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.

      

      January
        26, 2003

      

      To:

      

      Yeda
        Research and

      Development
        Company Ltd.

      Rehovot

      

       

      Dear
        Sirs,

      

      
        	Re:	
                Amendment
                  No. 3 to Research and Licence Agreement dated April 7,
                  1993
                  (“the R&L Agreement”) as amended on August 31, 1995 (“Amendment
                  No. 1”) (restated on January 25, 1998) and on January 25,
                  1998 (“Amendment
                  No. 2”)

              

      

      

      We
        set
        out below the amendments to Amendments No. 1 and No. 2 agreed
        between
        Yeda Research and Development Company Ltd. (“Yeda”)
        and XTL
        Biopharmaceuticals Ltd. (“the
        Corporation”)
        following discussions between the parties conducted at the Corporation’s request
        (capitalised terms herein having the meanings ascribed thereto in the
        R&L Agreement, unless otherwise defined herein):

      

      
        	1.	
                Effective
                  on the date of signature hereof, Clause 2 of Amendment No. 1
                  is
                  hereby replaced by the following:

              

      

      

      
        	
              	“2.	
                Royalties

              

      

      

      
        	
              	2.1.	
                Royalty
                  Rates

              

      

      

      Instead
        of the royalties payable as specified in Clause 7(d)(ii) of the
        R&L Agreement, the royalties payable to Yeda by XTL in consideration
        of
        the Licence granted under the R&L Agreement, shall be as
        follows:

      

      
        	2.1.1.	
                (a) *****
                  percent) of Net Sales (as hereinafter defined) from sales by XTL
                  of human
                  therapeutical drugs developed and/or made under and/or using the
                  Licensed
                  Patents and/or the Licensed Technology (‘the
                  Therapeutical Products’).
                  ‘Net
                  Sales’
                  as
                  used herein shall have the meaning ascribed to the term in the
                  R&L Agreement, references therein to ‘the
                  Products’
                  being read as references to the Therapeutical
                  Products.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

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

         

      

      (b) *****
        percent) of any amount received by XTL from any third party and calculated
        on
        sales by such third party of Therapeutical Products, after deduction from
        such
        amount of Third Party Royalties (as defined below) (“the
        XTL Net Royalty”)_,
        provided (i) that if ***** of the XTL Net Royalty is greater than ***** percent)
        of Net Sales from such sales by such third party of such Therapeutical Products,
        then the royalty payable to Yeda by XTL on such amount shall be ***** per
        cent)
        of Net Sales from such sales by such third party and (ii) if ***** per cent)
        of
        the XTL Net Royalty is less than ***** per cent) of Net Sales from such sales
        by
        such third party of such Therapeutical Products, then the royalty payable
        to
        Yeda by XTL on such amount shall be *****) of Net Sales from such sales by
        such
        third party;

      

      ‘Third
        Party Royalties’,
        for the
        purpose of a deduction to be made from any amount received by XTL pursuant
        to
        this Section 2.1.1(b) above, shall mean any royalty calculated on
        the said
        amount and payable by XTL to a third party for the right to the use of a
        compound included in the Therapeutical Product in respect of which the amount
        has been received and/or for the right to the use of technology used directly
        in
        the development or production of the Therapeutical Product in respect of
        which
        the amount has been received, provided always that the duty to pay the royalty
        to the third party has been established at arms length and in good faith
        and the
        size of such royalty is no greater than what would be due in an arms length
        transaction entered into in good faith. “Third party” in this definition of
“Third Party Royalties” shall include Yeda itself, in the event a royalty as
        aforesaid in the said definition is payable to Yeda by XTL in respect of
        a
        compound or technology other than that licensed under the R&L
        Agreement.

      

      
        	2.1.2.	
                *****
                  percent) of all amounts received by XTL from third parties (except
                  the
                  amounts governed by Section 2.1.1(b) above or Section 2.1.4
                  below) under or pursuant to agreements allowing such third parties
                  the use
                  of results, including products, developed and/or made by XTL under
                  and/or
                  using the Licensed Patents and/or the Licensed Technology (including,
                  without limitation, results obtained by XTL’s use of chimeric mammals or
                  other animal models).

