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<SEC-DOCUMENT>0000950123-09-002028.txt : 20090506
<SEC-HEADER>0000950123-09-002028.hdr.sgml : 20090506
<ACCEPTANCE-DATETIME>20090205151933
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0000950123-09-002028
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		2
FILED AS OF DATE:		20090205

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			Protalix BioTherapeutics, Inc.
		CENTRAL INDEX KEY:			0001006281
		STANDARD INDUSTRIAL CLASSIFICATION:	BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836]
		IRS NUMBER:				650643773
		STATE OF INCORPORATION:			FL
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		2 SNUNIT ST
		STREET 2:		SCIENCE PARK, POB 455
		CITY:			CARMIEL
		STATE:			L3
		ZIP:			20100
		BUSINESS PHONE:		972-4-988-9488

	MAIL ADDRESS:	
		STREET 1:		2 SNUNIT ST
		STREET 2:		SCIENCE PARK, POB 455
		CITY:			CARMIEL
		STATE:			L3
		ZIP:			20100

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	ORTHODONTIX INC
		DATE OF NAME CHANGE:	19980422

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	EMBASSY ACQUISITION CORP
		DATE OF NAME CHANGE:	19960124
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
<HTML>
<HEAD>
<TITLE>CORRESP</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
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<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%">
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<TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">1290 AVENUE OF THE AMERICAS
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="left" valign="bottom"><FONT style="font-variant: SMALL-CAPS">morrison &#038; foerster llp</FONT>
</TD>
</TR>
<TR valign="bottom">
    <TD valign="bottom"><DIV style="margin-left:0px; text-indent:-0px"><IMG src="y01065y0106501.gif" alt="(MORRISON FOERSTER LOGO)">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">NEW YORK, NY 10104-0050
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="bottom"><FONT style="font-variant: SMALL-CAPS">new york, san francisco,</FONT>
</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">TELEPHONE: 212.468.8000
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top"><FONT style="font-variant: SMALL-CAPS">los angeles, palo alto,</FONT>
</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">FACSIMILE: 212.468.7900
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top"><FONT style="font-variant: SMALL-CAPS">san diego, washington, d.c.w</FONT>
</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">
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top"><FONT style="font-variant: SMALL-CAPS">&nbsp;
</FONT>
</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">WWW.MOFO.COM
</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD nowrap align="left" valign="top"><FONT style="font-variant: SMALL-CAPS">northern virginia, denver,</FONT>
</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 nowrap align="left" valign="top"><FONT style="font-variant: SMALL-CAPS">sacramento, walnut creek</FONT>
</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 nowrap align="left" valign="top"><FONT style="font-variant: SMALL-CAPS">&nbsp;
</FONT>
</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 nowrap align="right" valign="top">&nbsp;</TD>
    <TD nowrap align="left" valign="top"><FONT style="font-variant: SMALL-CAPS">tokyo, london, beijing,</FONT>
</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 nowrap align="left" valign="top"><FONT style="font-variant: SMALL-CAPS">shanghai, hong kong,</FONT>
</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 nowrap align="left" valign="top"><FONT style="font-variant: SMALL-CAPS"></FONT>
<FONT style="font-variant: SMALL-CAPS">singapore, brussels</FONT>
</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 nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD 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 nowrap align="left" valign="top">Writer&#146;s Direct Contact
</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">212.468.8163</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 nowrap align="left" valign="top">JTanenbaum@mofo.com
</TD>
</TR>
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</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">February&nbsp;5, 2009
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Mr.&nbsp;Todd E. Hardiman<BR>
Associate Chief Accountant<BR>
Division of Corporation Finance<BR>
United States Securities and Exchange Commission<BR>
100 F. Street, N.E.<BR>
Washington, D.C. 20549

