COOPERATIONAND PROJECT FUNDING AGREEMENT

A.1.

The preamble to this Agreement shall be deemed an integral part hereof.

A.2.

The Participants shall be bound and obliged jointly and severally, as herein provided.

A.3.

The Foundation represents that the Executive Director of the Foundation is empowered by its Board of Governors to execute this Agreement and to perform and cause to be performed all acts under the terms hereof on behalf of the Foundation.

A.4.

The following documents are incorporated by reference and made a part of this Agreement:

A.4.1.

The Proposal, dated the 29th day of October, 2007, as stamped with the Foundation’s approval of the 18th day of December, 2007. Nonetheless, should any provision of the Proposal be inconsistent with any provision of this Agreement, the provisions of this Agreement shall control.

A.4.2.

BIRD Foundation Procedures Handbook.

A.5.

The following definitions shall apply:

B.1.

The Foundation hereby agrees to fund, by Conditional Grant, the implementation of the Proposal in the maximum sum of $950,000 or 50% of the actual expenditures on the Project, as contemplated in the Approved Project Budget, whichever is less, and at the times and as may otherwise be set forth in Annex B hereto.

B.2.

The Proposer shall provide in timely fashion all budgetary funds in excess of those provided hereunder by the Foundation.

B.3.

Proposer shall make Repayments to the Foundation in the event of the successful completion of the development work. Such Repayments shall be based on the conditions as set out in Section B.3.1., Section B.5. and Section B.6.

B.3.1.

The Repayments by the Proposer shall be made on the following basis upon the successful completion of the development work being carried out by Proposer, the Conditional Grant provided by the Foundation shall be repayable in accordance with Sub Section B.3.1a. unless the provisions of Section B.5 or Section B.6. apply, in which event repayment stall be made pursuant to either or both of those Sections, applicable.

Upon the successful completion of the development work, the Conditional Grant and Other Sums provided to the Proposer by the Foundation shall be repayable by the Proposer. Such repayment will be due within 12 months following the Project completion (i.e. since the Project duration is for a period of 24 months, repayment will be due by no later than 36 months from the effective date stated in Section O) in an amount equal to the total grant paid to Proposer linked to the U.S. Consumer Price Index. Should the Proposer request the Foundation to extend the due date of the repayment for up to 12 months, the Proposer will then repay to the Foundation on this new due date 113% of the total Conditional Grant paid linked to the U.S. Consumer Price Index, and so on, pursuant to the timeframe and the maximum percentages set forth in the table set out in Section B.3.1.b., and to the extent of the monetary obligation described in Section B.3.

B.4.

All Repayments due the Foundation shall be calculated on a semi-annual calendar basis, and statements, certified by each Participant’s chief financial officer (or other senior financial officer acceptable to the Foundation), rendered with payment in and within 90 calendar days following the end of each semi-annual period. Repayments to the Foundation shall commence at the end of the semi-annual period during which the first sale was made. All late Repayments shall bear interest at the Late Payment Interest Rate.

B.5.

The Proposer shall not sell outright to a third party any portion of the Product without the prior written consent of the Foundation.

B.5.1.

The Proposer shall furnish to the Foundation reasonable prior notice with respect to any proposed sale as referred to in Section B.5., the notice to include the name of the prospective purchaser, the price and the other terms of the proposed sale, and all other relevant information concerning the proposed sale.

B.5.2.

The Foundation shall promptly provide consent to a sale as referred to in Section B.5, after receipt and review of the notice referred to above, provided that its rights pursuant to this Agreement are fully guaranteed to the Foundation’s satisfaction, and that the Foundation is satisfied that the proposed sale is at a price and upon terms no less than the actual market value of the portion of the Product. The Foundation shall be entitled in its sole discretion to designate a representative or representatives to review the terms of the proposed sale and to seek to determine the actual market value of the Product, and the Proposer shall cooperate with, and furnish all pertinent information, to any such representative or representatives.

B.5.3.

