of the volume of annual Licensed Product sales during any given
year during this Agreement. All of the foregoing shall be calculated in
accordance with U.S. GAAP.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>[***]</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In addition, the Net Sales shall be furthermore adjusted and reduced in the
event that a Licensed Product is sold as part of a Combination Product as set
forth in Section&nbsp;8.4 hereto.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>With respect to sales which are not at <I>bona fide </I>arms-length and/or are not in
the ordinary course of business, the term &#147;Net Sales&#148; shall mean the total
amount that would have been due in an arms-length sale made in the ordinary
course of business and according to the then current market conditions for such
sale or, in the absence of such current market conditions, according to market
conditions for sale of products similar to the Licensed Products. If Licensed
Products are sold or supplied in a currency other than United States Dollars
then the sum of Net Sales shall first be determined in the currency in
which such Licensed Products were invoiced and then converted into equivalent
United States Dollars at the middle market rate of such foreign currency as
quoted in the Financial Times at the close of business of the last business day
of the quarter with respect to which the payment is made.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.40.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Non-Platform IP</B>&#148; &#151; shall mean all Licensed Information and Teva
IP, other than Platform IP.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.41.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Other IP</B>&#148; shall mean any and all IP developed within the
framework of the collaboration hereunder (including both the performance of
the Feasibility Program and the performance of Stage 2, in the event that Teva
exercises its option to have Stage 2 performed), which is neither Platform IP
nor Protein IP.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.2.42.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Platform IP</B>&#148; &#151; shall mean Protalix&#146;s existing and future
proprietary recombinant plant culture process and technologies directly
related to such process, and improvements thereto, as may be further developed
in the course</TD>
</TR>



</TABLE>
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio --> - 5 - <!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 10%">of the collaboration, or otherwise, by or for Protalix, at any
time prior to the expiration of [***] following the First
Commercial Sale of the first Licensed Product. The list of patents and patent
applications included under the Platform IP, existing as of the date of
execution of this Agreement is attached hereto as Annex 1.2.42 (the &#147;<B>Platform
Patents</B>&#148;).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 10%">All additional patent applications/ patents that may be filed by or for Protalix
to cover portions of the Platform IP at any time prior to the expiration of
[***] following the First Commercial Sale of the first Licensed
Product, shall be immediately reported by Protalix to Teva and shall be included
in the term &#145;Platform Patents&#146; as of the time of such report.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">1.2.43.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Protalix Competitor</B>&#148; shall mean: [***]</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">1.2.44.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#147;Protein(s)&#148; </B>each of the two (2)&nbsp;therapeutic proteins as
selected by Teva and agreed upon by Protalix (such agreement not to be
unreasonably withheld, conditioned or delayed), expressed in plant
cell-expression system, to be described in <U><B>Annex 1.2.44</B></U> hereto, as
might be substituted subject to the terms of this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">1.2.45.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Protein IP</B>&#148; &#151; shall mean any and all IP developed during the
collaboration hereunder (including both the performance of the Feasibility
Program and the performance of Stage 2, in the event that Teva exercises its
option to have Stage 2 performed), which relates specifically to the Proteins
and which is not Platform IP. Notwithstanding the foregoing, any patent(s)
related to the Platform IP that specifically
and directly and solely relates to one or both of the Proteins shall be
considered part of the Protein IP, and not Platform IP.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">1.2.46.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>ROFL</B>&#148; shall bear the meaning assigned to such term in Section
14.1 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">1.2.47.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>ROFO</B>&#148; &#147;<B>ROFO Notice</B>&#148; and &#147;<B>ROFO Period</B>&#148; shall bear the meanings
assigned to such terms in Section&nbsp;3.2.1 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">1.2.48.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Royalty Payments</B>&#148; shall bear the meaning assigned to such term
in Section&nbsp;8.2 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">1.2.49.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>[***]</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">1.2.50.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Stage 2</B>&#148; shall bear the meaning assigned to such term in Section
3.4 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">1.2.51.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Stage 2 Notice</B>&#148; and &#147;<B>Stage 2 Notice Period</B>&#148; shall bear the
meaning assigned to such terms in Section&nbsp;3.4 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">1.2.52.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#147;Sublicence&#148; </B>shall mean any right granted, license given, or
agreement entered into, by Teva and/or its Affiliates to or with any other
person or entity</TD>
</TR>

</TABLE>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio --> - 6 - <!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>(whether or not such grant of rights, license given or
agreement entered into is described as a sublicence or otherwise), permitting
any use of the Licensed Information (or any part thereof) or any right to
research, develop, make, have made, register, import, manufacture, use, sell,
offer for sale, produce, sublicense, commercialize and/or distribute the
Proteins and/or the Licensed Products for any indication; and the term
<B>&#147;Sublicensee&#148; </B>shall be construed accordingly.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">1.2.53.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>&#147;Teva Competitor&#148; </B>shall bear the meaning ascribed to such term in
Section&nbsp;11.5 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">1.2.54.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;<B>Teva IP</B>&#148; shall bear the meaning assigned to such term in
Section&nbsp;11.6 below.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In this Agreement, words importing the singular shall include the plural and
<I>vice-versa </I>and words importing any gender shall include all other genders and
references to persons shall include partnerships, corporations and unincorporated
associations.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The words &#147;including&#148; and &#147;includes&#148; mean including, without limiting the
generality of any description preceding such terms.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the event of any discrepancy between the terms of this Agreement and any of
the Annexes hereto, the terms of this Agreement shall prevail.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">2. <U><B>General Scope </B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">2.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Parties hereby agree to collaborate in the development, and the
manufacturing of the Proteins, on the basis of the Platform IP.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">2.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The collaboration in respect of the development of the Licensed Products shall
initially be carried out through the performance of the Feasibility Program.
Following completion of same, should Teva so elect at its sole and exclusive
discretion, the collaboration shall continue by way of the development of Licensed
Products.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">2.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The commercialization of the Licensed Products shall be performed solely by
Teva (or any third party on its behalf in accordance herewith), without the
collaboration of Protalix, under the License granted to Teva hereunder.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>The Collaboration</B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">3.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>The Feasibility Program &#150; Stage 1</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">3.1.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Protalix shall carry out a feasibility program in respect of each
of the Proteins in accordance with the protocol and time schedule as agreed
between the Parties to be attached hereto within thirty (30)&nbsp;days of the
Effective Date as <B>Annex 3.1.1 </B>(the &#147;<B>Feasibility Program</B>&#148;). An outline of the
activities to be performed by Protalix under the Feasibility Program, as
currently envisaged, is attached hereto as Annex 3.1.1A. The Feasibility
Program will mainly consist of producing [***]. One (1)&nbsp;Protein shall be
agreed upon between the Parties, within thirty (30)&nbsp;days of the</TD>
</TR>



</TABLE>
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio --> - 7 - <!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Effective
Date, and shall be described in Annex 1.2.44 (the &#147;<B>First Protein</B>&#148;) and the
other Protein (the &#147;<B>Second Protein</B>&#148;) shall be selected by Teva by [***] following the execution hereof, and agreed upon by
Protalix, such agreement not to be unreasonably withheld.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">3.1.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Protalix shall begin performing the Feasibility Program in respect
of the First Protein immediately after the First Protein is selected by the
Parties, and, shall begin performing the Feasibility Program in respect of the
Second Protein, as soon as practicable, but no later than four (4)&nbsp;weeks
following the selection of Second Protein by Teva and its approval by
Protalix, as aforementioned.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">3.1.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each Feasibility Program will be carried out by Protalix at its
sole cost and expense in accordance with a budget reasonably determined by it
in accordance with industry standards, and based on the Feasibility Program. A
Feasibility Program may be adjusted with the consent of the R&#038;D Committee (as
defined below) from time to time. A non-binding estimate of the resources and
expenses that Protalix expects to dedicate to, and incur in the conduct of
each Feasibility Program (inclusive, <I>inter alia</I>, of the estimated costs of
FTEs and materials) will be submitted to the R&#038;D Committee at the beginning of
each Feasibility Program and an updated non-binding estimate pertaining to the
remainder of the Feasibility Program shall be submitted twelve (12)&nbsp;months
following commencement of each Feasibility Program. Protalix shall keep
separate records of the expenses actually incurred by it in the conduct of
each Feasibility Program and shall provide Teva and the R&#038;D Committee with
detailed quarterly reports of its expenses. For the avoidance of doubt, it is
clarified that any major deviation by Protalix from the activities set forth under a Feasibility Program shall require
the prior written approval of the R&#038;D Committee. Any material increase in
the cost of the conduct of the Feasibility Program deriving solely from
an agreed change in the activities included in the Feasibility Program
will be discussed and negotiated in good faith between the management of
both Parties.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">3.1.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Protalix shall complete each Feasibility Program within [***]. Any extension of such time period that may be
requested by Protalix, with respect to each or any Protein, must be approved
in advance and in writing by Teva, which approval shall not be unreasonably
withheld. For avoidance of doubt, Protalix shall bear all costs and expenses
related to the performance of the Feasibility Program until its completion
regardless of the term of its duration.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">3.1.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>At the end of each calendar quarter during the course of the
performance of each Feasibility Program, Protalix shall provide Teva with
periodic progress reports regarding the progress of such Feasibility Program,
in a form to be agreed in advance between the Parties.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">3.1.6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Teva&#146;s representative(s) on the R&#038;D Committee may, from time to
time, request updates regarding the progress of Stage 1, in addition to the
periodic progress reports, and Protalix shall provide any additional update
that Teva&#146;s representative(s) on the R&#038;D Committee may reasonably request.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">3.1.7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Not later than sixty (60)&nbsp;days after the completion of the
performance of</TD>
</TR>


</TABLE>
</DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio --> - 8 - <!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>each Feasibility Program in respect of each Protein, Protalix
shall provide Teva with a written report detailing the results of such
Feasibility Program in respect of each Protein, in a form acceptable to Teva
(each, a &#147;<B>Final Feasibility Report</B>&#148;).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">3.1.8.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>After receipt by Teva of each Final Feasibility Report, if Teva
wishes to receive further information from Protalix it shall so advise
Protalix by written notice specifying such additional information requested
(the &#147;<B>First Notice</B>&#148;), to be delivered to Protalix no later than sixty (60)
days as of the date of provision to Teva of the Final Feasibility Report.
Protalix will provide such additional information within a reasonable time,
but not later than sixty (60)&nbsp;days following receipt of the First Notice (the
&#147;<B>Initial Response</B>&#148;). In the event that following receipt of the Initial
Response, Teva wishes to receive further information from Protalix, it shall
so advise Protalix by written notice specifying such additional information
requested (the &#147;<B>Second Notice</B>&#148;), to be delivered to Protalix no later than
forty five (45)&nbsp;days as of the date of provision to Teva of the Initial
Response. Protalix will provide such additional information within a
reasonable time but not later than forty five (45)&nbsp;days following receipt of
the Second Notice (the &#147;<B>Additional Response</B>&#148;). In the event that following
receipt of the Additional Response, Teva wishes to receive further information
from Protalix, it shall so advise Protalix by written notice specifying such
additional information requested (the &#147;<B>Third Notice</B>&#148;), to be delivered to
Protalix no later than thirty (30)&nbsp;days as of the date of provision to
Teva of the Additional Response. Protalix will provide such additional
information within a reasonable time but not later than thirty (30)&nbsp;days
following receipt of the Third Notice (the &#147;<B>Final Response</B>&#148;). In the
event that the Initial Response, together with the Additional Response
and the Final Response provide the full and complete information
reasonably requested by Teva, then following submission of the Final
Response Protalix shall not be required to provide any additional
information to Teva in connection with the Final Feasibility Report.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">3.1.9.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Protalix shall NOT be entitled to subcontract its obligations to
perform the Feasibility Programs to any third party whatsoever without the
prior written approval of Teva, which approval shall not be unreasonably
withheld.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">3.1.10.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Without limiting the generality of the second sentence of Section
16.6, the Parties hereby acknowledge that Protalix has not guaranteed that
Stage 1 will be successful or achieve any specific results at all or within
the specified time period.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">3.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Right of First Offer</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">3.2.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Until the lapse of a [***] period from the Effective
Date or until the selection by Teva of the Second Protein, whichever comes
first (the &#147;<B>ROFO Period</B>&#148;) Protalix shall refrain from entering into an
agreement with any third party the purpose of which is the development or
commercialization of any [***] protein utilizing the Platform IP,
unless Protalix shall first offer Teva in writing to select such protein as
the Second Protein (the &#147;<B>ROFO</B>&#148; and the &#147;<B>ROFO Notice</B>&#148;, respectively). Upon
receipt of the ROFO Notice Teva will have the right, within thirty (30)&nbsp;days
of the date of the</TD>
</TR>


</TABLE>
</DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio --> - 9 - <!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>ROFO Notice, to select such protein as the Second Protein,
by written confirmation of such selection which selection Protalix shall be
deemed as being in agreement with. Protalix shall immediately notify Teva in
writing of the commencement of any negotiations with any third party regarding
the development or commercialization of any [***] protein during the
ROFO Period, and any such notice shall be deemed as a ROFO Notice pursuant to
this Section&nbsp;3.2.1, it being understood and agreed that Protalix shall not be
required to divulge the identity of such third party or any other detail of
such negotiations. The ROFO Notice shall in both cases be accompanied by any
Protalix&#146;s available information in respect of such [***] protein.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">3.2.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the avoidance of doubt, Protalix shall not be required to offer
any protein to Teva more than once pursuant to this Section&nbsp;3.2.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">3.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Substitution of a Protein</B></TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 10%">The Parties acknowledge and declare that their joint goal is that the
performance of the Feasibility Program will result in the development of two
(2)&nbsp;Proteins (within the timeframe envisaged hereunder) suitable, in
technological and marketing terms, for implementation of Stage 2 (as such
term is defined below). In furtherance thereof, the Parties may, at
any time during the performance of a Feasibility Program, by mutual consent (which
consent shall not be unreasonably withheld by either Party), and following
the recommendation of the R &#038; D Committee, decide upon the substitution of
the Protein in respect of which such Feasibility Program is being conducted
if the Parties are not satisfied with the results. Moreover, Teva, at its
sole discretion, shall be entitled to substitute the Protein(s) in respect of
which a Feasibility Program has been or is being conducted by another
protein, by instructing Protalix to cease the performance of a Feasibility
Program in progress, and to begin the performance of a Feasibility Program in
respect of a different protein to be selected by Teva as per the procedure
set out below, in each of the following events (i)&nbsp;during the first twelve
(12)&nbsp;months from the commencement of a certain Feasibility Program, for any
reason; or (ii)&nbsp;prior to the expiry of thirty (30)&nbsp;days after receipt by
Teva of the Final Feasibility Report, Initial Response, Additional Response
or Final Response (as the case may be), Teva reaches a decision that based on
scientific reasons it requires substitution of a certain Protein. Teva&#146;s
right to substitution under (i)&nbsp;and (ii)&nbsp;above shall exist only once with
respect to each Protein, and Teva shall be required to propose two new
proteins, each of which must be Contractually Free (as such term is defined
below), and Protalix shall have the right to choose one of them. Following
such selection, such new protein shall become a Protein for the purposes
hereof, and Protalix shall begin the performance of the Feasibility Program
in respect of the replacement Protein as shall be agreed between the Parties
at Protalix&#146; sole cost and expense. In any event, the replacement of one
Protein with another as set forth in this Section shall be subject to the
refund by Teva of the direct costs actually incurred by Protalix in the
performance of the Feasibility Program, until the date of mutual consent as
to, or the notice of, replacement (as the case may be), and winding down of
the Feasibility Program in respect of the Protein that was replaced (provided
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio --> - 10 - <!-- /Folio -->
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 10%">that such winding down costs shall be mitigated by Protalix to the maximum
extent reasonably possible), which costs shall be evidenced by invoices and
other supporting documentation that shall be provided to Teva.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 10%">For the purposes of this Section, the term &#147;<B>Contractually Free</B>&#148; shall mean,
in respect of any protein, that no third party has been granted any rights by
Protalix in respect of such protein, whether pursuant to an agreement or a
term sheet or other similar legally binding document, that would preclude or
limit Protalix&#146;s ability to grant Teva the rights granted hereunder if such
protein were to become a Protein.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">3.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Teva&#146;s Option for Stage 2</B></TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">Within two (2)&nbsp;months of the later of receipt by Teva of each Final Feasibility Program
Report, Initial Response, Additional Response or Final Response in conformance with
Section&nbsp;3.1.8 above (if at all) (the &#147;<B>Stage 2 Notice Period</B>&#148;), Teva, at its sole
discretion, shall notify Protalix in writing in respect of each Protein, if it wishes
to enter into the product development stage in respect of such Protein (&#147;<B>Stage 2</B>&#148;) (the
&#147;<B>Stage 2 Notice</B>&#148;).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">During the Stage 2 Notice Period Teva&#146;s representatives shall have the right to visit
and audit Protalix&#146;s facilities for the sole purpose of evaluating its interest in
entering
into Stage 2, at times to be coordinated in advance between the Parties.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">In the event that Teva does not provide Protalix with the Stage 2 Notice during the
Stage 2 Notice Period with respect to any specific Protein, but provided that Protalix
furnishes all of the information duly requested by Teva pursuant to Section&nbsp;3.1.8
above, then this Agreement shall expire forthwith with respect to such Protein in which
case, other than as to the obligations of confidentiality as set forth in Section&nbsp;20
below and the obligation to return documentation as set forth in Section&nbsp;15.6 below:
(i)&nbsp;Teva shall not be obligated in any manner towards Protalix with respect to such
Protein; and (ii)&nbsp;Protalix shall not be obligated in any manner towards Teva with
respect to such Protein.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">4. <U><B>Product Development &#151; Stage 2 </B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">4.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the event that Teva elects to exercise its option to initiate the
performance of Stage 2 of the collaboration as to one or both Proteins, Stage 2
shall be carried out by the Parties in accordance with Development Plans (defined
below) to be determined pursuant to this Section&nbsp;4.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">4.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Teva shall prepare preliminary development plans (the &#147;<B>Preliminary Plan(s)</B>&#148;),
in consultation with Protalix within [***] of Teva exercising its option
to initiate the Stage 2 collaboration. The Preliminary Plan(s) shall include
projected Licensed Product development activities, timelines and obligations of each
Party up to the completion of Phase I clinical trials in respect of the relevant
Protein.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">4.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Stage 2 shall commence, as to each Protein (as applicable), immediately upon
the relevant Preliminary Plan being presented to the R&#038;D Committee (or in its
absence to Protalix) which shall be given the opportunity to comment thereon prior
to implementation, provided that in no event shall such entitlement to comment</TD>
</TR>


</TABLE>
</DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio --> - 11 - <!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>derogate in any way from the full and sole discretion of Teva in respect of all
aspects of the Preliminary Plan(s) (and the Development Plan(s)) and the performance
thereof.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">4.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Preliminary Plan shall be updated from time to time but not less often
than once every six (6)&nbsp;months, by Teva, in consultation with the R &#038; D Committee,
as per the progress of the different development phases (the Preliminary Plan so
updated being referred to hereinafter as the &#147;<B>Development Plan(s)</B>&#148;). The
Development Plan shall incorporate detailed development activities in respect of the
Licensed Product for the upcoming phase. Teva, in consultation with Protalix will
consider and determine Phase II clinical trial target activities, timelines and the
Parties&#146; obligations, which will become specific obligations of the Parties.
Notwithstanding the foregoing, Teva may update the Development Plan, at Teva&#146;s
discretion, in consultation with the R&#038;D Committee<B>, </B>at any time and from to time, to
reflect progress made as per the Development Plan. Without derogating from any of
the above, the outline of the activities of the Parties under the Development Plan,
as currently envisaged, is attached hereto as Annex 4.4.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">4.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Development Plan shall specify the activities, timelines and division of
responsibilities between Teva and Protalix in respect of the performance of the
Stage 2 collaboration. Teva and Protalix shall each make commercially
reasonable efforts consistent with their respective normal business practices to
each pursue their obligations under the Development Plan, and shall each diligently
perform its tasks as set forth in the Development Plan. Without derogating from the
foregoing, in the course of the performance of Stage 2, Protalix shall be obligated
to provide Teva with manufacturing information as may be reasonably required by
Teva solely for the purpose of Teva&#146;s pursuing clinical development, and obtaining
regulatory approvals for and commercializing, Licensed Products.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">4.6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>At the end of each calendar quarter during the course of the performance of
Stage 2, each Party shall provide the other Party with periodic progress reports
regarding the progress of such Party&#146;s activities under Stage 2, in a form to be
agreed between the Parties. Each Party may, from time to time, request updates
regarding the progress of the other Party&#146;s activities during Stage 2, in addition
to the periodic progress reports, and pursuant to any reasonable request, the other
Party shall provide same.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">4.7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In addition, Protalix shall provide Teva, at Teva&#146;s request, with reports, in
an agreed form, including financial reports in the format required by the Office of
the Chief Scientist (&#147;<B>CSO</B>&#148;) which Teva may be required to provide to the CSO in
order to obtain CSO support for Stage 2, in addition to the periodic progress
reports to be provided hereunder.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">4.8.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each Party shall perform its obligations under the Development Plan in
accordance with all applicable laws and regulations, and each Party shall procure
the receipt of all approvals and consents necessary for the performance of such
Party&#146;s obligations under the Development Plan. Without derogating from the
foregoing, it is clarified that approvals and consents necessary for the performance
by Protalix of its portion of the Development Plan and specifically related to the
Protein but also usable by Protalix in respect of other proteins shall be procured
by Protalix and the costs of same shall be allocated between Teva and Protalix in
accordance with the relative use of same in respect of the relevant Protein.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio --> - 12 - <!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">4.9.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Teva&#146;s representatives shall have the right to visit and audit Protalix&#146;s
facility where Licenced Product is manufactured, at times to be coordinated between
the Parties in advance, once Protalix commences the manufacture of clinical
quantities of Licensed Product, but not more often than twice every calendar year.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">4.10.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Teva shall provide Protalix with copies of all regulatory filings and
approvals, investigational new drug (IND), chemistry manufacture and control (CMC)
files, new drug applications (NDA), drug master files, clinical protocols and
reports, and all modifications thereto, as well as material correspondence with
regulatory authorities. Teva shall keep Protalix currently informed about the
progress made towards obtaining regulatory approval of the Licensed Products in each
country and shall provide Protalix with written status reports on a quarterly basis.
Teva shall also notify Protalix, in writing, immediately upon the receipt of
regulatory approval of any Licensed Product in each country.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">4.11.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>No later than [***] prior to the commencement by Teva of Phase III
clinical trials in respect of the Licensed Product(s), Protalix shall provide to
Teva (or shall instruct the Escrow Agent to release to Teva) the Backup
Manufacturing File.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">4.12.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Protalix shall not be entitled to subcontract all or part of its tasks under
the Development Plan, without Teva&#146;s prior written consent. Should Protalix wish to
do so, Protalix shall so notify the R&#038;D Committee and Teva in writing, and Teva
shall have the right, at its sole discretion (but shall not be obligated), to
perform such tasks as Protalix&#146;s subcontractor, on the condition that Teva shall
perform same over a reasonable time period no longer than the time period that it
would take another reasonable third party to perform such task(s). For the sake of
clarity, in the event that Teva shall elect not to perform as Protalix&#146;s
subcontractor, and Protalix shall use a permitted subcontractor that is not Teva,
Protalix shall bear all responsibility and liability vis-&#224;-vis Teva arising from the
performance by such subcontractor. To the extent Teva wishes to subcontract any part
of its tasks under the Development Plan to any third party, it shall so notify the
R&#038;D Committee, it being understood and agreed that no subcontract by Teva shall be
made to a Protalix Competitor, except if and to the extent that Protalix is not
capable of performing the same service for Teva at a competitive market price. For
the sake of clarity and without limiting the foregoing, in the event that Teva shall
use a subcontractor for the performance of any of its obligations hereunder, Teva
shall bear all responsibility and liability vis-&#224;-vis Protalix arising from the
performance by such subcontractor.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">4.13.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Parties hereby acknowledge that neither Party has guaranteed that Stage 2
will be successful or achieve any specific results or that any regulatory approvals
shall be granted with respect to the Licensed Products.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">4.14.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>From the commencement of the performance of Protalix&#146;s obligations under
Stage 2, Teva shall bear all actual costs incurred or expended by Protalix directly
related to the performance of Protalix&#146;s activities included in Stage 2, according
to the budget proposed by Protalix and pre-approved in writing by Teva (the
&#147;<B>Budget</B>&#148;), as follows:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.14.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>[***]</TD>
</TR>

</TABLE>
</DIV>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio --> - 13 - <!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.14.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#091;***&#093;.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">4.15.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The amounts of the Budget described above shall be paid by Teva every &#091;***&#093;
months on a &#091;***&#093; rolling basis, whereby &#091;***&#093; of the relevant Budget for each &#091;***&#093;
shall be paid upfront at the beginning of such &#091;***&#093; period and the balance shall be
paid at the end of the relevant &#091;***&#093;, unless only part of the relevant tasks were
carried out during such period, in which case the balance shall be adjusted
accordingly. All payments shall be made against receipt of a proper tax invoice.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">4.16.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the avoidance of doubt, it is clarified that (i)&nbsp;any in-licensing of
third party technology by Protalix for the purposes of the performance of the
Feasibility Programs or the Development Programs (or any one of them) and/or for the
incorporation of such third party technology into the process of the development or
manufacture of the Proteins and/or (ii)&nbsp;any use of third party technology (including
that of [***] already licensed to Protalix) by Protalix in the
performance of the Feasibility Programs (or any one of them) or in the development
or manufacture of the Proteins, shall require the prior written agreement of Teva,
and shall not be in-licensed or used, as applicable, in the event that such prior
written agreement of Teva is not provided. Payments to third parties in respect of
such licenses shall be borne and paid by [***]. For the avoidance of doubt,
any such approval by Teva rendered in the course of a Feasibility Program, shall
continue to apply during the Development Program and thereafter for as long as the
third party technology is in use in relation to Licensed Products commercialized by
Teva, its Affiliates, Sublicensees or Further Sublicensees, and may not be retracted
by Teva.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">4.17.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Protalix shall be obligated to manufacture the Proteins, both for development
and commercial purposes for the sole consideration provided in Section&nbsp;4.14 above
and 10 below, in such quantities as shall be set forth in the Feasibility Program
(during Stage 1) and the Development Plan (during Stage 2), and thereafter, as per
orders placed by Teva pursuant to a separate manufacturing and supply agreement (the
&#147;<B>Supply Agreement</B>&#145;) to be entered into between the Parties by no later than the
initiation of Phase III regulatory clinical trials in respect of a Licensed Product.
Protalix shall manufacture the Proteins in accordance with applicable regulatory
requirements (such as GMP and GLP, as determined by Teva in consultation with
Protalix) and shall be fully responsible for its manufacturing activities (and those
of</TD>
</TR>


</TABLE>
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio --> - 14 - <!-- /Folio -->
</div>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any third party on its behalf). The Supply Agreement shall govern the procedures
for ordering and deliveries, lead time for deliveries, quality assurance,
specifications and all other matters related to the manufacture and supply of the
API by Protalix in accordance with the relevant regulatory requirements as shall be
determined by Teva in consultation with Protalix, reflecting the commercial terms
set out in Section&nbsp;10.4 hereunder. Key elements of the Supply Agreement shall be set
forth in <U><B>Annex 4.17</B></U> which shall be attached hereto within thirty (30)&nbsp;days
of the Effective Date.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">4.18.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any deviation from the approved Budget for Stage 2 shall require notification
to Teva in advance, provided that any such deviation in excess of
&#091;***&#093; shall also require the prior approval of Teva.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">5. <U><B>Research and Development Committee</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">5.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Parties shall form a Research and Development Committee (the &#147;<B>R &#038; D
Committee</B>&#148;), that shall be active for the duration of the Feasibility Program and the
Development Plan. During Stage 1 the R &#038; D Committee shall have the charter to adjust
and amend the Feasibility Program (per Protein), as required for scientific or
technological reasons. During Stage 2 the R &#038; D Committee shall monitor the
performance of the Development Plans, the research and other activities being
conducted thereunder, and shall issue its recommendations in writing to the Parties,
but shall have no decision making authority. The R&#038;D Committee shall be comprised of
four (4)&nbsp;members, having one vote each, of which two (2)&nbsp;shall be appointed by each
Party, including one co-chairperson appointed by each Party. Only employees of the
Parties can be appointed to serve on the R&#038;D Committee. The R&#038;D Committee shall meet
periodically (but in any event no less than quarterly) during the performance of the
Feasibility Program and Development Plan.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the event that, during the term of a Feasibility Program, the members of the R&#038;D
Committee cannot agree on an issue within the scope of its authority within thirty
(30)&nbsp;days of its initial consideration, the matter shall be referred by either
co-chairpersons in writing to one (1)&nbsp;expert, the identity of whom shall be mutually
agreed upon, for a reasoned determination in writing. In the event that, during the
term of the Development Plan, the members of the R&#038;D Committee cannot agree on a
recommendation to be made to Teva, then the members appointed by Teva shall have a
casting vote in respect of such recommendation.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">5.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>At each R&#038;D Committee meeting, at least one (1)&nbsp;member appointed by each Party
present in person or by telephone shall constitute a quorum. Each Party shall have
equal voting power, whether represented by one or two Committee members, on all
matters before the R&#038;D Committee.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">6. <U><B>License Grant</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">6.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Subject only to the provision of the Stage 2 Notice by Teva, Protalix hereby
grants Teva, and Teva hereby accepts from Protalix, an exclusive world-wide license
under the Platform IP, the Protein IP and the Other IP owned by or licensed to
Protalix (collectively, the &#147;<B>Licensed Information</B>&#148;) to research, develop, make, have
made, register, import, manufacture, use, sell, offer for sale, produce, sublicense,
commercialize, distribute the Proteins and/or pharmaceutical products embodying,</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio --> - 15 - <!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>based on or using the Proteins (the &#147;<B>Licensed Products</B>&#148;) for all indications (the
&#147;<B>License</B>&#148;) and for no other purposes whatsoever.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">6.1A</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To the extent that the Parties shall mutually agree that any Additional Patents are
reasonably required to be licensed to Teva in order for Teva to commercialize any
Licensed Product(s), then the same shall be added to the list of the Platform Patents and
as of such time shall be deemed as being covered by the License hereunder, as part of the
Platform IP, provided that at the relevant point in time an exclusive license in respect
of such Additional Patent has not already been granted to a third party by Protalix, it
being understood and agreed, however, that any such Additional Patents may not be
sub-licensed by Teva on a stand alone basis.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">6.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>From the Effective Date and at all times prior to [***] with respect to any particular Protein, Protalix shall not, without
Teva&#146;s prior written consent, grant or enter into any agreement, arrangement or
commitment according to which a third party is granted any rights which may derogate
from or hinder Teva&#146;s ability to exercise Teva&#146;s option to obtain the License.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">6.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Teva shall have the right to grant (whole or partial) Sublicenses to third
parties (and such third parties shall be entitled to grant further Sublicenses
(each, a &#147;<B>Further Sublicense</B>&#148; and the term &#147;<B>Further Sublicensee</B>&#148; shall be construed
accordingly) and so on under the License, on terms and conditions consistent with
the terms of this Agreement and Teva shall be entitled to determine the commercial
terms of any such Sublicense, all provided that under no circumstances may any
Sublicense or Further Sublicense be granted to a Protalix Competitor, unless such
Sublicense or Further Sublicense is not granted in respect of the core technology of
Protalix (for example, but without limitation, a Sublicense or Further Sublicense
may be granted in respect of the marketing and/or distribution of the Licensed
Products(s) even to a Protalix Competitor), and provided further that all of
Protalix&#146;s rights hereunder shall be ensured and, without limiting the generality of
the foregoing, that, with respect to each Sublicense or Further Sublicense
agreement: (i)&nbsp;Teva notifies Protalix immediately upon signature thereof, and
provides Protalix with the name of the Sublicensee or Further Sublicensee and the
scope and territory of the Sublicense or Further Sublicense; (ii)&nbsp;each such
Sublicense and Further Sublicense agreement (a)&nbsp;provides that the Sublicense or
Further Sublicense thereunder shall immediately terminate upon termination of the
License hereunder for any reason, and (b)&nbsp;restricting the right to grant a Further
Sublicense to a Protalix Competitor. The grant of any Sublicenses and Further
Sublicenses shall not derogate from the rights of Protalix and/or the obligations of
Teva under this Agreement. Without limiting the foregoing or any of Teva&#146;s
obligations hereunder relating to the grant of Sublicenses or Further Sublicenses
pursuant hereto, Teva shall be entitled to conduct or to perform any activity in
respect of the Licensed Products by means of any third party sub-contractor, and
such conduct shall not be considered to be a grant of a sublicense, provided it
shall notify the R&#038;D Committee and/or Protalix of any such subcontract and provided
further that under no circumstances may Teva subcontract any of its tasks or
obligations hereunder to a Protalix Competitor unless such subcontract is made not
in respect of the core technology of Protalix (i.e. Teva shall be entitled to
conduct marketing or distribution activities through subcontractors which are
Protalix Competitors). For the sake of clarity and without limiting the foregoing,
in the event that Teva shall use a subcontractor, Teva shall bear all responsibility
and liability vis-&#224;-vis Protalix arising from the performance by such subcontractor.</TD>
</TR>


</TABLE>
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio --> - 16 - <!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>


<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">7. <U><B>Commercialization of Licensed Products</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">7.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Teva undertakes, at its own expense, to make such commercially reasonable
efforts to commercialize the Licensed Products as are consistent with the commercial
efforts generally applied to products of similar potential at similar stages in
their life cycles, by Teva.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">7.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Teva shall provide Protalix with a non-binding sales forecast for each of the
Major Countries, in writing, in respect of each Licensed Product, by no later than
[***] prior to the anticipated date of the first regulatory approval in
respect thereto. Such report shall be updated by Teva, in writing, on
a [***] basis. Moreover, each sales forecast shall be accompanied by a report of Teva&#146;s
and its Affiliates launch dates and main regulatory filings on a [***] basis
with respect to the Licensed Products. Teva shall also provide Protalix with similar
information with regard to such launch dates and filings in territories in which
Sublicensees and Further Sublicensees have conducted similar activities, to the
extent available to Teva.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">7.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the removal of doubt, nothing contained in this Agreement shall be
construed as a warranty by Teva that any efforts to be exerted by Teva in connection
with this Agreement, including without limitation any development or any
commercialization to be carried out by it in connection with this Agreement, will
actually achieve their aims or any other results or succeed, and Teva makes no
warranties whatsoever as to any results to be achieved in consequence of the
carrying out of any such development, commercialization, efforts or activities.
Furthermore, Teva makes no representation to the effect that the commercialization
of the Licensed Products, or any part thereof, will succeed, or that it shall be
able to sell the Licensed Products in any quantity.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">8. <U><B>Milestones and Royalty Payments </B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">8.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In consideration for the grant of the License, Teva shall make the following
milestone payments to Protalix, upon achievement of the relevant
milestones on a &#091;***&#093; basis (each, a &#147;<B>Milestone</B>&#148;) (the &#147;<B>Milestone Payments</B>&#148;):</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">8.1.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#091;***&#093;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#091;***&#093;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#091;***&#093;</TD>
</TR>


</TABLE>
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio --> - 17 - <!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">8.1.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#091;***&#093;</TD>
</TR>



