Confidential Treatment Requested. Confidential portions of this document have been redacted and separately filed with the Commission. ***** Confidential material redacted and filed separately with the Commission.
Confidential
Treatment Requested. Confidential portions of this document have been redacted
and separately filed with the Commission.
*****
Confidential material redacted and filed separately with the
Commission.
January
26, 2003
To:
Yeda
Research and
Development
Company Ltd.
Rehovot
Dear
Sirs,
| Re: |
Amendment
No. 3 to Research and Licence Agreement dated April 7,
1993
(“the R&L Agreement”) as amended on August 31, 1995 (“Amendment
No. 1”) (restated on January 25, 1998) and on January 25,
1998 (“Amendment
No. 2”)
|
We
set
out below the amendments to Amendments No. 1 and No. 2 agreed
between
Yeda Research and Development Company Ltd. (“Yeda”)
and XTL
Biopharmaceuticals Ltd. (“the
Corporation”)
following discussions between the parties conducted at the Corporation’s request
(capitalised terms herein having the meanings ascribed thereto in the
R&L Agreement, unless otherwise defined herein):
| 1. |
Effective
on the date of signature hereof, Clause 2 of Amendment No. 1
is
hereby replaced by the following:
|
| “2. |
Royalties
|
| 2.1. |
Royalty
Rates
|
Instead
of the royalties payable as specified in Clause 7(d)(ii) of the
R&L Agreement, the royalties payable to Yeda by XTL in consideration
of
the Licence granted under the R&L Agreement, shall be as
follows:
| 2.1.1. |
(a) *****
percent) of Net Sales (as hereinafter defined) from sales by XTL
of human
therapeutical drugs developed and/or made under and/or using the
Licensed
Patents and/or the Licensed Technology (‘the
Therapeutical Products’).
‘Net
Sales’
as
used herein shall have the meaning ascribed to the term in the
R&L Agreement, references therein to ‘the
Products’
being read as references to the Therapeutical
Products.
|
*****
Confidential material redacted and filed separately with the
Commission.
(b) *****
percent) of any amount received by XTL from any third party and calculated
on
sales by such third party of Therapeutical Products, after deduction from
such
amount of Third Party Royalties (as defined below) (“the
XTL Net Royalty”)_,
provided (i) that if ***** of the XTL Net Royalty is greater than ***** percent)
of Net Sales from such sales by such third party of such Therapeutical Products,
then the royalty payable to Yeda by XTL on such amount shall be ***** per
cent)
of Net Sales from such sales by such third party and (ii) if ***** per cent)
of
the XTL Net Royalty is less than ***** per cent) of Net Sales from such sales
by
such third party of such Therapeutical Products, then the royalty payable
to
Yeda by XTL on such amount shall be *****) of Net Sales from such sales by
such
third party;
‘Third
Party Royalties’,
for the
purpose of a deduction to be made from any amount received by XTL pursuant
to
this Section 2.1.1(b) above, shall mean any royalty calculated on
the said
amount and payable by XTL to a third party for the right to the use of a
compound included in the Therapeutical Product in respect of which the amount
has been received and/or for the right to the use of technology used directly
in
the development or production of the Therapeutical Product in respect of
which
the amount has been received, provided always that the duty to pay the royalty
to the third party has been established at arms length and in good faith
and the
size of such royalty is no greater than what would be due in an arms length
transaction entered into in good faith. “Third party” in this definition of
“Third Party Royalties” shall include Yeda itself, in the event a royalty as
aforesaid in the said definition is payable to Yeda by XTL in respect of
a
compound or technology other than that licensed under the R&L
Agreement.
| 2.1.2. |
*****
percent) of all amounts received by XTL from third parties (except
the
amounts governed by Section 2.1.1(b) above or Section 2.1.4
below) under or pursuant to agreements allowing such third parties
the use
of results, including products, developed and/or made by XTL under
and/or
using the Licensed Patents and/or the Licensed Technology (including,
without limitation, results obtained by XTL’s use of chimeric mammals or
other animal models).
|
| 2.1.3. |
*****
percent) of all amounts received by XTL from a third party payable
upon
XTL reaching milestones specified in an agreement with such third
party
providing for performance of development activities by XTL for
such third
party under and/or using the Licensed Patents and/or the Licensed
Technology.
|
| 2.1.4. |
*****
percent) of all amounts received by XTL under or pursuant to agreements
with third parties allowing such third parties to use outside XTL’s
premises chimeric mammals or other animal models (collectively,
‘Models’)
made and/or developed by XTL under and/or using the Licensed Patents
and/or the Licensed Technology or allowing such third parties to
produce
Models under and/or using the Licensed Patents and/or the Licensed
Technology.
