Unassociated Document


    
      
         

        EXHIBIT
10.4

      

       

      COOPERATION
AND PROJECT FUNDING AGREEMENT

       

      PREAMBLE

       

      Agreement
made this 26th day of May, 2008, by
and

      


      BETWEEN

       

      The
ISRAEL-UNITED STATES BINATIONAL INDUSTRIAL RESEARCH AND DEVELOPMENT FOUNDATION,
a legal entity created by
Agreement between the Government of the State of Israel and the Government of
the United States of America (hereinafter referred to as the
“Foundation”).

      


      AND

      


      BioCancell
Therapeutics Ltd.

      


      AND

       

      Virginia
Biosciences Commercialization Center (VBCC), dba – Virginia-Israel
Biosciences Commercialization
Center

       

      severally
and jointly (hereinafter collectively referred
to as the “Proposer” and separately as the “Participants”).

       

      WHEREAS
the Foundation has been established under an Agreement between the Government of
the State of Israel and the Government of the United States of America to
promote and support joint non-defense industrial research and development
activities of mutual benefit to Israel and the United States, and

       

      WHEREAS
the Proposer has heretofore submitted to the Foundation a proposal (hereinafter
the “Proposal”), entitled “Phase 1 – Safety & dosing Trial for
Pancreatic Cancer Therapy” and on the basis
of the Proposal has applied to the Foundation for certain funding assistance for
the development of the Product therein described; and

       

      WHEREAS
the Foundation has examined and duly approved the Proposal and is willing to
provide certain funding for the implementation of the Proposal on the terms and
conditions hereinafter set forth;


      
        
           


        

        
          1

          
            

          

        

        
           


        

      

       

      
        Now
therefore the parties hereto agree as follows:

      

       

      
        	
                A.

              	
                GENERAL

              


      

      
        	
                A.1.

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

              


      

       

      
        	
                A.2.

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

              


      

       

      
        	
                A.3.

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

              


      

       

      
        	
                A.4.

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

              


      

       

      
        	
                A.4.1.

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

              


      

       

      
        	
                A.4.2.

              	
                BIRD
      Foundation Procedures Handbook.

              


      

       

      
        	
                A.5.

              	
                The
      following definitions shall apply:

              


      

       

      “Affiliate” – is an
entity under common control, controlled by or controlling either of the
Participants

       

      “Agreement” – this
Cooperation and Project Funding Agreement

       

      “Approved Project
Budget” – the schedule of expenses contemplated to be spent by a
Participant as set out in Annex A

       

      “BIRD Foundation
Procedures Handbook” – the most recent
version available as of the date of this Agreement or its copy on the
Foundation’s website

       

      “Calculation Date” – a
point in time at which the calculation of the then current balance due by the
Proposer is made

       

      “Commercial
Transaction” – gross sales derived by the Proposer, either Participant or
any Affiliate

       

      “Conditional Grant” –
funds provided by the Foundation for the implementation of the
Proposal

       

      “Foundation” – The Israel-United States
Binational Industrial Research and Development Foundation, as referred to in the
first paragraph of this Agreement

       

      “Foundation’s pro rata share” – the
percentage of the actual expenditures which the Foundation
provides


      
        
           


        

        
          2

          
            

          

        

        
           


        

      

       

      “Full Repayment to the
Foundation” – the repayment to the
Foundation by the Proposer of its entire obligation pursuant to this Agreement
as determined in accordance with Annex C

       

      “Grant Base Index” – the
index last published prior to the date of payment of each increment of the
grant

       

      “Index” – the U.S.
Consumer Price Index, CPI-U

       

      “Indexed Payments”
– the result of multiplying each grant payment received by the Proposer by the
last known Index on the Calculation Date and dividing by the Grant Base
Index

       

      “Indexed Repayment” –
the result of multiplying the Repayment received by the Foundation by the last
known Index on the Calculation Date and dividing by the Repayment Base
Index

       

      “Intellectual
Property” – patents, copyrights, trademarks, inventions, trade secrets,
confidential information, product design, engineering specifications and
drawings, technical information and all types of computer programs

       

      “Interim Reporting Segment” –
an interim period of time for which technical and fiscal reports need to be
submitted

       

      “Late Payment Interest
Rate” – 4% more than the average prime rate prevailing at the JP Morgan
Chase Bank, N.Y.C. (or any successor bank to that bank), during the period from
the date payment was due until payment is actually made

       

      “License Agreement” –
an agreement between the Proposer, or either Participant, or
any Affiliate of either Participant and a third party, whereby such third party
receives the right to use the Product in exchange for a payment. “License
Agreements” shall not include any license agreements, which Proposer, or either
Participant, or any Affiliate of either Participant enters into as a necessary,
common or convenient means by which products are sole to end-users in the
ordinary course of business