</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="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">RE:</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Protalix BioTherapeutics, Inc.<br>
Annual Report on Form 10-K, filed March&nbsp;17, 2008<br>
for the Fiscal Year Ended December&nbsp;31, 2007<br>
File No.&nbsp;001-33357</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Ladies and Gentlemen:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On behalf of our client, Protalix BioTherapeutics, Inc., a Florida corporation (the
&#147;Company&#148;), transmitted herewith are responses to the Staff&#146;s comments to the Company&#146;s Annual
Report on Form 10-K for the fiscal year ended December&nbsp;31, 2007 (the &#147;Form&nbsp;10-K&#148;),
which comments were delivered by the Staff to the Company&#146;s counsel by way of telephone calls
on January&nbsp;22, 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For ease of reference, we have noted the Staff&#146;s comments in bold faced type and the responses
in regular type.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>1. In a verbal comment issued by the Staff to the Company on January&nbsp;22, 2009, reference was made
to the Company&#146;s treatment of the exchange of certain options and warrants in connection with the
December&nbsp;31, 2006, merger as a modification. The Staff requested that the Company provide an
analysis of the Company&#146;s application of the modification treatment of the options and warrants
issued with respect to the lock up imposed on such options and warrants upon the closing of the
Merger and upon the termination of related lock-up agreements on June&nbsp;11, 2008.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>RESPONSE: </B>As discussed in the Company&#146;s response of December&nbsp;23, 2008, on December&nbsp;31, 2006, the
Company&#146;s wholly-owned subsidiary, Protalix Acquisition Co., Ltd., merged with and into Protalix
Ltd., a privately-held Israeli biotechnology company (the &#147;Merger&#148;). In connection with the
Merger, the Company issued options and warrants in exchange for substantially similar securities
issued by Protalix Ltd. prior to the Merger. For accounting purposes, the Company
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><IMG src="y01065y0106501.gif" alt="(MORRISON FOERSTER LOGO)">
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">treated the exchange as a modification of such securities and determined that the modification did not result
in an increase in the incremental value of the securities. Accordingly, the Company did not record
any incremental compensation costs due to the modification of stock options in connection with the
exchange of the Protalix Ltd. options in connection with the Merger. The underlying business
purpose of the modification was to provide the holders of Protalix Ltd. securities with the same
terms and conditions with respect to the new options and warrants as they had with respect to the
options and warrants surrendered in connection with the Merger.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Notwithstanding the foregoing, the terms of the Merger required that 90% of the shares, options and
warrants of each holder be subject to a lock-up agreement for a two-year period to satisfy certain
conditions imposed on the transaction by the Israeli Tax Authorities. The Company determined that
the lock-up agreements imposed on the holders of such securities by the Israeli Tax Authorities did
not significantly diminish the value of the locked-up options and warrants and, accordingly, the
Company did not adjust the calculated value of the outstanding options and warrants to reflect the
imposition of the related transfer restrictions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Similarly, the Company determined that the termination of certain lock-up agreements (for
shareholders holding less than 5% of the Company&#146;s shares outstanding at that time) in June&nbsp;2008
resulting from the completion of negotiations with the Israeli Tax Authorities did not
significantly increase the value the options and warrants. The termination of the lock-up
agreements did not result in any incremental value to the holders of the applicable securities as
the valuation assumptions, including the expected term, did not increase. For reference purposes,
the lock-up agreements had a term of two years and the contractual term of the applicable options
are 10&nbsp;years. Further, the expected term of the options at the time that the holders entered into
the lock-up agreements and at the time that the lock-up agreements were terminated well exceeded
the lock-up period and therefore applied only to a portion of the expected term of the applicable
securities. Last, the lock-up period did not cause an increase in
the expected term assumption or any other adjustment to the calculated value of the applicable
securities and, accordingly, did not impact the value of the securities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>2. In a verbal comment issued by the Staff to the Company on January&nbsp;22, 2009, the Staff requested
that the Company provide an example of how it applies straight-line attribution to nonemployee
equity awards.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>RESPONSE: </B>An example of the Company&#146;s application of the straight-line method in connection with
the accounting of equity awards issued to nonemployees is set forth in Exhibit&nbsp;C hereto.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>3. In reference to a verbal comment that the Staff issued to the Company on August&nbsp;28, 2008
regarding the Company&#146;s response dated July&nbsp;11, 2008, the Staff requested that the Company confirm
that it will include a note to the contractual obligations table in future filings that explains
what the purchase obligations represent.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>RESPONSE: </B>The Company will include a note to the contractual obligations table in its future
filings that explains what the purchase obligations represent.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><IMG src="y01065y0106501.gif" alt="(MORRISON FOERSTER LOGO)">
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>4. Please tell us how the 2,712,792 options issued immediately after the December&nbsp;31, 2006 merger
as referred to on Page 3 of your response relates to the 387,542 options issued in Exhibit&nbsp;B of
your October&nbsp;16, 2007 response. Also, please tell us the accounting treatment relating to the
issuance of those options and subsequent vesting.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>RESPONSE: </B>The 2,712,792 options issued by the Company immediately after the Merger as referred to
on Page 3 of the Company&#146;s December&nbsp;23, 2008 response includes the 387,542 options listed in
Exhibit&nbsp;B of the Company&#146;s October&nbsp;16, 2008 response. The accounting treatment applied by the
Company in connection with the issuance of the 387,542 options was straight-line attribution in the
manner described in the example described in Comment 2 and Exhibit&nbsp;C to this response.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>5. Please confirm that you will revise your policy and disclosure in future filings to use the
contractual term of the options to estimate the expected term rather than the simplified method.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>RESPONSE: </B>The Company confirms that it will revise its policy and disclosure in future filings
regarding future grants to use the contractual term of an option to estimate the expected term of
the option rather than the simplified method.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>6. Please explain to us why there are two different trading values listed in Exhibit&nbsp;A of your
response dated October&nbsp;16, 2008 for May&nbsp;15, 2007. Please confirm which trading value you used to
calculate the compensation expense recorded in 2007 related to the 204,351 options granted to
employees. In addition, please explain to us why the amount of compensation recorded in 2008
related to these options was a negative amount.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>RESPONSE: </B>The two different trading prices listed in Exhibit&nbsp;A of the Company&#146;s October&nbsp;16, 2008
response for May&nbsp;15, 2007 were the result of a typographical error in the Exhibit. There
was no difference between the &#147;Fair value used&#148; and the &#147;Trading value on the measurement date&#148; of
each of the awards issued in May&nbsp;15, 2007. The closing price of the Company&#146;s common stock on May
15, 2007 was $31.40, which was also the input price used for by the Company for the purposes of
calculating the common stock in the valuation of the awards. The measurement date of the
restricted stock issued on May&nbsp;15, 2007 (row 3) should have been listed as June&nbsp;30, 2007, at which
time both the &#147;Trading value on the measurement date&#148; and the &#147;Fair value used&#148; of such restricted
shares were each $26.99.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The amount of compensation recorded for 2007 and for the six months ended June&nbsp;30, 2008 for both of
the issuances on May&nbsp;15, 2007 listed in Exhibit&nbsp;A of the Company&#146;s October&nbsp;16, 2008 response is
correct. A revised analysis of the two issuances of May&nbsp;15, 2007 is attached as Exhibit&nbsp;D to this
response. The employment by the Company of the employee that received the 204,351 options on May
15, 2007 was terminated on May&nbsp;6, 2008, prior to the completion of the entire vesting period of the
option. Accordingly, the Company recorded a reversal of stock compensation expense related to
unvested awards during the termination period, which reversal resulted in a negative number.
</DIV>


