Unassociated Document


    

      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.


      EXECUTION
        COPY

      


      LICENSE
        AGREEMENT dated as of August 17, 2005 (the “Agreement
        Date”)
        between VivoQuest, Inc., a Delaware corporation
        (“VivoQuest”),
        and
        XTL Biopharmaceuticals Ltd., an Israeli corporation (“Licensee”).

      


      WHEREAS,
        VivoQuest owns the patents and patent applications listed on Schedule I hereto;
        

      


      WHEREAS,
        subject to the terms and conditions hereinafter set forth, VivoQuest is willing
        to grant to Licensee and Licensee is willing to accept from VivoQuest the
        License (as hereinafter defined); and

      


      WHEREAS,
        within five business days of the execution of this agreement, VivoQuest will
        issue a communication to ***** in the form attached hereto as Exhibit
        A;

      


      NOW,
        THEREFORE, in consideration of the mutual promises and agreements contained
        herein, the parties hereto hereby agree as follows: 

      


      SECTION
        1. Definitions.
        

      


      (a)
        As
        used in this Agreement, the following terms shall have the following
        meanings:

      


      “Affiliate”
        shall
        mean, with respect to any Person, any other Person directly or indirectly
        controlling, controlled by or under common control with such Person, and
        in the
        case of any natural Person shall include all relatives and family members
        of
        such Person. For purposes of this definition, a Person shall be deemed to
        control another Person if such first Person directly or indirectly owns or
        holds
        five percent (5%) or more of the ownership interests in such other
        Person.

      


      “Asset
        Purchase Agreement”
        shall
        mean that certain Asset Purchase Agreement dated as of the date hereof between
        VivoQuest and Licensee.

      


      “Contract”
        means
        any contract, indenture, note, bond, loan, mortgage, license, instrument,
        lease
        or agreement.

      


      “Disclosed
        Compound”
        shall
        mean a compound disclosed in a patent or patent application listed on Schedule
        I. 

       

      “Fair
        Market Value”
        shall
        mean, as to any security, the average closing bid price of such security
        on the
        principal stock exchange or interdealer quotation system in which such
        securities are traded over a period of 20 consecutive trading days the latest
        of
        which shall be the trading day immediately preceding the date as of which
        "Fair
        Market Value" is being determined or, if such security is not then traded
        on an
        exchange or through an inter-dealer quotation system, the fair value of such
        security as reasonably determined by the Board of Directors of Licensee.
        

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      *****
        Confidential material redacted and filed separately with the
        Commission.

       

      “FDA”
        shall
        mean the United States Food and Drug Administration.

       

      “Governmental
        Body”
        means
        any government or governmental or regulatory authority or body thereof, or
        political subdivision thereof, whether federal, state, local or foreign,
        or any
        agency, instrumentality or authority thereof, or any court or arbitrator
        (public
        or private).

       

      “HCV
        Product”
        shall
        mean a Licensed Product having as its active ingredient a Disclosed Compound
        that has been approved by the FDA or a foreign regulatory counterpart for
        the
        treatment or prevention of hepatitis C virus infection, whether or not such
        Licensed Product has been approved for another indication. 

       

      “Intellectual
        Property Rights”
        shall
        mean means the rights associated with the following: (a) any and all trademarks,
        service marks, brand names, certification marks, trade dress, assumed names,
        trade names, logos and other indications of origin, sponsorship or affiliation,
        together with the goodwill associated therewith (whether the foregoing are
        registered or unregistered); registrations thereof in any jurisdiction and
        applications to register any of the foregoing in any jurisdiction, and any
        extension, modification or renewal of any such registration or application;
        (b)
        any and all inventions, developments, improvements, discoveries, know how,
        concepts and ideas, whether patentable or not in any jurisdiction; (c) any
        and
        all patents, revalidations, industrial designs, industrial models and utility
        models, patent applications (including reissues, continuations, divisions,
        continuations-in-part and extensions) and patent disclosures; (d) any and
        all
        non-public information, trade secrets and proprietary or confidential
        information and rights in any jurisdiction to limit the use or disclosure
        thereof by any Person; (e) any and all writings and other works, whether
        copyrighted, copyrightable or not in any jurisdiction, such works including
        computer programs and software (including source code, object code, data
        and
        databases); (f) any and all copyrights, copyright registrations and applications
        for registration of copyrights in any jurisdiction, and any renewals or
        extensions thereof; (g) any and all other intellectual property or proprietary
        rights; (h) any and all agreements, licenses, immunities, covenants not to
        sue
        and the like relating to any of the foregoing; and (i) any and all claims
        or
        causes of action arising out of or related to any infringement or
        misappropriation of any of the foregoing.

      


      “Knowledge
        of VivoQuest”
        means
        (regardless of case) any fact, circumstance, event or other matter in question,
        of which any member of senior management of VivoQuest has actual knowledge
        or
        should have had actual knowledge after reasonable due inquiry 

      


      “Law”
        means
        any federal, state, local or foreign law (including common law), statute,
        code,
        ordinance, rule, regulation or binding administrative
        pronouncement.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

        *****
          Confidential material redacted and filed
          separately with the Commission.

         

      

         “Liability”
        means
        any liability (whether known or unknown, whether asserted or unasserted,
        whether
        absolute or contingent, whether accrued or unaccrued, whether liquidated
        or
        unliquidated, and whether due or to become due). 

      


      “License”
        shall
        mean the license granted to Licensee in Section 2(a). 

      


      “Licensed
        Patents”
        shall
        mean (i) the patents listed on Schedule I, (ii) any and all U.S. and foreign
        patent applications covering the Licensed Technology including, without
        limitation, the patent applications listed on Schedule I, (iii) the patents
        proceeding from such applications and (iv) all claims of and any divisions,
        continuations, in whole or in part, reissues, re-examinations, renewals and
        extensions of any such patents or patent applications.

      


      “Licensed
        Products”
        shall
        mean any product covered by a claim of any unexpired Licensed Patent which
        has
        not been disclaimed or held invalid by a court of competent jurisdiction
        from
        which no appeal can be taken, or which incorporates or is developed using
        Licensed Technology.

      


      “Licensed
        IP”
        shall
        mean all Licensed Patents, the Licensed Technology and all other Intellectual
        Property Rights of VivoQuest (including Intellectual Property Rights arising
        under (i) the Contracts listed in Section 3.13 of the Seller Disclosure
        Schedule, (ii) the Contracts identified in Section 3.13(b) of the Asset Purchase
        Agreement and (iii) any other Contracts to which VivoQuest is or has at any
        time
        been a party, in each case whether or not any such Contract is an Included
        Contract). Notwithstanding the foregoing, the Licensed IP excludes the
        tradenames “VivoQuest” and “ChemQuest” and derivatives thereof.

       

      “Licensed
        Technology”
        shall
        mean all technology owned by VivoQuest or in which VivoQuest has any interest,
        including all, lab notebooks, drawings, designs, design and manufacturing
        documentation (such as bill of materials, build instructions and test reports),
        schematics, algorithms, routines, software (including all source code),
        databases and data collections, development and lab equipment, processes,
        prototypes and devices, compounds and compound libraries and technical
        information, know-how and concepts whether or not embodied in tangible form,
        including all Intellectual Property Rights in or underlying such technology.
        

      


      “Net
        Sales”
        shall
        mean the amount actually collected in connection with sales of the Licensed
        Products to any person or entity that is not an Affiliate or subcontractor
        of
        Licensee or a direct or indirect sublicensee of Licensee under the License,
        after deduction of all trade, cash and quantity credits, discounts; refunds
        or
        rebates; allowances or credits for returns; sales commissions; and prepaid
        freight, transportation insurance, sales taxes and other government charges
        (including value-added tax). Sales of Licensed Products by Licensee or an
        Affiliate, subcontractor or direct or indirect sublicensee of Licensee to
        any
        Affiliate, subcontractor or direct or indirect sublicensee shall be excluded,
        and only the subsequent sale of such Licensed Products by Affiliates or direct
        or indirect sublicensees of Licensee to unrelated end users shall be deemed
        Net
        Sales hereunder.