Should any portion of the Product be sold outright to a third party by the Proposer, by either Participant, or by any Affiliate of either Participant, one-half of all proceeds of the sale shall be applied as received until there has been full repayment to the Foundation of amounts due to the Foundation hereunder. If any such sale is (i) in exchange for a non-cash asset or (ii) part of the sale of a group of assets, and no separate value is assigned by the parties to the portion of the Product sold, the Proposer and the Foundation shall seek to agree: as to clause (i) the value of the asset received; and as to clause (ii) the portion of the consideration reasonably allocatable to the sale. If no such agreement is reached within a reasonable time, or if any value assigned by the parties is in the view of the Foundation not reasonable under all of the circumstances, the matter shall be resolved pursuant to Section M.4. Payments due and not made following receipt of proceeds by the Proposer shall bear interest at the Late Payment Interest Rate.

B.5.4.

The Proposer shall provide notice to the Foundation, either prior to, or immediately after, of any transfer of control of either Participant as a result of the sale of shares, or a merger or an amalgamation of either of the Participants with any other company.

B.5.5.

In the case of any transfer of control of a Participant as referred to in Section B.5.4., if that Participant, or in the case of a merger or amalgamation if the merged or amalgamated company, terminates the Project prior to the Termination of Product Development, such event shall be deemed to constitute an outright sale of the Product to a third party pursuant to Section B.5.3. notwithstanding any other provision of this Agreement.

B.6.

License agreements involving the Product developed in whole or in part during this Foundation-supported project shall be subject to Annex E.

C.1.

The Proposer agrees to do the work set out in the Proposal in accordance with good standards relevant to such undertakings, and shall expend funds received hereunder only in accordance with such Proposal and the requirements of this Agreement.

C.2.

The Proposer agrees to comply with the Program Plan as set forth in Annex D.

C.3.

The Proposer hereby appoints Doron Amit as Israel project manager and Donna Edmonds as U.S. project manager for the implementation of the project during the period of this Agreement and in accordance with the Program Plan.

C.4.1.

Should any key person be absent from work, or should such absence be expected, for 90 days or more, or should there be any significant reduction in the total personnel force assigned the project under the Proposal, the Proposer shall forthwith notify the Foundation.

D.1.

The Proposer shall submit to the Foundation, in writing, the following reports:

interim fiscal and technical reports to be submitted simultaneously within 30 days following the expiration of the first 6-month period;

interim fiscal and technical reports to be submitted simultaneously within 30 days following the expiration of the second 6-month period;

interim fiscal and technical reports to be submitted simultaneously within 30 days following the expiration of the third 6-month period;

D.1.1.

Any failure to submit reports in a timely fashion pursuant to Section D.1 shall be deemed a fundamental breach and a breach for cause pursuant to this Agreement.

D.1.2.

The reports to be submitted pursuant to this Section D shall be in form and substance in accordance with the most recent Formats for Technical and Fiscal Reports, as shown on the Foundation’s web site.

D.2.

Proposer shall provide to the Foundation at its expense, briefings on the progress of the work hereunder, within 45 days following any request from time to time by the Foundation. Such briefings shall be in accordance with such form and detail as the Foundation may reasonably request.

E.1.

In any publication in scientific or technical journals of data or other information derived from the work hereunder, or any publication related to the work, but not including product literature or manuals, the support of the Foundation shall be acknowledged.

E.2.

To the extent so required to permit the Foundation free dissemination of such publications or information, which the Foundation is privileged to disseminate, subject to the limitations of Section F, the Proposer shall be deemed hereby to wave any claim with respect to such dissemination for infringement of any copyright it may have or may obtain.

E.3.

The Proposer shall furnish to the Foundation two (2) copies of all publications resulting from Foundation-supported work as soon as possible after publication.

F.1.

Proprietary information, clearly identified as such, submitted to the Foundation in the Proposal, in any report or verbally, or obtained by Foundation personnel observation pursuant to any request or briefing, shall be treated by the Foundation as confidential. At the request of Proposer or either Participant, a confidential disclosure agreement may be entered into separately by the parties. Nothing contained in the foregoing shall restrict the right of the Foundation to make public the fact of the Foundation’s support for the Project, and the identification of the Participants therein. The details of any such publication, except for those permitted by the immediately preceding sentence of this Section F.1, shall be subject to prior approval by the Participants.