       

      “Participants” – the
term used for the Israeli Company and the U.S.
Company signing this Cooperation and Project Funding agreement

       

      “Product” – the
outcome of the
development work or any derivative thereof carried out by the Proposer pursuant
to the terms of this Agreement, including patented inventions

       

      “Program Plan” –
schedule of program activities as described in the Proposal and as presented in
graphical form (GANTT chart) in Annex D

       

      “Project” – the
process for the development of the Product with the funding assistance of the
Foundation

       

      “Proposal” – the
documents submitted by the Participants to the Foundation describing the
technical and business aspects of the proposed program

       

      “Proposer” – as
defined in the preamble


      
        
           


        

        
          3

          
            

          

        

        
           


        

      

       

      “Repayment” – the
grant repayment due by the Proposer to the Foundation in the event of the
successful completion of the development work and Repayments will be made upon
the successful completion of the project and not as a percentage of future
sales. Successful completion is broadly defined as reaching the phase defined
(in the BIRD CPFA) as the project’s goal; or licensing the technology (or
selling it outright) to a third party and from proceeds derived from the
outright sale of any portion of the Product to a third party or the licensing of
any portion of the Product to a third party

       

      “Repayment Base Index”
– the Index last published prior to the date on which a Repayment is received by
the Foundation from Proposer

       

      “Termination of Product
Development” – the conclusion of the development of the Product pursuant
to and in accordance with the Proposal, including the Product being ready for
commercialization

       

      “Termination of this
Agreement” – termination deriving from the payment by the Proposer of any
and all of its obligations pursuant to Section B, termination resulting from
revocation by the
Foundation of the Agreement, or termination of the Agreement by the Proposer
with the consent of the Foundation, the effective date in each instance being
the earlier of notice from the Foundation that the examination contemplated by
Section K.3. has been completed, or the expiration of one (1) year after the
specific termination event as aforesaid.

       

      “Total Indexed Grant”
– the result of multiplying the total of the Indexed Payments by the appropriate
percentage level from the table shown in Section B.3.1

       

      “Total Indexed
Repayments” – the total of the Indexed Repayments.

       

      
        	
                B.

              	
                PROJECT
      FINANCING

              


      

      
        	
                B.1.

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

              


      

       

      
        	
                B.2.

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

              


      

       

      
        	
                B.3.

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

              


      

       

      
        	
                B.3.1.

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

              


      


      
        
           


        

        
          4

          
            

          

        

        
           


        

      

       

      
        	
                a)

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

              


      

      


      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      	
                                                               

                                                            	 	 	
                                                              Maximum Percentage of

                                                            	 
	
                                                              
                                                                Years Following Original

                                                              

                                                            	 	 	
                                                              Conditional Grant to be

                                                            	 
	
                                                              
                                                                Date of Termination of

                                                              

                                                            	 	 	
                                                              Repaid (indexed according to

                                                            	 
	
                                                              Project Development

                                                            	 	 	
                                                              Annex C of this Agreement)

                                                            	 
	 	 	 	 	 
	1	 	 	 	100	%
	
                                                              2

                                                            	 	 	 	113	%
	
                                                              3

                                                            	 	 	 	125	%
	
                                                              4

                                                            	 	 	 	138	%
	
                                                              5
      or more

                                                            	 	 	 	150	%


                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

      
        	
                B.4.

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

              


      

       

      
        	
                B.5.

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

              


      

       

      
        	
                B.5.1.

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

              


      

       

      
        	
                B.5.2.

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

              


      


      
        
           


        

        
          5

          
            

          

        

        
           


        

      

       

      
        	
                B.5.3.

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

              


      

       

      
        	
                B.5.4.

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

              


      

       

      
        	
                B.5.5.

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

              


      

       

      
        	
                B.6.

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

              


      

       

      
        	
                C.

              	
                CONDUCT
      OF THE PROJECT

              


      

      
        	
                C.1.

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

              


      

       

      
        	
                C.2.

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

              


      

       

      
        	
                C.3.

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

              


      

      
         

        
          	
                  C.4.

                	
                  The
      Proposer shall not make substantial transfers of funds from one budget
      item to another, change key personnel or their duties and
      responsibilities, or diminish their time allocated to the proposed work
      hereunder without prior written approval by the Foundation, which approval
      shall not be unreasonably with
held.

                


        


        
          
             


          

          
            6

            
              

            

          

          
             


          

        

      

      
        	
                C.4.1.