      


      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

        *****
          Confidential material redacted and filed
          separately with the Commission.

         

      

      “Net
        Sublicensing Revenues”
        shall
        mean, with respect to any product for any fiscal period, the fair value,
        as
        reasonably determined by Licensee, of the milestone payments, profit sharing
        payments or royalty payments received by Licensee for the direct or indirect
        sublicensing of such product (other than to Affiliates of Licensee or to
        subcontractors), provided that “Net Sublicensing Revenues” shall exclude
        payments based on the achievement of research and development milestones
        and any
        other payments that are not based on commercial sales of products.

       

      “Non-HCV
        Product”
        shall
        mean a Licensed Product having as its active ingredient a Disclosed Compound
        that has been approved by the FDA or a foreign regulatory counterpart for
        an
        indication other than the treatment or prevention of hepatitis C virus infection
        and has not been so approved for the treatment or prevention of hepatitis
        C
        virus infection.

       

      “Option”
        shall
        mean the option granted to Licensee in Section 12. 

      


      “Order”
        means
        any order, injunction, judgment, decree, ruling, writ, assessment or arbitration
        award entered, issued, made or rendered by any Governmental Body.

       

      “Ordinary
        Shares”
        shall
        mean the ordinary shares, par value NIS 0.02 per share, of
        Licensee.

      


      “Person”
        shall
        mean any individual, corporation, partnership, firm, joint venture, association,
        joint-stock company, trust, unincorporated organization, Governmental Body
        or
        other entity. 

      


      *****

      


      “Transaction
        Documents”
        shall
        mean this Agreement and the Asset Purchase Agreement.

      (b)
        Capitalized terms used and not otherwise defined in this Agreement shall
        have
        the meanings assigned to such terms in the Asset Purchase
        Agreement.

      


      SECTION
        2. Grant
        of License.
        (a)
        Subject to the terms and conditions hereinafter set forth, VivoQuest hereby
        grants to Licensee, and Licensee hereby accepts from VivoQuest, in each case
        effective as of the Closing Date, a worldwide, perpetual, irrevocable,
        non-terminable (except as provided in Section 12), sublicensable right and
        license under all of the Licensed IP to make, have made, use, have used,
        sell,
        have sold, offer for sale, import and have imported Licensed Products and
        to
        practice the Licensed IP, including any claimed method within the Licensed
        IP.
        The License is subject to (i) the rights of ***** and (ii) the rights of
        the
        U.S. government under 35 U.S.C. Section 200 et seq.
        and the
        regulations promulgated thereunder, as in effect from time to time. If the
        Asset
        Purchase Agreement is terminated, the license granted herein shall not come
        into
        effect and this Agreement shall terminate, provided that (x) Section 7 shall
        survive such termination other than with respect to the Licensed IP, (y)
        Section
        10 shall survive such termination with respect to the matters described in
        Section 10(a)(i) and 10(a)(ii) and (z) no such termination shall relieve
        a
        breaching party from Liability resulting from any breach by that party of
        this
        Agreement. 

      


      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

        *****
          Confidential material redacted and filed
          separately with the Commission.

         

      

      (b)
        In
        the event that at any time (i) ***** is entitled to a license under the *****
        (or any agreement to which ***** becomes a party pursuant to the *****) with
        respect to any portion of the Licensed IP in the field of hepatitis C virus
        or
        (ii) VivoQuest is obligated to refrain from entering into an agreement with
        a
        third party with respect to ***** in the field of hepatitis C virus, the
        License
        shall, without further act of any party, be deemed to be non-exclusive or
        to
        have terminated, as appropriate to avoid any conflict with the terms of the
        ***** or any such other agreement, with respect to such portion of the Licensed
        IP in the field of hepatitis C virus, provided that the License shall, without
        further act of any party, be deemed to have been reinstated in the field
        of
        hepatitis C virus at such time as the reinstatement no long is in conflict
        with
        the ***** or any such other agreement. 

      


      (c)
        The
        License granted to Licensee in Section 2(a) shall remain in force on a
        country-by-country basis until ten (10) years from the first commercial sale
        in
        such country or until the expiration date of the last to expire of the Licensed
        Patents, whichever shall be later. Licensee shall inform VivoQuest in writing
        of
        the date of first commercial sale with respect to each Licensed Product in
        each
        country as soon as reasonably practicable after the making of each such first
        commercial sale. Upon the expiration of the License in any country, the License
        shall be fully paid-up, royalty free and perpetual in such country.

      


      (d)
        To
        the extent any of the tangible items within the Licensed Technology are not
        located at VivoQuest’s Valley Cottage, New York facility as of the Closing Date,
        VivoQuest shall deliver such tangible items to such facility within 5 business
        days following the Closing Date. 

      


      (e)
        If
        ***** does not provide the *****, including *****, to VivoQuest within the
        period provided in the communication referenced in the letter agreement dated
        the date hereof between Seller and Purchaser and Section 6.1(m) of the Asset
        Purchase Agreement, or if any other basis for termination of the ***** exists
        after the date hereof, VivoQuest shall, unless the Asset Purchase Agreement
        has
        terminated, effect the termination of the ***** if and as directed by Licensee,
        and Licensee shall be entitled to participate in any discussions with *****
        relating to such termination. VivoQuest shall provide the ***** to *****
        as
        promptly as practicable in accordance with the terms of the *****. The *****
        shall be subject to the prior review and approval of Licensee. VivoQuest
        acknowledges and agrees that money damages would not be an adequate remedy
        for
        any breach of its obligations under this paragraph and that in addition to
        any
        other remedies available to Licensee, Licensee shall be entitled to the remedies
        of injunction, specific performance and other equitable relief for any
        threatened or actual breach of such obligations.

      


      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

        *****
          Confidential material redacted and filed
          separately with the Commission.

         

      

      SECTION
        3. Consideration
        for License.

      


      (a)
        In
        consideration for the grant and during the term of the License, Licensee
        shall
        provide the following consideration to VivoQuest:

      


      (i)
        on
        the Closing Date, US $941,176 in Ordinary Shares; 

      


      (ii)
        upon
        achievement of each the following technical milestones, the payments indicated
        below, each of which shall be payable no more than one time: 

      


      
        	
                Milestone

              	
                Consideration

              
	
                *****

              	
                *****

              
	
                *****

              	
                *****

              
	
                *****

              	
                *****

              
	
                *****

              	
                *****

              
	
                *****

              	
                *****

              


      

      


      All
        or
        any portion of the milestone payments described in (A) through (E) above
        may, at
        Licensee’s sole option, be satisfied by the delivery to VivoQuest of Ordinary
        Shares. Any consideration required to be provided in the form of Ordinary
        Shares
        (or, where permitted to be provided in the form of Ordinary Shares, to the
        extent Licensee elects to provide such consideration in the form of Ordinary
        Shares) shall be satisfied by the delivery to VivoQuest of a number of Ordinary
        Shares equal to the applicable US dollar amount divided by the Fair Market
        Value
        of one Ordinary Share as of the date such milestone payment is earned in
        accordance with the foregoing schedule; and

      


      (iii)
        (A)
        with respect to each HCV Product, for each fiscal year of Licensee, a royalty
        of
        ***** of the first US $***** of Net Sales of such HCV Product by Licensee
        and
        its Affiliates and ***** of the Net Sales in excess of US $***** of such
        HCV
        Product by Licensee and its Affiliates; 

      


      (B)
        for
        each fiscal year of Licensee, with respect to each HCV Product, a royalty
        equal
        to the lower of (I) ***** of the Net Sales of such HCV Product by direct
        or
        indirect sublicensees of Licensee (other than Affiliates of Licensee) and
        (II)
        ***** of Net Sublicensing Revenues attributable to such HCV Product;
        and

      


      (C)
        for
        each fiscal year of Licensee, with respect to each Non-HCV Product, a royalty
        equal to the lower of (I) ***** of the Net Sales of such Non-HCV Product
        by
        License and direct or indirect sublicensees of Licensee (including Affiliates
        of
        Licensee) and (II) ***** of Net Sublicensing Revenues attributable to such
        Non-HCV Product.

      


      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      *****
        Confidential material redacted and filed separately with the
        Commission.