<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#091;***&#093;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#091;***&#093;</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#091;***&#093;</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#091;***&#093;</TD>
</TR>

</TABLE>
</DIV>




<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio --> - 18 - <!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">8.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In addition, in consideration for the grant of the License, Teva shall,
throughout the Royalty Term (as such term is defined below), pay to Protalix
royalties at the following rates on annual Net Sales, during each calendar year in
respect of each Licensed Product, on a &#091;***&#093; (the &#147;<B>Royalty Payments</B>&#148;), as specified in this Section&nbsp;8.2 below:</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 8%">(a) &#091;***&#093;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 8%">(b) &#091;***&#093;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 8%">(c) &#091;***&#093;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 8%">(d) &#091;***&#093;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 8%">(e) &#091;***&#093;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 8%">[***]
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">8.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>[***].</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">8.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding the foregoing, in the event that any
&#091;***&#093; is sold
in the form of a Combination Product, then the proportion of such Combination
Product to</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio --> - 19 - <!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>be attributed to Net Sales that are subject to the Royalty Payments (the
&#147;<B>Relevant Proportion</B>&#148;) shall be calculated as
provided below.<br><br>
Provided that both active ingredients of the Combination Product are sold on a
stand-alone basis at the time in question, the Relevant Proportion shall be as follows:
[***].
</TD>
</TR>


</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">8.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Payments to Protalix pursuant to this Section&nbsp;8 will be due and payable
hereunder until the expiration of &#091;***&#093;years after the First Commercial Sale in any
country calculated on &#091;***&#093; basis (in
each case, the &#147;<B>Royalty Term</B>&#148;).</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">8.6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Following the expiry of the Royalty Term, &#091;***&#093;, Teva
shall have a fully paid up license to continue to exploit the License without
having to make Royalty Payments with respect thereto.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">9. <U><B>Payment Terms and Reporting in Respect of the License</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">9.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As of the achievement of the first Milestone pursuant to Section&nbsp;8.1.1 above,
and for the duration of the Royalty Terms, Teva shall submit to Protalix, no later
than [***] after the end of each [***], [***] reports
setting out all amounts owing to Protalix in respect of the [***] to
which the report refers, and with respect to each Licensed Product, (i)&nbsp;the Net
Sales [***],
including a breakdown of Net Sales according to country and currency of sales, (ii)
amounts deducted as royalties to third parties pursuant to Section&nbsp;1.2.39(vii),
(iii)&nbsp;total Milestone Payments and Royalty Payments due to Protalix in respect of
such [***] or, if no such payments are due to Protalix in respect of such
[***], a statement that no payments are due; and (iv)&nbsp;any calculations
made in relation to Combination Products. Teva shall submit to Protalix, by no
later than [***] after the end</TD>
</TR>


</TABLE>
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio --> - 20 - <!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 5%">of each [***], an [***] report
setting out any adjustments in Royalty Payments pursuant to Section&nbsp;9.2A. Each such
report shall be signed by the relevant financial executive of the Global Products
division of Teva.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 5%">All such reports, as well as all other reports provided hereunder, shall be treated as
Confidential Information pursuant to Section&nbsp;20 below.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">9.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Amounts payable to Protalix in terms of Section&nbsp;8 shall be paid to Protalix
(i)&nbsp;in respect of Royalty Payments, on a [***] basis, and no later than [***] after the end of each [***],
commencing with the first
[***] in which Net Sales are made, (ii)&nbsp;in respect of Milestone Payments,
within [***] following the achievement of the applicable Milestone.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">9.2A</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding, the [***] payments of Royalty Payments shall be paid based on
the assumption that no Market Advantage exists. Not later than [***] following the end
of a [***], Teva shall pay Protalix the additional nominal amounts of Royalty
Payments due in the event Market Advantage existed during such [***].</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">9.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each payment due to Protalix hereunder shall be paid by wire transfer of
immediately available funds to an account designated by Protalix in writing.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">9.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Teva shall maintain and shall cause its Affiliates to maintain, complete and
accurate records of Licensed Products sold under this Agreement, any amounts payable
to Protalix in relation to such Licensed Products and which records shall contain
information to reasonably permit Protalix to confirm the accuracy of any payments
made to Protalix. Teva shall retain and shall cause its Affiliates to retain such
records relating to a given calendar year for at least
&#091;***&#093; after the
conclusion of that calendar year, during which time Protalix shall have the right,
at its expense, to cause an independent, certified public accountant to inspect such
records during normal business hours for the sole purpose of verifying any payments
delivered under this Agreement. Such accountant shall not disclose to Protalix any
information other than information relating to the accuracy of reports and payments
delivered under this Agreement. In the event that any audit performed under this
Section&nbsp;9.4 reveals an underpayment in excess of &#091;***&#093;in any calendar year, and if
such underpayment is proven to the satisfaction of a mutually agreed external
auditor (it being agreed that absent such mutual agreement as to the identity of the
auditor within thirty (30)&nbsp;days of a Party&#146;s written notice to the other Party that
it wishes to have such external auditor appointed, the external auditor shall be one
of the &#145;big four&#146; accounting firms), then Teva shall bear the full cost of such
audit. Protalix may exercise its rights under this Section only once every year and
only with reasonable prior notice to Teva, and the relevant Affiliate and subject to
prior coordination. Any such audit shall be made during Teva&#146;s or the relevant
Affiliate&#146;s normal business hours and shall not unreasonably interfere with the
business of Teva or the relevant Affiliate, and shall be completed within a
reasonable time. Teva shall promptly transfer to Protalix any payment due pursuant
to such auditor&#146;s audit. Such payment shall bear interest as set forth in Section
23.17.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">9.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Without derogating from the provisions of the preceding Section&nbsp;9.4, Protalix
shall have the right to request that Teva inspect records of Licensed Products sold
under this Agreement by Sublicencees and Further Sublicensees, for the sole purpose
of verifying any payments delivered under this Agreement, in which case Teva shall
exert its reasonable commercial efforts to perform such audit. In the event that any
audit performed under this Section&nbsp;9.5 reveals an underpayment in excess of &#091;***&#093;,</TD>
</TR>


</TABLE>
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio --> - 21 - <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>and if such underpayment is proven to the satisfaction of a mutually agreed external
auditor (to be appointed in accordance with the procedure set out in Section&nbsp;9.4
above), then Teva shall bear the full cost of such audit. In any other event (of
overpayment or underpayment of less &#091;***&#093;, Protalix shall bear the full cost of such
audit. Protalix may exercise its rights under this Section only once every year.
Teva or Protalix, as applicable, shall immediately pay to the other Party any
underpayment or overpayment together with interest provided in Section&nbsp;23.17 below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">9.6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Protalix shall maintain, and shall cause its Affiliates to maintain, complete
and accurate records of both its Internal Expenses and External Development
Expenses, as well as records of costs incurred in the performance of each
Feasibility Program (for the event that Teva reimburses Protalix for same pursuant
to the substitution of a Protein), which records shall contain information to
reasonably permit Teva to confirm the accuracy of any payments made to Protalix.
Protalix and/or its Affiliates shall retain such records relating to a given
calendar year for at least seven (7)&nbsp;years after the conclusion of that calendar
year, during which time Teva shall have the right, at its expense, to cause an
independent, certified public accountant to inspect such records during normal
business hours for the sole purpose of verifying any payments delivered under this
Agreement. Such accountant shall not disclose to Teva any information other than
information relating to the accuracy of reports and payments delivered under this
Agreement. In the event that any audit performed under this Section&nbsp;9.6 reveals an
overpayment in excess of &#091;***&#093;in respect of any Protein, and if such overpayment is
proven to the satisfaction of a mutually agreed external auditor (to be appointed
in accordance with the procedure set in Section&nbsp;9.4 above), then Protalix shall
bear the full cost of such audit and shall promptly pay to Teva such overpayment
together with interest as provided in Section&nbsp;23.17 below. Teva may exercise its
rights under this Section only once every year and only with reasonable prior
notice to Protalix, and subject to prior coordination. Any such audit shall be made
during Protalix&#146;s or the relevant Affiliate (as applicable) normal business hours
and shall not unreasonably interfere with the business of Protalix or the relevant
Affiliate (as applicable) and shall be completed within a reasonable time.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">10. <U><B>Bulk (API)&nbsp;Manufacturing Terms</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">10.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding Section&nbsp;6 above, Protalix shall retain the exclusive right to
manufacture the API and to continuously supply same to Teva and its Affiliates,
Sublicensees and Further Sublicensees, for the Licensed Products, during the first
&#091;***&#093; years following the First Commercial Sale of the first Licensed Product on a
per Protein basis (the &#147;<B>Exclusive Manufacturing Term</B>&#148;). Teva shall be responsible
for the formulation of the API into finished Licensed Product. Without derogating
from any other visit and audit right under this Agreement, as from [***]
prior to the expected commencement of the Exclusive Manufacturing Term, Teva&#146;s
representatives shall have the right to visit and audit Protalix&#146;s facilities where
the API is being manufactured, during normal business hours, and following prior
coordination with Protalix.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">10.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Following the expiry of the Exclusive Manufacturing Term, Teva shall have the
right to manufacture the API [***] in its own facility or elsewhere, or through any third party which is not a
Protalix Competitor, at its sole discretion, subject to the appropriate undertakings
by the transferee of non-disclosure and non-use other than the supply to Teva and
its</TD>
</TR>


</TABLE>
</DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio --> - 22 - <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Affiliates, Sublicensees and Further Sublicensees, and shall use the
Manufacturing Know-how (as such term is defined below) solely for such purpose.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">10.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Without derogating from the above, Teva may elect, at its sole discretion, to
continue receiving Protalix&#146;s manufacturing services after expiration of the
Exclusive Manufacturing Term. In such event, Protalix undertakes to perform such
manufacturing services, for the sole consideration set forth in Section&nbsp;10.4
hereinafter.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">10.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As of the First Commercial Sale, Teva shall pay Protalix consideration based
on the actual direct cost of the manufacturing of the API incurred by Protalix to be
calculated pursuant to the Supply Agreement as shall be mutually
agreed &#091;***&#093;:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">10.4.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#091;***&#093;.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">10.4.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#091;***&#093;.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 5%">&#091;***&#093;.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">10.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding the foregoing, in the event that the annual payments to
Protalix that consist of the &#091;***&#093; (calculated according to Section
10.4 above) plus the Royalty Payments on a &#091;***&#093; basis during any given
calendar year (the &#147;<B>Annual Protalix Payment</B>&#148;), shall exceed the amount of &#091;***&#093; of
the aggregate amount of annual Net Sales in such calendar year on a &#091;***&#093;
basis (the &#147;<B>Ceiling Amount</B>&#148;), then the Annual Protalix Payment, in respect of the
&#091;***&#093;, shall be reduced to an amount equal to the Ceiling Amount,
provided that in no event shall the Annual Protalix Payment in respect of the
&#091;***&#093;, be reduced to an amount less than &#091;***&#093; calculated on the
basis of &#091;***&#093;. Any over payment by Teva shall be set-off, by written notice from
Teva to Protalix, detailing the calculation of such over-payment, from the upcoming
Royalty Payment due to Protalix hereunder.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">10.6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Parties hereby acknowledge and agree that a back-up manufacturing
facility should be available in respect of the Proteins. Not later than six (6)
months prior to the commencement of Phase III clinical trials to be performed in
respect of the First Licensed Product on a per Protein basis, the Parties shall
mutually agree on the site at which such back-up manufacturing facility shall be
located, and the Party by whom such facility shall be established.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">10.7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>(A)&nbsp;Protalix shall transfer, on a per-Protein basis, to an agreed third party
(the &#147;<B>Escrow Agent</B>&#148;), by not later than date of the completion of Phase I (last
patient out) as set forth in the Development Plan, a complete file (the &#147;<B>Back-Up
Manufacturing File</B>&#148;) consisting of all engineering schemes, standard operating
procedures, protocols, plans, master manufacturing file, know how and any other
information, tangible or intangible, whether in writing, electronic form or
otherwise, and any updates thereof, which is reasonably necessary for Teva in</TD>
</TR>



</TABLE>
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio --> - 23 - <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 7%">order
to establish its own internal manufacturing facility and manufacture the API (the
&#147;<B>Manufacturing Know-how</B>&#148;). Concurrently with the transfer of the Back-Up
Manufacturing File to the Escrow Agent, a copy of the table of contents of such file
shall be transferred to the R&#038;D Committee. Teva may request, based on such table of
contents, that the Back-Up Manufacturing File be reviewed by a mutually agreed
industry expert (the &#147;<B>Industry Expert</B>&#148;) who may recommend in writing that the file
be supplemented, as may be reasonably required and Protalix shall supplement such
file as recommended within sixty (60)&nbsp;days
from the receipt by Protalix of such written recommendation. The Industry Expert
shall be bound by confidentiality undertakings to Protalix no less stringent
than those contained in Section&nbsp;20 hereof and shall not disclose to Teva any
information relating to or contained in the Back-Up Manufacturing File. The
Industry Expert shall sign a non-disclosure agreement to such effect.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 7%">(B)&nbsp;Subject to the terms of this Section&nbsp;10.7(B), the Escrow Agent shall be
authorized to release the Back-Up Manufacturing File to Teva, solely upon the terms
and conditions set out in a tri-party agreement to be executed between the Parties
and the Escrow Agent, in the form to be attached hereto within thirty (30)&nbsp;days of
the Effective Date hereof (the &#147;<B>Escrow Agreement</B>&#148;). Such Escrow Agreement shall
determine that the Back-Up Manufacturing File shall be released to Teva upon the
earlier of: (i)&nbsp;&#091;***&#093;; (ii)&nbsp;the occurrence
of a material breach by Protalix of its manufacturing obligations hereunder, which
breach is not rectified within sixty (60)&nbsp;days of receipt by Protalix of Teva&#146;s
written notice specifying the breach; and (iii)&nbsp;the grant of a winding-up order or
the appointment of a receiver in respect of Protalix, or the grant of an attachment
order on all, or a substantial portion of, Protalix&#146;s assets, which is not set aside
within ninety (90)&nbsp;days of the issuance thereof. The Back-Up Manufacturing File as
may be duly released to Teva pursuant to the Escrow Agreement may be utilized by
Teva solely for the establishment and operation of a facility for the manufacture of
the API. Following release of the Back-Up Manufacturing File to Teva, on the grounds
stated in (ii)&nbsp;or (iii)&nbsp;above, Teva shall be entitled to manufacture the API also
through a Protalix Competitor.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 7%">(C)&nbsp;Teva shall reimburse Protalix, for its reasonable expenses directly incurred and
associated with the preparation by Protalix of the Back-Up Manufacturing File for
submission to the Escrow Agent and for its costs associated with the services of the
Escrow Agent and the Industry Expert pursuant hereto (pursuant to invoices submitted
by the Escrow and Industry Expert and paid by Protalix).<U> </U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">11. <U><B>Intellectual Property Rights </B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">11.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Parties agree that, as between the Parties, Protalix does and shall own
all rights, title and interest in and to the Platform IP. The Parties acknowledge
that certain of the Platform IP that might be developed by or for Protalix or a
subsidiary of Protalix (if such shall exist) following the Effective Date may be
subject to contractual limitations vis-&#224;-vis third parties. Such limitations (which
by their nature, would apply to the Proteins and/or the Licensed Products) shall
apply to Teva only if and to</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio --> - 24 - <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the extent Teva shall approve them in writing in
advance. Otherwise, Protalix shall be fully responsible for such contractual
limitations whether monetary or other.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">11.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the event that during the collaboration hereunder, any subsidiary of
Protalix or any company with which Protalix merges (if such shall exist) shall
generate or own any IP that if generated or owned by Protalix would have been
considered part of the Licensed Information hereunder, then Protalix shall
immediately notify Teva of such IP and shall act immediately and ensure that such IP
shall be licensed to Protalix (or directly to Teva) and will become part of
the Licensed Information, licensed to Teva as provided hereunder, at no additional
cost to Teva. Such IP shall be classified as Platform IP, Protein IP or Other IP in
accordance with the terms hereof as if it had been generated by Protalix in the
first place.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">11.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>All rights, title and interest in and to the Protein IP and Other IP
developed during the performance of the Feasibility Program, will be owned by
Protalix (&#147;<B>Protalix&#146;s Protein and Other IP</B>&#148;). For avoidance of doubt, Protalix&#146;s
Protein and Other IP will be considered part of the Licensed Information, and as
such, covered by the License hereunder.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">11.3A</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the event that there is any portion of Platform IP that specifically and
directly relates (but does not solely relate) to one or more of the Proteins, and
Protalix shall seek patent protection in respect of such portion of the Platform IP,
then, to the extent possible: the Parties shall co-operate in order that the patent
protection sought shall be filed in a manner that will split/ distinguish between
patents covering Platform IP that solely relates to the Proteins and other Platform IP.
The patent applications/ patents filed in respect of Platform IP that solely relates to
the Proteins(s) shall be considered part of the Protein IP, and not Platform IP.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">11.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding the above, in the event that a Change of Control of Protalix
is effected following the commencement of Stage 2, such that a Teva Competitor
acquires Control of Protalix, Teva shall have the right, at its sole discretion, to
receive an assignment of all Protalix Protein and Other IP without any assignment
fee. Protalix&#146;s Protein and Other IP so assigned to Teva shall be treated hereunder
as Teva IP (as defined below) for all intents and purposes, provided however that
the economic benefits to Protalix under this Agreement, including <I>inter alia</I>, its
right to receive Royalty Payments and Milestone Payments, shall not be diminished as
a result of such assignment, in any way.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">11.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A &#147;<B>Change of Control</B>&#148; means (i)&nbsp;the sale of all or substantially all of the
assets of Protalix, or (ii)&nbsp;any transaction between Protalix or its shareholders and
another entity/ies as a result of which another company/ies, or another company/ies&#146;
ultimate shareholder/s, directly or indirectly shall own more than fifty percent
(50%) of the shares of Protalix or its successor, or has/ve the power to elect more
than half of Protalix&#146;s or its successor&#146;s directors. A
&#147;<B>Teva Competitor</B>&#148; means [***].</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">11.6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>All Protein IP and Other IP developed as of the date on which Teva provides
the Stage 2 Notice, by or for Protalix, jointly by or for both Parties, or by or for
Teva, shall be exclusively owned by Teva, and Teva shall have all right, title and
interest thereto (the &#147;<B>Teva IP</B>&#148;).</TD>
</TR>

</TABLE>
</DIV>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio --> - 25 - <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">11.7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Teva hereby grants Protalix a non-exclusive, royalty-free, perpetual license
to use such portion of the Other IP included in the Teva IP that shall be developed
solely by Protalix&#146;s employees, for any purpose that is not related in any manner to
the manufacturing, developing, selling and/or commercialization of the Proteins or
the Licensed Products (which Teva IP, for the avoidance of doubt, shall include any
Other IP that may be assigned to Teva pursuant to Section&nbsp;11.4 above).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">11.8.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Except as otherwise set forth in this Agreement, Teva and Protalix shall
retain their respective unrestricted rights to make, have made, use and sell all
such data, information, discoveries or inventions that are or may be owned by them,
provided however that Protalix shall not be entitled to sell, pledge (other than in
the ordinary course of business for the receipt of credit-lines) or assign any
portion of the Licensed Information without prior written approval by Teva.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">11.9.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each Party hereto undertakes to sign, execute and deliver all documents and
papers that may be required, and perform such other acts as may be reasonably
required in the circumstances, in order to ensure the division of the intellectual
property rights between the Parties in accordance with the terms of this Section&nbsp;11,
as well as the filing of any and all patents arising hereunder and the registration
of the License granted hereunder.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">12. <U><B>Prosecution and Protection of Intellectual Property</B></U>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%"><B>Patent Filing</B>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">12.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Throughout the term of the License granted hereunder, &#091;***&#093;shall be
obligated, at its own expense, to file, record, prosecute, and maintain all patent
rights with respect to the &#091;***&#093; in the countries as set forth in <U><B>Annex 12.1</B>
</U>attached hereto (the &#147;<B>Current Countries</B>&#148;). In addition, throughout the
performance of the Feasibility Program only, &#091;***&#093; shall be obligated to file,
record, prosecute and maintain, all patent rights with respect to the &#091;***&#093; in all
the Major Countries. In addition, &#091;***&#093; shall have the right, at its own expense, to
file, record, prosecute, and maintain all patent rights with respect to the &#091;***&#093;,
in all other countries which are not the Current Countries.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">12.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding 12.1 above, as of the provision of Stage 2 Notice by &#091;***&#093;,
&#091;***&#093; shall, at &#091;***&#093; expense and as long as this Agreement is in effect, file,
record, prosecute and maintain all patent rights with respect to the &#091;***&#093;, in the
Major Countries, and, at its discretion, in the other countries of the world.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">12.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each Party shall provide the other Party with a prior written notice
regarding filing of each patent application which is filed pursuant to section 12.1
or 12.2, and shall furthermore give reasonable consideration to the comments
received by the other with respect to the filing of such patents. Each Party shall
provide the other with reasonable information relating to the prosecution of such
Party&#146;s IP &#091;***&#093;, and the maintenance and other proceedings relating thereto
including, without limitation, by providing copies of substantive communications,
notices, actions, search reports and third party observations submitted to or
received from patent offices. Provision of all such documentation and information
from one Party to the other shall be at no cost to the receiving Party.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">12.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the event that &#091;***&#093; fails to file, record, prosecute or maintain all
patent rights with respect to the &#091;***&#093; in all the Current Countries or, as
applicable throughout the</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio --> - 26 - <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>performance of the Feasibility Program, the &#091;***&#093; in any
of the Major Countries, which failure constitutes a breach of its obligations under
Section&nbsp;12.1 above, then &#091;***&#093; shall be entitled to terminate this Agreement and
to any other remedy provided to it under law.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">12.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If &#091;***&#093; elects not to file, record, prosecute or maintain all patent
rights with respect to the &#091;***&#093; in countries other than the Current Countries or,
as applicable, &#091;***&#093;, in any country of the world which is not one of the Major
Countries, &#091;***&#093; shall notify &#091;***&#093;in writing of such election to allow &#091;***&#093;, in
its sole discretion, to file and/or continue to prosecute such patent application
and/or maintain such patent in such country at its own cost and expense. In such
event, for as long as &#091;***&#093; continues to prosecute and maintain such patents,
then, in respect of such country, &#091;***&#093; shall not be obligated to pay &#091;***&#093; in such
country protected or to be protected by such patent until such time as &#091;***&#093; out of
pocket expenses incurred in prosecuting and/or maintaining such patents are
recouped. &#091;***&#093; shall notify &#091;***&#093; in writing of &#091;***&#093; election as aforesaid. For
the avoidance of doubt, it is hereby clarified that should &#091;***&#093; assume control
over the prosecution and maintenance of such patents as aforesaid, then at any time
thereafter &#091;***&#093; may, in its sole discretion, cease the prosecution and maintenance
of such patents, upon prior written notice to &#091;***&#093;.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">12.6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If &#091;***&#093; elects not to file, record, prosecute or maintain all patent
rights with respect to the &#091;***&#093; in any of the Major Countries, &#091;***&#093; shall notify
&#091;***&#093; in writing of such election to allow &#091;***&#093;, in its sole discretion, to file,
record and/or continue to prosecute such patent application and/or maintain such
patent in such country. In such event, for as long as &#091;***&#093; continues to file,
record, prosecute and maintain such patents or patent applications and notifies
&#091;***&#093; of same, then, in respect of such country, with respect to the &#091;***&#093; in any
of the Major Countries, &#091;***&#093; shall reimburse &#091;***&#093; for &#091;***&#093; out of its patent
expenses.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">12.7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Nothing contained herein shall be deemed to be a warranty by either of the
Parties that they can or will be able to obtain patents on patent applications
included in the Licensed Information or that any such patents will afford adequate
or commercially worthwhile protection.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%"><U><B>Patent Enforcement</B></U>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">12.8.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the event that either Party hereto becomes aware of any product that is
made, used, or sold or any action that it believes infringes or misappropriates the
Licensed Information applicable to the Licensed Products or the Teva IP
(collectively, &#147;<B>Product IP</B>&#148;), such Party will promptly advise the other of all the
relevant facts and circumstances known to such first-mentioned Party in connection
with such infringement or misappropriation.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">12.9.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Prior to the provisions of a Stage 2 Notice, with respect to &#091;***&#093;, &#091;***&#093;
shall, at its own expense, enforce the &#091;***&#093;, or any part thereof, against
infringement or misappropriation, bring an action against any third party suspected
of infringement or misappropriation of same and control the defense of any
counterclaim or declaratory judgment action (or other action) relating thereto;
&#091;***&#093; will fully cooperate with &#091;***&#093; at &#091;***&#093; expense, with respect to the
investigation and prosecution of such alleged infringement or misappropriation
including the eventual joining of &#091;***&#093; as a party to such action, as may be
required by the law of the particular forum where enforcement is being sought. Any
recovery obtained as a result of such action shall</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio --> - 27 - <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>be applied first to the
documented costs and expenses actually incurred by &#091;***&#093;, and &#091;***&#093; shall retain any
and all remaining amounts recovered.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">12.10.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As of provision of the Stage 2 Notice, with respect to the &#091;***&#093;, &#091;***&#093; shall have
the first right, but not the obligation, to bring an action against any third party
suspected of infringement or misappropriation of same, and to control the defense of
any counterclaim or declaratory judgment action alleging invalidity or
non-infringement (or other action) relating thereto. If &#091;***&#093;elects to bring such
action against a third party, &#091;***&#093; will fully cooperate with &#091;***&#093;, at &#091;***&#093;
expense, with respect to the investigation and prosecution of such alleged
infringement or misappropriation, including the joining of &#091;***&#093; as a party to such
action, as may be required by the law of the particular forum where enforcement is
being sought. Any recovery obtained as a result of such action shall be split, after
the deduction of the documented costs and expenses actually incurred by &#091;***&#093;, so
that &#091;***&#093; will be entitled to &#091;***&#093; and &#091;***&#093; shall retain &#091;***&#093; out of the amounts
which constitute compensation for loss of sales. All other amounts shall be retained
by &#091;***&#093;.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As of provision of the Stage 2 Notice &#091;***&#093; may, at its own expense, enforce the &#091;***&#093;,
or any part thereof, against infringement or misappropriation, bring an action against
any third party suspected of infringement or misappropriation of same and control the
defense of any counterclaim or declaratory judgment action (or other action) relating
thereto if &#091;***&#093; fails, within sixty (60)&nbsp;days after becoming aware of such
infringement, or receiving notice from &#091;***&#093; of such infringement, to take reasonable
action to investigate such alleged infringement. &#091;***&#093; will fully cooperate with &#091;***&#093;,
at &#091;***&#093; expense, with respect to the investigation and prosecution of such alleged
infringement or misappropriation including the joining of &#091;***&#093; as a
party to such action, as may be required by the law of the particular forum where
enforcement is being sought. Any recovery obtained as a result of such action taken by
&#091;***&#093; shall be retained by &#091;***&#093; in full.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">12.11.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each Party shall execute all necessary and proper documents, take such actions as
shall be appropriate to allow the other Party to institute and litigate such
infringement actions referred to in this Section&nbsp;12, and shall otherwise cooperate
in the institution and litigation of such actions (including, without limitation,
consenting to being named as a party thereto). Each Party, in litigating any such
infringement actions, shall keep the other Party reasonably informed as to the
status of such actions.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Patent Infringement</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">12.12.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As of the provision of Stage 2 Notice by Teva, in the event that either Teva or
Protalix, or both of them, are sued by a third party alleging that the
commercialization of the Licensed Products infringes upon any intellectual property
rights of such third party the Party being so sued shall immediately give the other
Party notice of same.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Teva shall have the right to defend against such action, on behalf of both Parties, as
aforesaid within twenty (20)&nbsp;business days from the date the relevant suit becomes known
to Teva, and any expenses or costs incurred by Teva in connection with such action(s),
and any costs or amounts awarded to the counterparties in such action(s) shall be fully
borne by Teva and any recovery in such action shall be retained by Teva in full. In the
event that Teva does not exercise its right to defend in a certain country, then
Protalix shall be entitled to defend against such claim at its own cost and</TD>
</TR>


</TABLE>
</DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio --> - 28 - <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>expense in
such country and any recovery in such action shall be retained by Protalix
in full. In addition, in such event that Protalix defends against such claim, Protalix
shall have the right to terminate the License provided hereunder in respect of such
country (in which the defense is taken) only with respect to the certain Licensed
Product as to which the claim relates.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%"><U><B>General</B></U>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">12.13.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A Party shall be deemed to have met its obligation to file, record, prosecute,
maintain, enforce and defend patents in accordance with Section&nbsp;12 above if its
decision is commercially reasonable solely in view of the foreseeable impact of any
action or inaction on the development or commercialization of Licensed Products.
For the sake of clarity, such obligations shall apply to the Platform Patents only
in respect of actions that may be taken in the Current Countries after the
Effective Date.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">12.14.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Protalix and Teva will reasonably co-operate in the defense of any claims brought
against the other Party pursuant to this Agreement and shall voluntarily join any
such litigation if so required by law. Protalix and Teva will execute all documents
reasonably necessary for the relevant Party to defend against such action, and shall
provide documents and help with making contact with witnesses that are or were their
employees, consultants or otherwise connected to them, whose testimony &#151; in the
judgment of the attorneys handling the law suit (or Teva&#146;s or Protalix&#146;s counsel in
the event the proceedings will be brought only on the name of one Party) &#151; is
necessary to allow such litigation to go forward.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">12.15.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In no event shall either Party enter into any settlement, consent order, consent
judgment or any voluntary disposition of such action that would adversely affect the
rights of the other without the prior written consent of such other Party, which
consent shall not be unreasonably withheld.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">13. <U><B>New Breakthrough Technology</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">13.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Should Protalix develop on its own or receive a license to Breakthrough
Technology, Protalix shall notify Teva thereof as soon as practicable, and provide
Teva with all information related thereto, and enter into discussions with Teva, in
good faith, with a view towards granting Teva or procuring the grant to Teva of an
exclusive worldwide license to utilize such Breakthrough Technology as it relates
solely to the Proteins and/or the Licensed Products, but shall not be bound to such
discussions if Teva did not initiate negotiation with Protalix in such respect for a
period exceeding &#091;***&#093; of its provision of such information to Teva as
provided above.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">13.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The license to the Breakthrough Technology shall be granted by Protalix to
Teva in return for [***], as shall be
discussed and agreed in good faith between the Parties.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 5%">For the purposes hereof, the term &#147;<B>Breakthrough Technology</B>&#148; means any [***].
</DIV>
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio --> - 29 - <!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">14. <U><B>Right of First Look &#150; GCD Product</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">14.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Protalix hereby grants Teva and Teva hereby accepts from Protalix a right of
first look (the &#147;<B>ROFL</B>&#148;) at Protalix&#146;s proprietary product based on
glucocerebrosidase which is currently under development, for the treatment of
Gauchers Disease and for other clinical indications (the &#147;<B>GCD Product</B>&#148;), to enable
Teva to evaluate its interest in obtaining an exclusive, worldwide license to
develop, commercialize, manufacture, market, distribute and sell the GCD Product for
all indications, including without limitation Gauchers Disease (the &#147;<B>GCD License</B>&#148;).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">14.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The period of time during which the ROFL shall be valid, is referred to
hereunder as the &#147;<B>Evaluation Period</B>&#148;. The Evaluation Period shall start as of the
Effective Date and shall automatically terminate, on a per country basis, upon: (x)
Protalix exclusively licensing the GCD Product (with respect to all indications) to
one or more third parties in all of the Major Countries, or (y)&nbsp;the commercial
launch of the GCD Product by Protalix in all of the Major Countries, provided
Protalix fully complied with the provisions of this section 14. If licenses to third
parties in respect of the Major Countries subsequently terminates, the ROFL to Teva
shall be reinstated pursuant to the terms of this Section&nbsp;14.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">14.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Throughout the Evaluation Period, Protalix shall submit to Teva within thirty
(30)&nbsp;days after the end of each calendar quarter, a written report briefly
describing all updates in its research and development activities in relation to the
GCD Product and the results thereof. Notwithstanding the above, if a material event
has occurred relating to the development of the GCD Product then Protalix shall so
notify Teva promptly.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">14.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>At any time or times during the Evaluation Period Teva may notify Protalix in
writing, that it wishes to negotiate the terms and conditions of the GCD License
(the &#147;<B>Notice</B>&#148;). In such event, Protalix shall be bound to an exclusive negotiation
period of [***] as of the date of the Notice (the &#147;<B>Negotiation Period&#146;</B>)
during which time the Parties shall act in good faith and endeavor to finalize the
terms and conditions of a license agreement to govern the grant to Teva of the GCD
License (the &#147;<B>GCD License Agreement</B>&#148;). If the Parties fail to execute GCD License
Agreement by the expiry of the Negotiation Period, the Parties shall endeavor to
finalize the GCD License Agreement as soon as possible thereafter, without Protalix
being barred, however, from negotiating with any third party. The exclusive [***] Negotiation Period shall not occur more than [***]. For the
avoidance of doubt, under no circumstances shall Protalix be barred from launching
or commercially selling the GCD Product by itself and/or through an Affiliate, and
for as long as Protalix intends to do so in any Major Country (as evidenced by a
board resolution), Protalix shall <B>not </B>be required to conduct negotiations with Teva
following receipt of any Notice pursuant to this Section&nbsp;14.4, in respect to such
Major Country. Protalix shall provide Teva with a copy of such board resolution, at
its request.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">14.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>During the Negotiation Period: (i)&nbsp;Teva shall have the right to evaluate the
GCD Product to determine its interest in receiving the GCD License, and to receive
all data and information related to the GCD Product generated or
received by Protalix prior to the commencement of or during the Negotiation Period,
excluding only information regarding commercial terms related to previous
negotiations with third parties; (ii)&nbsp;Protalix shall not grant any third party any
rights to or in respect of the GCD Product</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio --> - 30 - <!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>


<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>which may interfere with the grant of the GCD License to Teva or provide any third party with any information relating to
the GCD Product.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">14.6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Without derogating from the above, should a third party show interest in
acquiring a license for the GCD Product for any indication from Protalix at any time
during the Evaluation Period except during a Negotiation Period, and Protalix will
decide to enter into negotiations with such third party (the &#147;<B>Third Party
Negotiation Period</B>&#148;), Protalix shall so notify Teva immediately in writing, and will
disclose to Teva all updated information regarding the GCD Product available during
and throughout the Third Party Negotiation Period such that Teva may be able to
negotiate in parallel with full and complete updated GCD Product information
disclosed. For the avoidance of doubt, Protalix shall not be entitled to accept an
offer from any third party in connection with the licensing of GCD Product for any
indication unless Protalix has first complied with the terms of this Section&nbsp;14.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">14.7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the event that, at the time Teva exercises its right to enter into the
Negotiation Period, Protalix is already in a Third Party Negotiation Period, then,
notwithstanding the exclusivity provision set forth above, Protalix may continue
negotiating with such third party ONLY, but not with any other third party or parties
(for so long as the Negotiation Period is in effect).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">14.8.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>It is hereby agreed that in the event that the Parties will agree upon a
definitive agreement with respect to the GCD License, such agreement shall include a
provision setting out a mechanism whereby Protalix will not compete with Teva through
a second generation GCD Product.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>14A</B></U> <U><B>Services by Teva regarding the [***]</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">14A.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Teva will provide Protalix with  &#091;***&#093;
with respect to the [***] for the performance of Phase III clinical trials, as set
forth in Section&nbsp;14A.3 below, all in accordance with applicable regulatory requirements
(collectively, the &#147;<B>[***] Services</B>&#148;).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">14A.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The price of the [***] Services shall be &#091;***&#093; in the aggregate, and such price shall
be invoiced on a [***] basis, and paid within thirty (30)&nbsp;days of the end of the [***]
during which Protalix receives an invoice from Teva, subject to performance of such [***]
Services. Any material increase in the cost of the [***] Services stated above will be
discussed and negotiated in good faith between the management of both Parties.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">14A.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The [***] Services shall entail the provision of
&#091;***&#093;.</TD>
</TR>