              

      

      

      
        	2.1.3.	
                *****
                  percent) of all amounts received by XTL from a third party payable
                  upon
                  XTL reaching milestones specified in an agreement with such third
                  party
                  providing for performance of development activities by XTL for
                  such third
                  party under and/or using the Licensed Patents and/or the Licensed
                  Technology.

              

      

      

      
        	2.1.4.	
                *****
                  percent) of all amounts received by XTL under or pursuant to agreements
                  with third parties allowing such third parties to use outside XTL’s
                  premises chimeric mammals or other animal models (collectively,
                  ‘Models’)
                  made and/or developed by XTL under and/or using the Licensed Patents
                  and/or the Licensed Technology or allowing such third parties to
                  produce
                  Models under and/or using the Licensed Patents and/or the Licensed
                  Technology.

              

      

      

      
        	2.1.5.	
                *****
                  percent) of all amounts received by XTL as a result of any activities
                  under and/or using the Licensed Patents and/or the Licensed Technology
                  (including the grant of sublicences to third parties to carry out
                  activities under and/or using the Licensed Patents and/or the Licensed
                  Technology), other than those specified in Sections 2.1.1.,
                  2.1.2,
                  2.1.3 or 2.1.4 above. Where the amounts received by XTL as aforesaid
                  are
                  the result of activities not involving the grant of sublicences
                  to third
                  parties (‘Direct
                  Activities’)
                  and are amounts received in a transaction other than at arms length,
                  the
                  royalty due to Yeda shall be calculated on the amount that would
                  have been
                  received by XTL in a transaction at arms
                  length.

              

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

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

         

      

      
        	2.1.6.	
                For
                  the avoidance of doubt, it is expressly stated that royalties shall
                  not be
                  due pursuant to Sections 2.1.2, 2.1.4 or 2.1.5 above on
                  funds
                  received by XTL which are paid by a third party (i) in order to
                  cover, and
                  are actually applied by XTL in covering, the cost of research and
                  development by XTL for such third party of products generating
                  any of the
                  amounts in respect of which royalties are payable pursuant to
                  Sections 2.1.2, 2.1.4 or 2.1.5 above or (ii) as an investment
                  in the
                  equity of XTL in connection or conjunction with any agreement between
                  XTL
                  and such third party relating to the Licence and/or the Licensed
                  Technology and/or the Licensed Patents or otherwise, provided such
                  investment is made at no lower than the then current market price
                  of the
                  shares in XTL’s equity of the kind acquired in such investment and does
                  not have the effect of replacing or reducing the amounts which
                  are or
                  which would be payable in an arms-length transaction by such third
                  party
                  to XTL and in respect of which royalties are payable pursuant to
                  Section
                  2.1.2, 2.1.4 or 2.1.5 above.

              

      

      

      
        	2.1.7.	
                For
                  the avoidance of doubt, it is expressly stated, that nothing in
                  this
                  Section 2.1 above or elsewhere in this letter shall be deemed
                  to
                  derogate from the provisions of Clause 7(c) of the R&L Agreement
                  governing the grant of sublicences.

              

      

      

      
        	2.1.8.	
                A
                  table exemplifying the provisions of Clause 2.1 above is attached
                  as
                  Appendix A hereto. If there shall be any contradiction between
                  the table
                  and the provisions of Clause 2.1, the provisions of Clause 2.1
                  shall
                  govern.

              

      

      

      
        	2.1.9.	
                If
                  XTL shall be obliged to pay any third party a royalty on any amount
                  on
                  which a royalty is due to Yeda pursuant to Clause 2.1.5 above,
                  Yeda shall
                  agree, at XTL’s written request, to discuss with XTL the extent, if at
                  all, by which the royalty due to Yeda under Clause 2.1.5 on such
                  amount
                  shall be reduced having regard to XTL’s obligation to pay a royalty to a
                  third party as aforesaid and the terms and conditions governing
                  any such
                  reduction, provided that Yeda shall be entirely free in its absolute
                  discretion to refuse to agree to any such
                  reduction.