       

      Notwithstanding
        the foregoing: 

      


      (x)
        if a
        payment is owed by Licensee or a direct or indirect sublicense of Licensee
        (including an Affiliate of Licensee) to one or more third parties with respect
        to any sale of an HCV Product, Licensee may credit ***** of such third party
        payments in determining the amounts payable to VivoQuest pursuant to clauses
        (A)
        and (B) above, provided that aggregate royalty payments to VivoQuest pursuant
        to
        clauses (A) and (B) above shall not be reduced by more than *****percent
        (*****)
        as a result of such third party payments, with excess amounts being carried
        forward and credited in future periods, provided further that if such third
        party payments are attributable to a breach of a representation, warranty
        or
        covenant by VivoQuest in the Transaction Documents (irrespective of any
        limitation on the survival period applicable thereto), the entire amount
        of such
        payments may be credited without limitation as to the reduction in amounts
        payable to VivoQuest pursuant to clauses (A) and (B) above except to the
        extent
        that the portion of any such reduction in excess of ***** percent (*****)
        would
        exceed any cap, or would not give effect to any threshold amount, applicable
        to
        liability for breach of such representation, warranty or covenant;
        and

      


      (y)
        if a
        payment is owed by Licensee or a direct or indirect sublicense of Licensee
        (including an Affiliate of Licensee) to one or more third parties with respect
        to any sale of a non-HCV Product, Licensee may credit ***** of such third
        party
        payments in determining the amounts payable to VivoQuest pursuant to clause
        (C)
        above, provided that aggregate royalty payments to VivoQuest pursuant to
        clause
        (C) above shall not be reduced by more than ***** percent (*****) as a result
        of
        such third party payments, with excess amounts being carried forward and
        credited in future periods, provided further that if such third party payments
        are attributable to a breach of a representation, warranty or covenant by
        VivoQuest in the Transaction Documents (irrespective of any limitation on
        the
        survival period applicable thereto), the entire amount of such payments may
        be
        credited without limitation as to the reduction in amounts payable to VivoQuest
        pursuant to clause (C) above except to the extent that the portion of any
        such
        reduction in excess of ***** percent (*****) would exceed any cap, or would
        not
        give effect to any threshold amount, applicable to liability for breach of
        such
        representation, warranty or covenant.

      


      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      *****
        Confidential material redacted and filed separately with the
        Commission.

       

      Only
        one
        royalty shall be paid hereunder with respect to the sale of any HCV Product
        or
        Non-HCV Product, whether or not it is covered by more than one claim of a
        patent, by the claims of more than one patent, or by the claims of patents
        of
        more than one country.

      


      (b)
        For
        the purpose of computing the royalties due to VivoQuest hereunder, the year
        shall be divided into four parts ending on March 31, June 30, September 30,
        and
        December 31. Not later than ***** days after each December, March, June,
        and
        September in each calendar year during the term of the License, Licensee
        shall
        submit to VivoQuest a full and detailed report of royalties or payments due
        VivoQuest under the terms of this Agreement for the preceding quarter year
        (hereinafter the “Quarter-Year
        Report”),
        setting forth the Net Sales and/or lump sum payments and all other payments
        or
        consideration received by Licensee and its direct and indirect sublicensees
        upon
        which such royalties are computed, as well as any offsetting payments described
        in clauses (x) and (y) of Section 3(a)(iii), and including at least


      


      (i) the
        quantity of each HCV Product and Non-HCV Product
        sold;

      


      (ii) the
        selling price of each HCV Product and Non-HCV
        Product; 

       

      (iii) a
        detailed description of the amount of, and the justification
        for, any offsetting payments;

      


      (iv) the
        revenues received from sublicensees; and 

      


      (v) the
        royalty computations.

      


      If
        no
        royalties or other payments are due, a statement shall be sent to VivoQuest
        stating such fact. Payment of the full amount of any royalties or other payments
        due to VivoQuest for the preceding quarter shall accompany each Quarter-Year
        Report on royalties and payments. Licensee shall keep for a period of at
        least
        ***** years after the date of entry, full, accurate and compete books and
        records consistent with sound business and accounting practices and in such
        form
        and in such detail as to enable the determination of the amounts due to
        VivoQuest from Licensee pursuant to the terms of this Agreement. 

      


      (c)
        On
        reasonable notice and during regular business hours, VivoQuest or the authorized
        representative of VivoQuest shall each have the right to inspect the books
        of
        accounts, records and other relevant documentation of Licensee or any of
        its
        Affiliates insofar as they relate to the production, marketing and sale of
        the
        Licensed Products, in order to ascertain or verify the amount of royalties
        and
        other payments due to VivoQuest hereunder, and the accuracy of the information
        provided to VivoQuest in the aforementioned reports.

      


      
        
          
          

        

        
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        *****
          Confidential material redacted and filed
          separately with the Commission.

         

      

      (d)
        In no
        event will any Ordinary Shares be issued hereunder if the issuance of such
        Ordinary Shares would cause the total number of Ordinary Shares issued pursuant
        to the Transaction Documents to exceed 19.9% of the number of Ordinary Shares
        outstanding on the date of this Agreement unless all requisite shareholder
        approvals for the issuance of Ordinary Shares in excess of such amount have
        been
        obtained. Any amounts that would otherwise be satisfied by the issuance of
        Ordinary Shares in excess of such amount will be paid in cash. The Ordinary
        Shares issued from time to time hereunder are referred to herein collectively
        as
        the “Shares”.

       

      (e)
        (i)
        VivoQuest acknowledges that the Shares are being acquired pursuant to an
        exemption from registration under the Securities Act of 1933, as amended
        (the
“Securities
        Act”)
        and
        that the Shares may be transferred only pursuant to an effective registration
        statement or an exemption from registration under the Securities Act. VivoQuest
        represents that it is familiar with Rule 144 under the Securities Act. VivoQuest
        shall not be permitted to transfer any Shares in the absence of an effective
        registration statement unless VivoQuest has furnished Licensee with an opinion
        of counsel, reasonably satisfactory to Licensee, that such disposition does
        not
        require registration of such Shares under the Securities Act. It is agreed
        that
        Licensee will not require opinions of counsel for transfers made pursuant
        to
        Rule 144 if Licensee is provided with any certificates or other evidence
        of
        compliance with Rule 144 reasonably required by it in connection with such
        transfer (including without limitation a copy of the relevant Form 144).
        

       

      (ii)
        It
        is understood that the certificates evidencing the Shares shall bear a legend
        to
        the following effect:

       

      THE
        SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
        THE
        SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE SOLD, PLEDGED,
        HYPOTHECATED OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
        STATEMENT WITH RESPECT THERETO OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION
        REQUIREMENTES OF SUCH ACT.

       

      The
        certificates evidencing the Shares may also bear any legends required by
        applicable blue sky laws.

       

      (iii)
        (A)
        The Shares shall be freely tradeable on the London Stock Exchange (for so
        long
        as the Parent Ordinary Shares are listed on the London Stock Exchange), subject
        to any restrictions imposed on a party to any transaction executed on the
        London
        Stock Exchange by the Laws of a country other than the United Kingdom to
        which
        such party is subject, including the other provisions of this section
        3(e)).

       

      (B)
        In
        the event any of the Shares evidenced by a certificate bearing a restrictive
        legend as provided in Section 3(e)(ii) above are transferred by VivoQuest
        or a
        transferee of VivoQuest pursuant to Rule 904 under the Securities Act, as
        currently in effect, Licensee shall instruct the transfer agent for the Ordinary
        Shares to issue shares upon transfer free of any restrictive legend or notation
        if Licensee is presented with a written certification to the following effect
        from the transferor in such transfer: 

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

        *****
          Confidential material redacted and filed
          separately with the Commission.

         

      

      The
        undersigned registered holder is selling some or all of the shares evidenced
        by
        the accompanying certificate in a resale transaction in compliance with Rule
        904
        under the United States Securities Act of 1933. 

       

      Any
        unsold balance of the shares represented by such certificate will continue
        to
        bear a restrictive legend until such time as they are the subject of a
        transaction executed in accordance with this Section 3(e)(iii)(B) or until
        such
        legend may otherwise be removed in the opinion of counsel to Licensee.


