Unassociated Document




  
    

    Private
      & Confidential

  

       

      August
        1,
        2005

       

      Michael
        S. Weiss

      Keryx
        Biopharmaceuticals, Inc.

      750
        Lexington Avenue 

      26th
        Floor 

      New
        York,
        NY 10022 

      USA

       

      Dear
        Mr.
        Weiss

       

      This
        letter records the terms on which you are invited to serve as a non-Executive
        director of XTL Biopharmaceuticals Ltd (the "Company", “XTLbio”).

       

      1.
         Chairman's
        Duties 

       

      As
        the
        Chairman of the Board of Directors of the Company, Michael S. Weiss (“Weiss”)
        shall be responsible for the overall management, direction and leadership
        of the
        Board of Directors of the Company. The Chief Executive Officer of the Company
        shall report directly to Weiss as Chairman of the Board of Directors. The
        description of responsibilities set forth herein shall serve as a general
        statement of the duties, responsibilities and authority of Weiss. Additional
        duties, responsibilities and authority consistent with that of a Chairman
        may be
        assigned to Weiss by the Board of Directors of the Company from time to time
        in
        its reasonable discretion. 

       

      2.
         Term

       

      Weiss's
        appointment as the Chairman of the Board of Directors of the Company shall
        commence from the date of the resolution of the Board of Directors appointing
        him as a Chairman of the Company. The terms and conditions contained in the
        Agreement and Weiss’s engagement shall commence upon the date the Agreement is
        approved by the shareholders of the Company (the "Effective Date") and shall
        continue until terminated as provided (the "Term"). 

       

      3.
         Compensation

       

      (a)
        As
        compensation for the performance of his duties on behalf of XTLbio, Weiss
        shall
        be compensated as follows: 

       

       

      (i)
        Annual
        Fee.
        Weiss
        shall receive a fee at the annualised rate of one hundred and fifty thousand
        dollars (US$150,000), less applicable state and federal withholdings, (as
        may be
        adjusted from time to time in accordance with the Agreement, the "Chairman’s
        Fee"), payable quarterly in arrears. Weiss shall be entitled to annual increases
        in the Chairman's Fee, the amount of which shall be within the sole discretion
        of the Company's Board of Directors, but each such increase will require
        the
        approval of the shareholders of the Company. 

       

       

      (ii)
        Stock
        Options.
        The
        Company will grant Weiss options (the "Options")
        to
        purchase a total of 9,250,000 ordinary shares of New Israeli Shekels 0.02
        each
        (the "Ordinary
        Shares")
        of the
        Company (the "Grant")
        at an
        exercise price equal to $0.354(£0.20) (the "Exercise
        Price"),
        which
        options shall be exercisable for a period of five (5) years from the date
        of
        issuance (expected to be the Effective Date). Weiss's Options will be granted
        under the same terms and conditions as share options granted in accordance
        with
        the Company's Share Option Plan 2001 (the "Plan")
        and
        according to the terms of any share option agreement entered into by Weiss
        and
        the Company; provided, however, that if any provisions of the Agreement are
        inconsistent with the terms and conditions of the Plan and any such share
        option
        agreement, the terms of the Agreement shall control. In accordance with the
        Plan, should any change be made to the Ordinary Shares by reason of any stock
        split, stock dividend, extraordinary cash dividend, recapitalisation,
        combination of shares, exchange of shares or other change affecting the
        outstanding Ordinary Shares as a class without the Company's receipt of
        consideration, appropriate adjustments shall be made to the total number
        and/or
        class of securities subject to such options, and the Exercise Price in order
        to
        reflect such change and thereby preclude a dilution or enlargement under
        such
        options. 

       

      
        
           

        

        
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      The
        Grant
        shall vest as follows: 

       

       

      (A)
        1/3
        of the options shall vest and be exercisable upon the Company achieving a
        total
        market capitalization on a fully diluted basis of more than US$150 million,
        as
        determined utilizing the Market Capitalization Formula (defined
        below);

       

      (B)
        1/3
        of the options shall vest and be exercisable upon the Company achieving a
        total
        market capitalization on a fully diluted basis of more than US$250 million,
        as
        determined utilizing the Market Capitalization Formula; and

       

      (C)
        1/3
        of the options shall vest and be exercisable upon the Company achieving a
        total
        market capitalization on a fully diluted basis of more than US$350 million,
        as
        determined utilizing the Market Capitalization Formula; 

       