              

      

      

      
        	2.2.	
                Payment
                  of Royalties

              

      

      

      The
        provisions of Clause 7(d)(iii) of the R&L Agreement shall apply,
mutatis
        mutandis,
        to the
        royalties payable to Yeda pursuant to Section 2.1 above, references
        to ‘Net
        Sales’ in the said Clause 7(d)(iii) being deemed references to ‘Net Sales’
        as defined in Section 2.1.1 above for the purpose of that Section
        and to
        amounts received by XTL from Direct Activities (as defined in Section 2.1.5
        above) and references to "Sublicensing Receipts" in Clause 7(d)(iii)
        being
        deemed references to amounts subject to royalty payment to Yeda pursuant
        to
        Sections 2.1.2, 2.1.3, 2.1.4 or 2.1.5 above (not being amounts resulting
        from Direct Activities (as defined in Section 2.1.5 above)).

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

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

       

      
        	2.3.	
                For
                  the avoidance of doubt, it is expressly stated that payment of
                  royalties
                  under the R&L Agreement shall continue as
                  follows:

              

      

      

      
        	2.3.1.	
                Payment
                  of royalties pursuant to Section 2.1.1 shall continue with
                  respect to
                  sales of any Therapeutical Product as
                  follows:

              

      

      

      (aa) if
        the
        Therapeutical Product sold is made and/or sold in a country where a Licensed
        Patent or Patents issue including claims covering, in whole or in part, such
        product or the manufacture thereof—then, until the date of expiry of the last of
        the Licensed Patents covering such Therapeutical Product in such country
        to
        expire, or (ii) until termination of the ***** commencing on the date of
        the
        first commercial sale of such Therapeutical Product in such country, whichever
        is the longer period;

      

      (bb) on
        sales
        of a Therapeutical Product made and sold in any other country, until the
        date of
        expiry of a period of ***** commencing on the date of the first commercial
        sale
        of such Therapeutical Product in such country.

      

      
        	2.3.2.	
                Payment
                  of royalties pursuant to Section 2.1.2 shall continue as
                  follows:

              

      

      

      (aa) payment
        of royalties on amounts paid to XTL and attributable to activities of the
        paying
        third party under a Licensed Patent or Patents in a particular country shall
        continue: (i) until the expiry of the last to expire of the said Licensed
        Patents; or (ii) until termination of the ***** commencing on the
        first
        date on which XTL receives an amount relating to activities in such country
        on
        which a royalty is due to Yeda pursuant to Section 2.1.2, whichever
        is the
        longer period; 

      
         

        (bb) payment
          of royalties on amounts paid to XTL and attributable to activities of the
          paying
          third party in a particular country in which there is no Licensed Patent
          shall
          continue until termination of the ***** commencing on the first date on
          which
          XTL receives an amount relating to activities in such country on which
          a royalty
          is due to Yeda pursuant to Section 2.1.2;

        

        (cc) payment
          of royalties on amounts paid to XTL and not attributable to the paying
          third
          party's activities in any particular country, shall continue until: the
          expiry
          of the last to expire of any Licensed Patents sublicensed to the third
          party
          under the agreement with it; or (ii) until the date of expiry of
          a period
          of ***** commencing on the first date on which XTL receives an amount relating
          to activities in any country included in the countries covered by such
          agreement
          on which a royalty is due to Yeda pursuant to Section 2.1.2, whichever
          is
          the longer period.

        

        
          	2.3.3.	
                  Payment
                    of royalties pursuant to Section 2.1.3 shall continue
                    as
                    follows:

                

        

        

        (aa) payment
          of royalties on amounts paid to XTL and attributable to activities of XTL
          or of
          the paying third party under a Licensed Patent or Patents in a particular
          country shall continue: (i) until the expiry of the last to expire
          of the
          said Licensed Patents; or (ii) until termination of the ***** commencing
          on
          the date on which XTL first receives an amount relating to activities in
          such
          country on which a royalty is due to Yeda pursuant to Section 2.1.3,
          whichever is the longer period, 

        

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

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

         

      