      


      (f)
        In
        the event of a merger, consolidation or other transaction (a “Conversion
        Transaction”)
        as a
        result of which substantially all of the outstanding Shares are converted
        into
        the right to receive, in whole or in part, equity securities, if such equity
        securities are traded on a recognized securities exchange or interdealer
        quotation system, in the United States, Europe or Israel, or another securities
        exchange or interdealer quotation system reasonably acceptable to VivoQuest
        (“Listed
        Equity Securities”),
        (i)
        any Shares shall be eligible to participate in any Conversion Transaction
        on the
        same basis as other outstanding Shares and (ii) any consideration required
        to be
        provided to VivoQuest hereunder that would otherwise be permitted to be
        satisfied through the issuance of Shares shall thereafter be permitted to
        be
        satisfied through the issuance of such Listed Equity Securities. For such
        purpose, such Listed Equity Securities shall be valued at their aggregate
        Fair
        Market Value as of the date such Shares would have been valued. In the event
        that, in any Conversion Transaction, substantially all of the outstanding
        Shares
        are converted into the right to receive equity securities that are not Listed
        Equity Securities (or are converted into the right to receive a combination
        of
        such equity securities and cash), then, until such equity securities constitute
        Listed Equity Securities, any further consideration required to be provided
        to
        VivoQuest hereunder that would otherwise be permitted to be satisfied through
        the issuance of Shares shall be satisfied entirely in cash. In the event
        of a
        merger, consolidation or other transaction as a result of which substantially
        all of the outstanding Shares are converted into the right to receive only
        cash,
        any further consideration required to be provided to VivoQuest hereunder
        that
        would otherwise be permitted to be satisfied through the issuance of Shares
        shall be required to be satisfied entirely in cash, provided that if the
        surviving or transferee entity in such transaction (or an Affiliate thereof)
        has
        a class of Listed Equity Securities, any portion of such consideration that
        would otherwise be permitted to be satisfied through the issuance of Shares
        shall thereafter be permitted to be satisfied through the issuance of such
        Listed Equity Securities, valued at their aggregate Fair Market Value as
        of the
        date such Shares would have been valued.

      


      (g)
        Neither VivoQuest nor any transferee of VivoQuest shall sell, pledge, hedge
        or
        otherwise dispose of any economic interest in 50% of the Shares issued pursuant
        to Section 3(a)(i) during the period ending 30 days after the Closing Date.
        Furthermore, VivoQuest shall consult with Licensee prior to disposing of
        any
        Shares issued pursuant to Section 3(a)(i) on the open market to determine
        whether Licensee may provide VivoQuest with an alternate opportunity for
        liquidity at the same or better pricing, taking into account transaction
        costs,
        and without material delay.

      


      
        
          
          

        

        
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      (h)
        Responsibility for the aggregate license payments under the ReBLikon GmbH
        license required to be delivered by VivoQuest pursuant to Section 6.1(o)
        of the
        Asset Purchase Agreement shall be allocated as follows: the first $50,000
        shall
        be borne by Licensee, the next $50,000 shall be borne 50% by Licensee and
        50% by
        VivoQuest, and any portion in excess of $100,000 shall be borne by VivoQuest.
        The portion of such aggregate license payments to be borne by VivoQuest shall
        be
        deducted from the Ordinary Shares to be issued to Seller pursuant to Section
        3(a)(i) and (ii) of this Agreement.

      


      SECTION
        4. Method
        of Payment.
        (a) (i)
        Royalties due to VivoQuest under Section 3(a)(iii) with respect to sales
        in the
        United States shall be paid to VivoQuest in United States dollars. All royalties
        due to VivoQuest based on sales in countries other than the United States
        shall
        accrue in the currency of the country in which the sales are made. Licensee
        shall utilize its best efforts to effect US dollar transfers with respect
        to
        such royalties. However, any and all loss of exchange value, taxes, or other
        expenses incurred in the transfer or conversion of foreign currency into
        US
        dollars (measured, with respect to currency conversion, as of the end of
        the
        quarterly period during which the applicable royalties accrue), and any income,
        remittance, or other taxes on such royalties required to be withheld at the
        source shall be the exclusive responsibility of VivoQuest. 

      


      (ii)
        It
        is agreed and understood that the milestone payments to be made pursuant
        to
        Section 3(a)(ii) shall be made in United States dollars and that this Section
        4(a) shall be inapplicable thereto.

      


      (b)
        Licensee shall be responsible for payment to VivoQuest of all royalties due
        on
        Net Sales of Licensed Products by direct or indirect sublicensees of Licensee
        (including Affiliates of Licensee). 

      


      SECTION
        5. Patents
        and Patent Applications.
        (a) At
        the initiative of Licensee, the parties shall consult with each other regarding
        the prosecution of all patent applications with respect to the Licensed IP.
        VivoQuest shall use its best efforts to implement all requests made by Licensee,
        at Licensee’s sole expense, with regard to the preparation, filing, prosecution
        and/or maintenance of patent applications and/or patents within the Licensed
        IP.
        Such patent applications shall be filed, prosecuted and maintained by counsel
        selected by Licensee. 

      


      (b)
        All
        applications and proceedings with respect to the Licensed Patents shall be
        filed, prosecuted and maintained by VivoQuest at the direction and expense
        of
        Licensee, provided that Licensee shall have the right to assume direct oversight
        of any or all such activities at any time. Against the submission of invoices,
        Licensee shall reimburse VivoQuest for all costs and fees invoiced by outside
        patent counsel to VivoQuest during the term of this Agreement in connection
        with
        the filing, maintenance, prosecution, protection and the like of the Licensed
        Patents. 

      


      
        
          
          

        

        
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      (c)
        Licensee shall be entitled to discontinue (or direct VivoQuest to discontinue)
        in its sole discretion the prosecution or maintenance of any patents or patent
        applications within the Licensed Patents, or to elect to forego the filing
        of
        any such patent application, without loss of any portion of the License
        (including the exclusivity of the License in any jurisdiction). 

       

      (d)
        Nothing herein contained shall be deemed to be a warranty by VivoQuest that
        VivoQuest can or will be able to obtain any patent or patents on any patent
        application or applications in the Licensed Patents or any portion thereof,
        or
        that any of the Licensed Patents will afford adequate or commercially worthwhile
        protection.

      


      SECTION
        6. Representations
        And Warranties.
        (a)
        Licensee hereby represents and warrants to VivoQuest as follow:

      


      (i)
        Licensee is a corporation duly organized, validly existing and in good standing
        under the laws of Israel. Licensee has been granted all requisite power and
        authority to carry on its business and to own and operate its properties
        and
        assets. The execution, delivery and performance of this Agreement have been
        duly
        authorized by the Board of Directors of Licensee. 

      


      (ii)
        There is no pending or, to Licensee’s knowledge, threatened litigation involving
        Licensee which would have any effect on this Agreement or on Licensee's ability
        to perform its obligations hereunder.

      


      (iii)
        None of the execution and delivery by Licensee of this Agreement, the
        consummation of the transactions contemplated hereby by Licensee, or compliance
        by Licensee with any of the provisions hereof or thereof will (i) conflict
        with,
        or result in the breach of, any provision of Licensee’s charter documents;
        (ii) conflict with, violate, result in the breach or termination of,
        or
        constitute a default under any Contract to which Licensee is a party or by
        which
        Licensee or its properties or assets is bound, or require a consent or waiver
        by
        any Person in order to avoid any such conflict, violation, breach, termination
        or default; (iii) violate any Law or any Order by which Licensee is bound;
        or
        (iv) result in the creation of any Lien upon the properties or assets
        of
        Licensee. No governmental franchise, easement, permit, right, application,
        filing, registration, license or other authorization (each a “Permit”),
        Order, waiver, declaration or filing with, or notification to any Person
        is
        required on the part of Licensee in connection with the execution, delivery
        and
        performance of this Agreement or the compliance by either Licensee with any
        of
        the provisions hereof.

      


      (b)
        VivoQuest hereby represents and warrants to Licensee as follows: 

      


      (i)
        VivoQuest is a corporation duly organized, validly existing and in good standing
        under the laws of the State of Delaware and is qualified to do business and
        is
        in good standing in the State of New York. VivoQuest has been granted all
        requisite power and authority to carry on its business and to own and operate
        its properties and assets. The execution, delivery and performance of this
        Agreement have been duly authorized by the Board of Directors of VivoQuest.
        

      


      
        
          
          

        

        
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      (ii)
        There is no pending or, to VivoQuest's Knowledge, threatened litigation
        involving VivoQuest which would have any effect on this Agreement or on
        VivoQuest's ability to perform its obligations hereunder.