|
| 2.1.5. |
*****
percent) of all amounts received by XTL as a result of any activities
under and/or using the Licensed Patents and/or the Licensed Technology
(including the grant of sublicences to third parties to carry out
activities under and/or using the Licensed Patents and/or the Licensed
Technology), other than those specified in Sections 2.1.1.,
2.1.2,
2.1.3 or 2.1.4 above. Where the amounts received by XTL as aforesaid
are
the result of activities not involving the grant of sublicences
to third
parties (‘Direct
Activities’)
and are amounts received in a transaction other than at arms length,
the
royalty due to Yeda shall be calculated on the amount that would
have been
received by XTL in a transaction at arms
length.
|
*****
Confidential material redacted and filed separately with the
Commission.
| 2.1.6. |
For
the avoidance of doubt, it is expressly stated that royalties shall
not be
due pursuant to Sections 2.1.2, 2.1.4 or 2.1.5 above on
funds
received by XTL which are paid by a third party (i) in order to
cover, and
are actually applied by XTL in covering, the cost of research and
development by XTL for such third party of products generating
any of the
amounts in respect of which royalties are payable pursuant to
Sections 2.1.2, 2.1.4 or 2.1.5 above or (ii) as an investment
in the
equity of XTL in connection or conjunction with any agreement between
XTL
and such third party relating to the Licence and/or the Licensed
Technology and/or the Licensed Patents or otherwise, provided such
investment is made at no lower than the then current market price
of the
shares in XTL’s equity of the kind acquired in such investment and does
not have the effect of replacing or reducing the amounts which
are or
which would be payable in an arms-length transaction by such third
party
to XTL and in respect of which royalties are payable pursuant to
Section
2.1.2, 2.1.4 or 2.1.5 above.
|
| 2.1.7. |
For
the avoidance of doubt, it is expressly stated, that nothing in
this
Section 2.1 above or elsewhere in this letter shall be deemed
to
derogate from the provisions of Clause 7(c) of the R&L Agreement
governing the grant of sublicences.
|
| 2.1.8. |
A
table exemplifying the provisions of Clause 2.1 above is attached
as
Appendix A hereto. If there shall be any contradiction between
the table
and the provisions of Clause 2.1, the provisions of Clause 2.1
shall
govern.
|
| 2.1.9. |
If
XTL shall be obliged to pay any third party a royalty on any amount
on
which a royalty is due to Yeda pursuant to Clause 2.1.5 above,
Yeda shall
agree, at XTL’s written request, to discuss with XTL the extent, if at
all, by which the royalty due to Yeda under Clause 2.1.5 on such
amount
shall be reduced having regard to XTL’s obligation to pay a royalty to a
third party as aforesaid and the terms and conditions governing
any such
reduction, provided that Yeda shall be entirely free in its absolute
discretion to refuse to agree to any such
reduction.
|
| 2.2. |
Payment
of Royalties
|
The
provisions of Clause 7(d)(iii) of the R&L Agreement shall apply,
mutatis
mutandis,
to the
royalties payable to Yeda pursuant to Section 2.1 above, references
to ‘Net
Sales’ in the said Clause 7(d)(iii) being deemed references to ‘Net Sales’
as defined in Section 2.1.1 above for the purpose of that Section
and to
amounts received by XTL from Direct Activities (as defined in Section 2.1.5
above) and references to "Sublicensing Receipts" in Clause 7(d)(iii)
being
deemed references to amounts subject to royalty payment to Yeda pursuant
to
Sections 2.1.2, 2.1.3, 2.1.4 or 2.1.5 above (not being amounts resulting
from Direct Activities (as defined in Section 2.1.5 above)).
*****
Confidential material redacted and filed separately with the
Commission.
| 2.3. |
For
the avoidance of doubt, it is expressly stated that payment of
royalties
under the R&L Agreement shall continue as
follows:
|
| 2.3.1. |
Payment
of royalties pursuant to Section 2.1.1 shall continue with
respect to
sales of any Therapeutical Product as
follows:
|
(aa) if
the
Therapeutical Product sold is made and/or sold in a country where a Licensed
Patent or Patents issue including claims covering, in whole or in part, such
product or the manufacture thereof—then, until the date of expiry of the last of
the Licensed Patents covering such Therapeutical Product in such country
to
expire, or (ii) until termination of the ***** commencing on the date of
the
first commercial sale of such Therapeutical Product in such country, whichever
is the longer period;
(bb) on
sales
of a Therapeutical Product made and sold in any other country, until the
date of
expiry of a period of ***** commencing on the date of the first commercial
sale
of such Therapeutical Product in such country.