      (bb) payment
        of royalties on amounts paid to XTL and attributable to activities of XTL
        or the
        paying third party in a particular country in which there is no Licensed
        Patent
        shall continue until termination of the ***** commencing on the date on which
        XTL first receives an amount relating to activities in such country on which
        a
        royalty is due to Yeda pursuant to Section 2.1.3;

      

      (cc) payment
        of royalties on amounts paid to XTL and not attributable to XTL's or the
        third
        party's activities in any particular country shall continue until: (i) the
        expiry of the last to expire of any Licensed Patents under which such activities
        are or may be performed in terms of the agreement with the third party; or
        (ii) until the date of expiry of a period of ***** commencing on the
        date
        on which XTL first receives an amount relating to activities in any country
        covered by such agreement on which a royalty is due to Yeda pursuant to Section
        2.1.3, whichever is the longer period.

      

      
        	2.3.4.	
                Payment
                  of royalties pursuant to Section 2.1.4 shall continue as
                  follows:

              

      

      

      (aa) payment
        of royalties on amounts paid to XTL and attributable to activities of the
        paying
        third party under a Licensed Patent or Patents in a particular country shall
        continue: (i) until the expiry of the last to expire of the said Licensed
        Patents; or (ii) until termination of the ***** commencing on the
        date on
        which XTL first receives an amount relating to activities in such country
        on
        which a royalty is due to Yeda pursuant to Section 2.1.4, whichever
        is the
        longer period;

      

      (bb) payment
        of royalties on amounts paid to XTL and attributable to activities of the
        paying
        third party in a country in which there is no Licensed Patent shall continue
        until termination of the ***** commencing on the date on which XTL first
        receives an amount relating to activities in such country on which a royalty
        is
        due to Yeda pursuant to Section 2.1.4;

      

      (cc) payment
        of royalties on amounts paid to XTL and not attributable to the third party's
        activities in any particular country shall continue, until: (i) the
        expiry
        of the last to expire of any Licensed Patents sublicensed to the third party
        under the agreement with it; or (ii) until the date of expiry of a
        period
        of ***** commencing on the date on which XTL first receives an amount relating
        to activities in any country covered by such agreement on which a royalty
        is due
        to Yeda pursuant to Section 2.1.4, whichever is the longer
        period.

      

      
        	2.3.5.	
                Payment
                  of royalties pursuant to Section 2.1.5 shall continue as
                  follows:

              

      

      

      (A) where
        the
        royalties are on amounts received by XTL on any Direct Activity, the duty
        to pay
        royalties shall continue:

      

      (aa) if
        the
        activity or any part thereof is carried out in any country under a Licensed
        Patent or Patents—then: (i) until the date of expiry of the last of such
        Licensed Patents to expire, or (ii) until termination of the *****
        commencing on the first date on which XTL first receives an amount as a result
        of that activity in that country, whichever is the longer period;

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

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

         

      

      (bb) if
        the
        activity is carried out in any other country, until the date of expiry of
        a
        period of ***** commencing on the first date on which XTL receives an amount
        as
        a result of that activity in that country;

      

      (B) Where
        the
        royalties are due on amounts received by XTL on activities not being a Direct
        Activity, the duty to pay royalties shall continue as follows:

      

      (aa) payment
        of royalties on amounts paid to XTL and attributable to activities of the
        paying
        third party under a Licensed Patent or Patents in a particular country shall
        continue: (i) until the expiry of the last to expire of the said Licensed
        Patents; or (ii) until termination of the ***** commencing on the
        first
        date on which XTL receives an amount relating to activities in such country
        on
        which a royalty is due to Yeda pursuant to Section 2.1.5, whichever
        is the
        longer period; 

      

      (bb) payment
        of royalties on amounts paid to XTL and attributable to activities of the
        paying
        third party in a particular country in which there is no licensed Patent
        shall
        continue until termination of the ***** commencing on the first date on which
        XTL receives an amount relating to activities in such country on which a
        royalty
        is due to Yeda pursuant to Section 2.1.5;

      

      (cc) payment
        of royalties on amounts paid to XTL and not attributable to the third party's
        activities in any particular country shall continue: (i) until the
        last to
        expire of any Licensed Patents sublicensed to the third party under the
        agreement with it; or (ii) until the date of expiry of a period of
        *****
        commencing on the first date on which XTL receives an amount relating to
        activities in any country covered by such agreement on which a royalty is
        due to
        Yeda pursuant to Section 2.1.5, whichever is the longer
        period.