</TABLE>
</DIV>




<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio --> - 31 - <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 5%">Teva shall compile the requisite batch production documentation or a batch master
file and provide the same to Protalix.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">14A.4 The comprehensive timeline and the detailed description of the [***] Services shall be
attached hereto as <U><B>Annex 14A.4</B></U> within thirty (30)&nbsp;days of the Effective Date.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">14A.5 Teva will provide Protalix with any regulatory documentation in its possession in
respect of the [***] Services, as may be required pursuant to an audit by regulatory
authorities and as may required for the submission of a CMC file (for example Media Fill,
Closure Integrity test, etc.). Protalix&#146;s QA representatives and/or regulatory QP persons
shall have the right to visit and audit Teva&#146;s [***] site for the sole purpose of
regulatory audit at times to be coordinated in advance between the Parties, but only to the
extent required by the relevant regulatory authorities for the conduct of the Phase III
clinical trials.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">14A.6 Following the completion of the performance of the [***] Services, Protalix shall have
the option to request that Teva continue the performance of the [***] with respect to the [***] on a
commercial basis (the &#147;<B>Commercial [***] Services</B>&#148;), and in the event that Protalix shall
request that Teva perform the Commercial [***] Services, the terms of same (including the
pricing of batch production) shall be negotiated in good faith between the Parties, to
reflect a competitive market price at the relevant time. For the avoidance of doubt, it is
clarified that Teva shall only be required to provide the Commercial [***] Services in the
event that both Parties hereto agree on the terms of the provision of same.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">14A.7 At any time, Protalix may request that Teva transfer to Protalix a technology
transfer file, and in such event Teva shall promptly provide the same to Protalix. The
reasonable costs of such transfer, as demonstrated by Teva, shall be reimbursed to Teva by
Protalix within thirty (30)&nbsp;days of the receipt from Teva of an invoice in respect of same,
along with supporting documentation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">15. <U><B>Term and Termination </B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">15.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Agreement shall be effective from the date of receipt of all necessary
corporate approvals of Teva required in respect of this Agreement (the &#147;<B>Effective
Date</B>&#148;) and shall continue in full force and effect until terminated in accordance
with the terms hereof. For the avoidance of doubt, Protalix hereby acknowledges that
the approval of the Board of Directors of Teva is required,
and that in the event that such approval is not received, this Agreement shall have
no force or effect whatsoever.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">15.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Teva shall have the right to terminate this Agreement for any reason with
respect to both or any specific Protein (the &#147;<B>Terminated Protein</B>&#148;), by providing
Protalix with</TD>
</TR>

</TABLE>
</DIV>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio --> - 32 - <!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>thirty (30)&nbsp;days prior written notice of such decision. In the event
that only one Protein is terminated, this Agreement shall remain in full force and
effect with respect to the remaining Protein which is not a Terminated Protein. No
compensation from Teva to Protalix shall be due as a result of such termination.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">15.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Upon the termination of this Agreement by Teva pursuant to Section&nbsp;15.2
above, with respect to any specific Protein, the following shall apply:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="7%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">15.3.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the License granted to Teva by Protalix, with regard to
Licensed Products based on such Protein shall be terminated;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="7%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">15.3.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Teva shall provide Protalix with a report summarizing its
development activities and the results up to termination.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">15.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Without derogating from any other remedies that either Party hereto may have
under the terms of this Agreement or at law, each Party hereto shall have the right
to terminate this Agreement forthwith upon the occurrence of any of the following:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the commission of a material breach by the other
Party hereto of its obligations hereunder, and such other
Party&#146;s failure to remedy such breach within sixty (60)&nbsp;days
after being requested in writing to do so by the non-breaching
Party; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the other Party&#146;s liquidation, whether voluntarily
or otherwise, or its entering into any arrangement with its
creditors.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">15.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding anything to the contrary in this Agreement, to the extent
that a Party (the &#147;Respondent&#148;) reasonably and in good faith disagrees with any
assertion by the other Party (the &#147;<B>Claimant</B>&#148;) that there has been a material breach
of this Agreement by Respondent, and Respondent provides written notice to Claimant
of its disagreement and the basis for its belief (a &#147;<B>Rebuttal Notice</B>&#148;) within
fifteen (15)&nbsp;days after Respondent receives notice from Claimant of a breach, this
Agreement will remain in effect and any termination of this Agreement further to
Section&nbsp;15.4(i) hereunder will be suspended pending resolution of such disagreement
between the Parties as provided in Section&nbsp;23.18 below. The Parties will attempt to
resolve such disagreement as expeditiously as possible and Respondent will continue
to comply with the provisions of this Agreement, to the extent that they are not the
subject of the disagreement between the Parties. For the avoidance of doubt, it is
clarified that nothing in this Section&nbsp;15.5 shall derogate from Teva&#146;s right of
termination pursuant to Section&nbsp;15.2, at any time and for any reason.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">15.6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Upon termination of this agreement for whatever reason, each Party shall
immediately return to the other party all materials, reports, updates,
documentation, written instructions, notes, memoranda, discs or records or other
documentation or physical matter of whatsoever nature or description provided by
the other Party, except in the event that such material is owned by such Party
pursuant to the terms of this Agreement, and provided that each Party shall be
allowed to retain one (1)&nbsp;copy for archival purposes.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">15.7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the event that following termination of this Agreement for convenience or
breach by Teva, Protalix shall request the license to utilize the Teva IP for the
sole purpose of the further development, manufacturing, commercialization, marketing
and sale of a Licensed Product, then Teva will enter into discussions with Protalix,
in good faith, with a view towards granting Protalix such license, but shall not be
bound to grant</TD>
</TR>



</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio --> - 33 - <!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>such license. Such license to the Teva IP shall be granted by Teva in
return for reasonable consideration by industry standards, as shall be discussed and
agreed in good faith between the Parties. For the avoidance of doubt, following
termination of this Agreement pursuant to Section&nbsp;15.4 due to a breach hereof by
Protalix, Teva shall <B>not </B>be required to enter into discussions with Protalix
regarding any request of Protalix to grant any license to the Teva IP.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">15.8.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Upon termination hereof for any reason, each Party shall be entitled to
collect any debt then owed to it by the other Party.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">15.9.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Save as explicitly stipulated otherwise in any Agreement, any provision, that
by its nature, is intended to survive termination, shall survive the termination or
expiration of this Agreement.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">16. <U><B>Representations</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">16.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each Party hereby represents to the other Party that:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="7%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">16.1.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>it has the full power and authority to enter into this
Agreement and to perform its obligations hereunder, and that subject to
Section&nbsp;15.1 with respect to Teva, that all corporate approvals have been
obtained.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="7%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">16.1.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>entering this Agreement shall not constitute a breach of any
agreement, contract, understanding and/or obligation, including such
Party&#146;s documents of incorporation, that it is currently bound by, and as
long as this Agreement is in effect and without derogating from the rights
to terminate the Agreement pursuant to Section&nbsp;15 above, such Party shall
not undertake any obligations which conflict with its obligations under
this Agreement.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">16.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In addition, Protalix hereby represents and warrants that:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="7%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">16.2.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>it is the sole and exclusive owner of the existing Platform
Patents, and the existing Platform IP, and that all right, title and
interest therein and thereto vest in Protalix, and that no third party,
other than the CSO to the extent applicable, has any rights whatsoever
(including the right to receive royalties or any other compensation) in
respect of the existing Platform Patents, and the existing Platform IP;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="7%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">16.2.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>No third party, has or shall have any rights whatsoever
(including the right to receive royalties or any other
compensation) in respect of any results of the Feasibility Program
and Stage 2 activities to be conducted by or for Protalix, except
as might be agreed pursuant to Section&nbsp;4.16;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="7%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">16.2.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To the best of its knowledge, the performance of Protalix&#146;s
obligations under this Agreement, and the exploitation of the Platform IP
do not infringe upon any third party intellectual property rights
currently existing;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="7%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">16.2.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>it has the right and authority, as the proprietor of the
Platform IP, to grant the License;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="7%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">16.2.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>it has no knowledge of any legal suit or proceeding by a
third party against Protalix contesting the ownership or validity of the
Licensed</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio --> - 34 - <!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="7%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Information or any part thereof or contesting the possible
exploitation of the License granted hereunder (including as it relates to
the commercialization of the Licensed Products) as infringing upon any
third party intellectual property rights;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="7%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">16.2.6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>it shall not, during the term of this Agreement, perform any
work or other activities on or in respect of the Proteins, except in the
course of the collaboration hereunder;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="7%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">16.2.7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>it has the financial capacity to carry out all its
obligations hereunder, including, the performance of the Feasibility
Programs in accordance with the timelines set forth therein;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="7%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">16.2.8.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>other than in respect of the Platform IP, it has not received
and hereby undertakes that it shall not receive any funding from the CSO
in respect of the Licensed Information, the Feasibility Programs or the
performance thereof, or the performance of any other of its obligations
under this Agreement; and in respect of the Platform IP, Protalix shall
bear any and all amounts due to the CSO;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="7%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">16.2.9.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>it has the necessary experience and expertise to perform each
of the Feasibility Programs, and its share of the Development Plan during
Stage 2;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="7%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">16.2.10.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Protalix does not have any Affiliates; and that</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="7%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">16.2.11.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>in carrying out its undertakings and responsibilities
pursuant to this Agreement, Protalix shall comply with all applicable laws
and regulations, licenses, permits, approvals and procedures.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="margin-left: 7%; text-indent: -5%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">16.3. In addition, Teva hereby represents and warrants that in carrying out its
undertakings and responsibilities pursuant to this Agreement, Teva shall comply, and
shall require that its Affiliates, Sub-licensees and Further Sub-licensees comply,
with all applicable laws and regulations, licenses, permits, approvals and
procedures.</DIV>


<DIV align="left" style="margin-left: 7%; text-indent: -5%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">16.4. Without derogating from any of the remedies available to either Party
hereunder or under applicable law, if either Party shall become aware of the
inaccuracy of any of the above representations, such Party shall immediately
notify the other Party of such in writing.</DIV>


<DIV align="left" style="margin-left: 7%; text-indent: -5%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">16.5. Both Teva and Protalix represent that they shall perform their obligations
hereunder diligently, expeditiously and to the best of their abilities.</DIV>


<DIV align="left" style="margin-left: 7%; text-indent: -5%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">16.6. Except as otherwise expressly provided in this Agreement, no Party makes any
warranty with respect to any technology, patents, goods, services, rights or other
subject matter of this Agreement and each Party hereby disclaims warranties of
merchantability, fitness for a particular purpose and non-infringement with respect
to any and all of the foregoing. Without derogating from the generality of the
foregoing, nothing contained in this Agreement is a warranty or representation by
Protalix or Teva that any efforts to be exerted by Protalix or Teva in connection
with this Agreement including without limitation any development activities to be
performed by it hereunder, or any part thereof, will actually achieve their aims or
succeed, and the Parties make no warranties whatsoever as to any results to be
achieved in consequence of the carrying out of any such efforts or activities; and
that any patents will be issued with respect to</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio --> - 35 - <!-- /Folio -->
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">





<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 7%">the patent applications that are or
may constitute part of the list of Platform Patents, or that patents obtained on any
of the said patent applications are or will be valid or will afford proper
protection or that the Licensed Information will be commercially exploitable or of
any other value.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">17. <U><B>Indemnification </B></U>
</DIV>


<DIV align="left" style="margin-left: 7%; text-indent: -5%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">17.1. Teva shall indemnify, defend, and hold harmless each of Protalix and its
directors, officers, employees, and agents and its respective successors, heirs and
assigns (the &#147;<B>Protalix Indemnitees</B>&#148;), from and against any liability, damage, loss,
or expense (including reasonable attorney&#146;s fees and expenses of litigation)
incurred by or imposed upon any of Protalix Indemnitees in connection with any
claims, suits, actions, demands or judgments (&#147;<B>Claims</B>&#148;) arising pursuant to a breach
of a representation or warranty of Teva hereunder and/or concerning the use of any
Licensed Information by Teva, or any of its Affiliates or Sub-licensees or Further
Sub-licensees, or concerning any Licensed Product that is developed, tested, made,
used, or sold pursuant to any right or license granted by Protalix to Teva under
this Agreement (except in cases where, and to the extent that, such Claims are
finally proven to result from the gross negligence and/or willful misconduct on the
part of any of the Protalix Indemnitees and/ or any misrepresentation by Protalix
hereunder).</DIV>


<DIV align="left" style="margin-left: 7%; text-indent: -5%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">17.2. Teva&#146;s undertakings under Section&nbsp;17.1 above shall be subject to: (a)&nbsp;receipt
of prompt written notice of any Claim by the Protalix Indemnitee (provided, however,
that the failure to give such notice shall not affect Teva&#146;s indemnification
undertakings provided hereunder except to the extent Teva shall have been actually
prejudiced as a result of such failure), (b)&nbsp;the cooperation of the Protalix
Indemnitee(s) regarding the response to and the defense of any such Claim, and (c)
Teva&#146;s right, by written notice to the Protalix Indemnitees, to assume the defense
of the Claim or represent the interests of the Protalix Indemnitees in respect of
such Claim, that shall include the right to select and direct legal counsel and
other consultants to
appear in proceedings on behalf of the Protalix Indemnitees and to propose,
accept or reject offers of settlement, all at its sole cost; <U>provided</U>
<U>however</U>, that no such settlement shall be made without the written
consent of the Protalix Indemnitees, such consent not to be unreasonably
withheld or delayed. Nothing herein shall prevent the Protalix Indemnitees from
retaining their own counsel and participating in their own defense at their own
cost and expense.</DIV>


<DIV align="left" style="margin-left: 7%; text-indent: -5%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">17.3. Protalix shall indemnify, defend, and hold harmless each of Teva and its
directors, officers, employees, and agents and its respective successors, heirs and
assigns (the &#147;<B>Teva Indemnitees</B>&#148;), from and against any liability, damage, loss, or
expense (including reasonable attorney&#146;s fees and expenses of litigation) incurred
by or imposed upon any of Teva Indemnitees in connection with any claims, suits,
actions, demands or judgments (&#147;<B>Claims</B>&#148;) arising pursuant to a breach of a
representation or warranty of Protalix hereunder and/or concerning the research,
development or manufacturing activities of Protalix hereunder (except in cases
where, and to the extent that, such Claims are finally proven to</DIV>




<P align="center" style="font-size: 10pt"><!-- Folio --> - 36 - <!-- /Folio -->
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">





<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 7%">result from the
gross negligence and/or willful misconduct on the part of any of the Teva
Indemnitees and/ or any misrepresentation by Teva hereunder).
</DIV>

<DIV align="left" style="margin-left: 7%; text-indent: -5%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">17.4. Protalix&#146;s undertakings under Section&nbsp;17.3 above shall be subject to: (a)
receipt of prompt written notice of any Claim by the Teva Indemnitee (provided,
however, that the failure to give such notice shall not affect Protalix&#146;s
indemnification undertakings provided hereunder except to the extent Protalix shall
have been actually prejudiced as a result of such failure), (b)&nbsp;the cooperation of
the Teva Indemnitee(s) regarding the response to and the defense of any such Claim,
and (c)&nbsp;Protalix&#146;s right, by written notice to the Teva Indemnitees, to assume the
defense of the Claim or represent the interests of the Teva Indemnitees in respect
of such Claim, that shall include the right to select and direct legal counsel and
other consultants to appear in proceedings on behalf of the Teva Indemnitees and to
propose, accept or reject offers of settlement, all at its sole cost;
<U>provided</U> <U>however</U>, that no such settlement shall be made without the
written consent of the Teva Indemnitees, such consent not to be unreasonably
withheld or delayed. Nothing herein shall prevent the Teva Indemnitees from
retaining their own counsel and participating in their own defense at their own cost
and expense.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">18. <U><B>Insurance</B></U>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">Each Party hereto shall maintain, for the term of this Agreement and thereafter,
insurance sufficient to cover its obligations under this Agreement and under law as it
customarily maintains for similar activities in the regular course of its business.
Protalix&#146;s insurance obligations with respect to the manufacturing of the API will be
included in the Supply Agreement. Teva may fulfill its obligation hereunder to obtain
insurance by the maintenance of appropriate self insurance regardless of the nature or
title thereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">19. <U><B>Limitation of Liability </B></U>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER OR ANY OF
ITS AFFILIATES FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, SPECIAL, PUNITIVE OR EXEMPLARY
DAMAGES (INCLUDING, WITHOUT LIMITATION, LOST PROFITS, BUSINESS OR GOODWILL) SUFFERED OR
INCURRED BY SUCH OTHER PARTY OR ITS AFFILIATES, WHETHER BASED UPON A CLAIM OR ACTION OF
CONTRACT, WARRANTY, NEGLIGENCE OR TORT, OR OTHERWISE, ARISING OUT OF THIS AGREEMENT.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">20. <U><B>Confidentiality </B></U>
</DIV>


<DIV align="left" style="margin-left: 7%; text-indent: -5%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">20.1. Other than as expressly set forth herein, Teva and Protalix undertake to
treat and to maintain and to ensure that their Representatives (as defined below)
shall treat and maintain, in strict confidence and secrecy any information disclosed
by either Party under this Agreement, whether disclosed in oral or visual form or in
writing and shall keep in confidence the existence and contents of this Agreement
(the &#147;<B>Confidential Information</B>&#148;) and shall not disclose, publish, or disseminate in
any manner, any Confidential Information including, without limitation, any aspect
thereof which may have been disclosed prior to the signature hereof to a third party
other than those of its Representatives with a need to know same for the purpose of
performing its obligations under this Agreement (the &#147;<B>Purpose</B>&#148;).</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio --> - 37 - <!-- /Folio -->
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">





<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 7%">In addition, each
Party shall undertake to treat and maintain (and to ensure that its Representatives
treat and maintain) in strict confidence and secrecy and to prevent any unauthorized
use, disclosure, publication, or dissemination of the Confidential Information,
except for the Purpose. Each Party agrees to be responsible for any use or
disclosure of Confidential Information of any of its said Representatives.
</DIV>

<DIV align="left" style="margin-left: 7%; text-indent: -5%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">20.2. Each Party shall:</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">20.2.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>safeguard and keep secret all Confidential Information, and
will not directly or indirectly disclose to any third party the
Confidential Information without written permission of the other.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">20.2.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>in performing its duties and obligations hereunder, use at
least the same degree of care as it does with respect to its own
confidential information of like importance but, in any event, at least
reasonable care.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="margin-left: 7%; text-indent: -5%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">20.3. The undertakings and obligations under Sections&nbsp;20.1 and 20.2 above shall not
apply to any part of the Confidential Information which:</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">20.3.1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>was known to the recipient of the Confidential Information
(&#147;<B>Recipient</B>&#148;) prior to disclosure by the disclosing Party (&#147;<B>Discloser</B>&#148;);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">20.3.2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>was generally available to the public prior to disclosure to
the Recipient;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">20.3.3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>is disclosed to Recipient by a third party who is not bound
by any confidentiality obligation, having a legal right to make such
disclosure;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">20.3.4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>has become through no act or failure to act on the part of
the Recipient public information or generally available to the public;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">20.3.5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>was independently developed by Recipient without reference to
or reliance upon the Confidential Information;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">20.3.6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>is required to be disclosed by Recipient by law, by court
order, or governmental regulation (including securities laws and/or
exchange regulations), provided that the Recipient gives Discloser
reasonable notice prior to any such disclosure and cooperates (at
Discloser&#146;s expense) with Discloser to assist Discloser in obtaining a
protective order or other suitable protection from disclosure (if
available) with respect to such Confidential Information.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="margin-left: 7%; text-indent: -5%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">20.4. Teva and Protalix acknowledge that the respective Confidential Information is
of special and unique significance to each of them and that any unauthorized
disclosure or use of the Confidential Information could cause irreparable harm and
significant injury to the Discloser that may be difficult to ascertain. Accordingly,
any breach of this Agreement may entitle the aggrieved Party in addition to any
other right or remedy that it may have available to it by law or in equity, to
remedies of injunction, performance and other relief, including recourse in a court
of law.</DIV>


<DIV align="left" style="margin-left: 7%; text-indent: -5%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">20.5. Each Party agrees to inform the other Party of any breach or threatened
breach of the provisions hereof by its Representatives.</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio --> - 38 - <!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="margin-left: 7%; text-indent: -5%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">20.6. The provisions relating to confidentiality in this Section&nbsp;20 shall remain in
effect during the term of this Agreement and for a period of three (3)&nbsp;years after
its termination.</DIV>


<DIV align="left" style="margin-left: 7%; text-indent: -5%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">20.7. &#147;<B>Representatives</B>&#148; shall mean employees, officers, agents, subcontractors,
consultants, and/or any other person or entity acting on either Party&#146;s behalf,
individually or collectively and which shall be exposed to Confidential Information.</DIV>


<DIV align="left" style="margin-left: 7%; text-indent: -5%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">20.8. Notwithstanding the foregoing, each Party may disclose the terms of this
Agreement to the extent required, in the reasonable opinion of such Party&#146;s legal
counsel, to comply with applicable laws, as well as to Sub-licensees and prospective
and current investors, pursuant to appropriate non-disclosure arrangements, provided
however that prior to any disclosure, the disclosing Party shall consult with the
non-disclosing Party, and the non-disclosing Party shall have the right to delete
business sensitive issues.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">21. <U><B>Publication</B></U>

</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">Neither Party shall issue any press release, make any public statement or advertise any
information pertaining to this Agreement, or to the collaboration hereunder, without the
prior written approval of the other, except as required by applicable
law.<br><br>Without
derogating from the foregoing, disclosure required under applicable law and regulations
shall not be subject to the written consent of the other Party, however the disclosing
party shall give the other sufficient notice, as far as practicable under law, of such
required disclosure as to enable the non-disclosing Party time to object to such
disclosure.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">22. <U><B>Independent Parties</B></U>

</DIV>

<DIV align="left" style="margin-left: 7%; text-indent: -5%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">22.1. This Agreement shall not make either Party the agent or legal representative
of the other Party. Neither Party is granted any right or authority to assume or to
create any obligation or responsibility, expressed or implied, on behalf of or in
the name of the other Party, with regard to any manner or thing whatsoever, unless
otherwise specifically agreed upon in writing.</DIV>


<DIV align="left" style="margin-left: 7%; text-indent: -5%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">22.2. Protalix hereby agrees that its employees, officers, agents, subcontractors,
consultants, and/or any other person or entity acting on Protalix behalf,
individually or collectively, shall be the sole responsibility of Protalix and shall
not be considered at any time as Teva employees and shall not have any claims
against Teva whatsoever.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">23. <U><B>Miscellaneous</B></U>

</DIV>

<DIV align="left" style="margin-left: 7%; text-indent: -5%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">23.1. The headings in this Agreement are intended solely for convenience or
reference and shall be given no effect in the interpretation of this Agreement.</DIV>


<DIV align="left" style="margin-left: 7%; text-indent: -5%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">23.2. All amounts required to be paid pursuant to this Agreement are final and
inclusive of all taxes and/or duties, of whatsoever nature, except for VAT, which
are now or may hereafter be imposed with regard to this Agreement.</DIV>


<DIV align="left" style="margin-left: 7%; text-indent: -5%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">23.3. All payments to be made hereunder shall be made by the due date for payment
as provided herein, in US Dollars or in New Israeli Shekels (&#147;<B>NIS</B>&#148;), as converted
from US Dollars as per the representative rate of the US Dollar against the NIS</DIV>




<P align="center" style="font-size: 10pt"><!-- Folio --> - 39 - <!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="left" style="margin-left: 12%; text-indent: -5%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">&nbsp;last published by the Bank of Israel prior to the actual date of payment.</DIV>


<DIV align="left" style="margin-left: 7%; text-indent: -5%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">23.4. If applicable laws require that taxes be withheld from any amounts due to
Protalix under this Agreement, Teva shall (a)&nbsp;deduct these taxes from the remittable
amount, (b)&nbsp;pay the taxes to the proper taxing authority, and (c)&nbsp;deliver to
Protalix a statement including the amount of tax withheld and justification
therefor, and such other information as may be necessary for tax credit purposes.</DIV>


<DIV align="left" style="margin-left: 7%; text-indent: -5%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">23.5. Teva shall be entitled to set-off from any amounts due to Protalix hereunder,
any amounts not exceeding the amounts of any damage caused to Teva, including
without limitation, as a result of Protalix&#146;s breach hereunder.</DIV>


<DIV align="left" style="margin-left: 7%; text-indent: -5%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">23.6. Teva shall be entitled to perform any and all of its obligations arising
under the terms of this Agreement and to exploit any and all of its rights arising
under the terms of this Agreement either directly or through its Affiliates,
provided that Teva remains liable to the performance of all of its obligations
hereunder.</DIV>


<DIV align="left" style="margin-left: 7%; text-indent: -5%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">23.7. Without derogating from Teva&#146;s right to grant Sublicenses hereunder, neither
Party may assign its rights or its obligations hereunder, in whole or in part,
except with the prior written consent of the other Party. Notwithstanding the
foregoing, (i)&nbsp;provided that Teva remains liable to the performance of all of its
obligations hereunder, Teva may assign its rights and obligations hereunder to an
Affiliate thereof, and such assignment may be made by Teva, at Teva&#146;s sole
discretion, either in respect of the entire Agreement, or with respect to the rights
and obligations related to any part of this Agreement; and (ii)&nbsp;Protalix may assign
its rights and obligations hereunder to any party
acquiring all of the business to which this Agreement pertains, other than to a
Teva Competitor.</DIV>


<DIV align="left" style="margin-left: 7%; text-indent: -5%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">23.8. Should any part or provision of this Agreement be held unenforceable or in
conflict with the applicable laws or regulations of any applicable jurisdiction, the
invalid or unenforceable part or provision shall, provided that it does not go the
essence of this Agreement, be replaced with a revision which accomplishes, to the
extent possible, the original commercial purpose of such part or provision in a
valid and enforceable manner, and the balance of this Agreement shall remain in full
force and effect and binding upon the Parties.</DIV>


<DIV align="left" style="margin-left: 7%; text-indent: -5%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">23.9. This Agreement and the annexes attached hereto, constitute the entire
agreement between the Parties with respect to its subject matter and supersede all
prior agreements, arrangements, dealings or writings between the Parties, including
without limitation, the Outlines of Teva &#151; Protalix Co-Operation executed between
the Parties on March&nbsp;19, 2006. This Agreement may not be varied except in writing
signed by the Parties&#146; authorized representatives.</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">23.10.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Defined terms used in this Agreement and in the annexes shall have the meanings
ascribed thereto herein and therein. References to Section numbers in this Agreement
and in the annexes are to sections of this Agreement. References to Paragraphs in
the annexes are to paragraphs in the respective annex in which the reference is made
or in other annexes, if so specified.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">23.11.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>No waiver of a breach or default hereunder shall be considered valid unless in
writing and signed by the Party giving such waiver and no such waiver shall be
deemed a waiver of any subsequent breach or default of the same or similar nature.</TD>
</TR>


</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio --> - 40 - <!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">23.12.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>VAT will be added, where applicable, to all payments to be made hereunder and
shall be paid against proper invoices.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">23.13.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each Party agrees to execute, acknowledge and deliver such further documents and
instruments and do any other acts, from time to time, as may be reasonably
necessary, to effectuate the purposes of this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">23.14.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>None of the provisions of this Agreement shall be enforceable by, any person who
is not a party to this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">23.15.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The remedies afforded to any of the Parties hereto, whether hereunder, or under
applicable law or otherwise, shall be cumulative in nature and not alternative.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">23.16.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any notice, declaration or other communication required or authorized to be given
by any Party under this Agreement to any other Party shall be in writing and shall
be personally delivered, sent by facsimile transmission (with a copy by ordinary
mail in either case) or dispatched by courier addressed to the other Party at the
address stated below or such other address as shall be specified by the Parties
hereto by notice in accordance with the provisions of this Section. Any notice shall
operate and be deemed to have been served, if personally delivered, sent by fax or
by courier on the next following day.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Teva&#146;s and Protalix&#146;s addresses for the purposes of this Agreement shall be as
follows</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-left: 9%; margin-top: 6pt"><B>If to Teva:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 9%; margin-top: 6pt">Teva Pharmaceutical Industries Ltd.<BR>
Attention: Dr.&nbsp;Ram Petter<BR>
5 Basel Street, Petah Tiqva 49131<BR>
Israel<BR>
Telephone: 972-3-9267683
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 9%; margin-top: 0pt">Facsimile: 972-3-9267309
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 9%; margin-top: 6pt">With a copy (that will not constitute notice) to:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 9%; margin-top: 6pt">Teva Pharmaceutical Industries Ltd.<BR>
Attention: General Counsel, Legal Department<BR>
5 Basel Street, Petah Tiqva 49131<BR>
Israel<BR>
Telephone: 972-3-926-7297<BR>
Facsimile: 972-3-926-7429
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 9%; margin-top: 6pt"><B>If to Protalix Bio-Pharmaceuticals Ltd.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 9%; margin-top: 6pt">Protalix Bio-Pharmaceuticals Ltd.<BR>
2 Snunit St., Science Park, P.O. Box 455, Carmiel 20100<BR>
Israel<BR>
Attention: C.E.O.<BR>
Telephone: 972-4-9889488<BR>
Facsimile: 972-4-9889489
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio --> - 41 - <!-- /Folio -->
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">23.17.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any payment not received when due pursuant hereto shall bear interest from the due
date until the date of actual payment at the rate of [***] (or such other percentage, if lower, as shall not exceed the maximum rate permitted by
law).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">23.18.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Agreement shall be governed and interpreted according to the laws of the
State of Israel. Any dispute arising from this Agreement shall be resolved
exclusively by the competent Courts of Tel Aviv-Jaffa, Israel, and by no other court
or jurisdiction.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">23.19.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Agreement may be executed in any number of counterparts (including
counterparts transmitted by fax), each of which shall be deemed to be an original,
but all of which taken together shall be deemed to constitute one and the same
instrument.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%"><B>IN WITNESS WHEREOF</B>, each Party has caused this Agreement to be executed by its duly
authorized representative:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="27%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="27%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD colspan="3" valign="top" align="center"><B>TEVA PHARMACEUTICAL INDUSTRIES LTD.</B><BR></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="center"><B>Protalix Bio-Pharmaceuticals Ltd.</B><BR></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><I>signature:</I>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;<I>/s/ Amir Elstein</I>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>&nbsp;</I>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>signature:</I>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;<I>/s/ David Aviezer</I></TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><I>name:</I>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amir Elstein
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>name:</I>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;David Aviezer</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 0px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 0px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><I>designation:</I>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;Group VP, Global Specialty Pharmaceutical
Products
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>designation:</I>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; CEO</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="1" valign="top" align="left" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000; border-top: 0px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><I>signature:</I>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;<I>/s/ Keren Siemon</I>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>signature:</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><I>name:</I>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Keren Siemon
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>name:</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 0px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><I>designation:</I>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sr. Director BD and Finance, Global
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>designation:</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 0px solid #000000">Specialty</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Pharmaceutical Products</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Date: 14 September 2006</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Date: 14 September 2006</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio --> - 42 - <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>Annex 1.2.1</B></U>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>List of Additional Patents</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&#091;***&#093;
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio --> - 43 - <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>Annex 1.2.42</B></U>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Platform Patents</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&#091;***&#093;
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio --> - 44 - <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Annex 1.2.44</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Proteins</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&#091;***&#093;
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio --> - 45 - <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Annex
3.1.1</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>Feasibility Program</B>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio --> - 46 - <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Annex 3.1.1A</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">Outline of the Feasibility Program
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&#091;***&#093;
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio --> - 47 - <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>Annex 4.4</B></U>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>Outline of the activities of the Parties under the Development Plan</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&#091;***&#093;
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio --> - 48 - <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>Annex 4.17</B></U>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>Key elements of the Supply Agreement</B>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio --> - 49 - <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Annex 8.2</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&#091;***&#093;
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio --> - 50 - <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>Annex 12.1 </B></U>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>Current Countries</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">&#091;***&#093;
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">* The list above is subject to further review by Teva
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 0px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#091;***&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio --> - 51 - <!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>Annex 14A.4</B></U>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>Timeline and detailed Description of the GCD Services</B>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio --> - 52 - <!-- /Folio -->
</DIV>


</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.9
<SEQUENCE>11
<FILENAME>g04822exv10w9.htm
<DESCRIPTION>EX-10-9 UNPROTECTED LEASE CONTRACT
<TEXT>
<HTML>
<HEAD>
<TITLE>EX-10-9 Unprotected Lease Contract</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Exhibit&nbsp;10.9
</DIV>
<DIV align="center" style="font-size: 10pt; margin-top: 18pt">[Translation from Hebrew]</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>Unprotected Lease Contract</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">Made and executed in Tel Aviv this 28<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> October, 2003

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="15%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Between:</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Engel Science Parks (99)&nbsp;Ltd.</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">66 Hahistadrut Blvd., Haifa Bay<BR>