| 2.3.2. |
Payment
of royalties pursuant to Section 2.1.2 shall continue as
follows:
|
(aa) payment
of royalties on amounts paid to XTL and attributable to activities of the
paying
third party under a Licensed Patent or Patents in a particular country shall
continue: (i) until the expiry of the last to expire of the said Licensed
Patents; or (ii) until termination of the ***** commencing on the
first
date on which XTL receives an amount relating to activities in such country
on
which a royalty is due to Yeda pursuant to Section 2.1.2, whichever
is the
longer period;
(bb) payment
of royalties on amounts paid to XTL and attributable to activities of the
paying
third party in a particular country in which there is no Licensed Patent
shall
continue until termination of the ***** commencing on the first date on
which
XTL receives an amount relating to activities in such country on which
a royalty
is due to Yeda pursuant to Section 2.1.2;
(cc) payment
of royalties on amounts paid to XTL and not attributable to the paying
third
party's activities in any particular country, shall continue until: the
expiry
of the last to expire of any Licensed Patents sublicensed to the third
party
under the agreement with it; or (ii) until the date of expiry of
a period
of ***** commencing on the first date on which XTL receives an amount relating
to activities in any country included in the countries covered by such
agreement
on which a royalty is due to Yeda pursuant to Section 2.1.2, whichever
is
the longer period.
| 2.3.3. |
Payment
of royalties pursuant to Section 2.1.3 shall continue
as
follows:
|
(aa) payment
of royalties on amounts paid to XTL and attributable to activities of XTL
or of
the paying third party under a Licensed Patent or Patents in a particular
country shall continue: (i) until the expiry of the last to expire
of the
said Licensed Patents; or (ii) until termination of the ***** commencing
on
the date on which XTL first receives an amount relating to activities in
such
country on which a royalty is due to Yeda pursuant to Section 2.1.3,
whichever is the longer period,
*****
Confidential material redacted and filed separately with the
Commission.
(bb) payment
of royalties on amounts paid to XTL and attributable to activities of XTL
or the
paying third party in a particular country in which there is no Licensed
Patent
shall continue until termination of the ***** commencing on the date on which
XTL first receives an amount relating to activities in such country on which
a
royalty is due to Yeda pursuant to Section 2.1.3;
(cc) payment
of royalties on amounts paid to XTL and not attributable to XTL's or the
third
party's activities in any particular country shall continue until: (i) the
expiry of the last to expire of any Licensed Patents under which such activities
are or may be performed in terms of the agreement with the third party; or
(ii) until the date of expiry of a period of ***** commencing on the
date
on which XTL first receives an amount relating to activities in any country
covered by such agreement on which a royalty is due to Yeda pursuant to Section
2.1.3, whichever is the longer period.
| 2.3.4. |
Payment
of royalties pursuant to Section 2.1.4 shall continue as
follows:
|
(aa) payment
of royalties on amounts paid to XTL and attributable to activities of the
paying
third party under a Licensed Patent or Patents in a particular country shall
continue: (i) until the expiry of the last to expire of the said Licensed
Patents; or (ii) until termination of the ***** commencing on the
date on
which XTL first receives an amount relating to activities in such country
on
which a royalty is due to Yeda pursuant to Section 2.1.4, whichever
is the
longer period;
(bb) payment
of royalties on amounts paid to XTL and attributable to activities of the
paying
third party in a country in which there is no Licensed Patent shall continue
until termination of the ***** commencing on the date on which XTL first
receives an amount relating to activities in such country on which a royalty
is
due to Yeda pursuant to Section 2.1.4;
(cc) payment
of royalties on amounts paid to XTL and not attributable to the third party's
activities in any particular country shall continue, until: (i) the
expiry
of the last to expire of any Licensed Patents sublicensed to the third party
under the agreement with it; or (ii) until the date of expiry of a
period
of ***** commencing on the date on which XTL first receives an amount relating
to activities in any country covered by such agreement on which a royalty
is due
to Yeda pursuant to Section 2.1.4, whichever is the longer
period.
| 2.3.5. |
Payment
of royalties pursuant to Section 2.1.5 shall continue as
follows:
|
(A) where
the
royalties are on amounts received by XTL on any Direct Activity, the duty
to pay
royalties shall continue:
(aa) if
the
activity or any part thereof is carried out in any country under a Licensed
Patent or Patents—then: (i) until the date of expiry of the last of such
Licensed Patents to expire, or (ii) until termination of the *****
commencing on the first date on which XTL first receives an amount as a result
of that activity in that country, whichever is the longer period;
*****
Confidential material redacted and filed separately with the
Commission.