      

      
        	2.4.	
                The
                  License granted under the R&L Agreement shall remain in force (if
                  not previously terminated according to the provisions of the R&L
                  Agreement (as amended hereby)) for the purpose of each of the activities
                  specified in Sections 2.1.1, 2.1.2, 2.1.3, 2.1.4 and 2.1.5,
                  as long
                  as there is a duty to pay royalties in respect of such activity,
                  as
                  provided in Section 2.3 above. Clause 7(b)(ii) of
                  the
                  R&L Agreement is replaced by the provisions of this
                  Section 2.4 above.”

              

      

      

      
        	2.	
                Effective
                  of the date of signature hereof, Clause 1 of Amendment No. 2
                  is
                  replaced by the following: 

              

      

      

      
        	“1.	
                Clause 13(b)(i)
                  of the R&L Agreement shall be and is hereby replaced by the
                  following:

              

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

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

         

      

      (i) (A) Yeda
        may
        terminate this Agreement by giving written notice to that effect to the
        Corporation if the aggregate of the royalties due to Yeda under
        Paragraph 2.1.1 of the letter agreement between the parties dated
        August 31, 1995 (and amended on January 25, 1998) amending this Agreement
        (hereinafter 'the
        Amendment')
        (hereinafter collectively 'Product
        Sale Royalties')
        and
        actually paid to Yeda on due date in respect of the seventh year, eighth
        year or
        ninth year of the term of the Licence shall be less than US $100,000
        (one
        hundred thousand United States Dollars) (hereinafter in this
        subparagraph (A) 'the
        Default Year'),
        UNLESS
        the
        Corporation shall have proved to Yeda's reasonable satisfaction within 30
        (thirty) days of the end of the Default Year that the Corporation and/or
        Collaboration Partners (as such expression is defined below) have spent at
        least
        US $750,000 (seven hundred and fifty thousand United States Dollars)
        in the
        Default Year in funding the cost of the activities described in Clause 8(b)
        above (hereinafter 'Development
        Activities')
        towards
        commercialisation of Therapeutical Products in respect of the sale of which
        Yeda
        is entitled to royalties under Paragraph 2.1.1 of Amendment No. 1
        (hereinafter collectively 'Yeda
        Royalty Bearing Products').
        Yeda
        shall give any such notice of termination within 60 (sixty) days of the end
        of
        the Default Year.

      

      'Collaboration
        Partner'
        shall
        mean an entity providing funding for the said Development Activities to the
        Corporation or on its behalf pursuant to an agreement between the Corporation
        and such entity whereby a sublicence has been granted to such entity with
        Yeda's
        consent in accordance with Paragraph 7(c) above.

      

      (B) If
        the
        aggregate payment due to Yeda on Product Sale Royalties and actually made
        to
        Yeda in respect of the tenth, eleventh or twelfth year of the term of the
        Licence shall be less than US $100,000 (one hundred thousand United
        States
        Dollars) (hereinafter in this subparagraph (B) 'the
        Default Year'),
        the
        Corporation shall pay Yeda within 30 (thirty) days of the end of the Default
        Year, the amount by which the Product Sale Royalties actually paid to Yeda
        in
        respect of the Default Year shall be less than US $100,000 (hereinafter
        in
        this subparagraph (B) 'the
        Shortfall Amount').
        Payment of the Shortfall Amount (except to the extent that it represents
        payments due and payable to Yeda in respect of the Product Sale Royalties
        other
        than pursuant to this subparagraph (B)) shall be fully credited against
        future Product Sale Royalties becoming due to Yeda but shall not be refundable
        in any event.

      

      It
        is
        agreed, without derogating from Yeda's rights to other or additional relief
        and
        remedies, including the right to sue for the Shortfall Amount, that failure
        to
        make the Shortfall Payment as aforesaid shall entitle Yeda to terminate this
        Agreement by giving written notice of termination to the Corporation within
        60
        (sixty) days of the end of the Default Year.