      


      (iii)
        None of the execution and delivery by VivoQuest of this Agreement, the
        consummation of the transactions contemplated hereby by VivoQuest, or compliance
        by VivoQuest with any of the provisions hereof or thereof will (i) conflict
        with, or result in the breach of, any provision of VivoQuest’s charter
        documents; (ii) conflict with, violate, result in the breach or termination
        of, or constitute a default under any Contract to which VivoQuest is a party
        or
        by which VivoQuest or its properties or assets is bound, or require a consent
        or
        waiver by any Person in order to avoid any such conflict, violation, breach,
        termination or default; (iii) violate any Law or any Order by which VivoQuest
        is
        bound; or (iv) result in the creation of any Lien upon the properties
        or
        assets of VivoQuest. No Permit, Order, waiver, declaration or filing with,
        or
        notification to any Person is required on the part of VivoQuest in connection
        with the execution, delivery and performance of this Agreement or the compliance
        by either VivoQuest with any of the provisions hereof

      


      (iv)
        (A)
        VivoQuest owns all right, title and interest in and to the Licensed Patents
        and
        the compounds listed on Schedule II to this License Agreement (the “Scheduled
        Compounds”),
        all
        other Licensed IP (other than compounds in its compounds libraries that are
        not
        Scheduled Compounds) and, to its Knowledge, all compounds in its compounds
        libraries that are not Scheduled Compounds, free and clear of all Liens (other
        than Permitted Exceptions), including without limitation any claims of joint
        ownership or right of use pursuant to any of the Contracts listed in Section
        3.13 of the Seller Disclosure Schedule or in Section 3.13(b) of the Asset
        Purchase Agreement, provided that not own all compounds listed in its pending
        patent applications that are not Scheduled Compounds may be covered by valid
        claims. No Licensed IP is held under license from a third party. The Licensed
        IP
        includes all Intellectual Property Rights and technology that was necessary
        to
        conduct the research and development programs conducted by VivoQuest through
        the
        date of this Agreement. 

       

      (B)
        There
        is no pending or, to the Knowledge of VivoQuest, threatened action, arbitration,
        suit, notice, order, or legal, administrative or other proceeding before
        any
        court or governmental agency, authority or body, against, or affecting
        VivoQuest, either directly or indirectly, with respect to the Licensed IP.
        There
        is no order, writ, injunction, or decree of any federal, state or local,
        or
        foreign court, department, agency, or instrumentality, which will directly
        or
        indirectly relate to the Licensed IP. VivoQuest has complied and is complying
        with all law, ordinances, and government rules and regulations applicable
        to it
        and its properties, assets, and business.

       

      
        
          
          

        

        
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      (C)
        No
        use of any of the Scheduled Compounds or any of the Licensed IP other than
        compounds or, to the Knowledge of VivoQuest, any compounds that are not
        Scheduled Compounds constitutes or has constituted an unauthorized use of,
        or an
        infringement, misappropriation or other violation or impairment of, the
        Intellectual Property Rights of any Person and no valid grounds exist for
        any
        bona fide claims against VivoQuest with respect to the Scheduled Compounds
        or
        any of the Licensed IP other than compounds or, to the Knowledge of VivoQuest,
        any compounds that are not Scheduled Compounds. No Person, including without
        limitation any Person who was ever employed or engaged as a contractor by
        VivoQuest, has asserted or, to the Knowledge of VivoQuest, threatened any
        claim
        of infringement against VivoQuest relating to the Licensed IP. 

       

      (D)
        To
        the Knowledge of VivoQuest, there is no unauthorized use or misappropriation
        or
        infringement of any Licensed IP, including by any employee or former employee
        of
        VivoQuest. VivoQuest has a policy requiring each employee and contractor
        to
        execute nondisclosure of proprietary information and confidentiality agreements
        in the forms previously provided to Licensee and each such employee and
        contractor has executed such agreements. Each such employee is or was an
        “employee” for purposes of 17 U.S.C. 101.

      


      (v)
        VivoQuest was not organized for the specific purpose of acquiring Shares.
        VivoQuest has sufficient knowledge and experience in investing in companies
        similar to Licensee in terms of Licensee’s market capitalization and other
        relevant factors so as to be able to evaluate the risks and merits of its
        investment in Licensee and it is able financially to bear the risks thereof.
        VivoQuest has had an opportunity to discuss the terms of the offering and
        sale
        of the Shares to be issued hereunder and Licensee’s business, management and
        financial affairs with Licensee’s management and to obtain any additional
        information regarding the foregoing which Licensee possesses or can acquire
        without unreasonable effort or expense. Such Shares are being acquired for
        VivoQuest’s own accounts and not with a view to, or the intention of, any
        distribution in violation of the Securities Act or any applicable state
        securities laws. VivoQuest understands that (i)
        such
        Shares have not been registered under the Securities Act by reason of the
        issuance of such Shares in a transaction exempt from the registration
        requirements of the Securities Act pursuant to Section 4(2) thereof or Rule
        505
        or 506 promulgated under the Securities Act, (ii)
        such
        Shares must be held indefinitely unless a subsequent disposition thereof
        is
        registered under the Securities Act or is exempt from such registration,
        (iii)
        such
        Shares will bear a legend to such effect and (iv)
        Licensee will issue stop transfer instructions to its transfer agent consistent
        with Section 3(e).

      


      (v)
        The
        representations and warranties made by VivoQuest in the Asset Purchase Agreement
        are correct and complete as of the date hereof, except as set forth in the
        Seller Disclosure Schedule.

       

      SECTION
        7. Confidential
        Information.
        (a)
        Except as otherwise provided in Sections 7(b) and (c) below, VivoQuest shall
        maintain (i) the Licensed IP, (ii) all information provided to VivoQuest
        by
        Licensee and its officers, directors, attorneys and other agents (collectively,
        “Representatives”)
        and
        (iii) the terms and provisions of this Agreement (the materials and information
        described in clauses (i) through (iii) being referred to herein as the
“Confidential
        Information”)
        in
        confidence and shall not release or disclose any tangible or intangible
        component thereof to any third party without first receiving the prior written
        consent of Licensee to said release or disclosure. Notwithstanding the
        foregoing, VivoQuest may disclose the Licensed IP (i) in accordance with
        the
        instructions of Licensee pursuant to Section 5 and (ii) to VivoQuest’s
        Representatives who are bound by confidentiality obligations equivalent to
        those
        provided herein.

      


      
        
          
          

        

        
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      (b)
        The
        obligations of confidentiality set forth in Section 7(a) shall not apply
        to any
        component of the Licensed IP which: (i) was part of the public domain prior
        to
        the Closing Date or which becomes a part of the public domain other than
        as a
        consequence of a breach by VivoQuest of this Agreement; or (ii) is disclosed
        to
        VivoQuest by a third party who has the right to make such disclosure free
        of any
        confidentiality restriction. 

      


      (c)
        If
        VivoQuest or any of its Representatives is requested or required (by oral
        questions, interrogatories, requests for information or documents in legal
        proceedings, subpoena, civil investigative demand or other similar process)
        to
        disclose any of the Confidential Information, VivoQuest shall provide Licensee
        with prompt written notice of any such request or requirement so that Licensee
        may seek a protective order or other remedy and/or waive compliance with
        the
        provisions of this Agreement. If Licensee seeks a protective order or other
        remedy, VivoQuest shall provide such cooperation as Licensee shall reasonably
        request. If, in the absence of a protective order or other remedy or the
        receipt
        by VivoQuest of a waiver from Licensee, VivoQuest or any of its Representatives
        is required to disclose Confidential Information to any person, VivoQuest
        or its
        Representatives may, without liability hereunder, disclose to such person
        only
        that portion of the Confidential Information that is legally required to
        be
        disclosed. 

      


      (d)
        VivoQuest agrees that because damages arising from violations of this Section
        7
        are extremely difficult to quantify with certainty, injunctive relief will
        be
        necessary to effect the intent of such Section. Accordingly, VivoQuest hereby
        consents to the imposition of a preliminary or permanent injunction as a
        remedy
        to his breach of this Section 7 (without any requirement that Licensee post
        a
        bond).

      


      SECTION
        8. Infringement
        of Licensed Patents.
        

      


      (a)
        In
        the event VivoQuest acquires information that a third party is infringing
        one or
        more of the Licensed Patents, VivoQuest shall promptly notify Licensee in
        writing of such infringement. 