By Yitzchak Yaacovinsky</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The party authorized to undertake and sign in the name of the Lessor<BR>
(hereinafter: &#147;<B>the Lessor</B>&#148;)</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><U><B>of the first part</B></U></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>And:</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Metabogal Ltd.</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">P.O.Box 432, Kiryat Shmonah, Zip code 11013<BR>
(hereinafter: &#147;<B>the Lessee</B>&#148;)</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><U><B>of the second part</B></U></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">WHEREAS
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Lessor has contracted with the Israel Lands Administration by
agreement whereby it acquired the development rights in the plot
known as Block 18984, Parcels 187 (part of), 188 (part), 190 (part
of), 191 (part of), 192 (part of), 193 (part of), 194 (part of),
199 (part of) and 206 (part of) in Carmiel, plot/s no. 1,
according to Detailed Plan no. C/8880, in Carmiel, (hereinafter: &#147;<B>the Land</B>&#148;) all pursuant to the Development Agreement and the
Appendices thereto attached to this Agreement and marked as
(Appendix &#147;A&#148;); and</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">WHEREAS
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Lessor intends to establish a science park on the Land,
consisting of industrial buildings for leasing (hereinafter: &#147;<B>the
Science Park</B>&#148;); and</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">WHEREAS
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Lessor is the proprietor of development rights from the Israel
Lands Administration under a Development Agreement and is entitled
to effect transactions with the Land, including leasing buildings
that it will construct thereon, as set out below in this Agreement
and there is nothing by law or agreement or otherwise to prevent
the Lessor from entering into this Agreement; and</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">WHEREAS
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The destination of the premises is compatible with the Purpose of
the Lease; and</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">WHEREAS
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Lessor declares that the Development Contract has not been
rescinded by the Israel Lands Administration and is about to be
further extended; and</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">WHEREAS
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Lessee is desirous to lease the Premises (as hereinafter
defined) from the Lessor under an unprotected lease according to
the Tenants Protection Laws, and the Lessor is prepared to grant
such a lease of the Premises to the Lessee, subject to all of the
conditions hereinafter contained;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->2<!-- /Folio -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>IT IS THEREFORE AGREED, DECLARED AND STIPULATED BETWEEN THE PARTIES AS FOLLOWS:</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Preamble </B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The preamble to this Contract and the Appendices thereto will constitute an integral part
hereof.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Interpretation </B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The headings to the clauses in this Contract are set out for ease of reference
only and do not constitute part of the Contract nor will they be applied for purposes of
interpretation.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Save where the context or the meaning otherwise requires, everything stated in
the singular includes the plural and vice-versa, and everything stated in the masculine
includes the feminine and vice-versa.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Unless the context otherwise requires, the following words shall bear the
meanings set out opposite them when used in this Contract:</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#147;<B>the Premises</B>&#148; -
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">means the gross area of some 750sq.m., situated on the
ground floor of Building no. 1 of the industrial building distended to be
constructed by the Lessor and/or on its behalf, on the Land, within the boundaries
of the Science Park in Carmiel. The Premises will consist of offices according to
the specification attached, and be totally finished and have a basic
infrastructure, but be without installations and furniture.<BR>
The Premises will be constructed in accordance with plans, the
Lessor&#146;s specification and the Lessee&#146;s specification
respectively attached hereto as Appendices &#147;B&#148;, &#147;C&#148; and &#147;D&#148;.
The Lessor&#146;s and the Lessee&#146;s specification will be
hereinafter collectively called &#150; &#147;the Specification&#148;.<BR>
The area of the Premises for the purpose of determining the
rent will be set in accordance with an actual survey
thereafter, after construction is completed.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Term of the Lease, Purpose thereof and Non-applicability of the Tenants Protection
Laws</B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Term of the Lease</B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.1.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessor hereby leases to the Lessee and the Lessee hereby takes
on lease from the Lessor the Premises for a term of 5&nbsp;years, commencing on 15.2.04
and expiring on 14.2.09 (hereinafter: &#147;<B>the Lease Term</B>&#148;).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If and to the extent the actual delivery date is deferred by reason of that
stated in clause 5.1 hereof, the date of the commencement of the Lease Term will
be deemed to be the date of actual delivery, and the expiration date of the Lease
Term will be correspondingly deferred.</TD>
</TR>

</TABLE>
</DIV></DIV>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->3<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Subject to the agreed time schedule mentioned in clause 19.9, the Lessor will, in
respect of each day of deferral of the date of the commencement of the Lease
Term, pay the Lessee an amount equal to twice the amount of the Rent plus VAT,
calculated on a daily basis as from the date prescribed above for the
commencement of the Lease Term until the actual date of the commencement of the
Lease Term. The deferral of the date of commencement of the Lease Term by reason
of any act or omission of the Lessee will not obligate the Lessor to make such
payment and the date of the commencement of the Lease will remain unchanged.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.1.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding the foregoing in relation to the Lease Term, the
Lessee will be entitled to terminate the Lease Term by four months prior notice,
during the periods and on the following terms and conditions:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="11%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.1.2.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>After 3&nbsp;years of the lease, against payment of the sum of NIS. 150,000
(plus VAT) in addition to the rent that has been paid in respect of such
three-year lease.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="11%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.1.2.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>After 4&nbsp;years of the lease, against payment of the sum of NIS. 75,000
(plus VAT) in addition to the rent that has been paid in respect of such
four-year lease.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The sums mentioned in the above sub-clause will be linked to the residential
construction inputs index, the base index being that known on the date of the
execution of this Contract, the operative index being that which will be known on
the date of the making of the payment according to this clause.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.1.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessee hereby undertakes to open the Premises for regular
business activity and carry on in the Premises for the entire duration of the
Lease Term, a business the purpose of which is set out below.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.1.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Subject clause 3.1.2 above, the cessation by the Lessee of the use
of the Premises or quitting the same prior to the expiration of the Lease Term
will not release it from fully performing its undertakings, including payment of
the rent and the remaining payments payable by it under this Contract until the
expiration of the Lease Term, except in a case where an alternative tenant is
found for the Premises whose identity has been agreed to by the Lessor, in which
case the Lessee will be released from the performance of its undertakings under
this Agreement from the date on which a contract is forged with the alternative
tenant and thereafter.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>It is clarified that the Rent will be paid by the expiration of the Lease Term or
until an alternative tenant is found who is acceptable to and approved by the
Lessor, whichever is the earlier.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessor&#146;s approval will not be unreasonably withheld save that where the
Lessor will have agreed to an alternative tenant that has been found by the
Lessee, the Lessee will remain liable, jointly with the alternative tenant, for
the performance of the undertakings under this Agreement.</TD>
</TR>

</TABLE>
</DIV></DIV>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->4<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Purpose of the Lease</B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessee hereby leases the Premises for the management of a business in the field of
biotechnology including the management of biotechnology laboratories, research,
development and production of medications and the Lessee is prohibited from making any
other use whatsoever of the Premises.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Non-applicability of the Tenants Protection Laws </B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.3.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>There was no tenant entitled to occupy the Premises on the date of
the commencement of the Tenants Protection Law (Consolidated Version), 5732-1972.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.3.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessee hereby declares that it has not been requested to pay nor
has it paid any key money or payments which could be construed as key money and
that all the works, alterations, improvements and enhancements that will be made
in the Premises, if at all, are not and will not be fundamental alterations and
further that the provisions of Part&nbsp;Three of the Tenants Protection Law
(Consolidated Version), 5732-1972 dealing with key money, will not apply to the
Contract.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.3.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lease, the Lessee and the Premises are not protected according
to the provisions of the Tenants Protection Law (Consolidated Version), 5732-1972
nor according to the provisions of any other law protecting tenants or occupiers
in any manner whatsoever and such Laws as amended and the regulations promulgated
now or hereafter thereunder do not and will not apply to the building and/or the
Lease and/or the Lessee and/or the Premises and/or this Contract.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.3.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessee will not be entitled, when quitting the Premises, to any
payment whatsoever either in the form of key money or in any other form.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3.3.5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the avoidance of any doubt the Lessee hereby declares and
warrants that if in the future any claims are raised to the effect that the
engagement under this Contract is protected according to the Tenants Protection
Law or any other law, the Lessee will compensate the Lessor in respect of any
damage that will be incurred by it, including the difference between the value of
the property at the expiration of the Lease Term as occupied, and the value
thereof in the open market, as vacant property.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Rent</B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessee undertakes to pay the Lessor monthly rent pursuant to the following
conditions and dates:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.1.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessee will pay for the duration of the Lease Term the sum of $9
per month for each sq.m., of the area of the Premises.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.1.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The parties agree that in respect of each 11-month period of the
Lease, the Lessee will be exempt from paying rent for one month. The month of the
Lease without payment of the rent will be granted in relation to each year of the
Lease, in the seventh month of the Lease, that is to say &#150; in each year of</TD>
</TR>

</TABLE>
</DIV></DIV>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->5<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Lease the Lessee will be exempt from payment of rent in respect of the period
between 15.4 &#150; 14.5.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.1.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessee will deduct from the rent, amount mentioned, tax at
source as required by law, unless the Lessor produces to the Lessee a lawful
certificate regarding the exemption from deduction of tax at source.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>VAT will be added to the above rent against a lawful VAT receipt, at the rate in force
on the date on which each payment is made.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Payment of the rent will be made in new shekels according to the representative
rate of exchange of the dollar on the date on which each payment will be made pursuant
to the publications of the Bank of Israel.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Deleted.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The rent will be paid in quarterly installments in advance, on the
15<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> of each month of February, May, August, November.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Deleted.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.6</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Arrears in payment of the rent as well as arrears in any other payment imposed
upon the Lessee under this Contract exceeding 14 (fourteen)&nbsp;days, will constitute a
fundamental breach of this Contract.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4.7</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Every sum which the Lessee is liable to pay under this Contract and which will
not have been paid on due date will bear interest on arrears at the maximum rate
customary for the time being in Bank Leumi le-Israel B.M., with respect to overruns of
unauthorized credit, from the date prescribed for payment under this Contract until the
date of actual payment, together with VAT as required by law. The interest rates will
vary during the period of the arrears in accordance with changes occurring from time to
time in the interest customary in Bank Leumi as stated. Nothing contained in this clause
shall derogate from any relief or other right conferred upon the Lessor according to the
provisions of this Contract or at law. In respect of the first three days of arrears, no
interest on arrears as stated above will be payable.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Acceptance of the Premises </B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessor will place the Premises at the Lessee&#146;s disposal in accordance with
the Execution Plans (as hereinafter defined) and the Specification attached hereto,
complete with connection to the electricity and water supply and after having duly
received a certificate from the Electric Corporation and the Lessee undertakes to accept
the same in such condition.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As part of the Lessor&#146;s undertakings it undertakes to allocate to the Lessee, for the
duration of the actual Lease Term, 20 parking places adjacent to the entrance to the
Premises.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>It is hereby agreed that by no later than <I>15.11.03</I>, the parties will confirm in
writing the detailed Execution Plans in respect of the works that will be carried out by
the Lessor at the Premises (in this Agreement referred to as: &#147;<B>the</B></TD>
</TR>


</TABLE>
</DIV></DIV>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->6<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&nbsp;</B></TD>
    <TD width="1%"><B>&nbsp;</B></TD>
    <TD><B>Execution Plans</B>&#148;). The Execution Plans will be prepared based on the plans contained in
Appendix &#147;B&#148; to the Contract by and at the expense of the Lessor, except for plans in
respect of the Lessee&#146;s dedicated purposes and any planning in excess of the Lessor&#146;s
Specification will be borne by the Lessee. The Lessor&#146;s Specification and the Lessee&#146;s
Specification will be delivered to the Lessee at least 7&nbsp;days prior to the date of the
approval thereof as stated above.<BR><BR>

The Lessor will provide the Lessee with an assessment of the cost
differentials prior to commencing execution.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the avoidance of any doubt it is hereby emphasized that the Lessor will not be
required to execute any work or alteration or improvement whatsoever in the Premises,
in addition to its undertakings in the Execution Plans and the Specification.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The parties agree that a delay of up to three months in the completion of the
development works surrounding the Premises does not constitute a breach of this
Agreement or a cause for any delay/refusal of the delivery of the Premises and/or the
taking of the possession thereof, all on the condition that the Lessee will be able to
make actual use of the Premises.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The parties will, 7&nbsp;days prior to delivery of possession of the Premises, make a
memorandum of delivery within the scope of which the Lessee will itemize all the defects
and deficiencies in the Premises. The Lessor will rectify or make good, as appropriate,
everything that requires repair and completion by the date of the delivery of
possession.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Additional payments to be borne by the Lessee </B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">6.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessee undertakes, in addition to the rent and the VAT, to pay all the taxes,
fees, levies and compulsory payments applicable now or hereafter to the Premises and/or
to the use thereof during the Lease Term including general municipal taxes and business
tax as well as expenses for the use of electricity, gas and telephone, and all the
remaining maintenance expenses of the Premises in the area of the Premises only
(including maintenance and cleaning) as well as the facilities serving the Premises,
(such as elevators, air-conditioning, fire-fighting systems and the like).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>It is clarified that all the above payments and any other payment applicable to the
Premises or the construction thereof (including property tax, amelioration levies
and/or sewerage, drainage and water fees), as well as any payment in respect of the
period culminating with the date of the delivery of the possession to the Lessee, will
be borne and paid for by the Lessor.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessee undertakes to transfer the municipal tax bill in respect of the Premises
into its name immediately after taking actual possession of the Premises.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>It is clarified and agreed that the Lessee will also be liable for a proportionate
share equal to the floor area of the Premises compared with the total floor area of the
building in which the Premises are situated, of the cost of maintaining the common
areas for the building.</TD>
</TR>

</TABLE>
</DIV></DIV>
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<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>It is clarified that the Lessee will bear the maintenance costs of the Premises
including all the installations and systems that are situated within the area of and
serve the Premises.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">6.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessee will be liable also after the termination of the Lease Term, for the
payments mentioned in this clause above if the liability has been created following the
use or consumption made during the currency of the Lease Term, even if the liability or
the demand for payment has arrived after the expiration of the Lease Term.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">6.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessee will pay the payments mentioned in this clause above immediately when
they fall due.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">6.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The parties will, on the date of the delivery of possession of the Premises, make
an accounting with respect to the alterations, additions and/or reductions that have
actually been made at the Premises compared with the Lessor&#146;s Specification (Appendix
&#147;C&#148;) and which will be priced according to the full price thereof according to the <I>Dekel</I>
price list. The amount due to either of the parties following such accounting will be
paid by way of a reduction or addition to the first quarterly payment of the rent as
appropriate.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">6.5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the event of the Lessor making any payment which, by the provisions of this
Contract, is payable by the Lessee, the Lessee will be bound to pay the Lessor such
payment immediately upon the Lessor&#146;s first demand, with the addition of exchange rate
differentials (if any) plus interest on arrears according to clause 9.2 hereof, computed
from the date of the making of the payment by the Lessor until the actual payment
thereof to the Lessor provided the Lessor has given 14&nbsp;days&#146; advance notice of its
intention to make the payment and the Lessee has failed to pay the same.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Possession of the Premises during the Lease Term </B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">7.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessee will keep the Premises in good and proper condition, keep the Premises
tidy and clean including the surroundings, installations and fittings thereof, and use
the same cautiously and carefully and fulfil the instructions of any competent authority
as they exist from time to time in connection with arrangements regarding cleanliness,
the removal of waste garbage, and keeping the drainage system and all the remaining
systems at the Premises in order.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">7.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessee will repair at its own expense, any defect, malfunction or fault that
will be caused or come about or be discovered in the Premises and in any part thereof
belonging to the Lessee, including plumbing and various other repairs when they arise
and/or have been caused or discovered, except for repairs or damages that have been
caused by reason of fair wear and tear following the reasonable use of the Premises
and/or as a result of construction and/or infrastructure defects (including sewage,
electricity, water) in the construction of the Premises, the responsibility for which
will apply to the Lessor.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Repairs which are the Lessor&#146;s responsibility will be repaired by it, failing which
they will be executed by the Lessee after notices as set out in this clause will have
been given, <I>mutatis mutandis</I>.</TD>
</TR>

</TABLE>
</DIV></DIV>
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<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">7.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If the need to make a repair arises that a party is responsible to fix according
to clause 7.2 above, the party liable for the repair will be bound to carry out the same
at its own expense, within a reasonable time of the date of discovery. Failure by the
party liable to carry out the repair will entitle the other party, that is not liable,
to carry out the same after giving 30&nbsp;days&#146; prior written notice and all the repair
expenses will be borne by the party liable, who shall be under an obligation to
reimburse the party actually carrying out the repair for expenses, immediately upon
first demand with the addition of linkage differentials and interest on arrears
according to clause 9.2 hereof, computed from the date of payment for the repair until
the actual payment thereof, to the repairing party. Notwithstanding the foregoing it is
agreed that in the event of an urgent repair, the party entitled may carry out the same
after giving 24 hours&#146; prior notice to the other party.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">7.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessee undertakes to comply with the provisions of any law including any Law,
Regulation, Order, By-law or instruction of any competent authority pertaining to the
management of its business at the Premises and in connection with the maintenance of the
Premises and the use thereof. The Lessee will also be responsible for paying any fine
that will be imposed following the failure to fulfil such instructions.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">7.5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessee undertakes not to effect any internal or external alteration at the
Premises nor make any addition thereto nor demolish any part of the Premises or any of
the installations thereof nor suffer any such alterations or additions or repairs or
demolition, to be made, without receiving the prior written consent of the Lessor, which
consent shall not be unreasonably withheld by the Lessor.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>It is clarified that this clause will not apply to works at the Premises that will be
carried out by the Lessee or any person on its behalf within the scope of the &#147;clean
room&#148; installation in that part of the Premises that is designated for production.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">7.6</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>It is expressly agreed that signage and advertising will only be made by
arrangement with the Lessor (including the architect of the building in which the
Premises are situated) and with its prior consent only, which consent will not be
unreasonably withheld by the Lessor.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">7.7</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Alterations made to the Premises with the Lessor&#146;s consent, will require the
Lessee, at the end of the Lease Term, to reinstate the Premises to its former condition
before the alterations were made, or leave the same in its condition, all as decided and
notified by the Lessor. Upon such agreement by the Lessor being given to the alterations
remaining, the Lessee may not remove from the Premises or reinstate the alterations or
any part thereof that the Lessor has required remain at the Premises or make any
alteration therewith, and the alterations will, at the end of the Lease Term, pass into
the Lessor&#146;s ownership and possession, without the Lessee being able to demand and/or
receive any compensation or payment for them.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">7.8</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessor and each of its managers may enter upon the Premises by prior
arrangement, at any reasonable time acceptable in order to check the condition of the
Premises and carry out repairs, works, technical or other arrangements for the Premises
all this without unreasonably effecting the Lessee&#146;s activity at the Premises.</TD>
</TR>

</TABLE>
</DIV></DIV>
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</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Nothing herein contained shall impose any duty whatsoever on the Lessor to carry out
anything which is mentioned in this Contract.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">7.9</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessor will independently install, at its own expense, fire fighting and
safety measures as appearing in the plans and Specifications attached hereto as
Appendices &#147;B&#148; and &#147;C&#148;.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessee will, at its own expense, fulfil the instructions of any competent authority
relating to the fire fighting arrangements and procedures, fire prevention, civil
defense and safety, to the extent these will be required in relation to the Premises
and the use made thereof, over and above those measures which will be installed by the
Lessor.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">8.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Assignment of rights </B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">8.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessee undertakes to use the Premises personally only or with its employees
and the Lessee will be prohibited from authorizing any other person or persons to use
the Premises or any part thereof for consideration or otherwise, directly or indirectly.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">8.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessee undertakes not to transfer and/or assign and/or convey and/or pledge
and/or charge in any manner whatsoever, without first receiving the written consent of
the Lessor (if and to the extent it will be granted) this Contract and/or any right
thereunder to any other party or parties, nor grant any leases of the Premises or any
part thereof by sub-lease or convey possession or use thereof or any part thereof to any
other person or persons for consideration or otherwise, in any manner whatsoever. Any
transfer and/or assignment and/or conveyance and/or pledge and/or charge that will be
made by the Lessee contrary to that stated above will be null and void <I>ab initio </I>and
devoid of any effect.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">8.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding the foregoing the Lessee will be entitled to share the use of the
Premises under this Agreement or sub-lease parts thereof to a parent, subsidiary or
affiliated company of the Lessee (as these terms are defined in the Companies Law, 1999)
without the need to obtain the Lessor&#146;s consent provided that the Lessee will remain
liable for all its obligations under this Agreement.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">9.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Breaches and remedies</B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This Contract will be governed by the provisions of the Contracts (Remedies for Breach of
Contract) Law, 5731-1970 and the provisions of the Contracts (General Part) Law, 5733-1973.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">10.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Licensing and Licences</B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">10.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessee hereby undertakes to obtain any licence it requires and ensure that
the business is carried on according to every licence that is required by law, including
from any municipal, governmental, local or other authority, for the purpose of operating
and managing the Lessee&#146;s business at the Premises.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessor will sign any document that will be required by the landlord &#091;sic&#093; in order
to obtain a business licence, but does not deviate from the conditions of this</TD>
</TR>


</TABLE>
</DIV></DIV>
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</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Agreement, within and by no later than 14&nbsp;days after delivery thereof for signature to
the Lessor.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">10.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessee shall ensure that throughout the entire Lease Term the licences and
approvals required in order to carry on and operate its business mentioned, will be
renewed.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">10.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the avoidance of any doubt the Lessor is not responsible towards the Lessee
for obtaining licences or approvals from any authority except where failure to obtain
receipt of the licence results from any act or omission of the Lessor or of any person
on its behalf and where a duty attaches to the Lessor by law and/or this Agreement to
carry out or refrain from carrying out such act, as appropriate.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Without derogating from the Lessee&#146;s undertaking mentioned above, the Lessor declares
that the Premises comply with the zoning thereof according to the Town Building Plan in
force in respect of the Land.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">11.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Insurance</B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">11.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessee hereby undertakes to insure at its own expense for the duration of the
Lease Term, the building of the Premises and the contents thereof against:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">11.1.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Fire, explosion, earthquake risks.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">11.1.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Flooding, water damage of any kind.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">11.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessee hereby undertakes to insure at its own expense, for the duration of
the Lease Term, its activity at the Premises, with the following insurances:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">11.2.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Third party liability insurance with liability limits that will not be less
than the amount equal to US$1,000,000 Million per event, and in the aggregate for
the insurance period, which will endure for the duration of the Lease Term.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">11.2.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Employers&#146; liability insurance.<BR>
The Lessee further undertakes to maintain at its own expense for the duration
of the Lease Term loss of rent insurance following the Premises being taken out
of use by reason of damage that has been caused thereto or to the contents
thereof by the risks set out in clause 11.1 above, for an indemnity period of
12&nbsp;months. This insurance may be made by means of extending the fire insurance
policy to cover loss of rent.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">11.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessee undertakes to add the Lessor&#146;s name as an additional insured in the
policies mentioned above.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">11.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessee will produce to the Lessor upon demand, all the insurance policies
which have been issued as required by this Contract and also produce to the Lessor on a
regular basis every new policy that has been issued to it or any amendment thereto. The
Lessee will, upon the Lessor&#146;s reasonable demand, add to or update and/or amend the
insurance policies to the Lessor&#146;s satisfaction in order to comply with the criteria
prescribed in this clause 11, and the amounts will in any event be linked to the Index
each year.</TD>
</TR>

</TABLE>
</DIV>
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->11<!-- /Folio -->

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">11.5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessee will cause an express condition to be added to the insurance policy
whereby the insurer expressly waives any right of subrogation or other right under any
law to have recourse against the Lessor in a claim of subrogation or repayment or
indemnity in respect of direct or indirect damage that has been caused by reason of the
Lessor, if any such damage is caused.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">11.6</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessor&#146;s right of inspection and its exercise or right to refrain from
exercising its right to view the policies and demand any update, addition or change as
set out in clause 11.1 above, will not impose upon it any liability whatsoever with
respect to the policies, or the nature and validity thereof, or with respect to the
absence thereof.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">11.7</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessee undertakes to comply with all of the conditions of the policies
mentioned above in this clause, punctually pay the insurance premiums and ensure that
the policies are renewed and remain in full force for the entire duration of the Lease
Term. Failure to renew the policies in the full value thereof, including linkage to the
Index for any reason whatsoever will constitute a fundamental breach of this Contract.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">11.8</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The policy will include a clause determining that it will not be varied,
cancelled or renewed without at least 30&nbsp;days&#146; prior notice being given to the Lessor.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">12.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Liability of the Lessee </B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">12.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessor, its agents and any person acting in its name and on its behalf will
not be responsible in any manner whatsoever with respect to any damage or harm that will
be caused to the Lessee or its property, subject as hereinafter provided.<BR>
It is hereby expressly agreed and declared that no liability will attach to the Lessor
of any kind whatsoever towards the Lessee in respect of any damage that has been caused
to the Premises or its contents or to any third party &#150; for any reason whatsoever
regardless of whether the reasons for the damage or the malfunction are known or not,
with the exception of any wilful act of damage by the Lessor and/or by any person on
its behalf.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">12.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessor will bear no responsibility whatsoever or liability with respect to
any physical damage or loss and/or damage to property of any kind whatsoever (whether
direct or indirect) that will be caused to the Lessee and/or its workers and/or those
employed by it and/or to its agents or customers or visitors or invitees or to any other
person who is found at the Premises or in any other area occupied by the Lessee with the
licence of the Lessor and/or any property of the Lessee, and the Lessee assumes total
responsibility for any damage of that kind and undertakes to compensate and indemnify
the Lessor against any damages that it will become liable for or compelled to pay
following damage of such kind, against any expense that it will lay out in connection
with such damage.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">13.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Grounds for eviction</B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Without derogating and/or detracting from any other provision herein contained, upon the
occurrence of any of the following events, the Lessor will be entitled to immediately
terminate the engagement and the Lease under this Contract, and demand the immediate vacation
of the Premises by the Lessee:</TD>
</TR>

</TABLE>
</DIV></DIV>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->12<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">13.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If the Lessee is in arrears for more than 14&nbsp;days in the payment of any amount
that has fallen due to the Lessor according to the provisions hereof, and under any law,
and the breach has not been cured within 5&nbsp;days of receiving a written notice from the
Lessor to do so;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">13.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If a receiver (whether temporary or permanent) is appointed or receiver and
manager (whether temporary or permanent) or liquidator (temporary or permanent) for the
Lessee&#146;s business or property or any part thereof and such appointment will not be
vacated within 60&nbsp;days;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">13.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If the Lessee passes a resolution for dissolution or if any dissolution order is
issued against it and such order is not vacated within 60&nbsp;days or if the Lessee reaches
a compromise or arrangement (within the meaning of the Companies Ordinance) with its
creditors or any of them;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">13.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If any final attachment is imposed over all the assets of the Lessee;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">13.5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If the Lessee is in breach of any of the provisions contained in clause 8 above
and grants to any other person the right of use or any other right whatsoever in the
Premises or in any part thereof and such breach will not have been cured within 5&nbsp;days
of the despatch of notice in writing by registered mail by the Lessor.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>It is clarified that the termination of the engagement and eviction of the Lessee in the
circumstances mentioned above will not terminate or detract from any obligation of the Lessee
to fulfil all of its financial obligations under this Contract, for the entire duration of
the Lease Term.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">14.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Vacation of the Premises </B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">14.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessee undertakes, upon the expiration of the Lease Term or the termination
of the Lease and/or the rescission of this Contract for any reason, to vacate the
Premises and surrender possession thereof to the Lessor, the Premises being clear and
vacant of any person and thing belonging to the Lessee, in clean and orderly condition
as the Lessee received the same from the Lessor, subject to fair wear and tear. Should
the Lessor demand, as stated in clause 7.6 above, that supplementary works, alterations
and additions that have been made by the Lessee in the Premises, if at all, will be left
by it at the Premises, then any improvement, enhancement, addition which is permanently
affixed to the Premises &#150; even if these were installed and added to the Premises by and
at the expense of the Lessee, will be left by the Lessee at the Premises.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">14.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the event of the Lessee failing to vacate the Premises on the date specified
above, then, in addition to the Lessor&#146;s right to sue for eviction from the Premises,
and in addition to any other right that the Lessor may have according to this Contract
or at law, and without derogating from any right or relief conferred upon the Lessor
stated above, the Lessee will pay the Lessor for the period commencing on the date it
ought to have vacated the Premises until the date on which it vacates the Premises, an
amount equal to twice the amount of the rent, plus interest on arrears according to
clause 9.2 above, and Value Added Tax, computed on a daily basis, from the date of
creation of the liability to pay until the full and actual payment to the Lessor, and
which would have been payable according to this Contract had the Lease been extended
according to the conditions hereof. The</TD>
</TR>

</TABLE>
</DIV></DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->13<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>above payment has been set and agreed as proper user fees and/or fixed and pre-agreed
damages as estimated in advance by the parties in accordance with their prior
calculations.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">14.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>It is hereby stipulated and agreed between the parties that nothing contained
above in this clause shall confer upon the Lessee any right to continue to occupy the
Premises (against payment of the agreed compensation) and/or constitute any waiver on
the part of the Lessor of any of its rights and/or derogate from the Lessor&#146;s right to
obtain any other remedy or relief, including, but without derogating from the generality
of the foregoing, the ejection or removal of the Lessee from the Premises.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">15.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Charge or pledge by the Lessor </B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">15.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessor may pledge and/or charge this Contract in whole or in part, assign any
of its rights thereunder to others, transfer the whole or part thereof in any form
whatsoever as the Lessor deems fit, from time to time, either for the purpose of
obtaining financing or for any other purpose, all at the Lessor&#146;s absolute discretion,
all this being without derogating from the Lessee&#146;s rights under this Contract of Lease.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">15.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessor may assign all or any of its rights in the Premises, transfer all or
partial ownership thereof, at its absolute and exclusive discretion, without requiring
the Lessee&#146;s consent, and the Lessee accepts in advance and expressly any such act which
will be effected by the Lessor, unconditionally, and the Lessee will have no claim or
demand or action of any kind whatsoever against the Lessor or its successors, subject to
the Lessee&#146;s rights under this Agreement not being affected.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">16.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Lessor&#146;s Remedies in respect of Breach </B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">16.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Without derogating from that stated in clause 9 above, and further to this clause
and the specific remedies appearing in this Contract, the provisions of the Contracts
(Remedies for Breach of Contract) Law, 5731-1970 will apply to a breach of this
Contract, as well as the provisions of the Contracts (General Part) 5733-1973.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">16.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If the Lessee fails to keep the Premises in proper condition or fails to repair
that necessary in the Premises and/or fails to return the Premises to the Lessor at the
expiration of the Lease Term in proper condition or if any damage is caused whatsoever
to the Premises during the Lease Term, and has not been rectified by the Lessee, then,
in addition to any other right that the Lessor may have in such a case pursuant to the
provisions of this Contract and/or at law, the Lessor may effect any repair or do any
act that it deems fit in order to repair the damage or restore the condition to what it
was previously, at the Lessee&#146;s expense and after giving the Lessee seven days prior
written notice and the Lessee has failed to rectify the breach within the 7&nbsp;day period
mentioned. The Lessee will reimburse the repair expenses against presentation of
invoices for the repair.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">16.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Deleted.</TD>
</TR>

</TABLE>
</DIV></DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->14<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">16.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In the event of a termination of the rights of the Lessee under this Contract by
reason of a breach thereof by the Lessee, the Lessor will be entitled to any additional
remedy that it has by law on account of the breach, including the remedy of
compensation, or injunctive or mandatory orders. Notwithstanding anything stated herein
and in addition thereto, in the event of a breach by the Lessee by reason of which the
Lessee has been evicted from the Premises prior to the expiration of the Lease Term, the
Lessee will be required to pay the Lessor, for the period from the date of the eviction
until the expiration of the Lease Term, damages at the rate of double the amount of the
rent which applied prior to the termination of the Lease, all subject as provided in
clause 3.1.4 above, and subject to the fact that if the Premises will be re-leased to an
alternative lessee according and subject to the provisions of this Agreement, only the
difference between the rent prescribed by this Contract and the rent that will be
charged from the alternative tenant, will be paid by the Lessee.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">17.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Guarantees &#151; Collateral </B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">17.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To secure the performance by the Lessee of its undertakings under this Agreement,
the Lessee will deposit with the Lessor on the date of the signature of this Agreement,
an autonomous bank guarantee payable upon demand, linked to the Consumer Price Index,
according to the details contained in this Contract, or deposit an amount equal to six
months rent, or a guarantee of the directors and shareholders of the Lessee
(hereinafter: &#147;<B>the Guarantee</B>&#148; or &#147;<B>the Deposit</B>&#148;).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">17.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>It is hereby expressly agreed and declared between the parties that the giving of
the Guarantee or the Deposit to perform the terms of this Contract does not amount to
any waiver on the part of the Lessor of any right to any other relief against the
Lessee, whether such relief is set out in the body of this Contract or is available to
the Lessor by virtue of any law existing at the time of the execution of this Contract
or will exist in Israel on the date of the breach.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessor will give the Lessee seven days prior notice of its intention to exercise
the Guarantee or realize the Deposit.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">17.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The forfeiture of the Guarantee or the Deposit will not derogate from the
Lessor&#146;s right to sue for and receive against the Lessee any other relief.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">17.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessee will, at the expiration of the Lease Term and on the date of the
surrender of the Premises to the Lessor, furnish the Lessor with certifications
according to its demand in writing, indicating that all the payments and the fees which
it was subject to have been paid by it up till the date of the surrender of the Premises
or in relation to such period.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">17.5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>It is expressly agreed that in the event of the Lessee becoming liable to vacate
the Premises, the Lessor will be entitled to give notice to and demand from the Electric
Corporation and the municipality the disconnection of the electricity and water supply
to the Premises.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">18.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Option </B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">18.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>It is hereby agreed that as long as vacant areas remain on the floor on which the
Premises are situated, the Lessee will be entitled to demand to increase the area of</TD>
</TR>


</TABLE>
</DIV></DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->15<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Premises by no more than an additional 450sq.m., on the conditions of the Lease
under this Contract.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>It is clarified that the Lessee will have a first right of refusal in relation to the
leasing of the adjacent areas and that these areas will not be leased until the Lessee
has been given notice by the Lessor seeking to lease the same to any third party, 30
days in advance. The Lessee will notify the Lessor within 30&nbsp;days of its wish to take a
lease of those areas.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">18.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>An option is granted to the Lessee to lease an additional 1,000sq.m., in Building
no. 2, when it will be erected (and without this option amounting to any representation
or assurance and/or undertaking regarding the construction thereof) on conditions
identical to those of the Lease under this Agreement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Upon a decision being taken to construct Building no. 2, the Lessor will notify the
Lessee of its intention to embark upon the construction of the second building, and the
Lessee will be given a 30-day option to advise if it wishes to exercise its right to
lease an additional area, as stated above.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">19.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>General </B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">19.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The option will be afforded to the Lessee to place on the roof of the building of
the Premises, without any further payment, installations such as: air-conditioning
units, a generator, gas containers, air purification units, etc.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">19.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Use of the elevator (to ascend to the roof of the building) and payment of the
maintenance and use thereof will be done in accordance with a direct arrangement between
the Lessee and the <I>Ort Braude </I>College, without reference to and any involvement of the
Lessor.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessee gives notice that it is aware and knows that it is under an obligation to
arrange this matter directly with the <I>Ort Braude </I>College and will have no claims or
demands against the Lessor regarding the use of the elevator and/or the costs that will
be required of it in respect of the use and maintenance thereof.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">19.3</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>No delay or grant of time or lack of response, lack of action or lack of taking
any measures on the part of the Lessor will be construed in any form or manner as a
waiver on its part of its rights under this Contract against a continuing or further
breach on the part of the Lessee, unless the Lessor has waived any of its rights
expressly and in writing.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">19.4</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>All payments paid by the Lessee under this Contract will be made by the Lessee to
the Lessor by means of a bank transfer to the bank account instructed by the Lessor to
the Lessee in writing.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">19.5</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The addresses of the parties for the purposes of to this Contract appear at the
head of this Contract. If the parties or any of them change their addresses they will
give notice in writing to the other party of the new address in Israel and such address
will from that time onwards serve as the address of that party for the purposes of this
Contract.</TD>
</TR>