      

      (C) If
        the
        aggregate payment due to Yeda as Product Sale Royalties and actually paid
        to
        Yeda in respect of the thirteenth year or the fourteenth year of the term
        of the
        Licence shall be less than US $100,000 (one hundred thousand US Dollars)
        (hereinafter in this subparagraph (C) 'the
        Default Year'),
        Yeda
        shall be entitled to terminate the Agreement by service of written notice
        to
        that effect on the Corporation, unless: (x) the Corporation shall
        pay Yeda
        by no later than 30 (thirty) days from the end of the Default Year, the amount
        by which the Product Sale Royalties actually paid to Yeda in respect of such
        year shall be less than US $100,000 (hereafter in this
        subparagraph (C) 'the
        Shortfall Amount');
        and
        (y) sales of Yeda Royalty Bearing Products shall have commenced before
        or
        during that year or the Corporation shall have demonstrated to Yeda's reasonable
        satisfaction that regulatory approval for sale of a Yeda Royalty Bearing
        Product
        in the US or a major European country has been requested before or during
        the
        said year and that the Corporation has taken every reasonable, lawful action
        possible in that year to expedite grant of such approval. Payment of the
        Shortfall Amount (except to the extent that it represents payments due and
        payable to Yeda in respect of Product Sales Royalties other than pursuant
        to
        this subparagraph (C)) shall be fully credited against future Product
        Sale
        Royalties becoming due to Yeda but shall not be refundable in any event.
        Yeda
        shall give any such notice of termination within 60 (sixty) days of the end
        of
        the Default Year.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

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

         

      

      (D) If
        the
        aggregate payment due to Yeda as Product Sale Royalties and actually paid
        to
        Yeda on due date in respect of the fifteenth or any subsequent year of the
        term
        of the Licence shall be less than US $200,000 (two hundred thousand
        US
        Dollars) (hereinafter in this subparagraph (D) 'the
        Default Year'),
        Yeda
        shall be entitled to terminate the Agreement by service of written notice
        to
        that effect on the Corporation within 60 (sixty) days of the end of the Default
        Year.

      

      (E) If
        commercial exercise of the Licence by way of sale of Yeda Royalty Bearing
        Products, once commenced, shall cease thereafter for a period of 12 (twelve)
        consecutive months or more, Yeda shall be entitled to terminate the Agreement
        by
        service of written notice to that effect on the Corporation within 60 (sixty)
        days of the end of such period and, unless sales of Yeda Royalty Bearing
        Products shall have been renewed in the meantime, also at any time thereafter,
        provided, however, in the event Yeda desires to terminate the Agreement after
        such 60-day period, Yeda shall give the Corporation written notice at least
        60
        (sixty) days in advance of the desired date of termination.

      

      (F) Nothing
        in this Clause 13(b)(i) above shall be deemed to justify failure to
        make
        any payment due and payable to Yeda under any of the provisions of this
        Agreement other than under this Clause 13(b)(i) above or to derogate
        from
Yeda's
        rights with respect to such failure pursuant to Clause 13(b)(ii) below
        or
        otherwise."

      

      
        	3.	
                Except
                  as set forth in this letter, all the terms of the R&L Agreement
                  (as amended by Amendments No. 1 and No. 2 (as they
                  are amended
                  hereby)) shall remain unchanged. The R&L Agreement, as amended as
                  aforesaid, sets forth the entire understanding between Yeda and
                  XTL
                  regarding the R&L Agreement and supersedes any other prior
                  agreement or understanding, oral or
                  written.

              

      

      

      Please
        indicate your acceptance of the terms of this letter by affixing your signature
        below.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      Very
        truly yours,

      

      XTL
        BIOPHARMACEUTICALS LTD.

       

      By: _________________________

      

      Title: _________________________

      

      Agreed
        and accepted:

      

      YEDA
        RESEARCH AND DEVELOPMENT

      COMPANY
        LTD.