      


      (b)
        In
        the event of an infringement of a Licensed Patent, Licensee shall have the
        sole
        and exclusive right, but shall not be required, to bring suit against the
        infringer. Should Licensee elect to bring suit against an infringer, Licensee
        shall have the right to join VivoQuest as a party plaintiff in any such suit
        or
        to bring such suit in the name of VivoQuest. Except to the extent resulting
        from
        a breach of any representation, warranty or covenant of VivoQuest in the
        Transaction Documents, the expenses of any such suit that Licensee elects
        to
        bring, including any expenses of VivoQuest incurred in conjunction with the
        prosecution of such suit or the settlement thereof, shall be paid for entirely
        by Licensee and Licensee shall hold VivoQuest harmless from and against any
        and
        all costs of such litigation. 

      


      
        
          
          

        

        
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      (c)
        In
        the event Licensee exercises the right to sue herein conferred, Licensee
        shall
        be entitled to retain all recoveries with respect thereto. 

      


      (d)
        VivoQuest agrees to cooperate fully with Licensee at the request of Licensee,
        including by giving testimony and producing documents lawfully requested
        in the
        prosecution of any suit by Licensee for infringement of the Licensed Patents;
        provided that (except to the extent resulting from a breach of any
        representation, warranty or covenant of VivoQuest in the Transaction Documents)
        Licensee shall pay all reasonable expenses (including reasonable attorneys’
        fees) incurred by VivoQuest in connection with such cooperation. VivoQuest
        shall
        cooperate fully with Licensee and shall endeavor to cause the VivoQuest
        Representatives and all other present and former employees of VivoQuest to
        cooperate with Licensee at the request of Licensee, including by giving
        testimony and producing documents lawfully requested in the prosecution of
        any
        suit by Licensee for infringement of the Licensed Patents, provided that
        (except
        as aforesaid) Licensee shall pay all reasonable expenses (including reasonable
        attorneys’ fees) incurred by VivoQuest in connection with such cooperation.


      


      SECTION
        9. Pre-Closing
        Conduct.
        (a)
        During the period between the Agreement Date and the Closing Date (the
“Closing
        Period”),
        VivoQuest shall conduct its business in the ordinary course consistent with
        past
        practice. During the Closing Period, VivoQuest shall not, without the prior
        written consent of Licensee, (i) enter into, amend, terminate or assert any
        claim under or with respect to any Contract, (ii) dispose of any material
        asset
        or any interest therein, including without limitation any interest in any
        of the
        Licensed IP, (iii) incur any indebtedness, (iv) amend its charter documents
        or
        (v) issue any securities.

      


      (b)
        During the Closing Period, VivoQuest shall, and shall cause its employees,
        directors, agents and Affiliates to, immediately suspend any existing
        negotiations or discussions relating to any sale, joint venture or other
        transfer of any interest in the Licensed IP, and VivoQuest shall not, and
        shall
        cause its employees, directors, agents and Affiliates not to, (i) solicit
        any proposals or offers relating to a transaction involving any of the Licensed
        IP or (ii) negotiate or engage in discussions with any third party
        concerning any proposal or offer for a transaction involving any of the Licensed
        IP.

      


      SECTION
        10. Indemnification.
        (a)
        VivoQuest covenants and agrees to defend, indemnify and hold harmless Licensee
        and its Affiliates (including without limitation XTL Biopharmaceuticals Inc.)
        and the respective its officers, directors, employees, agents, advisers and
        representatives of the foregoing (collectively, the “Licensee
        Indemnitees”),
        from
        and against, and to pay or reimburse Licensee Indemnitees for, any and all
        claims, liabilities, obligations, losses, fines, costs, proceedings or damages
        (whether absolute, accrued, conditional or otherwise and whether or not
        resulting from third party claims), including all reasonable fees and
        disbursements of counsel incurred in the investigation or defense of any
        of the
        same or in asserting any of their respective rights hereunder (collectively,
        “Losses”),
        resulting from or arising out of:

       

      
        
          
          

        

        
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      (i) any
        misrepresentation or breach of any warranty of VivoQuest contained in the
        Transaction Documents; provided that in determining whether any such
        misrepresentation or breach occurred, any dollar amount thresholds, materiality
        qualifiers and material adverse effect qualifier contained in any such
        representation or warranty shall be disregarded; 

       

      (ii) any
        failure of VivoQuest to perform any covenant or agreement made or contained
        in
        the Transaction Documents or fulfill any obligation in respect thereof
        (including without limitation any indemnification obligation contained in
        the
        Asset Purchase Agreement); or

       

      (iii) except
        as
        provided in Section 10(b), any liability or obligation arising out of or
        relating to the *****, including any claim by ***** that the ***** is breached
        by virtue of VivoQuest’s entry into the Transaction Documents or the
        consummation of the transactions contemplated thereby.

       

      VivoQuest
        shall not be required to indemnify Licensee Indemnitees with respect to any
        claim for indemnification (other than a claim for indemnification based on
        a
        breach of the representations and warranties contained in Section 6(b)(iv)
        of
        this Agreement or Sections 3.9, 3.11(c), 3.12, 3.14 or 3.18 of the Asset
        Purchase Agreement) resulting from or arising out of matters described in
        clause (i) above pursuant to this Section 10(a) (and not resulting
        from or
        arising out of matters described in clause (ii) or (iii) above) or
        resulting from or arising out of matters described in clause (i) of
        Section
        8.1 of the Asset Purchase Agreement (and not resulting from or arising out
        of
        matters described in clause (ii) or (iii) of Section 8.1 of the Asset
        Purchase Agreement) unless and until the aggregate amount of all such claims
        against VivoQuest exceeds $10,000 (the “Threshold
        Amount”),
        in
        which case VivoQuest shall be required to indemnify Licensee Indemnitees
        for the
        amount of such claims in excess of the Threshold Amount. Claims thereafter
        may
        be asserted regardless of amount.

       

      VivoQuest’s
        maximum liability to Licensee Indemnitees under clause (i) above (and not
        resulting from or arising out of matters described in clause (ii)
        or (iii)
        above) and resulting from or arising out of matters described in clause (i)
        of Section 8.1 of the Asset Purchase Agreement (and not resulting from or
        arising out of matters described in clause (ii) or (iii) of Section
        8.1 of
        the Asset Purchase Agreement) shall
        not
        exceed the Total Consideration. “Total
        Consideration”
        means,
        as of the time any liability pursuant to this Section 10 is determined and
        required to be satisfied, the sum of (x) $1,250,000, (y) the total amount
        of
        cash paid to VivoQuest pursuant to Sections 3(a)(ii) and (iii) of this Agreement
        and (y) the aggregate Fair Market Value as of the applicable Value Date(s)
        of
        any Shares theretofore issued pursuant to Section 3(a)(ii) of this Agreement.
        As
        used herein, “Value
        Date”
        shall
        mean, with respect to the Shares issued pursuant to Section 3(a)(ii) of this
        Agreement, the date on which the relevant milestone is earned.

      


      
        
          
          

        

        
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      (b)
        Licensee covenants and agrees to defend, indemnify and hold harmless VivoQuest
        and its Affiliates and the respective its officers, directors, employees,
        agents, advisers and representatives of the foregoing (collectively, the
        “VivoQuest
        Indemnitees”)
        from
        and against any Losses resulting from or arising out of:

      


      (i)
        the
        design, production, manufacture, sale, use in commerce or in human clinical
        trials or promotion by Licensee or by a sublicense of Licensee of any Licensed
        Product; and

      


      (ii)
        any
        action taken from and after the Closing Date by a VivoQuest Indemnitee under
        or
        with respect to the ***** to the extent (A) such action is taken at the request
        of and in accordance with any related instructions from Licensee and (B)
        such
        instructions are determined by a final nonappealable order of a court of
        competent jurisdiction to have been given in bad faith. 