</TABLE>
</DIV></DIV>
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->16<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">19.6</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any notice that will be sent by one party to the other pursuant to the Contract
will be sent by registered mail or delivered personally, and will be deemed to have been
delivered within a reasonable time of notice arriving at the addressee.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">19.7</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The stamping expenses of this Contract will be borne by the parties to this
Agreement in equal shares.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">19.8</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The conditions of this Contract reflect the conditions stipulated between the
parties in full and supersede any engagement, assurance, representation and undertaking
formerly made by the parties prior to the execution of this Contract. No change of this
Contract or any addition thereto if at all will be binding unless made in writing and
signed by all parties.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">19.9</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Notwithstanding that stated in this Agreement and/or in the Plans, the Lessor
undertakes to induce, at its own expense, in the part of the Premises that are
designated to be a production zone according to the Plans, the making of passages
(&#147;shafts&#148;) to the roof for the use of the Lessee&#146;s infrastructure conduits, between the
Premises and the roof, in a ceiling area of up to 6sq.m., according to the definition of
the Lessee&#146;s requirements. It is further agreed that in the period preceding the
commencement of the Lease Term, the Lessee or any person on its behalf may, (but will
not be obliged) to carry out works at the Premises, at its own expense, for the purpose
of installing &#147;clean rooms&#148; in that part of the Premises designated to be a production
zone, as from 10 January, 2004 onwards. The Lessor undertakes to complete the
installation of the electricity and water supply infrastructures to the Premises that
are required to carry out such installation, until such date. It is further agreed that
in the period preceding the commencement of the Lease Term, the Lessee or any person on
its behalf will be entitled (but not obliged) to effect at the Premises at its own
expense, installation works for furniture and laboratory infrastructure at the Premises,
as from 1 February, 2004 onwards.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">19.10</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessor undertakes to grant the Lessee a right to use the internal security
shelter room situated on the floor of the Premises, subject to the provisions of any law
applicable in this respect in consideration of monthly user fees in an amount equal to
$3 (three)&nbsp;per sq.m., (gross)&nbsp;per month (plus VAT). These user fees will be subject to
the provisions of this Agreement in all matters pertaining to the rent <I>mutatis mutandis</I>.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">20.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Approved enterprise </B></U></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">20.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>It is agreed that the Lessee will deliver to the Lessor the original application
that it will personally prepare for the purpose of filing the same with the authorities
in order to obtain a certificate of an &#147;approved enterprise&#148;.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The application will be filed by the Lessor shortly after receiving the necessary
documents, as stated.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">20.2</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>If and to the extent the application for the approved enterprise that will be
filed on behalf of the Lessee will in fact be approved, the Lessee will be credited with
the rent on a monthly basis and with a proportionate share of the benefit that the
Lessor will receive at the rate which the area of the total areas of the building (and</TD>
</TR>

</TABLE>
</DIV></DIV>
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->17<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>that part linked thereto) bears to the area of the Premises (and that part linked
thereto).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>It is clarified and agreed that in such a case, the bank guarantee that has been
deposited with the Lessor according to the provisions of clause 17.1 will similarly
serve to secure to indemnify of the Lessor in relation to the monies that it may be
required to repay to the State, if it is compelled to repay them, as a result of a
breach by the Lessee of the conditions for obtaining the definition of &#147;approved
enterprise&#148;.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>In witness whereof the parties have set their hands at the time and place first above written:</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">

<TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Yitzhak Yankopanski
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
<B>The Lessor</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">/s/ David Aviezer
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
<B>The Lessee</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Engel Science Parks (99)&nbsp;Ltd.</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>Metabogal Ltd.</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

</DIV>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Engel<BR>
Construction and Development Group</B><BR>
66 Hahistadrut Blvd., Haifa Bay, Tel: 04-8422777; Fax: 04-8419333

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="80%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="18%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">27 May, 2003</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" valign="top">Carmiel &#150; Science Park /10610</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%"></TD>
    <TD width="5%"></TD>
    <TD width="47%"></TD>
</TR>
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<TR valign="bottom"><!-- Blank Space -->
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">Dr. David Aviezer, CEO</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">Metabogal Laboratories Ltd.,</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><U>Kiryat Shmonah </U>
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><U>By fax: 08-9762596</U></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">RE: <U>Science Park, Carmiel &#150;Lease Offer</U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Further to our meeting, the offer to plan which was submitted to us by the architect, Hanoch
Shapira and approved by you in principle, I am offering you the ground floor of Building no. 1
(part of) in an area of some 800sq.m., with complete finish, at office level.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The specification will include plasterboard partitions between the offices with acoustic insulation
as required by the Standard, minimum acoustic ceilings, natural porcelain granite flooring,
fluorescent lighting to the level of 500 lumen, electricity sockets for plugs every 4sq.m.,
communication sockets for computers &#150; one every 8 sq.m., telephone sockets &#150; one every 8 sq.m.,
air-conditioning at office level, mini-central air-conditioners and/or central air-conditioning,
as decided by the Company. Factory internal doors, aluminum entrance door of the same type of the
Building&#146;s curtain walls.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Maintenance of all the areas and facilities serving and/or situated in the area of the Premises to
be done by yourself and at your responsibility.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Maintenance of common areas in proportion to the areas leased by the tenants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">At your request one of the elevators will go to the roof of the Building.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Any addition that will be required beyond the above specification will be priced and added to the
rent in accordance with the duration of the lease.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The term of the lease will be five years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The lease price will be $9.5/sq.m.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Estimated population of the Building -October-November&nbsp;2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Please contact me with any further information you may require.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Yours faithfully,<BR>
/s/ Yitzchak Yaacovinsky<BR>
Yitzchak Yaacovinsky (Eng.)<BR>
Assistant CEO for Leasing and Operations

</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">c.c.</TD>
    <TD>&nbsp;</TD>
    <TD>Menachem Rosenblum- _____Engineer<BR>
Yael Miller, accountant &#150; Engel<BR>
Eyal Floumin, Chief Engineer &#150; Engel</TD>
</TR>
</TABLE>
</DIV>
</DIV>
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>Supplement to the Unprotected Lease Contract</B></U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">Made and signed this 18<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> April, 2005

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="15%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Between:</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Engel Science Parks (99)&nbsp;Ltd.</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">66 Hahistadrut Bldv., Haifa Bay<BR>

By Yossi Ashkenazi</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The party authorized to undertake and sign in the name of the Lessor<BR>
(hereinafter: &#147;<B>the Lessor</B>&#148;)</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><U><B>of the first part</B></U></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>And:</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Protalix Ltd.</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">2 Snonit Road, Science Park, P.O.B. 455, Carmiel 20100<BR>

(hereinafter: &#147;<B>the Lessee</B>&#148;)</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><U><B>of the second part</B></U></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">WHEREAS
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">A Lease Contract including Appendices was signed between the
parties on 28 October, 2003, (hereinafter: &#147;<B>the Contract</B>&#148;) to
lease a property situated on the ground floor of Building no. 1 of
the building known as &#147;Science Park&#148; &#150; industrial buildings in
Carmiel (hereinafter: &#147;<B>the Premises</B>&#148;) that have been erected by
the Lessor; and</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">WHEREAS
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">The Lessee is desirous leasing, and the Lessor has agreed to lease
an additional measured area of 239sq.m., (196sq.m., of principal
area &#043; 43sq.m., of ancillary area) from the Lessor (hereinafter:</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#147;<B>the Additional Area</B>&#148;), which, together with the Premises
according to the original contract will constitute the entire
balance of the area on the ground floor of Building no. 1;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>It is therefore agreed, declared and stipulated between the parties as follows:</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessor hereby leases to the Lessee and the Lessee hereby leases from the Lessor an
additional area in the Science Park, as described below, so that &#147;the Premises&#148; as defined in
clause 2.3 of the Original Contract, will from henceforth be called, a measured area of
1,177sq.m., constituting the entire ground floor of Building no. 1, and after reducing the
area of the lobby used by Ort for an entrance to their property as marked on the plan attached
hereto this Supplement (hereinafter: &#147;<B>the New Premises Area</B>&#148;).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Additional Area of the lease according to the Supplement together with the Lease under
the Original Agreement will both expire on 30 April, 2010 (hereinafter: &#147;<B>the New Lease Term</B>&#148;).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The additional rent relating to the Additional Area according to this Supplement will be as
follows:</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In respect of 196 sq.m., of principal area, the Lessee will pay the sum of $5.5 (in words:
five and a half U.S. dollars) per sq.m., per month and in respect of 43sq.m., of ancillary
area, the Lessee will pay the sum of $3 (in words: three U.S. dollars) per sq.m., per month
(hereinafter: &#147;<B>the Additional Rent</B>&#148;).</TD>
</TR>

</TABLE>
</DIV></DIV>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="center" style="font-size: 10pt"><!-- Folio -->2<!-- /Folio -->

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Additional Rent will be paid from 1.5.2005 onwards until the expiration of the New Lease
Term, according to this Supplement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>It is clarified that clause 4.1.2 of the Original Agreement does not apply to payment of the
Additional Rent in respect of the Additional Area according to this Supplement.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Additional Area will be conveyed to the Lessee upon the signature of this Supplement, in
its condition &#147;as is&#148; as of today, the planning of the adaptations and supplemental work in
the additional leased area to be carried out by, at the expense of and according to the
discretion of the Lessee, under the supervision and escorted by the Lessor&#146;s representatives.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For the Additional Leased Area according to this Supplement, the Lessor will designate 7
additional parking places for the use of the Lessee.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">6.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>An option is hereby granted to the Lessee for five years with respect to the entire Premises,
including the New Premises Area which will commence from the expiration of the New Lease Term,
that is, from 1.5.2010 and end on 30.4.2015 (hereinafter: &#147;<B>the Option Term</B>&#148;).</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Lessee will be required to give notice of its wish to exercise the Option Term, not less
than 60&nbsp;days prior to the expiration of the New Lease Term, according to this Supplement.
</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The rent during the Option Term, will be equal to the New Rent in respect of the New Premises
Area. In the last month of the Lease preceding the commencement of the Option Term &#150; with the
addition of 7.5% (in words: seven and a half percent) linked according to the provisions of
the Original Agreement and to be paid in accordance with the terms thereof.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The clauses of the Original Contract will apply in full to this Supplement, including the
relative Appendices, except for the changes arising from the above clauses.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>In witness whereof the parties have set their hands at the time and place first above written:</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">

<TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Yossi Ashkenazi

<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
<B>The Lessor</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">/s/ David Aviezer
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
<B>The Lessee</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Engel Science Parks (99)&nbsp;Ltd.</B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>Protalix Ltd.</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.10
<SEQUENCE>12
<FILENAME>g04822exv10w10.htm
<DESCRIPTION>EX-10.10 MERGER AGREEMENT AND PLAN
<TEXT>
<HTML>
<HEAD>
<TITLE>EX-10.10 Merger Agreement and Plan</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Exhibit&nbsp;10.10
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>MERGER AGREEMENT AND PLAN OF REORGANIZATION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THIS MERGER AGREEMENT AND PLAN OF REORGANIZATION (this &#147;<U>Agreement</U>&#148;) is made and
entered as of August&nbsp;21, 2006, by and among Orthodontix, Inc., a Florida corporation
(&#147;<U>Parent</U>&#148;), Protalix Acquisition Co., Ltd., an Israeli company (&#147;<U>Acquisition
Subsidiary</U>&#148;), which is a wholly owned subsidiary of Parent, and Protalix Ltd., an Israeli
company (the &#147;<U>Company</U>&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>WHEREAS</B>, the Boards of Directors of each of Parent, Acquisition Subsidiary and the Company
have, pursuant to the laws of their respective States of incorporation, approved this Agreement and
the consummation of the transactions contemplated hereby, including the merger of Acquisition
Subsidiary with and into the Company (the &#147;<U>Merger</U>&#148;); and the Boards of Directors of each of
the Company and Acquisition Subsidiary have declared that this Agreement is advisable, fair and in
the best interests of their respective shareholders and approved the Merger upon the terms and
conditions set forth in this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>NOW</B>, <B>THEREFORE</B>, in consideration of the covenants, promises and representations set forth
herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby
expressly and mutually acknowledged, and intending to be legally bound hereby, the parties hereto
agree as follows:
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE I<BR>
DEFINITIONS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless the context otherwise requires, the terms defined in this Article&nbsp;I shall have the
meanings herein specified for all purposes of this Agreement, applicable to both the singular and
plural forms of any of the terms herein defined.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Acquisition Subsidiary</U>&#148; shall have the meaning set forth in the Preamble.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Affiliate</U>&#148; means any Person that directly or indirectly controls, is controlled by,
or is under common control with, the indicated Person. For the purpose hereof the term &#147;control&#148;
shall mean the holding of shares in excess of fifty percent (50%) of the voting securities of a
corporate entity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Agreement</U>&#148; shall have the meaning assigned to it in the Preamble.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Audited Financial Statements Date</U>&#148; shall have the meaning assigned to it in Section
3.6.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Business Day</U>&#148; means any day, other than a Saturday or Sunday, on which the national
banks in New York, New York as a general matter are open for business for substantially all of
their banking functions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Certificate of Merger</U>&#148; shall have the meaning assigned to it in Section&nbsp;2.2.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Closing</U>&#148; shall have the meaning assigned to such term in Section&nbsp;9.1.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Closing Date</U>&#148; shall have the meaning assigned to such term in Section&nbsp;9.1.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Code</U>&#148; means the Internal Revenue Code of 1986, as amended.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Company</U>&#148; shall have the meaning assigned to such term in the Preamble.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Company Board</U>&#148; means the Board of Directors of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Company Shares</U>&#148; means, collectively, all of the issued and outstanding Company
Ordinary Shares and Company Preferred Shares, and shall mean immediately following the closing of
the Share Purchase Agreement, all of the issued and outstanding Company Ordinary Shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Company Option Plan</U>&#148; shall have the meaning set forth in Section&nbsp;2.8(a).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Company Ordinary Shares</U>&#148; means the ordinary shares of the Company, nominal value
NIS0.01 per share.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Company Preferred Shares</U>&#148; means, collectively, the Series&nbsp;A Preferred Shares of the
Company, nominal value NIS0.01 per share, the Series&nbsp;B Preferred Shares of the Company, nominal
value NIS0.01 per share, and the Series&nbsp;C Preferred Shares of the company, nominal value NIS0.01
per share.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Company Warrants</U>&#148; shall mean all of the Company&#146;s issued and outstanding warrants and
options other than options issued under the Company Option Plan and other than the FG Warrants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Contingent Obligation</U>&#148; means, as to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend or other
obligation of another Person if the primary purpose or intent of the Person incurring such
liability, or the primary effect thereof, is to provide assurance to the obligee of such liability
that such liability will be paid or discharged, or that any agreements relating thereto will be
complied with, or that the holders of such liability will be protected (in whole or in part)
against loss with respect thereto.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Effective Date</U>&#148; means the date that the Registration Statement is first declared
effective by the SEC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Effectiveness Period</U>&#148; has the meaning set forth in Section&nbsp;8.1.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Eligible Market</U>&#148; means the American Stock Exchange.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Environmental Laws</U>&#148; means all Israeli, federal, state, local or foreign laws relating
to pollution or protection of human health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata), including, without
limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals,
pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, &#147;<U>Hazardous
Materials</U>&#148;) into the environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as
well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments,
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">licenses, notices or notice letters, orders, permits, plans or regulations issued, entered,
promulgated or approved thereunder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Exchange Act</U>&#148; means the Securities Exchange Act of 1934, as amended.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Exchange Ratio</U>&#148; shall have the meaning assigned that term in Section&nbsp;2.5(b).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Existing Company Shareholders</U>&#148; means the holders of Company Shares immediately prior
to the Merger Effective Time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>FG Holders</U>&#148; means the holders of Company Ordinary Shares that purchased such Company
Ordinary Shares pursuant to the Share Purchase Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>FG Warrants</U>&#148; shall mean those certain warrants issued to the FG Holders pursuant to
the Share Purchase Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>GAAP</U>&#148; means United States and Israel generally accepted accounting principles
consistently applied, as in effect from time to time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Governmental Authority</U>&#148; means any foreign, federal, national, state or local
judicial, legislative, executive or regulatory body, authority or instrumentality, including,
without limitation, any such United States or Israeli authorities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Governmental Authorization</U>&#148; means any consent, license, registration, authorization
or permit issued, granted, given or otherwise made available by or under the authority of any
Governmental Authority or pursuant to any Law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Holder</U>&#148; means the holder of any Registrable Securities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Indebtedness</U>&#148; of any Person means, without duplication (A)&nbsp;all indebtedness for
borrowed money, (B)&nbsp;all obligations issued, undertaken or assumed as the deferred purchase price of
property or services (other than trade payables entered into in the ordinary course of business),
(C)&nbsp;all reimbursement or payment obligations with respect to letters of credit, surety bonds and
other similar instruments, (D)&nbsp;all obligations evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in connection with the acquisition of
property, assets or businesses, (E)&nbsp;all indebtedness created or arising under any conditional sale
or other title retention agreement, or incurred as financing, in either case with respect to any
property or assets acquired with the proceeds of such indebtedness (even though the rights and
remedies of the seller or bank under such agreement in the event of default are limited to
repossession or sale of such property), (F)&nbsp;all monetary obligations under any leasing or similar
arrangement which, in connection with GAAP, consistently applied for the periods covered thereby,
is classified as a capital lease, (G)&nbsp;all indebtedness referred to in clauses (A)&nbsp;through (F)&nbsp;above
secured by (or for which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or other
encumbrance upon or in any property or assets (including accounts and contract rights) owned by any
Person, even though the Person which owns such assets or property has not assumed or become liable
for the payment of such indebtedness and (H)&nbsp;all Contingent
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Obligations in respect of indebtedness or obligations of others of the kinds referred to in
clauses (A)&nbsp;through (G)&nbsp;above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Insolvent</U>&#148; means, with respect to any Person, (i)&nbsp;the present fair saleable value of
such Person&#146;s assets is less than the amount required to pay such Person&#146;s total Indebtedness, (ii)
such Person is unable to pay its debts and liabilities, subordinated, contingent or otherwise, as
such debts and liabilities become absolute and matured, (iii)&nbsp;such Person intends to incur or
believes that it will incur debts that would be beyond its ability to pay as such debts mature or
(iv)&nbsp;such Person has unreasonably small capital with which to conduct its business as such business
is now conducted and is proposed to be conducted.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Investors</U>&#148; shall have the meaning set forth in the Share Purchase Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Israeli Companies Law</U>&#148; means the Israeli Companies Law, 5759-1999.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Laws</U>&#148; means any Israeli, federal, national, state, local or foreign statute, law,
ordinance, regulation, rule, code, order or other requirement or rule of law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Letter of Transmittal</U>&#148; shall have the meaning assigned to it in Section&nbsp;5.7.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Lien</U>&#148; means any mortgage, pledge, security interest, encumbrance, lien or charge of
any kind, including, without limitation, any conditional sale or other title retention agreement,
any lease in the nature thereof and including any lien or charge arising by Law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Losses</U>&#148; means any and all losses, claims, actions, damages, liabilities, penalties,
fines, settlement costs and expenses, including, without limitation, costs of preparation and
reasonable attorneys&#146; fees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Material Adverse Effect</U>&#148; means, with respect to any Person, a change (or effect) in
the condition (financial or otherwise), properties, assets, liabilities, rights, Business or
results of operations or prospects of the Company, which change (or effect), individually or in the
aggregate, could reasonably be expected to be materially adverse to such condition, properties,
assets, liabilities, rights, Business or results of operations or prospects.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Material Permits</U>&#148; means, with respect to any Person, all certificates, authorizations
and permits issued by the appropriate Governmental Authorities necessary to conduct the business of
such Person, the lack of which would have a Material Adverse Effect.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Merger</U>&#148; shall have the meaning assigned to it in the Preamble.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Merger Effective Time</U>&#148; shall have the meaning assigned to it in Section&nbsp;2.2.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Merger Shares</U>&#148; shall have the meaning assigned to it in Section&nbsp;2.5(b).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Parent</U>&#148; shall have the meaning assigned to it in the Preamble.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Parent Board</U>&#148; means the Board of Directors of Parent.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Parent Common Stock</U>&#148; shall mean the common stock, par value $.0001 per share, of
Parent.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Person</U>&#148; means all natural persons, corporations, business trusts, associations,
unincorporated organizations, limited liability companies, partnerships, joint ventures and other
entities and Governmental Authorities or any department or agency thereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Proceeding</U>&#148; means an action, claim, suit, investigation or proceeding (including,
without limitation, an investigation or partial proceeding, such as a deposition), whether
commenced or threatened in writing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Prospectus</U>&#148; means the prospectus included in the Registration Statement (including,
without limitation, a prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule&nbsp;430A promulgated under
the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the
terms of the offering of any portion of the Registrable Securities covered by the Registration
Statement, and all other amendments and supplements to the Prospectus including post effective
amendments, and all material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Registrable Securities</U>&#148; means the Merger Shares and the shares of Parent Common Stock
issuable upon exercise of the warrants and the options issued pursuant to Section&nbsp;5.8 below,
together with any securities issued or issuable pursuant to the adjustment provisions set forth in
the Warrants or upon any stock split, dividend or other distribution, recapitalization, exchange or
similar event with respect to the foregoing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Registration Statement</U>&#148; means each registration statement required to be filed under
Article&nbsp;VIII, including (in each case) the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective amendments, all exhibits
thereto, and all material incorporated by reference or deemed to be incorporated by reference in
such registration statement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>SEC</U>&#148; means the U.S. Securities and Exchange Commission.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Securities Act</U>&#148; means the Securities Act of 1933, as amended.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Share Purchase Agreement</U>&#148; means that certain Share Purchase Agreement entered into as
of August&nbsp;21, 2006, by and among the Company and the purchasers signatory thereto.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Surviving Corporation</U>&#148; shall have the meaning assigned to it in Section&nbsp;2.1.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Takeover Protections</U>&#148; shall mean any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or other similar anti-takeover
provision under an entity&#146;s charter documents or the laws of its state of incorporation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Tax</U>&#148; or &#147;<U>Taxes</U>&#148; means (a)&nbsp;any and all taxes, assessments, customs, duties,
levies, fees, tariffs, imposts, deficiencies and other governmental charges of any kind whatsoever
(including, but not limited to, taxes on or with respect to net or gross income, franchise,
profits, gross
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">receipts, capital, sales, use, ad valorem, value added, transfer, real property transfer,
transfer gains, transfer taxes, inventory, capital stock, license, payroll, employment, social
security, unemployment, severance, occupation, real or personal property, estimated taxes, rent,
excise, occupancy, recordation, bulk transfer, intangibles, alternative minimum, doing business,
withholding and stamp), together with any interest thereon, penalties, fines, damages costs, fees,
additions to tax or additional amounts with respect thereto, imposed by Israel, the United States
(federal, state or local) or other applicable jurisdiction; (b)&nbsp;any liability for the payment of
any amounts described in clause (a)&nbsp;as a result of being a member of an affiliated, consolidated,
combined, unitary or similar group or as a result of transferor or successor liability, including,
without limitation, by reason of Section&nbsp;1.1502-6 of the Treasury Regulations promulgated under the
Code; and (c)&nbsp;any liability for the payments of any amounts as a result of being a party to any tax
sharing agreement or as a result of any express or implied obligation to indemnify any other Person
with respect to the payment of any amounts of the type described in clause (a)&nbsp;or (b).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Tax Return</U>&#148; shall include all returns and reports (including elections, declarations,
disclosures, schedules, estimates and information returns required to be supplied to a Tax
authority relating to Taxes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Trading Day</U>&#148; means (a)&nbsp;any day on which the Parent Common Stock is listed or quoted
and traded on its primary Trading Market, (b)&nbsp;if the Common Stock is not then listed or quoted and
traded on any Eligible Market, then a day on which trading occurs on the Eligible Market, or (c)&nbsp;if
trading ceases to occur on the Eligible Market, any Business Day.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Trading Market</U>&#148; means any trading market of which the Parent Common Stock is listed
or included for trading including the Eligible Market.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Transactions</U>&#148; means the Merger and the other transactions contemplated by or
referenced in this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Transaction Form&nbsp;8-K</U>&#148; shall have the meaning assigned to it in Section&nbsp;5.4.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Transaction Documents</U>&#148; means the Agreement and contracts, documents and instruments
contemplated by or referenced in this Agreement.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE II<BR>
THE MERGER</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2.1 <U>Merger</U>. Subject to the terms and conditions of this Agreement, at the
Merger Effective Time, Acquisition Subsidiary shall be merged with the Company in accordance with
the Israeli Companies Law, the separate legal existence of Acquisition Subsidiary shall cease, and
the Company shall (i)&nbsp;be the surviving corporation of the Merger (sometimes hereinafter referred to
as the &#147;<U>Surviving Corporation</U>&#148;); (ii)&nbsp;be governed and continue its corporate existence
under the laws of the State of Israel; and (iii)&nbsp;succeed to and assume all of the rights and the
properties and obligations of Acquisition Subsidiary and the Company in accordance with the Israeli
Companies Law. With respect to references in this Agreement relating to any obligations or duties
of the Company accruing after the Merger Effective Date, the usage of the defined term
&#147;Company&#148; as opposed to &#147;Surviving Corporation&#148; shall not operate to negate any such
obligation or duties.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2.2 <U>Merger Effective Time</U>. The Merger shall become effective on the date and
at the time that the Registrar of Companies of the State of Israel (the &#147;<U>Companies
Registrar</U>&#148;) provides the Surviving Corporation with the certificate of merger in accordance
with Section&nbsp;323(5) of the Israeli Companies Law (the &#147;<U>Certificate of Merger</U>&#148;) after
receipt from the Company and Acquisition Subsidiary of the Merger Proposal (as defined below)
pursuant to Section&nbsp;5.9. The time at which the Merger shall become effective as aforesaid is
referred to hereinafter as the &#147;<U>Merger Effective Time</U>.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2.3 <U>Articles of Association; Directors and Officers</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Articles of Association and Memorandum of Association</U>. The Memorandum of
Association of the Company, as in effect immediately prior to the Merger Effective Time, shall be
the Memorandum of Association of the Surviving Corporation from and after the Merger Effective Time
until further amended in accordance with applicable Law. The Company shall amend and restate its
Articles of Association and such amended and restated Articles of Association shall be the Articles
of Association of the Surviving Corporation (the &#147;<U>Company Articles</U>&#148;) from and after the
Merger Effective Time until further amended in accordance with applicable Law.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Directors and Officers</U>. The directors and officers of the Company immediately
prior to the Merger Effective Time and two designees of Frost Gamma Investments Trust, who
initially shall be Dr.&nbsp;Phillip Frost and Dr.&nbsp;Jane Hsiao, shall be the directors and officers of the
Surviving Corporation, and each shall hold his respective office or offices from and after the
Merger Effective Time until his successor shall have been elected and shall have qualified in
accordance with applicable Law, or as otherwise provided in the Articles of Association of the
Surviving Corporation.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2.4 <U>Effects of the Merger</U>. The Merger shall have the effects provided for
herein and in the applicable provisions of the Israeli Companies Law. Without limiting the
generality of the foregoing and subject thereto, at the Merger Effective Time, all of the
properties, rights, privileges, powers and franchises of the Company and Acquisition Subsidiary
shall vest in the Surviving Corporation and all debts, liabilities and duties of the Company and
Acquisition Subsidiary shall become the debts, liabilities and duties of the Surviving Corporation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2.5 <U>Manner and Basis of Converting Shares</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Acquisition Subsidiary Ordinary Share Conversion</U>. At the Merger Effective Time,
each ordinary share of Acquisition Subsidiary that shall be outstanding immediately prior to the
Merger Effective Time shall, by virtue of the Merger and without any action on the part of the
holder thereof, be converted into the right to receive one ordinary share of the Surviving
Corporation, so that at the Merger Effective Time, Parent shall be the holder of all of the issued
and outstanding shares of the Surviving Corporation.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Conversion of Company Shares</U>. At the Merger Effective Time, subject to the
provisions of Section&nbsp;2.5(c):
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;the Company Shares held by Existing Company Shareholders (other than FG Holders) prior to
the Merger Effective Time (other than securities of the Company cancelled in accordance with
Section&nbsp;2.5(c)) shall be converted, on a pro rata basis, into the right to receive such number of
shares of Parent Common Stock, which together with securities of Parent issued in exchange of the
Company Options and the Company Warrants and in accordance with Section&nbsp;2.8 and securities of
Parent reserved in accordance with Section&nbsp;2.8, shall constitute in the aggregate, 85% of the
issued and outstanding share capital of the Parent upon the Merger Effective Time, calculated on a
fully-diluted basis immediately after the Merger Effective Time, but excluding FG Warrant Shares
and any warrants and options issuable by Parent pursuant to Section&nbsp;5.8. The exact exchange ratio
shall be computed immediately prior to the Merger Effective Time based on the above (&#147;<U>Exchange
Ratio</U>&#148;);
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;the Company Ordinary Shares held by FG Holders prior to the Merger Effective Time which
were purchased under the Share Purchase Agreement, shall be converted into the right to receive
such number of shares of Parent Common Stock, which, when added to all other securities held by
holders of securities of the Parent immediately prior to the Merger Effective Time, shall
constitute, in the aggregate, 15% of the issued and outstanding share capital of the Parent upon
the Merger Effective Time, calculated on a fully-diluted basis immediately after the Merger
Effective Time, but excluding FG Warrant Shares and any warrants and options issuable by Parent
pursuant to Section&nbsp;5.8; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;each Company Ordinary Share held by FG Holders which was issued in connection with the
exercise of any FG Warrants (the &#147;<U>FG Warrant Shares</U>&#148;) prior to the Merger Effective Time
shall be converted into such number of shares of Parent Common Stock calculated by dividing: (i)
the aggregate exercise price paid by such FG Holders to the Company upon the exercise of the FG
Warrants; by (ii)&nbsp;the Ratio as defined in Section&nbsp;2.6(c);
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">all of the shares of Parent Common Stock issuable pursuant to this Section&nbsp;2.5(b) are referred to
herein collectively as the &#147;<U>Merger Shares</U>&#148;.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Other Securities</U>. Each of the Company Shares held in the treasury of the Company,
if any, each share of any other class of shares of the Company (other than the Company Shares), if
any, any debt or other securities convertible into or exercisable for the purchase of the Company
Shares, if any, and securities of the Company held by Parent and/or Acquisition Subsidiary, if any,
issued and outstanding immediately prior to the Merger Effective Time shall be canceled without
payment of any consideration therefor and without any conversion thereof.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2.6 <U>Surrender and Exchange of Securities</U>. (a)&nbsp;As soon as practicable after
the Merger Effective Time and upon (i)&nbsp;surrender of a certificate or certificates representing the
Company Shares that were outstanding immediately prior to the Merger Effective Time to Parent (or,
in case such certificates shall be lost, stolen or destroyed, an affidavit of that fact by the
holder thereof) (each a &#147;<U>Certificate</U>&#148;) and (ii)&nbsp;delivery
to Parent of an executed Letter of Transmittal (as described in Section&nbsp;5.7), Parent shall
deliver to the record holder of the Company Shares surrendering such certificate or certificates, a
certificate or certificates (or evidence of shares in book-entry form) registered in the name of
such shareholder representing the number of shares of Parent Common Stock to which such holder is
entitled under Section
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">2.5, including any cash paid in lieu of any fractional shares pursuant to
Section&nbsp;2.6(c). In the event of a transfer of ownership of Company Shares that is not registered
in the transfer records of the Company, a certificate (or evidence of shares in book-entry form)
representing the proper number of whole shares of Parent Common Stock may be issued to a Person
other than the Person in whose name the Certificate so surrendered is registered, if, upon delivery
by the holder thereof at the Closing, such Certificate shall be properly endorsed or shall
otherwise be in proper form for transfer and the Person requesting such issuance shall have paid
any transfer and other Taxes required by reason of the issuance of shares of Parent Common Stock to
a Person other than the registered holder of such Certificate or shall have established to the
reasonable satisfaction of Parent that such Tax either has been paid or is not applicable. As of
the Merger Effective Time, each Company Share issued and outstanding immediately prior to the
Merger Effective Time shall no longer be outstanding and shall automatically be canceled and
retired and until the certificate or certificates evidencing such shares are surrendered, each
certificate that immediately prior to the Merger Effective Time represented any outstanding Company
Share shall be deemed at and after the Merger Effective Time to represent only the right to receive
upon surrender as aforesaid the consideration specified in Section&nbsp;2.5 for the holder thereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Transfer Books; No Further Ownership Rights in Company Shares</U>. All shares of
Parent Common Stock issued upon the surrender for exchange of Certificates in accordance with the
terms of this Article&nbsp;II (including any cash paid in lieu of any fractional shares pursuant to
Section&nbsp;2.6(c)) shall be deemed to have been issued (and paid) in full satisfaction of all rights
pertaining to the Company Shares previously represented by such Certificates, and at the Merger
Effective Time, the share transfer books of the Company shall be closed and thereafter there shall
be no further registration of transfers on the share transfer books of the Surviving Corporation of
the Company Shares that were outstanding immediately prior to the Merger Effective Time. From and
after the Merger Effective Time, the holders of Certificates that evidenced ownership of the
Company Shares outstanding immediately prior to the Merger Effective Time shall cease to have any
rights with respect to such shares, except as otherwise provided for herein or by applicable Law.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>No Fractional Shares</U>. No fraction of a share of Parent Common Stock shall be
issued upon the surrender for exchange of a Certificate (or evidence of such shares in book-entry
form), no dividends or other distributions of Parent shall relate to such fractional share
interests and such fractional share interests will not entitle the owner thereof to vote or to any
rights of a stockholder of Parent. In lieu of such fractional share interests, Parent shall pay to
each holder of a Certificate (upon surrender thereof as provided in this Article&nbsp;II) an amount in
cash equal to the product obtained by multiplying the fractional share interest to which such
holder (after aggregating all shares of Parent Common Stock into which the Company Shares held at
the Merger Effective Time by such holder are exchangeable) would otherwise be entitled by the
quotient obtained by dividing (A)&nbsp;US$106.67&nbsp;million by (B)&nbsp;the aggregate number of issued and
outstanding shares of Parent Common Stock, on a fully diluted basis, calculated immediately upon
the Merger Effective Time, excluding any shares of Parent Common Stock
issued upon the Closing in exchange for the FG Warrant Shares or issuable upon conversion or
exercise of any warrants and options issuable by Parent pursuant to Section&nbsp;5.8 (such quotient
being referred to as the &#147;<U>Ratio</U>&#148;).
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <U>Lost, Stolen or Destroyed Certificates</U>. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed and, if required by Parent, the written agreement by
such Person to indemnify Parent and the Surviving Corporation against any claim that may be made
against it with respect to such Certificate, Parent will issue, in exchange for such lost, stolen
or destroyed Certificate, the Merger Shares and cash in lieu of any fractional shares of Parent
Common Stock to which such Person would be entitled pursuant to Section&nbsp;2.6(c), in each case
pursuant to this Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <U>No Liability</U>. Notwithstanding any provision of this Agreement to the contrary,
none of the parties hereto or the Surviving Corporation shall be liable to any Person in respect of
any shares of Parent Common Stock (or dividends or other distributions with respect thereto) or
cash in lieu of any fractional shares of Parent Common Stock, in each case required to be delivered
and delivered to a public official pursuant to any applicable abandoned property, escheat or
similar Law.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2.7 <U>Parent Common Stock</U>. Parent agrees that it will issue the Merger Shares
into which the Company Shares are converted at the Merger Effective Time pursuant to Section&nbsp;2.5 to
the respective holder under Section&nbsp;2.5 and will pay any cash amount in lieu of any fractional
shares as set forth in Section&nbsp;2.6(c).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2.8 <U>Company Options; Company Warrants</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Before the Closing, the Company Board shall adopt such resolutions or take such other
actions as may be required to effect the following:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;adjust the terms of all outstanding options of the Company to purchase Company Ordinary
Shares under the Company&#146;s 2003 Stock Option Plan (&#147;<U>Company Options</U>&#148; and &#147;<U>Company
Option Plan</U>&#148;), whether vested or unvested, as necessary to provide that, at the Merger
Effective Time, each Company Option outstanding immediately prior to the Merger Effective Time
shall be assumed and converted into an option to acquire, on the same terms and conditions as were
applicable under the Company Options and the Company Option Plan, the number of shares of Parent
Common Stock (rounded down to the nearest whole share) determined by Existing Holder multiplying
the number of Company Ordinary Shares subject to the Company Options by the Exchange Ratio (each,
as so converted, an &#147;<U>Assumed Option</U>&#148;); <U>provided</U>, that the aggregate exercise price
of each Company Option shall remain unchanged; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;make such other changes to the Company Option Plan as appropriate to give effect to the
Merger and any rulings or tax benefits of Israeli tax authorities with respect to the Assumed
Options, including the Israeli Income Tax Ruling referred to below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;At the Merger Effective Time, by virtue of the Merger and without the need of any further
corporate action, Parent shall assume the Company Option Plan with the result that all obligations
of the Company under the Company Option Plan, including with respect to Company Options outstanding
at the Merger Effective Time, shall become the obligations of Parent following the Merger Effective
Time, entitling the holders thereof to the Assumed Options referred to in Section&nbsp;2.8(a).
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;As soon as practicable after the Merger Effective Time, Parent shall deliver to the
holders of Company Options appropriate notices setting forth such holders&#146; rights under the Assumed
Options subject to the adjustments required and limitations imposed by Section&nbsp;2.8(a).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;Except as otherwise contemplated by Section&nbsp;2.8 and except to the extent required under
the respective terms of the Company Options, all restrictions or limitations on transfer and
vesting with respect to Company Options awarded under the Company Option Plan or any other plan,
program or arrangement of the Company, to the extent that such restrictions or limitations shall
not have already lapsed, shall remain in full force and effect with respect to such Assumed Options
after giving effect to the Merger and any rulings of Israeli tax authorities as set forth in
Section&nbsp;2.8(a).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;Each Company Warrant shall similarly be assumed by Parent and amended and converted into
the right to acquire upon exercise thereof the number of shares of Parent Common Stock (rounded
down to the nearest whole share) determined by multiplying the number of Company Ordinary Shares
issuable upon the exercise of each Company Warrant by the Exchange Ratio; <U>provided</U>, that
the aggregate exercise price of each Company Warrant shall remain unchanged.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2.9 <U>Further Assurances</U>. From time to time, from and after the Merger
Effective Time, as and when requested by Parent or its respective successors or assigns, the proper
officers and directors of the Company or Acquisition Subsidiary (as applicable) in office
immediately prior to the Merger Effective Time shall, for and on behalf and in the name of the
Company or Acquisition Subsidiary (as applicable), execute and deliver all such deeds, bills of
sale, assignments and other instruments and take or cause to be taken such further actions as
Parent or its respective successors or assigns may deem necessary or desirable in order to confirm
or record or otherwise transfer to the Surviving Corporation title to and possession of all of the
properties, rights, privileges, powers, franchises and immunities of the Company and the
Acquisition Subsidiary or otherwise to carry out fully the provisions and purposes of this
Agreement and the Certificate of Merger.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE III<BR>
REPRESENTATIONS AND WARRANTIES OF THE COMPANY</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company hereby represents and warrants to Parent and Acquisition Subsidiary that the
statements contained in this Article&nbsp;III are true and correct, except as set forth in the
disclosure schedule provided by the Company to Parent and Acquisition Subsidiary, as of the date
hereof (the &#147;<U>Company Disclosure Schedules</U>&#148;). For purposes of this Article&nbsp;III, the phrase
&#147;to the knowledge of the Company&#148; or any phrase of similar import shall be deemed to refer to
the actual knowledge of the Chief Executive Officer of the Company and Dr.&nbsp;Yoseph Shaaltiel, the
founder of the Company, as well as any other knowledge which such persons would have possessed had
they made reasonable inquiry of appropriate officers and employees (whether current or former),
agents and affiliates of the Company with respect to the matter in question.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.1 <U>Subsidiaries</U>. The Company does not own or control, directly or
indirectly, any interest in any other corporation, partnership, company, association, limited
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">liability company or other business entity. The Company is not a party to, or a participant in,
any joint venture, partnership or similar arrangement. Except as set forth on Schedule&nbsp;3.1 of the
Company Disclosure Schedules, the Company is not a party to, or a participant in, any joint venture
or similar arrangement, including strategic relationships to develop or promote the Company&#146;s
products and services, which relationships are conducted through contractual relationships between
the Company and third parties, but do not involve any interest of the Company in any separate legal
entities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.2 <U>Organization and Qualification</U>. The Company is duly organized and validly
existing under the laws of the State of Israel and has all requisite corporate power and authority
to own, lease and operate its assets and properties and to carry on its business (the
&#147;<U>Business</U>&#148;) as now conducted. Except as set forth on Schedule&nbsp;3.2 of the Company
Disclosure Schedules, the Company is duly qualified to transact business under the laws of the
State of Israel and in such other jurisdictions where the character of the properties owned, leased
or operated by it or the nature of the Business makes such qualification or licensing necessary and
has not taken any action or failed to take any action, which action or failure, as applicable, are
reasonably expected to interfere in any material respect with, preclude or prevent the Company from
carrying on its Business as now conducted. The Company is not in default with respect to the
Company Articles.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.3 <U>Capitalization</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The registered share capital of the Company as of the date hereof consists of NIS 22,900
divided into: 1,516,468 Ordinary Shares, 190,486 Series&nbsp;A Preferred Shares, nominal value NIS 0.01
per share, 183,046 Series&nbsp;B Preferred Shares, nominal value NIS 0.01 per share and 400,000 Series&nbsp;C
Preferred Shares, nominal value NIS 0.01 per share. As of the closing of the Share Purchase
Agreement, all issued and outstanding Company Preferred Shares shall be converted into Company
Ordinary Shares and the registered share capital of the Company shall consist of NIS 22,900 divided
into 2,290,000 Ordinary Shares.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The issued and outstanding Company Shares have been duly authorized and validly issued,
are fully paid, non-assessable, and have been issued in compliance with the Israeli Securities Law,
1968, other applicable securities laws, and the rules and regulations promulgated thereunder. The
issued and outstanding share capital of the Company, on a fully diluted basis, including a true and
correct list of the holders (beneficially and of record) of shares
or rights (vested or contingent) to acquire shares in the Company dated as of the date hereof
is as set forth in Schedule&nbsp;3.3 of the Company Disclosure Schedules.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Except: (i)&nbsp;as set forth in this Agreement and as specified in Schedule&nbsp;3.3 of the Company
Disclosure Schedules, (ii)&nbsp;as set forth in the Articles; and (iii)&nbsp;as set forth in the Amendment to
the Shareholders&#146; Rights Agreement between the Company and certain shareholders of the Company (the
&#147;<U>Amended Shareholders Agreement</U>&#148;), the Company is not a party or subject to any agreement
or understanding with respect to any security of the Company and there are no outstanding options,
warrants, convertible securities, rights (including registration rights, voting rights, conversion
or preemptive rights and rights of first refusal), or agreements of any kind for the purchase or
acquisition of securities from the Company.
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;Attached to Schedule&nbsp;3.3 of the Company Disclosure Schedules is a true and correct copy of
the Company Option Plan. True and correct copies of all Company Options and Company Warrants were
provided to Parent.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;Except as set forth in the Company Articles, the Amended Shareholders Agreement and as
specified in Schedule&nbsp;3.3 of the Company Disclosure Schedules, the Company is not a party or
subject to any agreement or understanding, and, to the Company&#146;s knowledge, there is no agreement
or understanding between any other persons and/or entities that affects or relates to the voting or
giving of written consents with respect to any security or the voting by a director or shareholder
of the Company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;Except as set forth on Schedule&nbsp;3.3 of the Company Disclosure Schedules, there is no share
option plan, share purchase, option or other right, or any agreement or understanding, between the
Company and any holder of its securities (or of any right to obtain a security), or to the
Company&#146;s knowledge, any agreement or understanding between shareholders of the Company that (i)
provides for redemption, acceleration or other changes in the vesting provisions or other terms of
such agreement or understanding, as a result of any merger, consolidation, sale of shares or
assets, change in control or similar transaction in respect of the Company or (ii)&nbsp;that relates to
the acquisition (including, without limitation, through anti-dilution, conversion, preemptive
(contractual or otherwise) or similar rights), disposition or registration for the public sale of
any securities of the Company. Except as set forth on Schedule&nbsp;3.3 of the Company Disclosure
Schedules, the Company does not have any right to purchase or otherwise acquire from any third
party (including, without limitation, employees, officers, directors, consultants and business
parties) shares of the Company or rights to acquire the same.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.4 <U>Authorization</U>. Except as set forth on Schedule&nbsp;3.4 of the Company
Disclosure Schedules, all corporate action on the part of the Company, its officers and directors
necessary for: (i)&nbsp;the due authorization, execution and delivery of this Agreement and (ii)&nbsp;the
performance of all obligations of the Company hereunder has been taken as of the date hereof,
except as set forth in Section&nbsp;5, 6 and 9. All corporate action on the part of the Company&#146;s
shareholders necessary for the due authorization, execution and delivery of this Agreement and the
performance of all obligations of the Company hereunder has been or will be taken prior to or upon
the Closing. The requisite number of the Company&#146;s shareholders has executed the Amended
Shareholders
Agreement as of the closing of the Share Purchase Agreement. This Agreement has been duly
executed by the Company and, assuming the due authorization, execution and delivery by the other
parties thereto, constitutes and will constitute a valid and legally binding obligation of the
Company, (i)&nbsp;subject, to applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or similar laws of general application affecting the enforcement of creditors&#146; rights
generally, (ii)&nbsp;subject to a court&#146;s discretionary authority with respect to the granting of
specific performance, injunctive relief or other equitable remedies and (iii)&nbsp;except to the extent
the indemnification and contribution provisions, if any, contained in any such agreement may be
limited by Israeli securities laws or unenforceable as against public policy.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.5 <U>Compliance with Other Instruments; No Conflict</U>. The Company is not in
violation or breach of, conflict with, or in default under (with or without the passage of time or
the giving of notice or both) any provision of (a)&nbsp;the Company Articles or (b)&nbsp;any mortgage,
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">indenture, lease, license or any other agreement or instrument, judgment, order, writ or decree to
which it is a party or by which it or its properties is bound, or, any statute, rule or regulation
applicable to it or its properties, except, in the case of clause (b)&nbsp;above for such possible
violations, breaches, conflicts or defaults which could not, individually or in the aggregate,
result in a Material Adverse Effect. Except as set forth in Schedule&nbsp;3.5 of the Company Disclosure
Schedules, the execution, delivery and performance of this Agreement, and the consummation of the
transactions contemplated hereby will not, to the Company&#146;s knowledge, result in any such
violation, breach, conflict or default or result in the creation of any Lien upon any assets of the
Company or the suspension, revocation, impairment, forfeiture or nonrenewal of any franchise,
permit, license, authorization or approval applicable to the Company or the Business which
individually or in the aggregate (a)&nbsp;could reasonably be expected to have a Material Adverse Effect
on the Company; or (b)&nbsp;prevent or materially delay the consummation of the transactions
contemplated hereby.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.6 <U>Absence of Changes</U>. Since December&nbsp;31, 2005, the date of the latest
audited financial statements provided to Parent (the &#147;<U>Audited Financial Statements Date</U>&#148;),
except as disclosed in Schedule&nbsp;3.6 of the Company Disclosure Schedules or incident to the
transactions contemplated hereby or in connection with the Merger, (i)&nbsp;there has been no event,
occurrence or development that, individually or in the aggregate, has had or that could result in a
Material Adverse Effect, (ii)&nbsp;the Company has not incurred any material liabilities or Indebtedness
that has had or could result in a Material Adverse Effect other than (A)&nbsp;trade payables and
expenses incurred in the ordinary course of business consistent with past practice and (B)
liabilities not required to be reflected in the Company&#146;s financial statements pursuant to GAAP,
(iii)&nbsp;the Company has not altered its method of accounting or the identity of its auditors, except
as disclosed in its audited financial statements, (other than the Company&#146;s election to start
preparing the Company Financial Statements (as defined below) in accordance with GAAP (as defined
below)), (iv)&nbsp;the Company has not declared or made any dividend or distribution of cash or other
property to its shareholders, in their capacities as such, or purchased, redeemed or made any
agreements to purchase or redeem any of its share capital and (v)&nbsp;the Company has not issued any
equity securities to any officer, director or Affiliate, except pursuant to an existing Company
Option Plan. Set forth on Schedule&nbsp;3.6 of the Company Disclosure Schedules is a list of all
Options issued since December&nbsp;31, 2005, including the identity of the persons to whom such Options
were issued and the exercise prices thereof. The Company has not taken any steps to seek
protection pursuant to any bankruptcy law nor does the Company have any knowledge or reason to
believe that its creditors intend to initiate involuntary bankruptcy proceedings or any actual
knowledge of any fact that would reasonably lead a creditor to do so. The Company is not Insolvent
as of the date hereof, and after giving effect to the transactions contemplated hereby to occur at
the Closing, will not be Insolvent.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.7 <U>Absence of Litigation</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;There is no action, suit, claim or Proceeding pending, or to the knowledge of the Company
currently threatened, against the Company, and the Company is not aware of any event or
circumstance that may form a basis for any such action, suit, claim, proceeding other than those
set forth on Schedule&nbsp;3.7(a) of the Company Disclosure Schedules that might result, either
individually or in the aggregate, in any Material Adverse Effect. The foregoing includes, to the
Company&#146;s knowledge, actions, suits, claims or proceedings pending or
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">threatened against the
Company (or any basis therefor known to the Company) involving the prior employment of any of the
Company&#146;s employees, their use in connection with the Business of any information or techniques
allegedly proprietary to any of their former employers, or their obligations under any agreements
with former employers.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Except as set forth on Schedule&nbsp;3.7(b) of the Company Disclosure Schedules, the Company is
not a party or subject to the provisions of any order, writ, injunction, judgment or decree of any
court or Government Authority that might, individually or in the aggregate, have a Material Adverse
Effect on the Company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;There is no action, suit, claim or proceeding by the Company that is currently pending or
that the Company intends to initiate.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;There is no action, suit, claim or proceeding pending or, to the knowledge of the Company,
threatened, that questions the validity of this Agreement or the right of the Company to enter into
this Agreement, or to consummate the transactions contemplated hereby.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.8 <U>Compliance</U>. The Company, except in each case as could not, individually
or in the aggregate, reasonably be expected to have or result in a Material Adverse Effect, (i)&nbsp;is
not 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 under), nor has the
Company received written notice of a claim that it is in default under or that it is in violation
of, any indenture, loan or credit agreement or any other agreement 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)&nbsp;is not in violation of any order of any court, arbitrator or governmental
body or (iii)&nbsp;is not or has not been in violation of any statute, rule or regulation of any
Governmental Authority.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.9 <U>Title to Assets</U>. The Company does not own any real property and has good and marketable title in all
personal property owned by the Company that is material to the Business, in each case free and
clear of all Liens, except for Liens that do not, individually or in the aggregate, have or result
in a Material Adverse Effect. Any real property and facilities held under lease by the Company are
held by the Company under valid, subsisting and enforceable leases of which the Company is in
material compliance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.10 <U>Proprietary Rights</U>. The Company does not have any knowledge of, and the
Company has not received any notice of, any pending conflicts with or infringement of the rights of
others with respect to any patents, patent applications, inventions, trademarks, trade names,
applications for registration of trademarks, service marks, service mark applications, copyrights,
know-how, manufacturing processes, formulae, trade secrets, licenses and rights in any thereof
which are material to the Business, as now conducted or as proposed to be conducted (herein called
the &#147;<U>Company Proprietary Rights</U>&#148;). No action, suit, arbitration or legal, administrative
or other Proceeding is pending or, to the Company&#146;s knowledge, threatened which involves any
Company Proprietary Rights. The Company is not subject to any judgment, order, writ, injunction or
decree of any court or any local, foreign or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, or any arbitrator, and the Company has not
entered into nor is the Company a party to any contract which restricts or
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">impairs the use of any
such Company Proprietary Rights in a manner which could have a Material Adverse Effect. To the
Company&#146;s knowledge, the Company owns or licenses all the Company Proprietary Rights which are
necessary for the Business as now conducted and as contemplated to be conducted, and has the right
to use such Company Proprietary Rights without payment to a third party, other than in respect of
the licenses disclosed in Schedule&nbsp;3.10 of the Company Disclosure Schedules. Except as disclosed
in Schedule&nbsp;3.10 of the Company Disclosure Schedules, the Company has not granted or assigned to
any other person or entity any right to manufacture, have manufactured or assemble the products or
proposed products or to provide the services or proposed services of the Company. Except as
disclosed in Schedule&nbsp;3.10 of the Company Disclosure Schedules, the Company does not have any
obligation to compensate any person for the use of any Company Proprietary Rights nor has the
Company granted to any person any license or other rights to use in any manner any Company
Proprietary Rights of the Company. Except as disclosed in Schedule&nbsp;3.10 of the Company Disclosure
Schedules, all of the issued patents included in the Company Proprietary Rights are valid and
enforceable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.11 <U>Insurance</U>. The Company maintains third party liability, fire, theft,
equipment and employee claim insurance and such other customary insurance policies of types and in
amounts as necessary to conduct its Business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.12 <U>Permits</U>. Except as set forth on Schedule&nbsp;3.12 of the Company Disclosure
Schedules, the Company has all Material Permits necessary for the conduct of the Business as now
conducted. The Company is not in material breach of or default under any of such Material Permits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.13 <U>Interested and Related-Party Transactions</U>. Except as set forth in
Schedule&nbsp;3.13 of the Company Disclosure Schedules, no shareholder, officer or director of the
Company is indebted to the Company, nor is the Company indebted to (or committed to make loans or
extend or guarantee credit of) any of them. Except as set forth in Schedule&nbsp;3.13 of the Company
Disclosure Schedules, to the Company&#146;s knowledge, no shareholder, officer or director of the
Company (i)&nbsp;has any direct or indirect interest in any contract to which the Company is a party or
by which it or its properties may be bound or affected, (ii)&nbsp;has any direct or indirect interest in
any entity which transacts business with the Company, (iii)&nbsp;has a direct or indirect interest in
any property, asset or right which is used by the Company in the conduct of its Business or (iv)
owns any asset used by the Company in connection with its Business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.14 <U>Employee Relations</U>. The Company is not a party to any collective
bargaining agreement nor does the Company employ any member of a union. The Company believes that
its relations with its employees are good. No executive officer of the Company has notified the
Company that such officer intends to leave the Company or otherwise terminate such officer&#146;s
employment with the Company. The Company is in compliance with all applicable laws and regulations
respecting labor, employment and employment practices and benefits, terms and conditions of
employment and wages and hours, except where failure to be in compliance would not, either
individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect on
the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.15 <U>Environmental Laws</U>. The Company (i)&nbsp;is in compliance with any and all
Environmental Laws applicable to the Company, (ii)&nbsp;has received all permits, licenses or other
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">approvals required of the Company under applicable Environmental Laws to conduct the Business and
(iii)&nbsp;is in compliance with all terms and conditions of any such permit, license or approval where,
in each of the foregoing clauses (i), (ii)&nbsp;and (iii), the failure to so comply could be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.16 <U>Tax Status</U>. The Company has timely made or filed all material income and
all other tax returns, reports and declarations required by any taxing authority to which it is
subject (unless and only to the extent that the Company is contesting in good faith such unpaid and
unreported taxes and has set aside on its respective books provisions reasonably adequate for the
payment of all such unpaid and unreported taxes), all such tax returns have been prepared in
compliance with all applicable laws and regulations and all such tax returns are true, accurate and
complete in all respects. The Company has timely paid all taxes and other governmental assessments
and charges, that are material in amount, shown or determined to be due on such returns, reports
and declarations, except those being contested in good faith, and has set aside on its books
provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods
to which such returns, reports or declarations apply. To the knowledge of the Company, there are
no unpaid taxes in any material amount claimed to be due by the taxing authority of any
jurisdiction, other than those incurred in the ordinary course of business and liabilities
which are reflected in the Company Financial Statements. The Company has not executed a waiver
with respect to the statute of limitations relating to the assessment or collection of any Israeli,
foreign, federal, state or local tax. None of the Company&#146;s tax returns are presently being
audited or the subject of any action, suit or Proceeding by any taxing Governmental Authority, and,
to the best of the Company&#146;s knowledge, no such audit, action, suit or Proceeding is being
threatened against the Company by such taxing Governmental Authority. The Company has made
available to Parent true, correct and complete copies of all Tax Returns with respect to income
taxes filed by or with respect to it with respect to taxable periods ended on or after December&nbsp;31,
2003, and has delivered or made available to Parent all relevant documents and information with
respect thereto, including without limitation work papers, records, examination reports, and
statements of deficiencies assessed against or agreed to by the Company. There are no outstanding
adjustments, deficiencies, additional assessments or refund claims proposed or outstanding with
respect to any Tax or Tax Return of the Company. The Company is not a party to or bound by any tax
sharing or allocation agreement and has no current or potential contractual obligation to indemnify
any other Person with respect to Taxes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.17 <U>&#147;Approved Enterprise&#148; Status</U>. Except as set forth on Schedule&nbsp;3.17 of
the Company Disclosure Schedules, the Company is in compliance with all conditions and requirements
stipulated by (i)&nbsp;the instruments of approval granted to it with respect to the &#147;Approved
Enterprise&#148; status of any of the facilities of the Company as well as with respect to the other tax
benefits received by the Company and (ii)&nbsp;Israeli laws and regulations relating to such &#147;Approved
Enterprise&#148; status and the aforementioned other tax benefits received by the Company, except to the
extent that noncompliance with the foregoing, individually or in the aggregate, would not result in
a Material Adverse Effect and would not prevent or delay the consummation of the transactions
contemplated hereby. The Company has not received any notice of any proceeding or investigation
relating to revocation or modification of any &#147;Approved Enterprise&#148; status granted with respect to
any of the facilities of the Company and the Transactions will not result in any such revocation or
modification.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.18 <U>Manipulation of Price</U>. The Company has not, and to its knowledge no one
acting on its behalf has, (i)&nbsp;taken, directly or indirectly, any action designed to cause or to
result in the stabilization or manipulation of the price of Parent Common Stock, (ii)&nbsp;sold, bid
for, purchased, or paid any compensation for soliciting purchases of, any shares of Parent Common
Stock or (iii)&nbsp;paid or agreed to pay to any Person any compensation for soliciting another to
purchase any shares of Parent Common Stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.19 <U>Material Agreements</U>. A list of the oral and written material agreements
of the Company is set forth on Schedule&nbsp;3.19 of the Company Disclosure Schedules (each a
&#147;<U>Material Agreement</U>&#148;). The Company, to the extent applicable, and to the Company&#146;s
knowledge, each other party thereto, have in all material respects performed all the obligations
required to be performed by them to date (or such non-performing party has received a valid,
enforceable and irrevocable written
waiver with respect to its non-performance), have received no notice of default and are not in
default (with due notice or lapse of time or both) under any Material Agreement. The Company has
no knowledge of any breach or anticipated breach by the other party to any Material Agreement to
which the Company is a party.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.20 <U>Office of Chief Scientist</U>. Except as set forth on Schedule&nbsp;3.20 of the
Company Disclosure Schedules, the Company has satisfied all conditions and requirements of the
instruments of approval granted to it by the Office of Chief Scientist of the Israeli Ministry of
Industry and Trade (the &#147;<U>OCS</U>&#148;) and any applicable laws and regulations, including the Law
for the Encouragement of Industrial Research and Development, 1984, with respect to any research
and development grants given to it by such office, except to the extent that noncompliance with the
foregoing, individually or in the aggregate, would not result in a Material Adverse Effect and
would not prevent or delay the consummation of the transactions contemplated hereby. 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.21 <U>Disclosure</U>. All disclosures provided by the Company to Parent and
Acquisition Subsidiary regarding the Company, the Business and the transactions contemplated
hereby, including the Company Disclosure Schedules, are true and correct in all material respects
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 the light of the circumstances under
which they were made, not misleading as of the date hereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.22 <U>Consents</U>. Except as set forth in Schedule&nbsp;3.22 of the Company Disclosure
Schedules, no consent, approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any Government Authority, or any other Person, is required
in connection with the execution and delivery of, and the consummation of the transactions
contemplated by, this Agreement, except any filing required any applicable securities laws or
regulations or as set forth herein.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.23 <U>Broker&#146;s and other Fees</U>. The Company has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders fees or agent&#146;s commissions
or any similar charges in connection with this Agreement or any transaction contemplated hereby.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.24 <U>Application of Takeover Protections</U>. Except as described in Schedule
3.24 of the Company Disclosure Schedules, to the knowledge of the Company, there are no Takeover
Protections that are or could become applicable to the Company as a result of the Company, Parent
and Acquisition Subsidiary fulfilling their obligations or exercising their rights under the
Transaction Documents.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.25 <U>Financial Statements</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The Company has delivered to Parent copies of: (i)&nbsp;the balance sheets of the Company as of
December&nbsp;31, 2005 and December&nbsp;31, 2004, and the statements of operations, and changes in
shareholders&#146; equity and cash flows for the years ended December&nbsp;31, 2005, December&nbsp;31, 2004 and
December&nbsp;31, 2003, in each case accompanied by the audit report of PriceWaterhouseCoopers, LLP &#150;
Kesselman &#038; Kesselman, independent accountants with respect to the Company, and (ii)&nbsp;the unaudited
balance sheets of the Company as of June&nbsp;30, 2006 (the &#147;<U>Company June Balance Sheets</U>&#148;) and
the unaudited statements of operations, and shareholders&#146; equity and cash flows for the six-month
period ended June&nbsp;30, 2006 (collectively, the &#147;<U>Company Financial Statements</U>&#148;). The Company
Financial Statements (including the related notes) have been prepared in accordance with United
States and Israeli generally accepted accounting principles consistently applied (&#147;<U>GAAP</U>&#148;)
during the periods involved (except as may be indicated therein or in the notes thereto), and
present fairly the consolidated financial position of the Company as of the respective dates set
forth therein, and the consolidated results of the Company&#146;s operations and its cash flows for the
respective periods set forth therein in accordance with GAAP (subject, in case of any unaudited
interim financial statements, to normal year-end adjustments).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The books and records of the Company are being maintained in material compliance with
applicable legal and accounting requirements.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.26 <U>Foreign Corrupt Practices</U>. Neither the Company nor any director,
officer, agent, employee or other Person acting on behalf of the Company has, in the course of its
actions for, or on behalf of, the Company (i)&nbsp;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)&nbsp;violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977, as amended, or (iv)&nbsp;made any unlawful bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic government
official or employee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.27 <U>OFAC</U>. The Company (i)&nbsp;is not a Person whose property or interest in
property is blocked or subject to blocking pursuant to Section&nbsp;1 of Executive Order 13224 of
September&nbsp;23, 2001 Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten
to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii)&nbsp;does not engage in any dealings
or transactions prohibited by Section&nbsp;2 of such executive order, or is otherwise associated with
any such Person in any manner violative of Section&nbsp;2 of such executive order or (iii)&nbsp;is not a
Person on the list of Specially Designated Nationals and Blocked Persons or subject to the
limitations or prohibitions under any other U.S. Department of Treasury&#146;s Office of Foreign Assets
Control regulation or executive order.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.28 <U>Patriot Act</U>. Assuming the foregoing were applicable to the Company, the
Company would be in compliance, in all material respects, with the (i)&nbsp;Trading with the Enemy Act,
as amended, and each of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter&nbsp;V, as amended) and any other enabling legislation or
executive order relating thereto and (ii)&nbsp;Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act of 2001).
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE IV<BR>
REPRESENTATIONS AND WARRANTIES OF PARENT,<BR>
AND ACQUISITION SUBSIDIARY</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each of Parent and Acquisition Subsidiary represents and warrants to the Company that the
statements contained in this Article&nbsp;IV are true and correct, except as set forth in the disclosure
schedule provided by Parent and Acquisition Subsidiary to the Company, as of the date hereof (the
&#147;<U>Parent Disclosure Schedules</U>&#148;). For purposes of this Article&nbsp;IV, the phrase &#147;to the
knowledge of Parent&#148; or any phrase of similar import shall be deemed to refer to the actual
knowledge of the executive officers of Parent, as well as any other knowledge which such executive
officers would have possessed had they made reasonable inquiry of appropriate officers and
employees (whether current or former), agents and affiliates of Parent with respect to the matter
in question.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.1 <U>Subsidiaries</U>. Except for Parent&#146;s 100% interest in Acquisition
Subsidiary, neither Parent nor Acquisition Subsidiary owns or controls, directly or indirectly, any
interest in any other corporation, partnership, company, association, limited liability company or
other business entity. Except as set forth on Schedule&nbsp;4.1 of the Parent Disclosure Schedules,
neither Parent nor Acquisition Subsidiary is a party to, or a participant in, any joint venture or
similar arrangement, including strategic relationships to develop or promote Parent&#146;s and/or
Acquisition Subsidiary&#146;s products and services, which relationships are conducted through
contractual relationships between Parent or Acquisition Subsidiary and third parties, but do not
involve any interest of Parent or Acquisition Subsidiary in any separate legal entities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.2 <U>Organization, Good Standing and Qualification</U>. Parent is a corporation
duly organized and validly existing and in good standing under the laws of the State of Florida and
has all corporate power and authority to carry on its business as now conducted. Acquisition
Subsidiary is a corporation duly organized and validly existing under the laws of the State of
Israel and has all requisite corporate power and authority to carry on its business as now
conducted. Each of Parent and Acquisition Subsidiary is duly qualified to transact business and is
in good standing in each jurisdiction<SUP style="font-size: 85%; vertical-align: text-top"> </SUP>in which the failure to be so qualified could have
a Material Adverse Effect on Parent and/or Acquisition Subsidiary. Parent is not in default with
respect to its Articles of Incorporation (as may be amended or supplemented from time to time, the
&#147;<U>Parent Articles</U>&#148;). Acquisition Subsidiary is not in default with respect to its Articles
of Association (as may be amended or supplemented from time to time, the &#147;<U>Sub Articles</U>&#148;).
Complete and correct copies of the Parent Articles and Sub Articles were provided to Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.3 <U>Authorization</U>. All corporate action on the part of each of Parent and
Acquisition Subsidiary, its officers and directors necessary for the (i)&nbsp;due authorization,
execution and delivery of this
Agreement and (ii)&nbsp;performance of all obligations of Parent and/or
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Acquisition Subsidiary
hereunder has been taken as of the date hereof. All corporate action on the part of the
stockholders of each of Parent and Acquisition Subsidiary necessary for the (i)&nbsp;due authorization,
execution and delivery of this Agreement and (ii)&nbsp;performance of all obligations of Parent and/or
Acquisition Subsidiary hereunder has been taken or will be taken prior to the Closing. This
Agreement has been duly executed by each of Parent and Acquisition Subsidiary and, assuming the due
authorization, execution and delivery by the other parties thereto, constitutes and will constitute
a valid and legally binding obligation of both Parent and Acquisition Subsidiary, (i)&nbsp;subject to
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or similar
laws of general application affecting the enforcement of creditors&#146; rights generally, (ii)&nbsp;subject
to a court&#146;s discretionary authority with respect to the granting of specific performance,
injunctive relief or other equitable remedies and (iii)&nbsp;except to the extent the indemnification
and contribution provisions, if any, contained in any such agreement may be limited by Israeli or
United States securities laws or unenforceable as against public policy.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.4 <U>Authorized Securities</U>. The Merger Shares shall be duly authorized and,
when issued in accordance with this Agreement, will be duly and validly issued, fully paid and
non-assessable, free and clear of all Liens and shall not be subject to preemptive or similar
rights of stockholders. The Assumed Options, any warrants or options issued by Parent in exchange
for the Company Warrants and all options and warrants issuable by Parent pursuant to Section&nbsp;5.8
shall be duly issued and authorized when issued in accordance with this Agreement and any share of
Parent Common Stock issued upon the exercise thereof according to the terms thereof will be duly
and validly issued, fully paid and non-assessable, free and clear of all Liens and shall not be
subject to preemptive or similar rights of stockholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.5 <U>Capitalization</U>. The authorized share capital of Parent and Acquisition
Subsidiary is as set forth on Schedule&nbsp;4.5 of the Parent Disclosure Schedules.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.6 <U>Valid Issuance</U>. The issued and outstanding capital stock of Parent have
been duly authorized and issued, are fully paid and non-assessable, and have been issued in
compliance with applicable securities laws. The issued and outstanding capital stock of Parent, on
a fully diluted basis, including a true and correct list of the record holders of shares or rights
(vested or contingent) to acquire shares in Parent immediately prior to the Closing is as set forth
in Schedule&nbsp;4.6 of the Parent Disclosure Schedules. All issued and outstanding share capital of
Acquisition Subsidiary has been duly authorized and issued, is fully paid and non-assessable, and
has been issued in compliance with Israeli securities laws. All issued and outstanding share
capital of Acquisition Subsidiary, on a fully diluted basis, is held by Parent immediately prior to
the Closing. As of the Closing, Parent will assume the Company Option Plan to provide for the
issuance of the Assumed Options and will, prior to the Closing, reserve sufficient number of shares
of Parent Common Stock available for issuance upon the exercise of the Assumed Options, any
warrants or options issued in exchange for the Company Warrants or as otherwise undertaken by Parent to
be issued following the Closing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.7 <U>SEC Reports; Financial Statements</U>. Parent has duly filed all reports
required to be filed by it under the Exchange Act, including pursuant to Sections 13(a) or 15(d)
thereof, for the two years preceding the date hereof (the foregoing materials (together with any
materials filed by Parent under the Exchange Act, whether or not required) being collectively
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">referred to herein as the &#147;<U>SEC Reports</U>&#148;) on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports prior to the expiration of any
such extension. 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 SEC 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 the light of the circumstances under which
they were made, not misleading. The financial statements of Parent included in the SEC Reports
comply in all material respects with applicable accounting requirements and the rules and
regulations of the SEC with respect thereto as in effect at the time of filing. Such financial
statements have been prepared in accordance with GAAP applied on a consistent basis, except as may
be otherwise specified in such financial statements or the notes thereto, and fairly present in all
material respects the financial position of Parent as of and for the dates thereof and the results
of operations and cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, year-end audit adjustments. Except as set forth on Schedule&nbsp;4.7 of the
Parent Disclosure Schedules, all material agreements to which Parent or Acquisition Subsidiary is a
party or to which the property or assets of Parent or the Acquisition Subsidiary are subject are
included as part of or specifically identified in the SEC Reports.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.8 <U>Absence of Changes</U>. Since the date of the latest audited financial
statements included within the SEC Reports, except as specifically disclosed in the SEC Reports or
in Schedule&nbsp;4.8 of the Parent Disclosure Schedules or incident to the transactions contemplated
hereby or in connection with the Merger, (i)&nbsp;there has been no event, occurrence or development
that, individually or in the aggregate, has had or that could result in a Material Adverse Effect
on Parent, (ii)&nbsp;Parent has not incurred any material liabilities, (iii)&nbsp;Parent has not altered its
method of accounting or the identity of its auditors, except as disclosed in its SEC Reports, (iv)
Parent has not declared or made any dividend or distribution of cash or other property to its
stockholders, in their capacities as such, or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock and (v)&nbsp;Parent has not issued any equity
securities to any officer, director or affiliate. Parent has not taken any steps to seek
protection pursuant to any bankruptcy law nor does Parent have any knowledge or reason to believe
that its creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of
any fact that would reasonably lead a creditor to do so. Parent is not Insolvent as of the date
hereof, and after giving effect to the transactions contemplated hereby to occur at the Closing,
will not be Insolvent.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.9 <U>Absence of Litigation</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;There is no action, suit, claim or proceeding pending, or to the knowledge of Parent
currently threatened, against Parent and/or Acquisition Subsidiary, and Parent is not aware of any
event or circumstance that may form a basis for any such action, suit, claim, proceeding other than
those set forth on Schedule&nbsp;4.9(a) of the Parent Disclosure Schedules. The foregoing includes, to
Parent and/or Acquisition Subsidiary&#146;s knowledge, actions, suits, claims or proceedings pending or
threatened against Parent and/or Acquisition Subsidiary (or any basis therefor known to Parent
and/or Acquisition Subsidiary) involving the prior employment of any of Parent&#146;s and/or Acquisition
Subsidiary&#146;s employees, their use in connection with the Business
</DIV>