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




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><IMG src="y01065y0106501.gif" alt="(MORRISON FOERSTER LOGO)">
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>7. Please reconcile the total expense for 2007 shown in Exhibits A and B of your response dated
October&nbsp;16, 2008 to the total share-based compensation expense for 2007 of 10,845,000.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>RESPONSE: </B>Exhibit&nbsp;A of the Company&#146;s response of October&nbsp;16, 2008 is an analysis of all equity
issuances in 2007 and 2008 (through the date of the response). Exhibit&nbsp;B of the Company&#146;s response
of October&nbsp;16, 2008 is an analysis of all issuances and grants to non-employees for which
compensation expenses were recorded by the Company in 2007 and 2008 (through June&nbsp;30, 2008). The
analysis in Exhibit&nbsp;B of the Company&#146;s response of October&nbsp;16, 2008 includes compensation expense
recorded for options granted to nonemployees that were remeasured during the applicable time period
in accordance with Statement of Financial Accounting Standards No.&nbsp;123 (Revised 2004), &#147;Share-Based
Payment&#148; and Emerging Issue Task Force 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
analysis does not include any compensation expense recorded for equity awards issued prior to 2007.
Such awards were measured as of their respective grant dates but the expenses are recorded over
their respective vesting periods. This reconciliation is summarized below:
</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="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="2"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Description</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" 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">Non-employee awards (see Exhibit&nbsp;B of the Company&#146;s
response of October&nbsp;16, 2008)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,487</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Employee awards included in Exhibit&nbsp;A of the Company&#146;s
response of October&nbsp;16, 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,266</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity awards issued pre-Merger for which compensation
expense was attributed in 2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,092</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total 2007 share-based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10,845</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company is evaluating the Staff&#146;s comments to the valuation methods used by the Company
for the first and third quarters of 2007 with respect to the compensation expense of certain option
grants. Upon resolution of the matters discussed in this response, the Company intends to make a
final decision regarding its financial statements.
</DIV>


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


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




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><IMG src="y01065y0106501.gif" alt="(MORRISON FOERSTER LOGO)">
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Please call the undersigned at the telephone number set forth above or Joseph Magnas at
212-336-4170 with any question or comment you may have regarding the responses set forth herein.
In addition, please send all written correspondence directly to the undersigned and Joseph Magnas
of Morrison &#038; Foerster LLP, 1290 Avenue of the Americas, New York, New York 10104, telecopy
212-468-7900, with copies to David Aviezer, Ph.D., the Company&#146;s President and Chief Executive
Officer, at 2 Snunit Street, Science Park, P.O.B. 455, Carmiel 20100, Israel, telecopy
&#043;972-4-988-9489.
</DIV>