F.2.

The Proposer represents and warrants that, to the best of its knowledge, information and belief, the Proposer has good, valid and enforceable title to all of the Intellectual Property necessary for purposes of implementation of the Proposal, free and clear of all third party interests, or otherwise possesses adequate rights to use the Intellectual Property (subject to the fact that no patent may have been obtained). To the best of the Proposer’s knowledge, information and belief, no Intellectual Property used or proposed to be used with respect to the Proposal infringes upon any Intellectual Property rights of others, and the use of such Intellectual Property with respect to the Proposal does not constitute an infringement, misappropriation or misuse of any intellectual property rights of any third party.

G.1.

If Proposer or either of the Participants elects to apply for letters patent on any Product developed in whole or in part from performance of Foundation-supported activity, such applicant shall, at his own expense, so apply in the United States and in Israel, and in such other countries and at such times as the Proposer or either of the Participants may deem appropriate.

H.1.

Regardless of the patent rights acquired by Participants by mutual agreement or pursuant to Section G.1., the Governments of Israel and of the United States shall each have a non-exclusive, irrevocable, royalty-free license to make or have made, to use or have used, and to sell or have sold any such Product specified, throughout the world for all governmental purposes: provided, however, that in any contracting situation involving a Product made under this Agreement, the Government of Israel shall give preference to the Participant retaining the entire right, title, and interest in the Product in Israel, and provided that “governmental purposes” shall not include manufacture of such Product where it is commercially available at reasonable prices. Notwithstanding the foregoing, except for military purposes or in emergency situations, neither the Government of Israel nor the Government of the United States, nor the Foundation, shall have the right to sell or otherwise dispose of in any third country any product incorporating the Product or part of the Product without the prior written permission of the Participant which has acquired the entire right and interest in the Product in that third country. Such Participant shall not withhold permission where appropriate royalties are paid by the Foundation or government(s) concerned.

H.2.

In addition to the patent rights specified In Section H.1. the Foundation reserves for itself and the Governments of Israel and the United States the right to use the Product, technical information, data, know-how and Intellectual Property arising out of, or developed under, this Agreement for any noncommercial purpose, and without charge.

H.3.

In order that the rights of the Foundation and the Governments of Israel and the United States described herein shall be exercisable, the Participants agree that any component, element or other part of the system described as the Product in the Preamble to this Agreement, whose use is necessary to the full enjoyment of the Product, will be made available, at reasonable prices, by the Participants either as a commercially purchasable item, or by special arrangement, and will be sold to the Foundation and/or the Government of Israel and/or the Government of the United States, also at reasonable prices.

H.4.

Notwithstanding the foregoing provisions of this Section H., it is understood and agreed that, so long as any Intellectual Property that comprises part or all of the Product is marketed by Proposer, by either Participant, or by others with the rights to market such Intellectual Property, neither the Government of Israel nor the Government of the United States shall have the right to obtain a license to use such Intellectual Property unless the license fee normally imposed in the ordinary course of business by either of the Participants or by others with the rights to market such Intellectual Property is paid, and the standard license agreement is executed.

I.1.

The Foundation may revoke the Conditional Grant, in whole or in part, for cause, as defined in the laws of the State of New York.

I.2.

Upon receipt of notice of revocation for a default, which constitutes a cause, the Proposer may cure the default in and within thirty (30) calendar days after the date of receipt of the notice.

I.3.

Notwithstanding any other provision in this Agreement to the contrary, the Foundation shall not be obliged to provide any further funding after notice of revocation until and unless the said default is cured and so demonstrated to the reasonable satisfaction of the Foundation.

I.4.

Should the Conditional Grant be revoked for reason of cause, in addition to the Foundation’s rights under Section I.5., the Foundation and the Governments of Israel and the United States shall continue to be entitled to all of their rights pursuant to Section H.

I.5.