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

              


      

       

      
        	
                D.

              	
                REPORTING
      REQUIREMENTS

              


      

      
        	
                D.1.

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

              


      

      
        	
                a)

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

              


      

      
        	
                b)

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

              


      

      
        	
                c)

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

              


      

      
        
          	
                  d)

                	
                  final
      fiscal and technical reports to be submitted simultaneously within 60 days
      following Termination of Product Development.

                
	 	 


        

      

      
        	
                D.1.1.

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

              


      

       

      
        	
                D.1.2.

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

              


      

       

      
        	
                D.2.

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

              


      

       

      
        	
                E.

              	
                PUBLICATIONS

              


      

      
        	
                E.1.

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

              


      

       

      
        	
                E.2.

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

              


      

       

      
        	
                E.3.

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

              


      


      
        
           


        

        
          7

          
            

          

        

        
           


        

      

       

      
        	
                F.

              	
                PROPRIETARY
      INFORMATION, INTELLECTUAL PROPERTY

              


      

      
        	
                F.1.

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

              


      

       

      
        	
                F.2.

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

              


      

       

      
        	
                G.

              	
                PATENTS
      AND ROYALTIES

              


      

      
        	
                G.1.

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

              


      

       

      
        	
                H.

              	
                RIGHTS
      OF THE GOVERNMENTS OF ISRAEL AND THE UNITED
  STATES

              


      

      
        	
                H.1.

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

              


      


      
        
           


        

        
          8

          
            

          

        

        
           


        

      

       

      
        	
                H.2.

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

              


      

       

      
        	
                H.3.

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

              


      

       

      
        	
                H.4.

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

              


      

       

      
        	
                I.

              	
                TERMINATION
      OF THE AWARD

              


      

      
        	
                I.1.

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

              


      

       

      
        	
                I.2.

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

              


      

       

      
        	
                I.3.

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

              


      

       

      
        	
                I.4.

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

              


      

      


      
        	
                I.5.

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

              


      

       

      
        	
                I.6.

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

              


      


      
        
           


        

        
          9

          
            

          

        

        
           


        

      

       

      
        	
                I.7.

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

              


      

       

      
        	
                J.

              	
                SURVIVAL
      OF PROVISIONS

              


      

      Notwithstanding
revocation or other termination of this Agreement, the following provisions
shall survive such revocation or other termination of this Agreement: Sections
B., D., E., F., G., H., I.3., I.4., I.5., I.7., K., L., M., N., Annex C and
Annex E if, however, the termination of this Agreement derives from the payment
by the Proposer of all of its obligations to the Foundation pursuant to Section
B, the following provisions only shall survive the termination of this
Agreement: Sections E., F., H., K., L. and M.

       

      
        	
                K.

              	
                FINANCIAL
      RECORDS

              


      

      
        	
                K.1.

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

              


      

       

      
        	
                K.2.

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

              


      

       

      
        	
                K.3.

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

              


      

       

      
        	
                L.

              	
                SUITS
      AGAINST THE FOUNDATION

              


      

      
        	
                L.1.

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

              


      

       

      
        	
                L.2.

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

              


      


      
        
           


        

        
          10

          
            

          

        

        
           


        

      

       

      
        	
                M.

              	
                MISCELLANEOUS
      CONDITIONS

              


      

      
        	
                M.1.

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

              


      

       

      
        	
                M.2.

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

              


      

       

      
        	
                M.3.

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

              


      

       

      
        	
                M.4.

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

              


      

       

      
        	
                M.5.

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

              


      

      


      
        	
                M.6.

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

              


      


      
        
           


        

        
          11

          
            

          

        

        
           


        

      

    

     

    
      	
              M.7.

            	
              Notices,
      communications and reports shall be hand-delivered or mailed by prepaid
      first-class mail (airmail if transmitted internationally) addressed
      to:

            


    

     

    
      	
               
      

            	
              a.

            	
              The
      Israel-U.S. Binational Industrial Research and Development
      Foundation

            


    

    
      
        
          
            
              
                
                  	
                          Office
      Address:

                        	 	
                          Mailing
      Address:

                        
	
                          Kiryat
      Atidim, Building 4

                        	
                           

                        	
                          P.O.
      Box 58054

                        
	
                          Tel
      Aviv 61581

                        	 	
                          Tel
      Aviv 61580

                        
	
                          Israel

                        	 	
                          Israel

                        


                

              

            

          

        

      

    

     

    
      
        	
                
                

              	
                b. 

              	
                BioCancell
      Therapeutics Ltd.