(bb) if
the
activity is carried out in any other country, until the date of expiry of
a
period of ***** commencing on the first date on which XTL receives an amount
as
a result of that activity in that country;
(B) Where
the
royalties are due on amounts received by XTL on activities not being a Direct
Activity, the duty to pay royalties shall continue as follows:
(aa) payment
of royalties on amounts paid to XTL and attributable to activities of the
paying
third party under a Licensed Patent or Patents in a particular country shall
continue: (i) until the expiry of the last to expire of the said Licensed
Patents; or (ii) until termination of the ***** commencing on the
first
date on which XTL receives an amount relating to activities in such country
on
which a royalty is due to Yeda pursuant to Section 2.1.5, whichever
is the
longer period;
(bb) payment
of royalties on amounts paid to XTL and attributable to activities of the
paying
third party in a particular country in which there is no licensed Patent
shall
continue until termination of the ***** commencing on the first date on which
XTL receives an amount relating to activities in such country on which a
royalty
is due to Yeda pursuant to Section 2.1.5;
(cc) payment
of royalties on amounts paid to XTL and not attributable to the third party's
activities in any particular country shall continue: (i) until the
last to
expire of any Licensed Patents sublicensed to the third party under the
agreement with it; or (ii) until the date of expiry of a period of
*****
commencing on the first date on which XTL receives an amount relating to
activities in any country covered by such agreement on which a royalty is
due to
Yeda pursuant to Section 2.1.5, whichever is the longer
period.
| 2.4. |
The
License granted under the R&L Agreement shall remain in force (if
not previously terminated according to the provisions of the R&L
Agreement (as amended hereby)) for the purpose of each of the activities
specified in Sections 2.1.1, 2.1.2, 2.1.3, 2.1.4 and 2.1.5,
as long
as there is a duty to pay royalties in respect of such activity,
as
provided in Section 2.3 above. Clause 7(b)(ii) of
the
R&L Agreement is replaced by the provisions of this
Section 2.4 above.”
|
| 2. |
Effective
of the date of signature hereof, Clause 1 of Amendment No. 2
is
replaced by the following:
|
| “1. |
Clause 13(b)(i)
of the R&L Agreement shall be and is hereby replaced by the
following:
|
*****
Confidential material redacted and filed separately with the
Commission.
(i) (A) Yeda
may
terminate this Agreement by giving written notice to that effect to the
Corporation if the aggregate of the royalties due to Yeda under
Paragraph 2.1.1 of the letter agreement between the parties dated
August 31, 1995 (and amended on January 25, 1998) amending this Agreement
(hereinafter 'the
Amendment')
(hereinafter collectively 'Product
Sale Royalties')
and
actually paid to Yeda on due date in respect of the seventh year, eighth
year or
ninth year of the term of the Licence shall be less than US $100,000
(one
hundred thousand United States Dollars) (hereinafter in this
subparagraph (A) 'the
Default Year'),
UNLESS
the
Corporation shall have proved to Yeda's reasonable satisfaction within 30
(thirty) days of the end of the Default Year that the Corporation and/or
Collaboration Partners (as such expression is defined below) have spent at
least
US $750,000 (seven hundred and fifty thousand United States Dollars)
in the
Default Year in funding the cost of the activities described in Clause 8(b)
above (hereinafter 'Development
Activities')
towards
commercialisation of Therapeutical Products in respect of the sale of which
Yeda
is entitled to royalties under Paragraph 2.1.1 of Amendment No. 1
(hereinafter collectively 'Yeda
Royalty Bearing Products').
Yeda
shall give any such notice of termination within 60 (sixty) days of the end
of
the Default Year.
'Collaboration
Partner'
shall
mean an entity providing funding for the said Development Activities to the
Corporation or on its behalf pursuant to an agreement between the Corporation
and such entity whereby a sublicence has been granted to such entity with
Yeda's
consent in accordance with Paragraph 7(c) above.
(B) If
the
aggregate payment due to Yeda on Product Sale Royalties and actually made
to
Yeda in respect of the tenth, eleventh or twelfth year of the term of the
Licence shall be less than US $100,000 (one hundred thousand United
States
Dollars) (hereinafter in this subparagraph (B) 'the
Default Year'),
the
Corporation shall pay Yeda within 30 (thirty) days of the end of the Default
Year, the amount by which the Product Sale Royalties actually paid to Yeda
in
respect of the Default Year shall be less than US $100,000 (hereinafter
in
this subparagraph (B) 'the
Shortfall Amount').