If the Foundation shall revoke the Conditional Grant as aforesaid, all funds given to Proposer in accordance with Section B.1. shall become due immediately, without need for demand. Such funds shall be repaid with interest at the Late Payment Interest Rate from the date of notice of the revocation.

I.6.

The Proposer may not terminate this Agreement or abandon the Project without the prior written consent of the Foundation, which consent shall not be unreasonably withheld. The Foundation declares that it will furnish such a consent if it is satisfied that, despite good faith efforts, the Proposer has not succeeded in developing the Product, or if the Product has been developed the Proposer has not succeeded in effecting any sales or other commercial exploitation of the Product, except in the cases referred to in Section B.5.5.

I.7.

If upon termination of the Project development work for any reason, the entire budgeted sum has not been expended, the Proposer shall forthwith return to the Foundation its pro rata share of such unexpended portion. If not repaid forthwith, such sum shall bear interest in accordance with Section I.5.

K.1.

The Proposer shall maintain business and financial records and books of account for the work hereunder identifiable within the framework of the business and financial records of the Proposer. Such books and records shall be in usual and accepted form.

K.2.

Books and records of the work hereunder shall show Proposer’s contribution. Upon request by the Foundation, the Proposer shall provide evidence of its compliance herewith.

K.3.

The Foundation may examine, or cause to be examined, the financial books, vouchers, records and any other documents of the Proposer relating to this Agreement at reasonable times and intervals and upon reasonable notice during the term of this Agreement.

L.1.

The Proposer shall defend all suits brought against the Foundation, its officers or personnel, indemnify them for all liabilities and costs and otherwise hold them harmless on account of any and all claims, actions, suits, proceedings and the like arising out of, or connected with or resulting from the performance of this Agreement by the Proposer, or from the manufacture, sales, distribution or use by the Proposer of the Product, whether brought by Proposer or its personnel or by third parties.

L.2.

The Proposer agrees that persons employed by it, or otherwise retained by the Proposer, if connection with the Project, shall be deemed to be solely its own employees or agents, and that no relationship of employer and employee or principal and agent shall be created between such employees or agents and the Foundation, either for purposes of tort liability, social benefits, or for any other purpose. The Proposer shall indemnify the Foundation and hold it harmless from court costs and legal fees, and for any payment, which the Foundation may be obliged to make as a result of a cause of action based upon an employee-employer or principal-agent relationship as aforesaid.

M.1.

The Foundation makes no representation, by virtue of its funding the work hereunder, or receiving any payments or royalties as a result of this Agreement, as to the safety, value or utility of the Product or the work undertaken, nor shall the fact of participation of the Foundation, its funding or exercise of its rights hereunder be deemed an endorsement of the Product or of the Proposer, nor shall the name of the Foundation be used for any commercial purpose or be publicized in any way by the Proposer except within the strict limits of this Agreement.

M.2.

The Proposer may not assign this Agreement or any of the work undertaken pursuant to it without the prior written consent of the Foundation, which consent shall not be unreasonably withheld.

M.3.

This Agreement shall be construed under the laws of the State of New York. The exclusive forums for the resolution of any dispute arising from this Agreement shall be the State of Israel or Washington, D.C. in the U.S., as the moving party may elect. Execution of this Agreement shall be taken as submission to the forum selected pursuant to this Section.

M.4.

Any dispute concerning the subject matter of this Agreement shall be resolved through arbitration, unless the Foundation and the other parties to such dispute agree otherwise, in writing. If the forum is in Israel, the arbitration will be conducted pursuant to the rules of the Israeli Institute for Commercial Arbitration. If the forum is in the United States, the arbitration will be conducted pursuant to the rules of the American Arbitration Association.

M.5.

Proposer undertakes to comply with all applicable laws, rules and regulations of the State of Israel and the United Stales of America and any applicable State or Commonwealth, and will apply for and obtain all necessary licenses and permits for the carrying out of its obligations hereunder.

M.6.

Under Israeli law, no stamp duty is required on BIRD Foundation Cooperation and Project Funding Agreements.