              


      

    

    
      
        
          
            	
                    Office
      Address:

                  	
                     

                  	
                    Mailing
      Address:

                  
	
                    8
      Hartom St

                  	 	
                    8
      Hartom St

                  
	
                    Beck
      Science Center

                  	 	
                    Beck
      Science Center

                  
	
                    Har
      Hotzvim

                  	 	
                    Har
      Hotzvim

                  
	
                    Jerusalem
      91487

                  	 	
                    Jerusalem
      91487

                  
	
                    Israel

                  	 	
                    Israel

                  


          

        

      

    

     

    
      	
               
      

            	
              c.

            	
              Virginia
      Biosciences Commercialization Center (VBCC), dba
      – Virginia-Israel Biosciences Commercialization
      Center

            


    

     

    
      
        
          
            
              	
                      Office
      Address:

                    	 	
                      Mailing
      Address:

                    
	
                      800
      East Leigh Street

                    	 	
                      800
      East Leigh Street

                    
	
                      Richmond,
      VA 23219

                    	 	
                      Richmond,
      VA 23219

                    
	
                      U.S.A.

                    	 	
                      U.S.A.

                    


            

          

        

      

    

     

    
      	
              N. 

            	
              LIMITATION
      ON PAYMENTS

            


    

    Notwithstanding
any contrary interpretation of this Agreement or the Annexes hereto, Proposer's
total obligation hereunder for payments to the Foundation shall not exceed the
amount calculated in accordance with the applicable percentage provided in
Sections B.3.1(a) and (b) in equivalent dollars valued at time of repayment as
determined in accordance with Annex C.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    
      	
              O.

            	
              EFFECTIVE
      DATE

            


    

    The
effective date of this Agreement shall be the 1st day of January, 2008. The
development work shall commence on the aforementioned date and, unless sooner
terminated by the Foundation in accordance with Section I., the development work
shall terminate 24 months following the effective date.

    


    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      	
                                              Signed
      the day and date above first given

                                            
	 
      	 
      
	
                                              Printed
      Name:

                                            	
                                              Eltan
      Yudilevlon

                                            
	 
      	 
      
	
                                              Signature:

                                            	
                                              /s/
      Eltan Yudilevlon

                                            
	 
      	 
      
	
                                              Title:

                                            	
                                              Executive
      Director

                                            
	 
      	 
      
	
                                              (for
      the BIRD Foundation)

                                            
	 
      	 
      
	
                                              Printed
      Name:

                                            	
                                              /s/Avi Barak

                                            
	 
      	 
      
	
                                              Signature:

                                            	
                                              Avi
      Barak

                                            
	 
      	 
      
	
                                              Title
      :

                                            	
                                              Chief
      Executive Officer

                                            
	 
      	 
      
	
                                              (for
      BioCancell Therapeutics Ltd.)

                                            
	 
      	 
      
	
                                              Printed
      Name:

                                            	
                                              Robert
      T. Skupa

                                            
	 
      	 
      
	
                                              Signature:

                                            	
                                              /s/
      Robert T. Skupa

                                            
	 
      	 
      
	
                                              Title:

                                            	
                                              President

                                            


                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    


    (for
Virginia Biosciences Commercialization Center (VBCC), dba – Virginia-Israel
Biosciences Commercialization Center)

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    
       

      

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

    

     

    ANNEX
B

    PAYMENT
OF CONDITIONAL GRANT

    


    
      
        
          
            
              
                
                  
                    	
                            1.             

                          	
                            First
      Payment – On signing –

                          	
                            Israeli
      Company:

                          	$ 	
                            107,128

                          
	 
      	 
      	
                            U.S.
      Company:

                          	$	
                            66,293

                          


                  

                

              

            

          

        

      

    

     

    
      	
              2.

            	
              Second
      Payment –

            


    

    After
receipt and approval of the first interim technical and fiscal reports for the
first 6-month period, or after actual expenditure, on the project have equaled
or exceeded the required expenditures whichever is later.

     

    
      
        
          
            	
                  	 	
                    Required

                  	 	 	
                    Payment

                  	 
	 
      	 	
                    Expenditure

                  	 	 	 	 
	 
      	 	 	 	 	 	 
	
                    Israeli
      Company:

                  	 	$	267,819	 	 	$ 	107,128	 
	
                    U.S.
      Company:

                  	 	$	165,745	 	 	$	99,447	 


          

        

      

       

    

    However,
if at the required time of submission of the first interim technical and fiscal
reports, work on the project or expenditures thereon prove to be materially
behind plan, in accordance with Annex D and Annex A, respectively, the
Foundation will review the project with Proposer and determine a suitable course of action
with respect to further payments against the Conditional Grant, if
any.

     

    
      	
              3.