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


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</TR>
<TR>
    <TD style="border-bottom: 1px solid #000000" align="left">/s/ James R. Tanenbaum
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
</TABLE>

<DIV style="margin-top: 6pt">
<TABLE width="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">cc:</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>David Aviezer, Ph.D.<br>
Yossi Maimon</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->5<!-- /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 style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><U>Exhibit&nbsp;C</U>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U>Example of the Company&#146;s Application of the Straight-Line Method</U><BR>
<U>in connection with the Accounting of Equity Awards Issued to Nonemployees</U>
</DIV>


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

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">An award to purchase 100 shares of the Company&#146;s common stock to a non-employee that vests in four
equal tranches of 25% each at the end of each quarter. The fair value of the award at the end of
each of the four quarters is 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="88%">&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">End of the first quarter:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center">$2.00 per share</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">End of the second quarter:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">$5.00 per share</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">End of the third quarter:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">$4.00 per share</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">End of the fourth quarter:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">$1.00 per share</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


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

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The aggregate compensation expense recorded by the Company calculated under the straight-line
attribution method is $300.00. The expense for each quarter is factor of the number of shares that
vested as of the quarter multiplied by the fair value per share for the quarter, 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="58%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD colspan="3" valign="top" align="left" >First quarter:</TD>
    <TD>&nbsp;</TD>
    <TD nowrap><DIV style="margin-left:15px; text-indent:-15px">25 shares multiplied by $2.00 per share = $50.00</DIV></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left" >Second quarter:</TD>
    <TD>&nbsp;</TD>
    <TD nowrap><DIV style="margin-left:15px; text-indent:-15px">25 shares multiplied by $5.00 per share = $125.00</DIV></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD colspan="3" valign="top" align="left" >Third quarter:</TD>
    <TD>&nbsp;</TD>
    <TD nowrap><DIV style="margin-left:15px; text-indent:-15px">25 shares multiplied by $4.00 per share = $100.00</DIV></TD>
</TR>
<TR valign="bottom">
    <TD colspan="3" valign="top" align="left" >Fourth quarter:</TD>
    <TD>&nbsp;</TD>
    <TD nowrap><DIV style="margin-left:15px; text-indent:-15px">25 shares multiplied by $1.00 per share = $25.00</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


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

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The illustration above reflects the same expense recognition as if a company had agreed to pay cash
for each quarter of service. The Company believes that the EITF 96-18 approach requires the
Company to use the then current value of the award as the final measurement. Each period&#146;s
compensation cost reflects the valuation of the incremental shares earned during that period as the
period is completed. The use of a graded attribution methodology would result in the same
aggregate compensation cost.
</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="right" style="font-size: 10pt; margin-top: 12pt"><U>Exhibit&nbsp;D</U>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>Analysis of all equity issuances in 2007 and 2008&#151;Revisions</B></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="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&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="2"><B>Number</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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Trading</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>Post-</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Amount of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Amount of</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"><B>of shares</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>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>value on</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>vesting/</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>compensation</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>compensation</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Type of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Date of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Fair</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>the</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>Recipient</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>service</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>recorded for</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>recorded for</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>grant/</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>common</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>grant/</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>value</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Measure-</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>measure-</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>of grant/</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>period</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2007 (in</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2008 (in</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>issuance</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>stock</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>issuance</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>used</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>ment date</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>ment date</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>price</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>issuance</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>restrictions</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>$1,000s)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>$1,000s) &#091;6&#093;</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Grant of options&#091;3&#093;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">204,351</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5/15/2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">31.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5/15/2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">31.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4.33</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Employee</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">None</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,255.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">-145.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Issuance of
restricted shares&#091;4&#093;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5/15/2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">26.99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6/30/2007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">26.99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.001</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Non-employee</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Contractual lockup&#091;5&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">-5.00</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">&#091;3&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Employee terminated in May&nbsp;2008.</TD>
</TR>

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

<TR valign="top">
    <TD nowrap align="left">&#091;4&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Restricted shares, subject to vesting.</TD>
</TR>

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

<TR valign="top">
    <TD nowrap align="left">&#091;5&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>Only a portion such grants are restricted and the restrictions terminate before the term of the options.</TD>
</TR>

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

<TR valign="top">
    <TD nowrap align="left">&#091;6&#093;</TD>
    <TD>&nbsp;</TD>
    <TD>For the six-month period ended June&nbsp;30, 2008.</TD>
</TR>

</TABLE>




<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
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end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