      Provided
        that at each such vesting Weiss is still a member of the Board of Directors
        of
        the Company, the “Market
        Capitalization Formula”
        shall
        be calculated as follows: 

       

      (A)
         the
        amount obtained as the product of 

       

      (1)
        the
        fully diluted Ordinary Shares (including shares attributable to all options,
        warrants, other purchase rights and convertible securities, which are in
        the
        money and including shares held by affiliates (collectively "market
        capitalization shares")),
        multiplied by

       

      (2)
        the
        quotient of:

       

      (x)
        the
        three (3) consecutive trading day average of the closing price of the American
        Depository Shares ("ADS"),
        as
        reported by the Nasdaq Stock Market (or such other exchange as such shares
        are
        then listed or in the good-faith determination of the Board of Directors,
        if not
        then listed or quoted), divided by

       

      (y)
        the
        number of Ordinary Shares then represented by each ADS; plus

       

      (B)
         long-term
        debt (as of any date); minus

       

      (C)
         Working
        Capital (as defined below); and minus

       

      (D)
         the
        aggregate exercise price of all options and warrants included in the market
        capitalization shares. 

       

      The
        term
“Working
        Capital”
        shall
        mean as of any date, (1) the current assets plus investment securities or
        cash
        equivalents thereof or similar assets that have maturities in excess of 12
        months, minus (2) current liabilities.

       

      (iii)
        In
        the event of a Change of Control or a Reorganization Event, as those terms
        are
        defined in the Plan, or in the event that Weiss is terminated by the Company
        without Cause (as defined below) or terminates his engagement for Good Reason
        (as defined below) or dies or suffers a Disability (as defined below), the
        exercisability of any of the options described in this Section 3 that are
        unexercisable at the time of such event or termination shall accelerate (and,
        in
        the case of a Change of Control or a Reorganization Event, such acceleration
        shall occur at a time and in a manner which allows Weiss to participate in
        such
        event in respect of the shares subject to such options in the same manner
        as
        other shareholders). Additionally, the Board of Directors shall have the
        discretion to accelerate all or a portion of these options at any time. In
        addition, at the discretion of the Board of Directors, Weiss shall be entitled
        to special grants of subsequent stock options. Weiss shall be entitled to
        pay
        the exercise price of any or all of the options described in this Section
        3 by
        each of the methods set forth in the Plans and shall be allowed to satisfy
        any
        withholding obligations incurred on the exercise of such options by electing
        to
        have option shares withheld upon such exercise. The Company shall use best
        efforts to cause all of the shares underlying such options to be fully
        registered and freely tradable, including for resale without any limitations
        or
        restrictions, provided, however, that while Weiss is an employee or director
        of
        the Company, Weiss agrees to abide by the trading restrictions that may be
        imposed upon him from time to time pursuant to any laws, statutes, rules
        or
        regulations to which the shares underlying the options may be subject from
        time
        to time. 

       

      
        
           

        

        
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      (b)
        Expenses 

       

      The
        Company shall reimburse Weiss for all normal, usual and necessary expenses
        incurred by Weiss in furtherance of the business and affairs of the Company,
        including travel and entertainment, provided Weiss submits to the Company
        appropriate vouchers, receipts or other proof of Weiss's expenditures and
        otherwise in accordance with such expense reimbursement policy as may from
        time
        to time be adopted by the Board of Directors of the Company. 

       

      4.
         Confidential
        Information 

       

      Weiss
        agrees to sign and comply with the Company's Proprietary Information and
        Inventions Agreement. 

       

      5.
         Termination 

       