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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">of any information or techniques
allegedly proprietary to any of their former employers, or their obligations under any agreements
with former employers.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;To Parent&#146;s and/or Acquisition Subsidiary&#146;s knowledge, neither Parent nor Acquisition
Subsidiary is party or subject to the provisions of any order, writ, injunction, judgment or decree
of any court or Government Authority other than those set forth on Schedule&nbsp;4.9(b) of Parent
Disclosure Schedules.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;There is no action, suit, claim or proceeding by Parent and/or Acquisition Subsidiary that
is currently pending or that Parent and/or Acquisition Subsidiary intends to initiate.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;To Parent&#146;s and/or Acquisition Subsidiary&#146;s knowledge, there is no action, suit, claim or
proceeding pending or, to the knowledge of Parent and/or Acquisition Subsidiary, threatened, that
questions the validity of this Agreement or the right of Parent and/or Acquisition Subsidiary to
enter into this Agreement, or to consummate the transactions contemplated hereby.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.10 <U>No Assets; No Liabilities</U>. Except as specifically disclosed
in the SEC Reports, neither Parent nor Acquisition Subsidiary has the right to own, or will have
the right to own prior to the Closing, any assets (including without limitation, tangible and
intangible, personal and real property) and neither is involved in the operation of any business or
property. As of the date hereof, other than as specifically disclosed in the SEC Reports and those
liabilities related to this Agreement set forth on Schedule&nbsp;4.10 of the Parent Disclosure
Schedules, neither Parent nor Acquisition Subsidiary has any direct or indirect liability,
indebtedness or obligation (including without limitation, known or unknown, absolute or contingent,
liquidated or unliquidated or due or to become due).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.12 <U>Application of Takeover Protections</U>. Except as described in Schedule
4.12 of the Parent Disclosure Schedules, there are no Takeover Protections that are or could become
applicable to Parent as a result of the Company, Parent and Acquisition Subsidiary fulfilling their
obligations or exercising their rights under the Transaction Documents, including, without
limitation, as a result of Parent&#146;s issuance of the Merger Shares or any other warrant or option as
specified in this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.13 <U>Disclosure</U>. All disclosure provided by Parent and Acquisition Subsidiary to the Company regarding
Parent and Acquisition Subsidiary, their respective businesses and the transactions contemplated
hereby, including the Schedules to this Agreement, furnished by or on the behalf of Parent and
Acquisition Subsidiary are true and correct in all material respects 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 the light of the circumstances under which they were made, not
misleading as of the date hereof. To Parent&#146;s and Acquisition Subsidiary&#146;s knowledge, no event or
circumstance has occurred or information exists with respect to Parent or Acquisition Subsidiary or
their respective business, properties, operations or financial conditions, which, under applicable
law, rule or regulation, requires public disclosure or announcement by Parent but which has not
been so publicly announced or disclosed. Parent and Acquisition Subsidiary acknowledge and agree
that the Company has not made nor will make any
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in the Transaction
Documents.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.14 <U>Operations of Acquisition Subsidiary</U>. Acquisition Subsidiary is a
direct, wholly owned subsidiary of Parent, was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement, has engaged in no other business activities and has
conducted its operations only as contemplated by this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.15 <U>Sarbanes-Oxley Act</U>. Parent is in compliance with all applicable
requirements of Sarbanes-Oxley Act of 2002 and applicable rules and regulations promulgated by the
SEC thereunder, except where such noncompliance would not have, individually or in the aggregate, a
Material Adverse Effect on Parent.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.16 <U>Manipulation of Price</U>. Neither Parent nor Acquisition Subsidiary has,
and to their knowledge no one acting on their behalf has, (i)&nbsp;taken, directly or indirectly, any
action designed to cause or to result in the stabilization or manipulation of the price of any
security of Parent or to facilitate the sale or resale of any of Parent Common Stock, (ii)&nbsp;sold,
bid for, purchased or paid any compensation for soliciting purchases of, any of Parent Common Stock
or (iii)&nbsp;paid or agreed to pay to any Person any compensation for soliciting another to purchase
any other securities of Parent.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.17 <U>Material Agreements</U>. A list of the material agreements of each of Parent
and Acquisition Subsidiary is set forth on Schedule&nbsp;4.17 of the Parent Disclosure Schedules. Each
of Parent and Acquisition Subsidiary, to the extent applicable, and to Parent&#146;s and/or Acquisition
Subsidiary&#146;s knowledge, each other party thereto, have in all material respects performed all the
obligations required to be performed by them to date (or such non-performing party has received a
valid, enforceable and irrevocable written waiver with respect to its non-performance), have
received no notice of default and are not in default (with due notice or lapse of time or both)
under any material agreement specified in Schedule&nbsp;4.17 of the Parent Disclosure Schedules. Except
as set forth on
Schedule&nbsp;4.17 of the Parent Disclosure Schedules, immediately following the Closing all
agreements to which the Parent or the Acquisition Subsidiary is a party shall be terminated and of
no further force and effect with no liability to Parent, Acquisition Subsidiary or the Surviving
Corporation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.18 <U>Foreign Corrupt Practices</U>. Neither Parent nor Acquisition Subsidiary nor
any director, officer, agent, employee or other Person acting on behalf of Parent or Acquisition
Subsidiary has, in the course of its actions for, or on behalf of, Parent and Acquisition
Subsidiary (i)&nbsp;used any corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expenses relating to political activity, (ii)&nbsp;made any direct or indirect unlawful payment
to any foreign or domestic government official or employee from corporate funds, (iii)&nbsp;violated or
is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or
(iv)&nbsp;made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment
to any foreign or domestic government official or employee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.19 <U>OFAC</U>. Neither Parent nor Acquisition Subsidiary (i)&nbsp;is a Person whose
property or interest in property is blocked or subject to blocking pursuant to Section&nbsp;1 of
Executive Order 13224 of September&nbsp;23, 2001 Blocking Property and Prohibiting Transactions
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">with Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii)
engages in any dealings or transactions prohibited by Section&nbsp;2 of such executive order, or is
otherwise associated with any such Person in any manner violative of Section&nbsp;2 of such executive
order or (iii)&nbsp;is a Person on the list of Specially Designated Nationals and Blocked Persons or
subject to the limitations or prohibitions under any other U.S. Department of Treasury&#146;s Office of
Foreign Assets Control regulation or executive order.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.20 <U>Patriot Act</U>. To the extent applicable, each of Parent and Acquisition
Subsidiary is in compliance, in all material respects, with the (i)&nbsp;Trading with the Enemy Act, as
amended, and each of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter&nbsp;V, as amended) and any other enabling legislation or
executive order relating thereto and (ii)&nbsp;Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act of 2001).
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE V<BR>
ADDITIONAL AGREEMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5.1 <U>Publicity</U>. Until the Merger Effective Time, no party shall issue any
press release or public announcement pertaining to the Merger that has not been agreed upon in
advance by Parent and the Company, except as Parent reasonably determines to be necessary in order
to comply with the rules of the SEC or of the principal trading exchange or market for Parent
Common Stock and as the Company reasonably determines to be necessary in accordance with the
performance of its obligations under Section&nbsp;5.9; <U>provided</U>, <U>however</U>, that to the
maximum extent practicable, Parent and the Company shall give prior notice thereof to the other, as
applicable, and consult with each other regarding the same.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5.2 <U>Tax Returns; Cooperation</U>. From and after the Closing, the Company, on the one hand, and Parent, on the other, will
cooperate with each other and provide such information as the other party may require in order to
file any return to determine Tax liability or a right to a Tax refund or to conduct a Tax audit or
other Tax Proceeding. Such cooperation shall include making employees available on a mutually
convenient basis to explain any documents or information provided hereunder or otherwise as
required in the conduct of any audit or other proceeding. In addition, each of the parties shall
use all commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, as soon as reasonably practicable,
the Merger and the other Transactions contemplated by this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5.3 <U>Tax Free Exchange</U>. Each of Parent and the Company shall use its
respective reasonable efforts to cause the Merger to qualify as a tax free exchange of the Merger
Shares under the Code. For purposes of the foregoing, this Agreement shall constitute a plan of
reorganization.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5.4 <U>Transaction Form 8-K; Other Filings</U>. As promptly as practicable (but in
no event, with respect to filing, later than the date required under applicable Law), Parent will
prepare and file a current report on Form 8-K (the &#147;<U>Transaction Form&nbsp;8-K</U>&#148;) and any filings
required to be filed by it under the Exchange Act, the Securities Act or any other Federal, foreign
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">or blue sky or related Laws relating to the execution of this Agreement and the consummation of the
Transactions, as well as under the stock exchange or trading system on which shares of Parent
Common Stock are listed or quoted and such other governmental agencies as may require the filing of
such other filings. The Company will work together with Parent as promptly as practicable to
prepare the Transaction Form 8-K and other filings referred to above and provide Parent whatever
information is necessary to accurately complete such filings in a timely manner.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5.5 <U>Notices from Governmental Agencies</U>. Subject to applicable Laws relating
to the exchange of information, each party will promptly furnish to the other Parties copies of
written communications (and memoranda setting forth the substance of all oral communications)
received by such party, or any of their respective subsidiaries, affiliates or associates (as such
terms are defined in Rule&nbsp;12b-2 under the Exchange Act as in effect on the date hereof), from, or
delivered by any of the foregoing to, any Governmental Authority relating to or in respect of the
transactions contemplated under this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5.6 <U>Parent Directors and Officers</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Directors</U>. Immediately following the Merger Effective Time, Parent and the Parent
Board shall take all necessary actions to ensure that the Parent Board shall consist of the
directors of the Company as of the Merger Effective Time, including the two designees of Frost
Gamma Investments Trust, one of which shall be Dr.&nbsp;Phillip Frost and one of whom shall be Dr.&nbsp;Jane
Hsiao, to be appointed and removed in accordance with a Voting Agreement
substantially in the form attached hereto as Exhibit&nbsp;B, subject to any limitations imposed by
applicable law or the rules of the Eligible Market.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Officers</U>. Immediately following the Merger Effective Time, the officers of Parent
shall consist of those individuals appointed by the Parent Board.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5.7 <U>Letters of Transmittal</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A reasonable amount of time prior to the Merger Effective Time, Parent shall provide to each
Existing Company Shareholder a letter of transmittal (&#147;<U>Letter of Transmittal</U>&#148;) which shall
contain additional representations, warranties and covenants of such shareholder as to the
following matters: (a)&nbsp;such shareholder has full right, power and authority to deliver such Company
Shares and Letter of Transmittal; (b)&nbsp;the delivery of such Company Shares will not violate or be in
conflict with, result in a breach of or constitute a default under, any indenture, loan or credit
agreement, deed of trust, mortgage, security agreement or other agreement or instrument to which
such shareholder is bound or affected; (c)&nbsp;such shareholder has good, valid and marketable title to
all Company Shares indicated in such Letter of Transmittal and that such stockholder is not
affected by any voting trust, agreement or arrangement affecting the voting rights of such Shares;
(d)&nbsp;such shareholder is acquiring the Parent Common Stock for investment purposes and not with a
view to selling or otherwise distributing such Parent Common Stock in violation of the Securities
Act or the securities Laws of any state, subject to any limitations imposed by the Israeli Tax
Ruling; (e)&nbsp;such shareholder has had an opportunity to ask and receive answers to any questions
such stockholder may have had concerning the terms and conditions of the Merger and Parent Common
Stock and has obtained any additional information that such stockholder has requested; and (f)&nbsp;such
shareholder acknowledges that the stock
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">certificates evidencing the shares of Parent Common Stock
to be issued to such shareholder shall bear a restrictive legend customarily used in connection
with restricted securities within the meaning of Rule&nbsp;144 under the Securities Act subject to and
until the registration thereof as set forth below. The Merger Shares shall be issued to such
shareholder, only upon delivery to Parent (or an agent of Parent) of (x)&nbsp;certificates acceptable to
Parent and its transfer agent evidencing ownership thereof as contemplated by Section&nbsp;2.6(a) (or
affidavit of lost certificate acceptable to Parent and its transfer agent) and (y)&nbsp;the Letter of
Transmittal containing the representations, warranties and covenants contemplated by this Section
5.7.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5.8 <U>Issuance of Additional Warrants and Options</U>. Parent shall issue the
replacement warrants and the options in accordance with Section&nbsp;1.3(b) and (c)&nbsp;of the Share
Purchase Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5.9 <U>Merger Proposal</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;As promptly as practicable (i)&nbsp;the Company and Acquisition Subsidiary shall cause a merger
proposal (in the Hebrew language) (the &#147;<U>Merger Proposal</U>&#148;) to be executed in accordance with
Section&nbsp;316 of the Israeli Companies Law, (ii)&nbsp;each of the Company and Acquisition Subsidiary shall
convene a shareholders meeting (the &#147;<U>Company General Meeting</U>&#148; and &#147;<U>Acquisition
Subsidiary General Meeting</U>&#148;), and (iii)&nbsp;each of the Company and Acquisition Subsidiary shall
deliver the Merger Proposal to the Companies Registrar. The Company and Acquisition Subsidiary
shall cause a copy of the Merger Proposal to be delivered to each of their
secured creditors, if any, no later than three days after the date on which the Merger
Proposal is delivered to the Companies Registrar and shall promptly inform their non-secured
creditors of the Merger Proposal and its contents in accordance with Section&nbsp;318 of the Israeli
Companies Law and the regulations promulgated thereunder. Promptly after the Company and
Acquisition Subsidiary shall have complied with the preceding sentence but in any event no more
than three days following the date on which such notice was sent to the creditors, the Company and
Acquisition Subsidiary shall inform the Companies Registrar, in accordance with Section 317(b) of
the Companies Law, that notice was given to their creditors under Section&nbsp;318 of the Israeli
Companies Law and the regulations promulgated thereunder.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Notice to creditors pursuant to Section&nbsp;318 shall be provided as set forth below and each
of the Company and, if applicable, Acquisition Subsidiary shall publish a notice to its creditors,
stating that a Merger Proposal was submitted to the Companies Registrar and that the creditors may
review the Merger Proposal at the Companies Registrar, the Company&#146;s registered offices or at such
other locations as Company shall determine, in (A)&nbsp;two daily Hebrew newspapers, on the day that the
Merger Proposal is submitted to the Companies Registrar and (B)&nbsp;a popular newspaper in any foreign
jurisdiction, no later than three Business Days following the day on which the Merger Proposal was
submitted to the Companies Registrar if the Company or Acquisition Subsidiary, as applicable, has
any Material Creditor in such jurisdiction. For the purpose hereof &#147;<U>Material Creditor</U>&#148;
means any creditor to which the Company or the Acquisition Subsidiary, as applicable, is indebted
in an amount equal to the higher of NIS100,000 or an amount equal to 15% or more of the equity of
the Company or the Acquisition Subsidiary, as applicable, or as such term is otherwise defined in
the regulations promulgated under the Israeli Companies Law.
</DIV>


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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Within four Business Days from the date of submitting the Merger Proposal to the Companies
Registrar, the Company and Acquisition Subsidiary, as applicable, shall send a notice by registered
mail to all of the Material Creditors that each is aware of, in which it shall state that a Merger
Proposal was submitted to the Companies Registrar and that the creditors may review the Merger
Proposal at such additional locations, if such locations were determined in the notice referred to
in Section&nbsp;5.9(b).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;With respect to the Company, since it employs 50 or more persons, the Company shall send
to the &#147;workers committee&#148; or display in a prominent place at the Company&#146;s premises, a copy of the
notice published in a daily Hebrew newspaper (as referred to in Section&nbsp;5.9(b)(A)), no later than
three Business Days following the day on which the Merger Proposal was submitted to the Companies
Registrar.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5.10 <U>General Meetings</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Promptly after the execution and delivery of this Agreement, the Company shall take all
action necessary under all applicable legal requirements to convene, give notice of and hold a
Company General Meeting to vote on the proposal to approve the Merger, this Agreement and the
transactions contemplated hereby. In the event that Parent, or any &#147;affiliate&#148; thereof (as such
term is defined in the Israeli Companies Law), shall cast any votes in respect of the Merger,
Parent shall, prior to such vote, disclose to Company its interest or its affiliates respective
interests in such shares so voted and any votes by such shares shall not be counted
with respect to such Company General Meeting. Required under applicable law The Company may
adjourn or postpone the Company General Meeting if, as of the time for which the Company General
Meeting is originally scheduled there are insufficient Company Shares represented (either in person
or by proxy) to constitute a quorum necessary to conduct the business of the Company General
Meeting. Without derogating from Section&nbsp;6.3 below, the Board of Directors of the Company shall
note to the Company&#146;s shareholders its approval and recommendation for approval by the shareholders
of the Company of this Agreement and the consummation of the transactions contemplated hereby,
including the Merger and the Board of Director&#146;s declaration that this Agreement is advisable, fair
and in the best interests of their respective shareholders and approved the Merger upon the terms
and conditions set forth in this Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Parent (as the sole shareholder of Acquisition Subsidiary) shall approve the Merger at an
Acquisition Subsidiary General Meeting.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Each of the Company and Acquisition Subsidiary shall (in accordance with Section 317(b) of
the Israeli Companies Law and the regulations thereunder) inform the Companies Registrar of the
decision of the respective General Meetings with respect to the Merger within three days following
the adoption of the respective resolution but in any event not later than 50&nbsp;days following the
delivery of the Merger Proposal to Companies Registrar.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5.11 <U>Notification</U>. Either party shall give prompt notice to the other party
upon becoming aware that any representation or warranty made by it contained in this Agreement has
become untrue or inaccurate in any material respect, or of any failure of such party to comply with
or satisfy in any material respect any covenant, condition or agreement to be complied with
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">or satisfied by it under this Agreement. Each party to this Agreement shall promptly inform the other
parties of any communication to or from the Israeli Restrictive Trade Practices Commissioner, the
OCS, the Investment Center, the Israel Securities Authority, the Companies Registrar or any other
Governmental Authority regarding the Merger or any of the other Transactions contemplated by this
Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5.12 <U>Israeli Approvals</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Government Filings</U>. Each party to this Agreement shall use all commercially
reasonable efforts to deliver and file, as promptly as practicable after the date of this
Agreement, each notice, report or other document required to be delivered by such party to or filed
by such party with any Israeli Governmental Authority with respect to the Merger. Without limiting
the generality of the foregoing:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;as promptly as practicable after the date of this Agreement, the Company and Parent shall
prepare and file any notification required under the Israeli Restrictive Trade Practices Law in
connection with the Merger; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;the Company shall use all reasonable efforts to obtain, as promptly as practicable after
the date of this Agreement, the following consents, and any other consents that may be required in
connection with the Merger: (i)&nbsp;approval of the OCS and (ii)&nbsp;approval of
the Investment Center. In this connection, if required, Parent shall provide to the OCS and
the Investment Center any information reasonably requested by such authorities and shall, without
limitation of the foregoing, execute an undertaking in customary form in which Parent undertakes to
comply with the OCS laws and regulations and confirm to the OCS and the Investment Center that the
Company shall continue after the Merger Effective Time to operate in a manner consistent with its
previous undertakings to the OCS and the Investment Center.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Israeli Income Tax Ruling</U>. The parties acknowledge that the Company has caused
its Israeli counsel, advisors and accountants to prepare and file with the Israeli Income Tax
Commissioner an application for a ruling: (i)&nbsp;deferring any obligation to pay capital gains tax on
the exchange of the Company Shares in the Merger subject to the restrictions imposed on the
Existing Company Shareholders and the Parent pursuant to Section 103(k) of the Israeli Tax
Ordinance and (ii)&nbsp;confirming that the conversion of the Company Options into the Assumed Options
will not result in a requirement for an immediate Israeli tax payment and that the Israeli taxation
will be deferred until the exercise of the warrants or options issued in exchange of the Company
Options and Warrants, or in the event of Assumed Options which are part of a &#147;<U>Section&nbsp;102
Plan</U>,&#148; until the actual sale of the shares of Parent Common Stock by the option holders (the
&#147;<U>Israeli Income Tax Ruling</U>&#148;). The Company shall use reasonable efforts to promptly take,
or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or
advisable under applicable Law to obtain the Israeli Income Tax Rulings.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5.13 <U>Indemnification and D&#038;O Insurance</U>. From and after the Closing, Parent
will cause the Surviving Corporation to fulfill and honor in all respects the obligations of
Company pursuant to any indemnification agreements between Company and its directors and officers
(the &#147;<U>Company Indemnitees</U>&#148;) in effect immediately prior to the Merger Effective Time and
any indemnification provisions under the Company Articles to the maximum extent
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">permitted by law. The Articles of Association of the Surviving Corporation will contain provisions with respect to
exculpation and indemnification that are at least as favorable to the Company Indemnitees as those
contained in the Company Articles, which provisions will not be amended, repealed or otherwise
modified in any manner that would adversely affect the rights thereunder of individuals who,
immediately prior to the Merger Effective Time, were directors, officers, employees or agents of
Company, unless such modification is required by Law. see in SPA
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5.14 <U>Conduct of Business</U>. During the period from the date of this Agreement
to the Merger Effective Time, each of Parent and the Company shall:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;conduct its business only in the ordinary course and consistent with prudent and prior
business practice, except for transactions permitted hereunder, or with the prior written consent
of the other party, which consent will not be unreasonably withheld; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;confer on a reasonable basis with each other regarding operational matters and other
matters related to the Merger.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5.15 <U>Prohibited Actions Pending Closing</U>. Except as provided in this Agreement and as disclosed in Schedule&nbsp;5.15 to either the
Company Disclosure Schedules or to the Parent Disclosure Schedules, during the period from the date
of this Agreement to the Merger Effective Time, neither the Company nor Parent shall:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;amend or otherwise change their respective Articles of Association or Articles of
Incorporation, as the case may be, or other governing documents;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;issue or sell or authorize for issuance or sale, or grant any options or make other
agreements with respect to, any shares of their respective capital stock, any options or any other
of their respective securities;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;declare, set aside, make or pay any dividend or other distribution to their respective
shareholders, or redeem, purchase or otherwise acquire, directly or indirectly, any of their
capital stock, or authorize or effect any reverse stock split, split-up or any recapitalization or
make any changes in the amount of their authorized or issued capital stock;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;sell, license or otherwise dispose of, or agree to sell, license or dispose of, any of
their respective assets or properties, other than any assets or properties where such sale, license
or disposition occurs or is to occur in the ordinary course of their respective business consistent
with past practice;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;take any action or omit to take any action for the purpose of preventing, delaying or
impeding the consummation of the Merger or the other transactions contemplated hereby; or
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)&nbsp;pay any finders or investment bankers&#146; fees in connection with the transactions
contemplated by this Agreement (other than any fees incurred in connection with the delivery of a
fairness opinion contemplated by Section&nbsp;6.2(d)).
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5.16 <U>Further Assurances</U>. Subject to the terms and conditions herein provided,
each of the parties hereto agrees to use reasonable efforts to take, or cause to be taken, all
action and to do, or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to satisfy the conditions to Closing and to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation, using reasonable
efforts to lift or rescind any injunction or restraining order or other order adversely affecting
the ability of the parties to consummate the transactions contemplated by this Agreement and using
reasonable efforts to prevent the breach of any representation, warranty, covenant or agreement of
such party contained or referred to in this Agreement and to promptly remedy the same. In case at
any time after the Merger Effective Time any further action is necessary or desirable to carry out
the purposes of this Agreement, the proper officers and directors of each party to this Agreement
shall take all such necessary action. Nothing in this Section&nbsp;5.16 shall be construed to require
any party to participate in any threatened or actual legal, administrative or other proceedings
(other than proceedings, actions or investigations to which it is a party or subject or threatened
to be made a party or subject) in connection with consummation of the transactions contemplated by
this Agreement unless such party shall consent in advance and in writing to such participation and
the other party agrees to reimburse and indemnify such party for and against any and all costs and
damages related thereto.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5.17 <U>Initial Listing Application</U>. After the execution of this Agreement,
Parent shall use its best efforts, to the extent allowed under the rules of the Eligible Market, to
prepare all filings and other documents necessary to be filed with the Eligible Market in
connection with the initial listing application for the inclusion of the Parent Common Stock on the
Eligible Market, conduct ongoing negotiations with the Eligible Market with the participation of
the Company and its counsel with respect to such listing and perform all acts requested by the
Eligible Market to the satisfaction of the Company and its counsel.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5.18 <U>Financial Statements</U>. The Company shall have initiated a system of
internal accounting controls sufficient to provide reasonable assurance that (i)&nbsp;transactions are
executed in accordance with management&#146;s general or specific authorizations, (ii)&nbsp;transactions are
recorded as necessary to permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability, (iii)&nbsp;access to assets is permitted only in accordance with
management&#146;s general or specific authorization and (iv)&nbsp;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 shall disclose to the Company&#146;s outside auditors (A)&nbsp;all
significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the Company&#146;s ability to
record, process, summarize and report financial data and (B)&nbsp;any fraud, whether or not material,
that involves management or other employees who have a significant role in the Company&#146;s internal
controls over financial reporting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5.19 <U>Shareholder Approvals</U>. Unless this Agreement is terminated, the Company
hereby agrees to enforce its rights under the Amended and Restated Shareholder Agreement between
the Company and its shareholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5.20 <U>Access to Parent</U> and Acquisition Subsidiary. Parent shall afford to the
Company and its officers, directors, agents and counsel access at times and upon conditions
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">reasonably convenient to Parent and make available all properties, books, records, contracts and
documents of Parent and Acquisition Subsidiary, and an opportunity to make such investigations as
they shall reasonably desire to make of Parent and Acquisition Subsidiary; and Parent shall furnish
or cause to be furnished to the Company and its authorized representatives all such information
with respect to the business and affairs of Parent and Acquisition Subsidiary as the Company and
its authorized representatives may request and make the officers, directors, employees, auditors
and counsel of Parent and Acquisition available for consultation and permit access to other third
parties reasonably requested for verification of any information so obtained.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5.21 <U>Access to the Company</U>. The Company shall afford to Parent and its
officers, directors, agents and counsel access at times and upon conditions reasonably convenient
to the Company and make available all properties, books, records, contracts and documents of the
Company, and an opportunity to make such investigations as it shall reasonably desire to make of
the Company; and the Company shall furnish or cause to be furnished to Parent and its authorized
representatives all such information with respect to the business and affairs of the Company as
Parent and its authorized representatives may request and make the officers,
directors, employees, auditors and counsel of the Company available for consultation and
permit access to other third parties reasonably requested for verification of any information so
obtained.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE VI<BR>
CONDITIONS OF PARTIES&#146; OBLIGATIONS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.1 <U>Conditions Precedent to Each Party&#146;s Obligation to Effect the Merger</U>. The
respective obligations of each party to effect the Merger shall be subject to the fulfillment or
satisfaction, prior to or on the Closing Date, of the following conditions:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Shareholder Approval; Board Approval</U>. The Merger shall have been duly approved by
the requisite vote of the outstanding Company Shares entitled to vote thereon in accordance with
Israeli law (the &#147;<U>Company Shareholder Approval</U>&#148;), by the Company Board according to Section
6.3 and, if necessary under applicable Laws or the rules of an applicable exchange, the requisite
vote of the outstanding shares of capital stock of Parent entitled to vote thereon.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>No Material Adverse Change</U>. No event shall have occurred which would have a
Material Adverse Effect on either of the Company or Parent.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Governmental Authorities Approvals</U>. All Governmental Authorities approvals
required for the consummation of the Merger shall have been obtained including, without limitation,
all Israeli Governmental Authorities approvals such as the Certificate of Merger, approval of the
OCS, the Investment Center, the Israeli Income Tax Ruling and the Israeli Commissioner of
Restrictive Trade Practices required by applicable Law.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.2 <U>Conditions Precedent to Obligations of Parent and Acquisition Subsidiary</U>.
Parent&#146;s and Acquisition Subsidiary&#146;s obligation to effect the Merger and consummate the other
transactions contemplated to occur in connection with the Closing and thereafter is subject to the
satisfaction of each condition precedent listed below. All corporate and other proceedings and
actions taken in connection with the transactions contemplated hereby and, where such
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">instruments are not exhibits to this Agreement, all certificates, opinions, agreements, instruments and
documents mentioned herein or incident to any such transactions, shall be satisfactory in form and
substance to Parent and Acquisition Subsidiary. The Company shall furnish to Parent and
Acquisition Subsidiary such supporting documentation and evidence of the satisfaction of any or all
of the conditions precedent specified in this Section&nbsp;6.2 as Parent or its counsel may reasonably
request.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Representations and Warranties</U>. As of the Closing, each representation and
warranty set forth in Article&nbsp;III shall be accurate and complete in all material respects after
giving full effect to any supplements to the schedules as amended from time to time so long as such
modification does not constitute a Company Material Adverse Effect.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Actions</U>. No action or Proceeding is pending or threatened by or before any
Governmental Authority, arbitrator, or mediator that seeks to restrain, prohibit, invalidate, or
collect any substantial damages arising out of the Transactions.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Miscellaneous Closing Documents</U>. Parent and Acquisition Subsidiary shall have
received the following:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;copies of resolutions of the Company and the shareholders of the Company, certified by the
Secretary or chief executive officer of the Company, authorizing and approving the execution,
delivery and performance of the Transaction Documents;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;A certificate of the Company&#146;s Chief Executive Officer certifying as of the Closing Date
that there are not more than 706,888 Company Shares issued and outstanding (excluding any shares
held by FG Holders) and not more than 283,015 Company Shares underlying outstanding options,
warrants and other convertible securities (excluding any securities held by FG Holders and/or the
FG Warrants); and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;and such additional supporting documentation and other information with respect to the
transactions contemplated hereby as the Company may reasonably request.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <U>Fairness Opinion</U>. Parent shall have received an opinion from an independent
financial advisor or investment banking firm that the Merger is fair to the shareholders of Parent.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <U>Lockup Agreements</U>. The majority of the shareholder of the Company shall have
delivered to Parent an executed lockup letter agreement in the form to be provided to the Israeli
Tax Authorities pursuant to the Israeli Income Tax Ruling.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.3 <U>Conditions Precedent to Obligation of the Company</U>. The Company&#146;s
obligations to effect the Merger and consummate the other transactions contemplated to occur in
connection with the Closing and thereafter is subject to the satisfaction of each condition
precedent listed below. All corporate and other proceedings and actions taken in connection with
the transactions contemplated hereby and, where such instruments are not exhibits to this
Agreement, all certificates, opinions, agreements, instruments and documents mentioned herein or
incident to any such transactions shall be satisfactory in form and substance to the Company.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Parent and Acquisition Subsidiary shall furnish to the Company such supporting documentation and
evidence of satisfaction of any or all of the conditions specified in this Section&nbsp;6.3 as the
Company may reasonably request.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Representations and Warranties</U>. As of the Closing, each representation and
warranty set forth in Article&nbsp;IV shall be accurate and complete in all material respects, after
giving full effect to any supplements to the schedules as amended from time to time so long as such
modification does not constitute a Material Adverse Effect on Parent.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Listing on the Eligible Market</U>. Parent shall have complied with its obligations
under Section&nbsp;5.17 to the reasonable satisfaction of the Company Board and the Company Board shall
be reasonably satisfied that Parent shall be included for listing on the Eligible Market within a
reasonable amount of time after the Closing.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Actions</U>. No action or Proceeding is pending or threatened by or before any
Governmental Authority, arbitrator, or mediator that seeks to restrain, prohibit, invalidate or
collect any substantial damages arising out of the Transactions.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <U>Director and Officer Resignations</U>. Each of the directors and officers of Parent
shall have delivered to Parent and the Company an executed resignation letter with an effective
date and time agreed upon by the Company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <U>Lockup Agreements</U>. Each Investor shall have delivered to Parent and the Company
an executed a lockup letter agreement substantially in the form of <U>Exhibit&nbsp;B</U> hereto.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <U>Miscellaneous Closing Documents</U>. The Company shall have received the following:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;Copies of resolutions of Parent&#146;s and Acquisition Subsidiary&#146;s respective board of
directors and shareholders, certified by their respective Secretaries, authorizing and approving,
to the extent applicable, the execution, delivery and performance of the Transaction Documents;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;A certificate of Parent&#146;s transfer agent and registrar certifying as of the Closing Date
that there are not more than 5,830,856 shares of Parent Common Stock issued and outstanding; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;Such additional supporting documentation and other information with respect to the
transactions contemplated hereby as the Company may reasonably request.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <U>Israeli Income Tax Ruling</U>. The Company shall have obtained the Israeli Income Tax
Ruling.
</DIV>