       

      By: _________________________ By: ___________________________

      

      Title: _________________________  Title: ____________________________

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Includes
        confidential material redacted in the to-be-publicly-filed copy of the
        Agreement

      APPENDIX
        A

      

      (to
        Amendment No. 3 to Research and License Agreement dated April 7, 1993

      (“the
        R&L Agreement”) as amended on August 31, 1995 (“Amendment No. 1”) (restated
        on January 25, 1998) and on January 25, 1998 (“Amendment No.
        2”)

      

      

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      Note:
        One
        page of material has been redacted and filed separately with the
        Commission.Dated 20th day of June, 2005

                          Executive Employment Contract

                                     between

                             Global Pharmatech, Inc.

                                       and

                               Junhui (Jason) Peng

<PAGE>

This Contract was made between the following two parties on 20th June, 2005:

(1) Global Pharmatech, Inc., duly incorporated under the laws of the State of
Delaware ("Party A"); and

(2) Junhui (Jason) Peng ("Party B").

      Both parties have entered into the following  agreement  through  friendly
negotiations  on the  principle  of  equality  and mutual  benefits  in order to
confirm and regulate the relationship between Party A as the appointor and Party
B as the appointee in respect of the service.

                              Article 1 Appointment

1.1 Party A shall appoint Party B as Chief Financial  Officer in accordance with
the terms of this Contract.

1.2 Party B agrees to be appointed as Chief Financial Officer in accordance with
the terms of this Contract.

                                Article 2 Duties

2.1 Party B's duties,  powers and  responsibilities  as Chief Financial  Officer
shall be those which are customary for such position,  as may be determined from
time to time by the  Board and CEO.  Party B shall  report to the Board and CEO,
and agrees to perform and discharge  such duties well and  faithfully  and to be
subject to the supervision and direction of the Board and of CEO.

2.2 The position of Chief  Financial  Officer is a full-time  position.  Party B
agrees to devote full time effort, attention, and energies to this position, and
will not render any  professional  services or engage in any activity that might
be competitive  with,  adverse to the best interest of, or create the appearance
of a conflict of interest with Party A.

2.3 Party B agrees to abide by the policies, rules and regulations of Party A as
they may be amended from time to time.

                             Article 3 Remuneration

3.1 From the Effective Date, the  remuneration to be received by Party B for the
performance  of his services  under this  Contract  shall be RMB10,000  (Equally
US$1205) per month, to be paid monthly.
<PAGE>

                            Article 4 Non-Competition

4.1  Unless  the  relevant  competition  is made  known  to the  public  and (if
required) approved by the relevant regulatory authorities, Party B warrants that
during the term of his appointment as Party A's outside director,  Party B shall
not in any way engage in any business in  competition  with Party A, or seek any
position from any company or individual who competes in business with Party A or
subsidiaries and branch companies of Party A ("Party A's Group"),  or accept any
capacity  or  position  offered by any  company or  individual  who  competes in
business with any member of Party A's Group.

                       Article 5 Confidentiality Liability

5.1 Party B is aware that he will gain access to secret information possessed by
members of Party A's Group  and/or kept in custody by members of Party A's Group
(hereinafter  referred to as  "Confidential  Information") in the performance of
his duties hereunder, including but not limited to, documents,  materials, data,
information,   plans  and  insider  information.  Party  B  confirms  that  such
Confidential Information is solely owned by members of Party A's Group and/or is
kept in custody by members of Party A's Group.

5.2  Whether  during  the term of this  Contract  or within  any time  after the
termination  of Party B's  appointment  as Party A's director,  Party B warrants
that (except such Confidential Information may be disclosed to the public not in
violation of the confidentiality undertaking under this Contract):

      (a)   Party B shall not divulge or disclose the  Confidential  Information
            to  any  third  party  in  any  way,   with  the  exception  of  any
            Confidential Information which Party B must disclose to the relevant
            employees  of  members  of  Party  A's  Group  and the  professional
            personnel employed by members of Party A's Group for the performance
            of his obligations  hereunder and any  Confidential  Information the
            disclosure  of which is  authorized  by the board of directors or is
            ordered by a court of competent jurisdiction;

      (b)   Party B shall not make use of the  Confidential  Information  in any
            way for his  own  benefit  or for the  benefit  of his  friends  and
            relatives or any third party without Party A's permission; or