      (a)
        Either party may terminate Weiss's engagement and appointment with the Company
        without Cause (in the case of the Company) or for Good Reason (in the case
        of
        Weiss) (as such terms are defined herein) at any time upon thirty (30) days
        notice. The Board of Directors shall have the right, in its sole discretion,
        to
        require Weiss to continue as Chairman or as a Director working for the Company
        during the notice period. For purposes of the Agreement, Weiss shall have
        "Good
        Reason" upon the occurrence of: (i) a failure to elect or re-elect Weiss
        to the
        office of Chairman of the Board of Directors of the Company or other change
        by
        the Company of Weiss's function, duties or responsibilities such that Weiss
        is
        no longer the highest member of the Board of Directors, or any other materially
        adverse change in such functions, duties or responsibilities, without Weiss's
        written consent; (ii) a reduction of Weiss's Chairman’s Fee (as set forth in
        Section 3(a)(i)) by more than ten percent (10%), except where the Company
        has
        made similar reductions in the base salary of senior management throughout
        the
        Company; or (iii) the Company's breach of any material term of the Agreement;
        or
        (iv) a Change in Control or Reorganization Event. "Good Reason" shall not
        exist
        unless the Company has not cured the basis for Weiss's resignation within
        fifteen (15) days following Weiss's written notice to the Company specifying
        the
        basis of his resignation. For purposes of the Agreement, "Cause" shall mean:
        (i)
        material breach by Weiss of the confidentiality and ownership of inventions
        agreement; (ii) the wilful and continual failure or refusal by Weiss to perform
        his duties under the Agreement (other than by reason of death or Disability
        (as
        defined below), or other reasons beyond Weiss' control), provided such failure
        or refusal continues for a period of thirty (30) days after receipt of written
        notice thereof from the Board of Directors providing reasonable detail of
        such
        failure or refusal; (iii) any action by Weiss constituting wilful misconduct
        in
        respect of Weiss's obligation to the Company that results in material, economic
        damage to the Company; or (iv) conviction of a felony. Notwithstanding the
        foregoing, the following shall not constitute Cause for the termination of
        Weiss’s engagement or the modification or diminution of any of his authority
        hereunder: any personal or policy disagreement between the Company and Weiss,
        or
        Weiss and any member of the Board of Directors of the Company; or any action
        taken by Weiss in connection with his duties hereunder if Weiss acted in
        good
        faith and in a manner he reasonably believed to be in, and not opposed to,
        the
        best interest of the Company. 

       

      (b)
        If
        the Company terminates Weiss without Cause or Weiss terminates his engagement
        for Good Reason, the Board of Directors shall take the necessary steps so
        that
        (i) any outstanding, but unvested, options granted to Weiss in accordance
        with
        Section 3, above, shall vest upon the effective date of his termination;
        and
        (ii) the period during which Weiss shall be permitted to exercise such options
        shall be extended to the earlier of two (2) years from the effective date
        of his
        termination, and ten (10) years from the Effective Date. 

       

      (c)
        In
        the event of a Change of Control Event or a Reorganization Event, as those
        terms
        are defined in the Plans, Weiss shall be entitled to (i) the immediate
        acceleration of any outstanding, but unvested options granted to him in
        accordance with Section 3, above, and (ii) the extension of the period during
        which Weiss shall be permitted to exercise such options to the earlier of
        two
        (2) years from the effective date of his termination (if applicable) and
        ten
        (10) years from the Effective Date 

       

      (d)
        Should Weiss's engagement terminate by his death or disability, he or his
        estate, if applicable, shall be entitled to continue to receive his Chairman’s
        Fee for three (3) months (less applicable state and federal withholdings)
        following his last day of actual engagement by the Company. For purposes
        of the
        Agreement, "Disability" shall be deemed to have occurred if Weiss is unable,
        due
        to any physical or mental disease or condition, to perform his normal duties
        of
        engagement for 120 consecutive days or 180 days in any twelve-month period.
        In
        addition, the Board of Directors shall take the necessary steps so that (i)
        any
        outstanding, but unvested, options granted to him in accordance with Section
        3,
        above, shall vest upon the effective date of his termination; and (ii) the
        period during which he shall be permitted to exercise such options shall
        be
        extended to the earlier of two (2) years from the effective date of his
        termination and ten (10) years from the Effective Date. Should Weiss's
        engagement terminate as a result of his death, the benefits granted herein,
        shall be granted instead to his lawful heir or heirs. 

       

      (e)
        Notwithstanding the foregoing, the Company and its shareholders may terminate
        Weiss’s engagement immediately and without prior notice for Cause. 

       

      (f)
        In
        the event that Weiss's engagement has been terminated in accordance with
        Section
        5(e), above, Weiss shall not be entitled to receive any of the severance
        benefits set forth in this Section 5, but he shall be entitled to any unpaid
        Chairman’s Fees, which have accrued through his date of
        termination.

       

      6. Governing
        Law  

       

      This
        letter shall be governed by Israeli Law.

       

       

      Yours
        sincerely,

       

      for
        and
        on behalf of XTL Biopharmaceuticals Ltd

       

      /s/
        XTL
        Biopharmaceuticals Ltd

       

      I
        agree
        to the above terms of my appointment.

       

      Dated:
        August 1, 2005

       

      /s/
        Michael S. Weiss  

      Michael
        S. Weiss

       

      
        
           

        

        
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