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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE VII<BR>
SURVIVAL</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;7.1 <U>Survival</U>. The representations, warranties, covenants and agreements made
or deemed made by any party to another shall not survive the Merger Effective Time but shall
terminate as of the Merger Effective Time.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE VIII<BR>
REGISTRATION RIGHTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;8.1 <U>Shelf Registration</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;As soon as practicable after the listing of the Parent Common Stock on the Eligible
Market, Parent shall file with the SEC a Registration Statement on Form S-3 (or any other
registration statement deemed appropriate by the Parent Board) covering the resale of all the
Registrable Securities for an offering to be made on a continuous basis pursuant to Rule&nbsp;415 under
the Securities Act. After such Registration Statement has been declared effective by the
SEC, Parent shall maintain the effectiveness of the Registration Statement until such time as
Parent is no longer obligated to maintain a registration statement for the Registrable Securities
pursuant to the terms hereof.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Parent shall use reasonable best efforts to cause the Registration Statement to be
declared effective by the SEC as promptly as possible after the filing thereof and shall use its
best efforts to keep the Registration Statement continuously effective under the Securities Act
until the earlier of the date that all Registrable Securities covered by such Registration
Statement have been sold or can be sold publicly under Rule 144(k) (the &#147;<U>Effectiveness
Period</U>&#148;).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Notwithstanding anything in this Agreement to the contrary, after 60 consecutive Trading
Days of continuous effectiveness of the initial Registration Statement filed and declared effective
pursuant to this Agreement, Parent may, by written notice to the Holders, suspend sales under a
Registration Statement after the Effective Date thereof and/or require that the Holders immediately
cease the sale of shares of the Parent Common Stock pursuant thereto and/or defer the filing of any
subsequent Registration Statement if Parent is engaged in a material merger, acquisition or sale or
an underwritten public offering of Parent&#146;s securities and the Parent Board determines in good
faith, by appropriate resolutions, that, as a result of such activity, (A)&nbsp;it would be materially
detrimental to Parent (other than as relating solely to the price of the Parent Common Stock) to
maintain a Registration Statement at such time and (B)&nbsp;it is in the best interests of Parent to
defer proceeding with such registration at such time. Notwithstanding the foregoing, Parent shall
not, and shall cause each of its respective officers, directors, employees and agents not to,
provide any Holder with any material nonpublic information regarding Parent or any of its
subsidiaries about the foregoing merger, sale or acquisition or public offering without the express
written consent of such Holder. Upon receipt of such notice, each Holder shall immediately
discontinue any sales of Registrable Securities pursuant to such registration until such Holder has
received copies of a supplemented or amended Prospectus or until such Holder is advised in writing
by Parent that the then-current Prospectus may be used and has received copies of any additional or
supplemental filings that are incorporated or deemed incorporated by reference in such Prospectus.
In no event, however,
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">shall this right be exercised to suspend sales beyond the period during which
(in the good faith determination of the Parent Board) the failure to require such suspension would
be materially detrimental to Parent. Parent&#146;s rights under this Section&nbsp;8.1(c) may be exercised
for a period of no more than 60&nbsp;days at a time and not more than three times in any 12-month
period. Immediately after the end of any suspension period under this Section&nbsp;8.1(c), Parent shall
take all necessary actions (including filing any required supplemental prospectus) to restore the
effectiveness of the applicable Registration Statement and the ability of the Holders to publicly
resell their Registrable Securities pursuant to such effective Registration Statement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;8.2 <U>Registration Procedures</U>. In connection with Parent&#146;s registration
obligations hereunder, Parent shall:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) (i)&nbsp;Subject to Section&nbsp;8.1(c), prepare and file with the SEC such amendments, including
post-effective amendments, to the Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep the Registration Statement continuously effective, as to the
applicable Registrable Securities for the Effectiveness Period
and prepare and file with the SEC such additional Registration Statements in order to register
for resale under the Securities Act all of the Registrable Securities; (ii)&nbsp;cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement, and as so
supplemented or amended to be filed pursuant to Rule&nbsp;424; (iii)&nbsp;respond as promptly as reasonably
possible, and in any event within 15 Trading Days (except to the extent that Parent reasonably
requires additional time to respond to accounting comments), to any comments received from the SEC
with respect to the Registration Statement or any amendment thereto and as promptly as reasonably
possible provide the Holders true and complete copies of all correspondence from and to the SEC
relating to the Registration Statement; and (iv)&nbsp;comply in all material respects with the
provisions of the Securities Act and the Exchange Act with respect to the disposition of all
Registrable Securities covered by the Registration Statement during the applicable period in
accordance with the intended methods of disposition by the Holders thereof set forth in the
Registration Statement as so amended or in such Prospectus as so supplemented.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Notify each Holder as promptly as reasonably possible of any of the following events: (i)
any Registration Statement or any post-effective amendment is declared effective; (ii)&nbsp;the SEC or
any other Federal or state governmental authority requests any amendment or supplement to any
Registration Statement or Prospectus or requests additional information related thereto; (iii)&nbsp;the
SEC issues any stop order suspending the effectiveness of any Registration Statement or initiates
any Proceedings for that purpose; (iv)&nbsp;Parent receives notice of any suspension of the
qualification or exemption from qualification of any Registrable Securities for sale in any
jurisdiction, or the initiation or threat of any Proceeding for such purpose; or (v)&nbsp;the financial
statements included in any Registration Statement become ineligible for inclusion therein or any
statement made in any Registration Statement or Prospectus or any document incorporated or deemed
to be incorporated therein by reference is untrue in any material respect or any revision to a
Registration Statement, Prospectus or other document is required so that it will not contain any
untrue statement of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Use its reasonable efforts to avoid the issuance of or, if issued, obtain the withdrawal
of (i)&nbsp;any order suspending the effectiveness of any Registration Statement or (ii)&nbsp;any suspension
of the qualification (or exemption from qualification) of any of the Registrable Securities for
sale in any jurisdiction, as soon as possible.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;During the Effectiveness Period, maintain the listing of such Registrable Securities on
the Eligible Market.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;Cooperate with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be delivered to a transferee pursuant to a
Registration Statement, which certificates shall be free, to the extent permitted by this Agreement
and under law, of all restrictive legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any such Holders may reasonably request.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;Upon the occurrence of any event described in Section&nbsp;8.2(b)(v), as promptly as reasonably
possible, prepare a supplement or amendment, including a post-effective
amendment, to the Registration Statement or a supplement to the related Prospectus or any
document incorporated or deemed to be incorporated therein by reference, and file any other
required document so that, as thereafter delivered, neither the Registration Statement nor such
Prospectus will contain an 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 light of the
circumstances under which they were made, not misleading.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;Cooperate with any reasonable due diligence investigation undertaken by the Holders in
connection with the sale of Registrable Securities, including, without limitation, by making
available documents and information; <U>provided</U>, that Parent shall not deliver or make
available to any Holder material, nonpublic information unless such Holder specifically requests in
advance to receive material, nonpublic information in writing.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;Comply with all rules and regulations of the SEC applicable to the registration of the
Registrable Securities.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;8.3 <U>Registration Expenses</U>. Parent shall pay all fees and expenses incident to
the performance of or compliance with Article&nbsp;VIII by the Surviving Corporation, including without
limitation (a)&nbsp;all registration and filing fees and expenses, including without limitation those
related to filings with the SEC, any Trading Market and in connection with applicable state
securities or Blue Sky laws, (b)&nbsp;printing expenses (including without limitation expenses of
printing certificates for Registrable Securities), (c)&nbsp;messenger, telephone and delivery expenses,
(d)&nbsp;fees and disbursements of counsel for Parent, (e)&nbsp;fees and expenses of all other Persons
retained by Parent in connection with the Registration Statement and (f)&nbsp;all listing fees to be
paid by Parent to the Eligible Market. Holders shall pay all fees and disbursements of counsel
retained for Holders in connection with such Registration Statement as well as all underwriter
discounts associated with any public offering conducted on such Holder&#146;s behalf.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;8.4 <U>Indemnification</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Indemnification by the Surviving Corporation</U>. Parent shall indemnify and hold
harmless each Holder, the officers, directors, partners, members, agents and employees of each of
them, each Person who controls any such Holder (within the meaning of Section&nbsp;15 of the Securities
Act or Section&nbsp;20 of the Exchange Act) and the officers, directors, partners, members, agents and
employees of each such controlling Person, to the fullest extent permitted by applicable law, from
and against any and all Losses (as determined by a court of competent jurisdiction in a final
judgment not subject to appeal or review), arising out of or relating to any untrue or alleged
untrue statement of a material fact contained in the Registration Statement, any Prospectus or any
form of Parent prospectus or in any amendment or supplement thereto or in any Parent preliminary
prospectus, or arising out of or relating to any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto, in the light of the circumstances under
which they were made) not misleading, except to the extent, but only to the extent, that (A)&nbsp;such
untrue statements, alleged untrue statements, omissions or alleged omissions are based solely upon
information regarding such Holder furnished in writing to Parent by such Holder for use therein, or
to the extent that such information relates to such Holder or such Holder&#146;s proposed method of
distribution of Registrable Securities, or (B)&nbsp;in the case of an occurrence of an event of the type
specified in Section&nbsp;8.2(b)(v)-(vii), the use by such Holder of an outdated or defective Prospectus
after Parent has timely notified such Holder that the Prospectus is outdated or defective and prior
to the receipt by such Holder of the Advice contemplated in Section&nbsp;8.5. Parent shall notify the
Holders promptly of the institution, threat or assertion of any Proceeding of which the Surviving
Corporation is aware in connection with the transactions contemplated by this Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Indemnification by Holders</U>. Each Holder shall, severally and not jointly,
indemnify and hold harmless Parent, its directors, officers, agents and employees, each Person who
controls Parent (within the meaning of Section&nbsp;15 of the Securities Act and Section&nbsp;20 of the
Exchange Act), and the directors, officers, partners, members, agents or employees of each such
controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses
(as determined by a court of competent jurisdiction in a final judgment not subject to appeal or
review) arising out of or relating to any untrue or alleged untrue statement of a material fact
contained in the Registration Statement, any Prospectus, or any Prospectus, or in any amendment or
supplement thereto, or arising out of or relating to any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto, in the light of the circumstances under
which they were made) not misleading to the extent, but only to the extent, that such untrue
statement or omission is contained in any information so furnished by such Holder to Parent
specifically for inclusion in such Registration Statement or such Prospectus or to the extent that
(i)&nbsp;such untrue statements or omissions are based solely upon information regarding such Holder
furnished to Parent by such Holder expressly for use therein, or to the extent that such
information relates to such Holder or such Holder&#146;s proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder expressly for use in
the Registration Statement, such Prospectus or such form of
Prospectus or in any amendment or supplement thereto or (ii)&nbsp;in the case of an occurrence of
an event of the type specified in Section&nbsp;8.2(b)(v)-(vii), the use by such Holder of an outdated or
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">defective Prospectus after Parent has notified such Holder that the Prospectus is outdated or
defective and prior to the receipt by such Holder of the Advice contemplated in Section&nbsp;8.5. In no
event shall the liability of any selling Holder hereunder be greater in amount than the dollar
amount of the net proceeds received by such Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>Conduct of Indemnification Proceedings</U>. If any Proceeding shall be brought or
asserted against any Person entitled to indemnity hereunder (an &#147;<U>Indemnified Party</U>&#148;), such
Indemnified Party shall promptly notify the Person from whom indemnity is sought (the
&#147;<U>Indemnifying Party</U>&#148;) in writing, and the Indemnifying Party shall assume the defense
thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and
the payment of all fees and expenses incurred in connection with defense thereof; <U>provided</U>,
that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying
Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent
that it shall be finally determined by a court of competent jurisdiction (which determination is
not subject to appeal or further review) that such failure shall have proximately and materially
adversely prejudiced the Indemnifying Party.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An Indemnified Party shall have the right to employ separate counsel in any such Proceeding
and to participate in the defense thereof, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party or Parties unless: (i)&nbsp;the Indemnifying Party has agreed in
writing to pay such fees and expenses; or (ii)&nbsp;the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (iii)&nbsp;the named parties to any such Proceeding
(including any impleaded parties) include both such Indemnified Party and the Indemnifying Party,
and such Indemnified Party shall have been advised by counsel that a conflict of interest is likely
to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party
(in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects
to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall
not have the right to assume the defense thereof and such counsel shall be at the expense of the
Indemnifying Party). It being understood, however, that the Indemnifying Party shall not, in
connection with any one such Proceeding be liable for the fees and expenses of more than one
separate firm of attorneys at any time for all Indemnified Parties, which firm shall be appointed
by a majority of the Indemnified Parties; <U>provided</U>, <U>however</U>, that in the case a
single firm of attorneys would be inappropriate due to actual or potential differing interests of
conflicts between such Indemnified Parties and any other party represented by such counsel in such
Proceeding or otherwise, then the Indemnifying Party shall be liable for the fees and expenses of
one additional firm of attorneys with respect to such Indemnified Parties. The Indemnifying Party
shall not be liable for any settlement of any such Proceeding effected without its written consent,
which consent shall not be unreasonably withheld. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any pending Proceeding in
respect of which any Indemnified Party is a party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability on claims that are the subject matter of such
Proceeding.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All fees and expenses of the Indemnified Party (including reasonable fees and expenses to the
extent incurred in connection with investigating or preparing to defend such Proceeding in
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within 10
Trading Days of written notice thereof to the Indemnifying Party (regardless of whether it is
ultimately determined that an Indemnified Party is not entitled to indemnification hereunder;
provided, that the Indemnifying Party may require such Indemnified Party to undertake to reimburse
all such fees and expenses to the extent it is finally judicially determined that such Indemnified
Party is not entitled to indemnification hereunder).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <U>Contribution</U>. If a claim for indemnification under Section&nbsp;8.4(a) or (b)&nbsp;is
unavailable to an Indemnified Party (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in
connection with the actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact or omission or
alleged omission of a material fact, has been taken or made by, or relates to information supplied
by, such Indemnifying Party or Indemnified Party, and the parties&#146; relative intent, knowledge,
access to information and opportunity to correct or prevent such action, statement or omission.
The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section&nbsp;8.4(c), any reasonable attorneys&#146; or other reasonable fees
or expenses incurred by such party in connection with any Proceeding to the extent such party would
have been indemnified for such fees or expenses if the indemnification provided for in this Section
was available to such party in accordance with its terms.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The parties hereto agree that it would not be just and equitable if contribution pursuant to
this Section&nbsp;8.4(d) were determined by pro rata allocation or by any other method of allocation
that does not take into account the equitable considerations referred to in the immediately
preceding paragraph. No Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The indemnity and contribution agreements contained in this Section&nbsp;8.4 are in addition to any
liability that the Indemnifying Parties may have to the Indemnified Parties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;8.5 <U>Dispositions</U>. Each Holder agrees that it will comply with the prospectus
delivery requirements of the Securities Act as applicable to it in connection with sales of
Registrable Securities pursuant to the Registration Statement. Each Holder further agrees that,
upon receipt of a notice from Parent of the occurrence of any event of the kind described in
Section&nbsp;8.2(b)(v), (vi)&nbsp;or (vii), such Holder will discontinue disposition of such Registrable
Securities under the Registration Statement until such Holder&#146;s receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement contemplated by Section&nbsp;8.2(i), or
until it is advised in writing (the &#147;<U>Advice</U>&#148;) by Parent that the use of the applicable
Prospectus may be resumed, and, in either
case, has received copies of any additional or supplemental filings that are incorporated or
deemed to be incorporated by reference in such Prospectus or Registration Statement. Parent may
provide appropriate stop orders to enforce the provisions of this Section&nbsp;8.5.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE IX<BR>
CLOSING</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;9.1 <U>Closing</U>. The closing of the Merger (the &#147;<U>Closing</U>&#148;) shall occur at
the offices of Morrison &#038; Foerster LLP, 1290 Avenue of the Americas, New York, NY 10104 on October
30, 2006, at 10:00&nbsp;A.M., Eastern time or such other date mutually agreeable to the parties hereto
(the &#147;Closing Date&#148;) which shall be no later than the later to occur of (i)&nbsp;the second Business Day
after the satisfaction or waiver of the conditions set forth in Article&nbsp;VI or (ii)&nbsp;the Merger
Effective Time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;9.2 <U>Deliveries</U>. At the Closing, or as promptly thereafter as practicable,
Parent shall deliver to each Existing Company Shareholder the certificates representing the Merger
Shares to be issued pursuant to the provisions of Section&nbsp;2.5 and to the holders of Company Options
and Company Warrants substituting options and warrants as applicable pursuant to the provisions of
Section&nbsp;2.8. Such presentment for delivery shall be against delivery to Parent and Acquisition
Subsidiary of the certificates, opinions, agreements and other instruments referred to in Section
6.2. All of the other documents, instruments, certificates and agreements referenced in Section
6.2 will also be executed and delivered as described therein.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE X<BR>
TERMINATION; NON-SOLICITATION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;10.1 <U>Termination</U>. This Agreement may be terminated at any time prior to the
Merger Effective Time, by action taken or authorized by the Board of Directors of the terminating
party or parties, and except as provided below, whether before or after the requisite approvals of
the shareholders of the Company:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;By mutual written consent of Parent and the Company;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;By either the Company or Parent if:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;(A)&nbsp;The Merger Effective Time shall not have occurred on or before October&nbsp;31, 2006 (the
&#147;<U>End Date</U>&#148;); provided that the End Date shall be automatically extended for three months
if, on the End Date, only the condition set forth in Section&nbsp;6.3(g) shall not have been satisfied,
and (B)&nbsp;the party seeking to terminate this Agreement pursuant to this Section&nbsp;10.1(b) shall not
have breached in any material respect its obligations under this Agreement in any manner that shall
have proximately caused the failure to consummate the Merger on or before such date;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;(A)&nbsp;Any Governmental Authority of competent jurisdiction that must grant an approval of
the Merger, the issuance of the Merger Shares or the issuance of Company Shares to the Investors by
the Company pursuant to the Share Purchase Agreement has denied such approval and such denial has
become final and nonappealable or (B)&nbsp;any Governmental Authority of competent authority located in
a jurisdiction where either Parent or the Company have substantial revenues or operations shall
have issued an injunction, judgment or order or taken any other action prohibiting the consummation
of the Merger, the issuance of the Merger Shares or the issuance of the Company Shares to the
Investors and such injunction, judgment, order or other action is or shall have become final and
nonappealable; or
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;The Company&#146;s shareholders shall have refused to grant the Company Shareholder Approval
contemplated by this Agreement or, if necessary under applicable Law or pursuant to the rules of
any applicable exchange, the Parent&#146;s shareholders shall have refused to grant approval of the
Transactions; &#093;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;By Parent:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;If the Company shall have breached or failed to perform in any material respect any of its
representations, warranties, covenants or other agreements contained in this Agreement, or any such
representation or warranty shall have become inaccurate, which breach, inaccuracy or failure to
perform would result in a failure of a condition set forth in Sections&nbsp;6.1 or 6.2;
<U>provided</U>, <U>however</U>, that prior to any termination pursuant to this Section&nbsp;10.1(c),
(A)&nbsp;Parent shall deliver written notice to the Company no fewer than 10&nbsp;days prior to the date of
termination stating Parent&#146;s intention to terminate this Agreement pursuant to Section&nbsp;10.1(c) and
the basis for such termination and (B)&nbsp;if such breach, inaccuracy or failure to perform is curable
by the Company prior to the End Date, then Parent shall not terminate this Agreement pursuant to
this Section&nbsp;10.1(c); <U>provided</U>, that the Company continues to use commercially reasonable
efforts to cure such breach, inaccuracy or failure to perform (it being understood that Parent may
not terminate this Agreement pursuant to this Section&nbsp;10.1(c) if it shall have materially breached
this Agreement).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;If an event shall have occurred which would have a Material Adverse Effect on the
Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;By the Company:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;If Parent or Acquisition Subsidiary shall have breached or failed to perform in any
material respect any of their respective representations, warranties, covenants or other agreements
contained in this Agreement, or any such representation or warranty shall have become inaccurate,
which breach, inaccuracy or failure to perform would result in a failure of a condition set forth
in Section&nbsp;6.1 or 6.3; <U>provided</U>, <U>however</U>, that prior to any termination pursuant to
this Section&nbsp;10.1(d), (A)&nbsp;the Company shall deliver written notice to Parent no fewer than 10&nbsp;days
prior to the date of termination stating the Company&#146;s intention to terminate this Agreement
pursuant to Section&nbsp;10.1(d) and the basis for such termination and (B)&nbsp;if such breach, inaccuracy
or failure to perform is curable by Parent or Acquisition Subsidiary, as applicable, prior to the
End Date, then the Company shall not terminate this Agreement pursuant to this Section&nbsp;10.1(d);
<U>provided</U>, that Parent and Acquisition Subsidiary continue to use their respective
commercially reasonable efforts to cure such breach, inaccuracy or failure to perform (it
being understood that the Company may not terminate this Agreement pursuant to this Section&nbsp;10.1(d)
if it shall have materially breached this Agreement).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;If the Company Board has reasonably concluded that the Parent Common Stock will not be
included for trading on the Eligible Market within a reasonable amount of time after the Closing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;If an event shall have occurred which would have a Material Adverse Effect on Parent or
Acquisition Subsidiary.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->42<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;At any time during the three week period following the receipt of the due diligence
materials requested from Parent, if the Company is not reasonably satisfied with the results of the
due diligence review of Parent and Acquisition Subsidiary by the Company and its counsel.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;10.2 <U>No Solicitation</U>. Except as set forth in Schedule&nbsp;5.15 of the Company
Disclosure Schedules, unless and until this Agreement shall have been terminated pursuant to and in
compliance with this Article&nbsp;X, the Company shall not, nor shall it authorize its officers,
directors, agents, employees, representatives or advisors to, (i)&nbsp;solicit, initiate, encourage
(including by way of furnishing information) or take any action to facilitate the submission of any
inquiries, proposals or offers (whether or not in writing) from any person (other than Parent and
its respective Affiliates) relating to (A)&nbsp;any acquisition or purchase of all or substantially all
the assets of the Company, or of any class of equity securities of the Company, (B)&nbsp;any tender
offer (including a self tender offer) or exchange offer, (C)&nbsp;any merger, consolidation, business
combination, sale of substantially all assets, recapitalization, liquidation, dissolution or
similar transaction involving the Company, or (D)&nbsp;any other transaction the consummation of which
would or would reasonably be expected to impede, interfere with, prevent or materially delay the
Merger or which would or would reasonably be expected to materially dilute the benefits to the
other party hereto of the transactions contemplated by this Agreement (collectively,
&#147;<U>Acquisition Proposals</U>&#148;), or agree to, recommend or endorse any Acquisition Proposal, (ii)
enter into or execute any agreement with respect to any of the foregoing or (iii)&nbsp;enter into or
participate in any discussions or negotiations regarding any of the foregoing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;10.3 <U>Liability</U>. In the event of termination of this Agreement pursuant to
this Article&nbsp;X, this Agreement shall terminate and there shall be no other liability on the part of
the Company or Parent to the other except liability arising out of an intentional breach of this
Agreement, in which case the aggrieved party shall be entitled to all rights and remedies available
at law or in equity.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ARTICLE XI<BR>
MISCELLANEOUS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;11.1 <U>Notices</U>. Any notice, request or other communication hereunder shall be given in writing and shall be
delivered personally or mailed, certified or registered mail, return receipt requested, or
delivered by overnight courier service, to the following addresses, or such other addresses as
shall be given by notice delivered hereunder, and shall be deemed to have been given upon delivery,
if delivered personally, five days after mailing, if mailed, one Business Day after timely delivery
to the overnight courier service, if delivered by overnight courier service, or upon receipt when
delivery is made by facsimile transmission or email:
</DIV>
<DIV align="left" style="font-size: 10pt; margin-left: 3%; margin-top: 6pt">If to Parent or Acquisition Subsidiary, to:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 3%; margin-top: 6pt">Orthodontix, Inc.<BR>
1428 Brickell Avenue, Suite&nbsp;105<BR>
Miami, Florida 33131<BR>
Attn: Glenn L. Halpryn, CEO<BR>
Fax: 305.579.9724<BR>
Email: ghalpryn@twinvestment.com
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->43<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-left: 3%; margin-top: 6pt">With a copy to:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 3%; margin-top: 6pt">To the persons and addresses indicated on the signature pages<BR>
of the Share Purchase Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 3%; margin-top: 6pt">If to the Company or the Surviving Corporation, to:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 3%; margin-top: 6pt">Protalix Ltd.<BR>
2 Snunit Street, Science Park<BR>
P.O.B. 455<BR>
Carmiel 20100, Israel<BR>
Attn: David Aviezer, Ph.D.<BR>
Fax: 011.972.4.988.9489<BR>
Email: david@protalix.com
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 3%; margin-top: 6pt">With a copy to:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 3%; margin-top: 6pt">Morrison &#038; Foerster LLP<BR>
1290 Avenue of the Americas<BR>
New York, NY 10104<BR>
Phone: 212.468.8000<BR>
Fax: 212.468.7900<BR>
Attention: James R. Tanenbaum<BR>
Email: <u>jtanenbaum@mofo.com</u>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 3%; margin-top: 6pt">and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-left: 3%; margin-top: 6pt">Baratz, Horn &#038; Co.<BR>
1 Azrieli Center<BR>
Round Tower, 18<SUP style="font-size: 85%; vertical-align: text-top">th</SUP> Floor<BR>
Tel Aviv 67021, Israel<BR>
Attention: Yuval Horn, Adv.<BR>
Phone: 011.972.3.607.3777<BR>
Fax: 011.972.3.607.3778<BR>
Email: y.horn@bar-law.com
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notices shall be deemed received at the earlier of actual receipt or three Business Days
following mailing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;11.2 <U>Entire Agreement</U>. This Agreement, including the schedules and exhibits
attached hereto, contains the entire understanding of the parties hereto with respect to the
subject matter hereof. This Agreement supersedes all prior oral or written agreements and
undertakings between the parties with respect to such subject matter.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;11.3 <U>Expenses</U>. If the Merger is not consummated, each party shall bear and
pay all of the legal, accounting and other costs and expenses incurred by it in connection with the
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->44<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">transactions contemplated by this Agreement. If the Merger is consummated, Parent shall pay the
reasonable costs and expenses of Parent, Acquisition Subsidiary and the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;11.4 <U>Severability</U>. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;11.5 <U>Successors and Assigns; Assignment</U>. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors, assigns and heirs;
provided, however, that neither the Company, Parent nor Acquisition Subsidiary shall directly or
indirectly transfer or assign any of its rights hereunder in whole or in part without the written
consent of the Company (in the case of Parent and Acquisition Subsidiary) or Parent (in the case of
the Company), which written shall not be unreasonably withheld or delayed, and any such transfer or
assignment without such written consent shall be void.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;11.6 <U>No Third Parties Benefited</U>. This Agreement is made and entered into for
the sole protection and benefit of the parties hereto, their successors, assigns and heirs, and no
other Person shall have any right or action under this Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;11.7 <U>Counterparts</U>. This Agreement may be executed in one or more counterparts, with the same effect as if all
parties had signed the same document. Each such counterpart shall be an original, but all such
counterparts together shall constitute a single agreement. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and binding obligation of
the party executing (or on whose behalf such signature is executed) the same with the same force
and effect as if such facsimile signature page was an original thereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;11.8 <U>Recitals, Schedules and Exhibits</U>. The Recitals, Schedules and Exhibits
to this Agreement are incorporated herein and, by this reference, made a part hereof as if fully
set forth herein.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;11.9 <U>Section&nbsp;Headings and Gender</U>. The Section headings used herein are
inserted for reference purposes only and shall not in any way affect the meaning or interpretation
of this Agreement. All personal pronouns used in this Agreement shall include the other genders,
whether used in the masculine, feminine or neuter gender, and the singular shall include the
plural, and vice versa, whenever and as often as may be appropriate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;11.10 <U>Governing Law</U>. This Agreement is to be construed in accordance with and
governed by the internal laws of the State of Israel without giving effect to any choice of law
rule that would cause the application of the laws of any jurisdiction other than the internal laws
of the State of Israel to the rights and duties of the parties. Any dispute, controversy or claim
arising out of or relating to this Agreement shall be settled by arbitration in accordance with the
International Chamber of Commerce (&#147;<U>ICC</U>&#148;) Arbitration Rules as at present in force and
shall be held at London, England in the English language by one arbitrator.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->45<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;11.11 <U>Specific Performance; Remedies</U>. Each of Parent and the Company
acknowledges and agrees that the other party would be damaged irreparably if any provision of this
Agreement is not performed in accordance with its specific terms or is otherwise breached.
Accordingly, each of Parent, Acquisition Subsidiary and the Company agrees that the other party
will be entitled to seek an injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and its terms and provisions in any action
instituted in any court of competent jurisdiction, in addition to any other remedy to which they
may be entitled, at law or in equity. Except as expressly provided herein, the rights, obligations
and remedies created by this Agreement are cumulative and in addition to any other rights,
obligations or remedies otherwise available at law or in equity, and nothing herein will be
considered an election of remedies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;11.12 <U>No Jury Trial</U>. EACH PARTY HERETO HEREBY WAIVES ITS RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE OTHER
TRANSACTION DOCUMENTS, THE SECURITIES OR THE
SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING
OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF
THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY
EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY
HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS
LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THIS WAIVER WILL APPLY TO ANY SUBSEQUENT AMENDMENTS, SUPPLEMENTS
OR MODIFICATIONS TO (OR ASSIGNMENTS OF) THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT
MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL (WITHOUT A JURY) BY THE COURT.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;11.13 <U>Amendment and Waivers</U>. This Agreement may be amended by action taken by
or on behalf of the respective Boards of Directors of Parent, Acquisition Subsidiary and the
Company, and the observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the written consent of
the Company, Parent and Acquisition Subsidiary at any time prior to the Merger Effective Time;
<U>provided</U>, that notwithstanding the foregoing, after the Existing Company Shareholders
approve and adopt this Agreement and the Merger, no amendment to this Agreement may be made that
would reduce the amount of or change the Merger Shares or otherwise would require the Existing
Company Shareholders to approve such amendment under Israeli Law, unless the Existing Company
Shareholders approve such amendment in accordance with Israeli Law. Amendments to this Agreement
must be in writing and signed by the Parties.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->46<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;11.14 <U>Electronic Signatures</U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Execution on Paper</U>. Notwithstanding the Electronic Signatures in Global and
National Commerce Act (15 U.S.C. Section&nbsp;7001 <U>et</U> <U>seq</U>.), the Uniform Electronic
Transactions Act or any other Law relating to or enabling the creation, execution, delivery or
recordation of any contract or signature by electronic means, and notwithstanding any course of
conduct engaged in by the Company, Acquisition Subsidiary and Parent, neither the Company, Parent
or Acquisition Subsidiary will be deemed to have executed a transaction document or other document
contemplated thereby (including any amendment or other change thereto) unless and until such party
shall have executed such transaction document or other document on paper by a handwritten original
signature or any other symbol executed or adopted by that party with the current intention to
authenticate such transaction document or such other document contemplated.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Electronic Delivery</U>. Delivery of a copy of a transaction document or such other
document bearing an original signature by facsimile transmission (whether directly from one
facsimile device to another by means of a dial-up connection or whether mediated by the worldwide
web), by electronic mail in &#147;portable document format&#148; (&#147;.PDF&#148;) form, or by any other electronic
means intended to preserve the original graphic and pictorial appearance of a document, will have
the same effect as physical delivery of the paper document bearing the original signature.
&#147;Originally signed&#148; or &#147;original signature&#148; means or refers to a signature that has not been
mechanically or electronically reproduced.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;11.15 <U>Construction</U>. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. If an ambiguity or question of intent or
interpretation arises, this Agreement will be construed as if drafted jointly by the parties hereto
and no presumption or burden of proof will arise favoring or disfavoring any party because of the
authorship of any provision of this Agreement. Any reference to any Law will be deemed also to
refer to law as amended and all rules and regulations promulgated thereunder, unless the context
requires otherwise. The words &#147;include,&#148; &#147;includes,&#148; and &#147;including&#148; will be deemed to be followed
by &#147;without limitation.&#148; Pronouns in masculine, feminine, and neuter genders will be construed to
include any other gender, and words in the singular form will be construed to include the plural
and vice versa, unless the context otherwise requires. The words &#147;this Agreement,&#148; &#147;herein,&#148;
&#147;hereof,&#148; &#147;hereby,&#148; &#147;hereunder,&#148; and words of similar import refer to this Agreement as a whole and
not to any particular subdivision unless expressly so limited. The parties hereto intend that each
representation, warranty, and covenant contained herein will have independent significance. If any
party hereto has breached any representation, warranty, or covenant contained herein in any
respect, the fact that there exists another representation, warranty or covenant relating to the
same subject matter (regardless of the relative levels of specificity) which that party has not
breached will not detract from or mitigate the fact that such party is in breach of the first
representation, warranty or covenant. The language used in this Agreement is 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.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><I>&#091;Signature Page Follows&#093;</I>
</DIV>


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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be binding and
effective as of the day and year first set forth above.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">ORTHODONTIX, INC.<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ Glenn L. Halpryn
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top">Name:&nbsp;&nbsp;</TD>
    <TD align="left">Glenn L. Halpryn&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top">Title:&nbsp;&nbsp;</TD>
    <TD align="left">Chief Executive Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">PROTALIX ACQUISITION CO. LTD.<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ Glenn L. Halpryn
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top">Name:&nbsp;&nbsp;</TD>
    <TD align="left">Glenn L. Halpryn&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top">Title:&nbsp;&nbsp;</TD>
    <TD align="left">President&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">PROTALIX LTD.<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ David Aviezer
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top">Name:&nbsp;&nbsp;</TD>
    <TD align="left">David Aviezer, Ph.D.&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top">Title:&nbsp;&nbsp;</TD>
    <TD align="left">Chief Executive Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="right" style="font-size: 10pt; margin-top: 12pt">EXHIBIT A
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">Form of Voting Agreement
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->49<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="right" style="font-size: 10pt; margin-top: 12pt">EXHIBIT B
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">Form of Lockup Agreement
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Protalix Ltd.<BR>
2 Snunit Street, Science Park<BR>
P.O.B. 455<BR>
Carmiel 20100, Israel<BR>
Attn: David Aviezer, Ph.D.

</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Ladies and Gentlemen:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned, a holder of shares of Protalix Ltd., an Israeli company (the
&#147;<U>Company</U>&#148;), and/or Orthodontix, Inc., a Florida corporation (&#147;<U>Orthodontix</U>&#148;),
desires that the Company merge with and into a wholly-owned subsidiary of Orthodontix (the
&#147;<U>Merger</U>&#148;). For good and valuable consideration, the undersigned hereby irrevocably agrees
that following the closing of the Merger, the undersigned will not, directly or indirectly, (1)
offer for sale, sell, pledge or otherwise dispose of (or enter into any transaction or device that
is designed to, or could be expected to, result in the disposition by any person at any time in the
future of) any (A)&nbsp;ordinary shares of the Company, nominal value NIS 0.01 per share, (B)&nbsp;shares of
common stock, par value $0.0001 per share, of Orthodontix or (C)&nbsp;any other securities of either the
Company or Orthodontix (collectively, the &#147;<U>Shares</U>&#148;), including, without limitation, Shares
that may be deemed to be beneficially owned by the undersigned in accordance with the rules and
regulations of the Securities and Exchange Commission and Shares that may be issued upon exercise
of any options or warrants, or securities convertible into or exercisable or exchangeable for
Shares, (2)&nbsp;enter into any swap or other derivatives transaction that transfers to another, in
whole or in part, any of the economic benefits or risks of ownership of Shares, whether any such
transaction described in clause (1)&nbsp;or (2)&nbsp;above is to be settled by delivery of Shares or other
securities, in cash or otherwise, (3)&nbsp;make any demand for or exercise any right or cause to be
filed a registration statement, including any amendments thereto, with respect to the registration
of any Shares or securities convertible into or exercisable or exchangeable for Shares or any other
securities of the Company or Orthodontix or (4)&nbsp;publicly disclose the intention to do any of the
foregoing, for a period commencing on the date of the closing of the Merger and ending on the
second anniversary of the closing of the Merger. Notwithstanding the above, up to &#95;&#95;&#95;
<SUP style="font-size: 85%; vertical-align: text-top">1</SUP>Shares shall be exempt from and shall not be subject to this Lock-Up Letter Agreement
and the undertakings set forth herein.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In furtherance of the foregoing, Orthodontix and its transfer agent on its behalf are hereby
authorized to decline to make any transfer of securities if such transfer would constitute a
violation or breach of this Lock-Up Letter Agreement.
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">1</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Insert number equal to ten percent (10%) of the
Shares held by person executing the Agreement.</TD>
</TR>

</TABLE>


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<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It is understood that if the Merger Agreement entered into in connection with the Merger has
been terminated without the consummation of the Merger, this Lock-Up Letter Agreement shall be
cancelled and of no further force and effect.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned understands that the Company will proceed with the Merger in reliance on this
Lock-Up Letter Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned hereby represents and warrants that the undersigned has full power and
authority to enter into this Lock-Up Letter Agreement and that, upon request, the undersigned will
execute any additional documents necessary in connection with the enforcement hereof. Any
obligations of the undersigned shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
</DIV>


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</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Very truly yours,<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">

&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top">Name:&nbsp;&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top">Title:&nbsp;&nbsp;</TD>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Dated: <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</DIV>



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