Payment of the Shortfall Amount (except to the extent that it represents
payments due and payable to Yeda in respect of the Product Sale Royalties
other
than pursuant to this subparagraph (B)) shall be fully credited against
future Product Sale Royalties becoming due to Yeda but shall not be refundable
in any event.
It
is
agreed, without derogating from Yeda's rights to other or additional relief
and
remedies, including the right to xxx for the Shortfall Amount, that failure
to
make the Shortfall Payment as aforesaid shall entitle Yeda to terminate this
Agreement by giving written notice of termination to the Corporation within
60
(sixty) days of the end of the Default Year.
(C) If
the
aggregate payment due to Yeda as Product Sale Royalties and actually paid
to
Yeda in respect of the thirteenth year or the fourteenth year of the term
of the
Licence shall be less than US $100,000 (one hundred thousand US Dollars)
(hereinafter in this subparagraph (C) 'the
Default Year'),
Yeda
shall be entitled to terminate the Agreement by service of written notice
to
that effect on the Corporation, unless: (x) the Corporation shall
pay Yeda
by no later than 30 (thirty) days from the end of the Default Year, the amount
by which the Product Sale Royalties actually paid to Yeda in respect of such
year shall be less than US $100,000 (hereafter in this
subparagraph (C) 'the
Shortfall Amount');
and
(y) sales of Yeda Royalty Bearing Products shall have commenced before
or
during that year or the Corporation shall have demonstrated to Yeda's reasonable
satisfaction that regulatory approval for sale of a Yeda Royalty Bearing
Product
in the US or a major European country has been requested before or during
the
said year and that the Corporation has taken every reasonable, lawful action
possible in that year to expedite grant of such approval. Payment of the
Shortfall Amount (except to the extent that it represents payments due and
payable to Yeda in respect of Product Sales Royalties other than pursuant
to
this subparagraph (C)) shall be fully credited against future Product
Sale
Royalties becoming due to Yeda but shall not be refundable in any event.
Yeda
shall give any such notice of termination within 60 (sixty) days of the end
of
the Default Year.
*****
Confidential material redacted and filed separately with the
Commission.
(D) If
the
aggregate payment due to Yeda as Product Sale Royalties and actually paid
to
Yeda on due date in respect of the fifteenth or any subsequent year of the
term
of the Licence shall be less than US $200,000 (two hundred thousand
US
Dollars) (hereinafter in this subparagraph (D) 'the
Default Year'),
Yeda
shall be entitled to terminate the Agreement by service of written notice
to
that effect on the Corporation within 60 (sixty) days of the end of the Default
Year.
(E) If
commercial exercise of the Licence by way of sale of Yeda Royalty Bearing
Products, once commenced, shall cease thereafter for a period of 12 (twelve)
consecutive months or more, Yeda shall be entitled to terminate the Agreement
by
service of written notice to that effect on the Corporation within 60 (sixty)
days of the end of such period and, unless sales of Yeda Royalty Bearing
Products shall have been renewed in the meantime, also at any time thereafter,
provided, however, in the event Yeda desires to terminate the Agreement after
such 60-day period, Yeda shall give the Corporation written notice at least
60
(sixty) days in advance of the desired date of termination.
(F) Nothing
in this Clause 13(b)(i) above shall be deemed to justify failure to
make
any payment due and payable to Yeda under any of the provisions of this
Agreement other than under this Clause 13(b)(i) above or to derogate
from
Yeda's
rights with respect to such failure pursuant to Clause 13(b)(ii) below
or
otherwise."
| 3. |
Except
as set forth in this letter, all the terms of the R&L Agreement
(as amended by Amendments No. 1 and No. 2 (as they
are amended
hereby)) shall remain unchanged. The R&L Agreement, as amended as
aforesaid, sets forth the entire understanding between Yeda and
XTL
regarding the R&L Agreement and supersedes any other prior
agreement or understanding, oral or
written.
|
Please
indicate your acceptance of the terms of this letter by affixing your signature
below.
Very
truly yours,
By: _________________________
Title: _________________________
Agreed
and accepted:
YEDA
RESEARCH AND DEVELOPMENT
COMPANY
LTD.
By: _________________________ By: ___________________________
Title: _________________________ Title: ____________________________
Includes
confidential material redacted in the to-be-publicly-filed copy of the
Agreement
APPENDIX
A
(to
Amendment No. 3 to Research and License Agreement dated April 7, 1993
(“the
R&L Agreement”) as amended on August 31, 1995 (“Amendment No. 1”) (restated
on January 25, 1998) and on January 25, 1998 (“Amendment No.
2”)
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Note:
One
page of material has been redacted and filed separately with the
Commission.
