Company: NCEL
Filing Date: 2025-02-05
Form Type: F-3
Source: 0001213900-25-010223
Chunk: 106

Company: NewcelX Ltd.
Filing Date: 2025-02-05
Form: F-3
Chunk 106
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 be required to pay monetary remuneration to its Israeli employees for their inventions, even if the rights to such inventions have been duly assigned to us.

Kadimastem enters into agreements with its Israeli employees pursuant to which such individuals agree that any inventions created in the scope of their employment are either owned exclusively by Kadimastem or are assigned to it, depending on the jurisdiction, without the employee retaining any rights. A portion of Kadimastem’s intellectual property has been developed by its Israeli employees during their employment for it. Under the Israeli Patent Law, 5727-1967, or the Patent Law, inventions conceived by an employee during the course of his or her employment and within the scope of said employment are considered “service inventions. Service inventions belong to the employer by default, absent a specific agreement between the employee and employer otherwise. The Patent Law also provides that if there is no agreement regarding the remuneration for the service inventions, even if the ownership rights were assigned to the employer, the Israeli Compensation and Royalties Committee, or the Committee, a body constituted under the Patent Law, shall determine whether the employee is entitled to remuneration for these inventions. The Committee has not yet determined the method for calculating this Committee-enforced remuneration. While it has previously been held that an employee may waive his or her rights to remuneration in writing, orally or by conduct, litigation is pending in the Israeli labor court is questioning whether such waiver under an employment agreement is enforceable. Although Kadimastem’s Israeli employees have agreed that Kadimastem exclusively own any rights related to their inventions, Kadimastem may face claims demanding remuneration in consideration for employees’ service inventions. As a result, Kadimastem could be required to pay additional remuneration or royalties to its current and/or former employees, or be forced to litigate such claims, which could negatively affect Kadimastem’s business.

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Kadimastem received Israeli government grants for certain of its research and development activities, the terms of which may require it to pay royalties and to satisfy specified conditions in order to manufacture products and transfer technologies outside of Israel. If Kadimastem fails to satisfy these conditions, it may be required to pay penalties and refund grants previously received.

Kadimastem’s research and development efforts have been financed in part through royalty-bearing grants that it received from the IIA. Kadimastem are further required to comply with the requirements