      


      (c)
        (i)
        In the case of any claim asserted by a third party against a party entitled
        to
        indemnification under this Agreement (the “Indemnified
        Party”),
        notice shall be given by the Indemnified Party to the party required to provide
        indemnification (the “Indemnifying
        Party”)
        as
        soon as practicable after such Indemnified Party has actual knowledge of
        any
        claim as to which indemnity may be sought, and the Indemnified Party shall
        permit the Indemnifying Party (at the expense of such Indemnifying Party)
        to
        assume the defense of any third party claim or any litigation with a third
        party
        resulting therefrom; provided,
        however,
        that
        (a) the counsel for the Indemnifying Party who shall conduct the defense
        of
        such claim or litigation shall be subject to the approval of the Indemnified
        Party (which approval shall not be unreasonably withheld or delayed),
        (b) the Indemnified Party may participate in such defense at such
        Indemnified Party’s expense (which shall not be subject to reimbursement
        hereunder except as provided below), and (c) the failure by any Indemnified
        Party to give notice as provided herein shall not relieve the Indemnifying
        Party
        of its indemnification obligation under this Agreement except and only to
        the
        extent that such Indemnifying Party is actually and materially damaged as
        a
        result of such failure to give notice. Except with the prior written consent
        of
        the Indemnified Party, no Indemnifying Party, in the defense of any such
        claim
        or litigation, shall consent to entry of any judgment or enter into any
        settlement that provides for injunctive or other nonmonetary relief affecting
        the Indemnified Party or that does not include as an unconditional term thereof
        the giving by each claimant or plaintiff to such Indemnified Party of a general
        release from any and all liability with respect to such claim or litigation.
        If
        the Indemnified Party shall in good faith determine that the conduct of the
        defense of any claim subject to indemnification hereunder or any proposed
        settlement of any such claim by the Indemnifying Party might be expected
        to
        affect adversely the ability of the Indemnified Party to conduct its business,
        or that the Indemnified Party may have available to it one or more defenses
        or
        counterclaims that are inconsistent with one or more of those that may be
        available to the Indemnifying Party in respect of such claim or any litigation
        relating thereto, the Indemnified Party shall have the right at all times
        to
        take over and assume control over the defense, settlement, negotiations or
        litigation relating to any such claim at the sole cost of the Indemnifying
        Party; provided,
        however,
        that if
        the Indemnified Party does so take over and assume control, the Indemnified
        Party shall not settle such claim or litigation without the prior written
        consent of the Indemnifying Party, such consent not to be unreasonably withheld
        or delayed. If the Indemnifying Party does not accept the defense of any
        matter
        as above provided within ten (10) days after receipt of the notice from the
        Indemnified Party described above, the Indemnified Party shall have the full
        right to defend against any such claim or demand at the sole cost of the
        Indemnifying Party and shall be entitled to settle or agree to pay in full
        such
        claim or demand. In any event, the Indemnifying Party and the Indemnified
        Party
        shall reasonably cooperate in the defense of any claim or litigation subject
        to
        this Article 10 and the records of each shall be reasonably available to
        the
        other with respect to such defense.

      


      
        
          
          

        

        
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        *****
          Confidential material redacted and filed
          separately with the Commission.

         

      

      (ii)
        With
        respect to any claim for indemnification hereunder which does not involve
        a
        third party claim, the Indemnified Party will give the Indemnifying Party
        written notice of such claim. The Indemnifying Party may acknowledge and
        agree
        by notice to the Indemnified Party in writing to satisfy such claim within
        twenty (20) days of receipt of notice of such claim from the Indemnified
        Party.
        If the Indemnifying Party shall dispute such claim, the Indemnifying Party
        shall
        provide written notice of such dispute to the Indemnified Party within such
        20-day period, setting forth in reasonable detail the basis of such dispute.
        Upon receipt of notice of any such dispute, the Indemnified Party and the
        Indemnifying Party shall use reasonable efforts to resolve such dispute within
        thirty (30) days of the date such notice of dispute is received. If the
        Indemnifying Party shall fail to provide written notice to the Indemnified
        Party
        within twenty (20) days of receipt of notice from the Indemnified Party that
        the
        Indemnifying Party either acknowledges and agrees to pay such claim or disputes
        such claim, the Indemnifying Party shall be deemed to have acknowledged and
        agreed to pay such claim in full and to have waived any right to dispute
        such
        claim. Once (a) the Indemnifying Party has acknowledged and agreed to pay
        any
        claim pursuant to this Section 10, (b) any dispute under this Section 10
        has
        been resolved in favor of indemnification by mutual agreement of the
        Indemnifying Party and the Indemnified Party, or (c) any dispute under this
        Section 10 has been finally resolved in favor of indemnification by order
        of a
        court of competent jurisdiction or other tribunal (including an arbitrator
        contemplated by this agreement) having jurisdiction over such dispute, then
        the
        Indemnifying Party shall pay the amount of such claim to the Indemnified
        Party
        within twenty (20) days of the date of acknowledgement by the Indemnifying
        Party
        or final resolution in favor of indemnification, as the case may be, to such
        account and in such manner as is designated in writing by the Indemnified
        Party.

       

      (d)
        All
        representations and warranties contained in this Agreement shall survive
        the
        Closing until March 31, 2007; provided,
        however,
        that
        the representations and warranties stated in Section 6(b)(iv) shall survive
        indefinitely and the representations and warranties incorporated by reference
        to
        the Asset Purchase Agreement in Section 6(b)(v) shall survive for the period
        provided in the Asset Purchase Agreement. 

       

      
        
          
          

        

        
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      *****
        Confidential material redacted and filed separately with the
        Commission.

       

      (e)
        Absent fraud or criminal activity, and except for equitable relief a party
        is
        entitled to seek under the Transaction Documents or applicable law, the
        indemnifications provided for in this Article 10 shall be the sole
        and
        exclusive post-Closing remedies available to either party against the other
        party for any claims under or based upon this Agreement. In no event shall
        VivoQuest be entitled to terminate the License as a remedy for any alleged
        breach of this Agreement by Licensee. VivoQuest acknowledges that the
        representations and warranties contained in the Transaction Documents shall
        not
        be deemed waived or otherwise affected by any investigation by or on behalf
        of
        Licensee.

       

      (f)
        If
        VivoQuest shall have any Liability to Licensee or any other Licensee Indemnitee
        pursuant to the Transaction Documents, Licensee shall be entitled, in addition
        to any other right or remedy it may have, to exercise rights of set-off against
        any payments or securities payable or deliverable to VivoQuest in connection
        with the Transaction Documents or otherwise, including without limitation
        pursuant to Section 3 of this Agreement. 

      


      SECTION
        11. *****. (a) From and after the date of this Agreement, VivoQuest (i) shall
        comply in all respects with the terms and conditions of the *****, (ii) shall
        consult with Licensee prior to taking any action under or with respect to
        the
        *****, (iii) shall not take any action under or with respect to the *****
        except
        in conformity with Licensee’s instructions and shall take all actions reasonably
        requested by Licensee under or with respect to the ***** and (iv) shall not
        enter into any amendment of the ***** or any license or other agreement with
        ***** (or, with respect to the Licensed IP, any other party) without the
        consent
        of Licensee.

      


      (b)
        In
        the event that ***** and VivoQuest execute an agreement for hepatitis C virus
        for *****, VivoQuest shall include in such agreement a provision permitting
        the
        assignment of VivoQuest’s rights and a delegation of VivoQuest’s obligations
        under such agreement to Licensee, and upon Licensee’s written request, VivoQuest
        shall assign such rights to Licensee provided that Licensee simultaneously
        assumes such obligations. Prior to such assignment, VivoQuest shall administer
        such agreement for the benefit of Licensee and in accordance with Licensee’s
        instructions and all consideration to VivoQuest under such agreement shall
        be
        transferred to Licensee on a pass-through basis, net of direct, out-of-pocket
        expenses of such administration.

      


      SECTION
        12. Licensee
        Option.
        (a)
        VivoQuest hereby grants to Licensee an irrevocable option, exercisable in
        whole
        at any time or in part from time to time, upon written notice to VivoQuest,
        to
        take title to and assume all legal and equitable attributes of ownership
        of all
        or any portion of the Licensed IP. If Licensee exercises such option with
        respect to any portion of the Licensed IP that is then subject to the *****
        Agreement, Licensee shall, to the extent reasonably practicable, consult
        with
        VivoQuest prior to doing so.

      


      
        
          
          

        

        
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        *****
          Confidential material redacted and filed
          separately with the Commission.