            	
              Third
      Payment –

            


    

     

    After
receipt and approval of the second interim technical and fiscal reports for the
second 6-month period, or after actual expenditures on the project have equaled
or exceeded the required expenditure, whichever is later.

     

    
      
        
          	
                	 	
                  Required

                	 	 	
                  Payment

                	 
	 
      	 	
                  Expenditure

                	 	 	 	 
	 	 	 	 	 	 	 
	
                  Israeli
      Company:

                	 	$	535,638	 	 	$	107,128	 
	
                  U.S.
      Company:

                	 	$	414,362	 	 	$	82,872


        

      

    

     

    However,
if at the required time of submission of the second interim technical and fiscal
reports, work on the project or expenditures thereon prove to be materially
behind plan, in accordance with Annex D and Annex A, respectively, the
Foundation will review the project with Proposer and determine a suitable course
of action with respect to further payments against the Conditional Grant, if
any.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    
      	
              4.

            	
              Fourth
      Payment –

            


    

     

    After
receipt and approval of the third interim technical and fiscal reports for the
third 6-month period, or after actual expenditures on the project have equaled
or exceeded the required expenditure, whichever is later.

     

    
      
        
          
            
              	 
      	 	
                      Required

                    	 	 	
                      Payment

                    	 
	 
      	 	
                      Expenditure

                       

                    	 	 	 	 
	
                      Israeli
      Company:

                    	 	$	803,457	 	 	$	107,128	 
	
                      U.S.
      Company:

                    	 	$	621,542	 	 	$	82,872	 


            

          

        

      

    

     

    However,
if at the required time of submission of the third interim technical and fiscal
reports, work on the project or expenditures thereon prove to be materially
behind plan, in accordance with Annex D and Annex A, respectively, the
Foundation will review the project with Proposer and determine a suitable course
of action with respect to further payments against the Conditional Grant, if
any.

     

    
      	
              5. 

            	
              Final
      Payment - After receipt and approval of the final technical and fiscal
      reports - the balance due Proposer up to the total sum of the Conditional
      Grant in accordance with Section
B.1.

            


    

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    ANNEX
C

    LINKAGE
OF CONDITIONAL GRANT REPAYMENTS

     

    The
monies given as a Conditional Grant shall be linked in value, until full
Repayment, to the Index. As each increment of the grant is given, it shall
thereafter be linked to the Grant Base Index. Upon Repayment of any portion of
Proposer's obligations under Section B.3, Section B.5, Section B.6. or Annex
E, such Repayment shall be linked to
the Repayment Base Index.

     

    At any
Calculation Date, Proposer's obligations shall be calculated according to the
following formula:

     

    The Total
Indexed Grant less the Total Indexed Repayments.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    
      D.4. Program Plan
(GANTT)

    

    


    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              	 
      	 	 	1Q07	 	 	 	1Q08	 	 	
                                      2Q08

                                    	 	 	 	1Q08	 	 	 	1Q09	 	 	
                                      2Q09

                                    	 	 	 	2Q09	 	 	 	3Q09	 	 	 	4Q09	 	 	 	1Q10	 	 	
                                      2Q10

                                    	 
	
                                      Receipt
      of BIRD Grant

                                    	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                      1.
      Development of IND

                                    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                      2.
      Protocol  development

                                    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                      3.
      Site contract

                                    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                      4.
      Case report forms/ patient consents

                                    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                      5.
      IRB/Helsinki Committee submission

                                    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                      6.
      Site set up

                                    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                      7.
      Per patient enrollment process and fees

                                    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                      8.
      PI and faculty training development

                                    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                      9.
      Site monitoring and coordination

                                    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                      10.
      Site grant administration

                                    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                      11.
      Product manufacture and shipping

                                    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                      12.
      Marketing communications of the trial

                                    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                      13.
      Honoraria, conference materials, attendance

                                    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                      14.
      Data collection, management and analysis

                                    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                      15.
      Summary and report

                                    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                      Key

                                    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                      VIBCC
      only

                                    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                      BioCancell
      only (assumes CRO fees are here)

                                    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                      By
      both entities concurrently

                                    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 


                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    ANNEX
E

    LICENSE
AGREEMENTS

     

    If
the Product becomes
the subject of any license agreement between Proposer, either Participant, or an
Affiliate of either Participant and a third party, the licensor shall pay to the
Foundation 30% of all payments received by it under such license agreement. Payment under this Annex
E shall be deemed payments against Proposer's obligations under Section B.3. In
no event shall this Annex E be construed as requiring payments of any amount
greater than those indicated in Section B.3.)

     

    
      
        
        

      

      
        22