         

      

      (b)
        If
        Licensee exercises its option to take title to and assume all legal and
        equitable attributes of ownership of any of the Licensed IP, the license
        granted
        in Sections 2 of this Agreement shall cease to exist with respect to such
        Licensed IP as a consequence thereof, but VivoQuest shall continue to be
        entitled to the consideration provided for in Section 3 as if such license
        had
        not terminated with respect to such Licensed IP. After the expiration of
        a
        reasonable transition period determined by Licensee (not to exceed 120 days
        with
        respect to any exercise of such option), Section 5 shall cease to apply with
        respect to such Licensed IP and Licensee shall have full control and
        responsibility for all patents and patent applications with respect to such
        Licensed IP. VivoQuest shall provide reasonable assistance to Licensee with
        any
        exercise of such option, including by promptly transferring to Licensee all
        relevant patents and patent applications owned by VivoQuest.

      


      (c)
        In
        connection with any exercise of the option granted to Licensee pursuant to
        this
        Section 12, VivoQuest shall and shall cause its Affiliates to execute such
        patent assignments and other agreements and instruments as shall be reasonably
        requested by Licensee in order to transfer and reflect of record the transfer
        of
        the ownership of the Licensed IP with respect to which such option is
        exercised.

      


      (d)
        VivoQuest hereby assigns to Licensee, effective as of the Closing Date, all
        of
        VivoQuest’s rights under or with respect to the Employee Non-Disclosure,
        Non-Competition and Assignment of Intellectual Property Agreements listed
        in
        paragraph (i)b. of Section 3.13 of the Seller Disclosure Schedule. The
        provisions of Section 1.3 of the Asset Purchase Agreement shall apply, mutatis
        mutandis, to the assignment of any tangible or intangible asset pursuant
        to this
        Agreement. 

      


      SECTION
        13. Assignment.
        Neither
        Licensee nor VivoQuest shall have the right to assign, delegate or transfer
        at
        any time to any party, in whole or in part, any or all of the rights, duties
        and
        interest herein granted without first obtaining the written consent of the
        other
        to such assignment, which consent shall not be unreasonably withheld, provided
        that no prior written consent shall be required (i) for any such assignment
        of
        Licensee’s rights and obligations hereunder (a) in connection with a sale or
        other transfer (whether directly or indirectly, including by merger or
        consolidation) of the business of Licensee relating to this Agreement, (b)
        to an
        Affiliate of Licensee or (c) as security for the obligations of Licensee
        or any
        Affiliate of Licensee under a credit agreement entered into with a bank or
        other
        financial institution or (ii) in connection with the assignment of this
        Agreement (together with its remaining transferable assets, if any) by VivoQuest
        to a liquidating trust in accordance with applicable Law. No assignment of
        this
        Agreement shall relieve the assigning party of any of its obligations or
        liability hereunder. Any attempted assignment not in compliance with this
        Section 13 shall be of no force or effect.

      


      SECTION
        14. Publicity.
        VivoQuest shall not issue any press release or make any other public
        announcement relating to the subject matter of this Agreement without the
        prior
        written consent of Licensee. Licensee shall be free to issue any such press
        release or other public announcement from and after the date
        hereof.

      


      
        
          
          

        

        
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        *****
          Confidential material redacted and filed
          separately with the Commission.

         

      

      SECTION
        15. Payment
        Net of Tax.
        All
        compensation due to VivoQuest hereunder shall be paid or provided net of
        all
        applicable duties, customs, shipping, import, export, value-added, withholding
        and any international, federal, state or local taxes (each of the foregoing
        an
“Imposition”
        and
        collectively, “Impositions”)
        imposed on or as a consequence of the payment or provision of such compensation
        by Licensee; provided that
        VivoQuest shall have no liability for any tax based on Licensee’s net income.
        Without limitation of the foregoing, all payments to VivoQuest hereunder
        shall
        be reduced by applicable withholding tax (at the statutory rate or, if VivoQuest
        provides any certificates or other evidence required to establish, in accordance
        with applicable law, that it is the beneficiary of a lower treaty rate, such
        lower rate). Shares to be delivered to VivoQuest hereunder, other than the
        Shares to be delivered pursuant to Section 3(a)(i) or with respect to milestone
        event (A) pursuant to Section 3(a)(ii), shall be reduced by a number of Shares
        reasonably determined by Licensee to have a Fair Market Value, as of the
        date
        the remainder of such Shares are issued to Licensee, equal to any Impositions
        required to be satisfied by Licensee with respect thereto. VivoQuest shall
        reimburse Licensee in cash for Licensee’s withholding tax liability (at an
        assumed rate of 15%) relating to the Shares issued pursuant to Section 3(a)(i)
        or with respect to milestone event (A) pursuant to Section 3(a)(ii). Licensee
        shall provide to VivoQuest original or certified copies of all Tax payments
        or
        other evidence of payment of Taxes by Licensee with respect to transactions
        or
        payments under this Agreement that is reasonably requested by VivoQuest for
        the
        purpose of determining its entitlement to any tax credit or deduction.


      


      SECTION
        16. Miscellaneous.
        (a) If
        any provision of this Agreement is determined to be invalid or void, the
        remaining provisions shall remain in effect.

      


      (b)
        This
        Agreement shall be deemed to have been made in the State of New York and
        shall
        be governed and interpreted in all respects under the laws of the State of
        New
        York without regard to conflicts of law rules.

      


      (c)
        All
        notices and other communications under this Agreement shall be in writing
        and
        shall be deemed given when delivered personally or mailed by certified mail,
        return receipt requested, to the parties (and shall also be transmitted by
        facsimile to the Persons receiving copies thereof) at the following addresses
        (or to such other address 


      
        
          
          

        

        
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*****
          Confidential material redacted and filed separately with the
          Commission.


      

      as
        a
        party may have specified by notice given to the other party pursuant to this
        provision):

      


      If
        to
        VivoQuest, to:

       

      *****

      


      With
        a
        copy to:

      


      *****

      


      If
        to
        Licensee:

      


      *****

      


      With
        a
        copy to:

       

      *****

       

      Any
        such
        notice or communication shall be deemed to have been received (i) when
        delivered, if personally delivered or transmitted by electronic mail, with
        receipt acknowledgment by the recipient by return electronic mail, (ii) when
        sent, if sent by facsimile on a business day during normal business hours
        (or,
        if not sent on a business day during normal business hours, on the next business
        day after the date sent by facsimile), (iii) on the next business day after
        dispatch, if sent by nationally recognized, overnight courier guaranteeing
        next
        business day delivery, and (iv) on the 5th
        business
        day following the date on which the piece of mail containing such communication
        is posted, if sent by mail. 

      


      (d)
        This
        Agreement constitutes the entire agreement between the parties with respect
        to
        the subject mater hereof and thereof and no variation, modification or waiver
        of
        any of the terms or conditions hereof or thereof shall be deemed valid unless
        made in writing and signed by both parties hereto. This Agreement supersedes
        any
        and all prior agreements or understandings, whether oral or written, with
        respect to such subject matter between Licensee and VivoQuest. 

      


      (e)
        No
        waiver by either party of any non-performance or violation by the other party
        of
        any of the covenants, obligations or agreements of such other party hereunder
        shall be deemed to be a waiver of any subsequent violation or non-performance
        of
        the same or any other covenant, agreement or obligation, nor shall forbearance
        by any party be deemed to be a waiver by such party of its rights or remedies
        with respect to such violation or non-performance. 

      


      (f)
        The
        descriptive headings contained in this Agreement are included for convenience
        and reference only and shall not be held to expand, modify or aid in the
        interpretation, construction or meaning of this Agreement. 

      


      
        
          
          

        

        
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      *****
        Confidential material redacted and filed separately with the
        Commission.

       

      (g)
        It is
        not the intent of the parties to create a partnership or joint venture or
        to
        assume partnership responsibility or liability. 

      
 

      IN
        WITNESS WHEREOF, the parties hereto have executed this Agreement effective
        as of
        the date and year first above written. 

      


      
        
          	 	 	 
	 	VIVOQUEST,
                  INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
                  

                  Name:

                  Title:

                
	 	 


        



      
        	 	 	 
	 	XTL
                BIOPHARMACEUTICALS LTD.
	 
 	 
 	 
 
	 	By:  	 
	 	
                

                Name:

                Title:

              
	 	 


      

      
 

      
        
          
          

        

        
          24