      (c)   Party  B  shall  take  all   necessary   measures   to  prevent  the
            Confidential  Information  from spreading or disclosure to any third
            party without Party A's permission.
<PAGE>

5.3 Upon the  expiry  of this  Contract  or  earlier  termination  of Party  B's
appointment,  Party B shall  immediately,  completely and effectively  return to
Party A all the  information  relating  to the  business of members of Party A's
Group  (including,  but not limited to,  Party A's  documents,  personal  notes,
records,  reports,  handbooks,  drawings,  forms,  computer diskettes and tapes)
within  Party B's  possession  or under his control  whether or not the same was
originally supplied to Party B by Party A.

5.4 Party B agrees  that  various  intellectual  rights  formulated,  developed,
created  and  made by him  during  the  term  of his  services  hereunder  shall
exclusively belong to Party A, with the exception of various intellectual rights
which are not formulated,  developed, created and made by him during his working
hours with the use of any assets or resources belonging to Party A.

                      Article 6 Termination of Appointment

6.1 When any one of the  following  events  occurs  to Party B, the  appointment
relationship  between  Party A and  Party B  herein  shall  be  immediately  and
automatically terminated (unless otherwise decided by the board of directors):

      (a)   Party B is  prohibited  by any laws,  regulations,  rules,  practice
            directions or practice  rules from taking up the position  hereunder
            or  Party  B  loses  the  qualifications  required  by the  position
            hereunder;

      (b)   if due to health  reasons,  Party B is unable to fully  perform  his
            duties hereunder for three months;

      (c)   Party B commits any serious breach and/or repeated and/or  continual
            breach of any of Party B's obligations hereunder;

      (d)   Party B is guilty of any serious  misconduct  or serious  neglect in
            the discharge of Party B's duties hereunder;

      (e)   Party B's actions or omissions bring the name or reputation of Party
            A or any  member  of Party  A's  Group  into  serious  disrepute  or
            prejudices  the business  interests  of Party A or other  members of
            Party A's Group;

      (f)   Party B is or has  become  of  unsound  mind or shall be or become a
            patient for the purpose of any laws relating to mental health;

      (g)   Party B is sued for criminal  liability or convicted of any criminal
            offence other than an offence which in the reasonable opinion of the
            board of  directors of Party A does not affect Party B's position as
            appointed  herein (bearing in mind the nature of the duties in which
            Party  B is  appointed  and  the  capacities  in  which  Party  B is
            appointed);
<PAGE>

      (h)   Party B is removed  from the office of the  position by the board of
            directors of Party A.

      (i)   Party B leaves the service  according to the articles of association
            of Party A; or

      (j)   Party B fails to attend the board of  directors'  meeting of Party A
            in person consecutively for three times.

6.2 In addition to the  aforesaid  provisions  of Article 6.1,  Party A may also
discharge  the  appointment  relationship  between Party A and Party B by giving
notice in writing to Party B when any one of the following events occurs:

      (a)   Party B is unable to substantially  perform his duties hereunder due
            to health reasons,  within any twelve-month  period for a cumulative
            total of two hundred and sixty-five  working days. Then, Party A may
            at any time  discharge  Party B from the  post by  giving  Party B a
            fourteen-day written notice of discharge.

      (b)   Party B is in breach of his  obligations  or the  provisions of this
            Contract and does not repent  after  warning has been given by Party
            A.

      (c)   Damage or loss has been caused to Party A due to Party B's wilful or
            material default in the performance of his duties hereunder.

      Any delay by Party A in  exercising  such right of  termination  shall not
constitute a waiver thereof.

6.3 If the  appointment  relationship  between both parties herein is terminated
due to the  occurrence  of any of the events  referred  to in Article 6.1 or 6.2
above, such termination shall not affect Party A's rights herein against Party B
and the provisions of Articles 4 and 5 hereof shall still be applicable.

6.4 Party B shall not,  during the  continuance  of his  appointment or within a
period of one year after the termination thereof, either on his own behalf or on
behalf of any other  person,  entice away from any member of Party A's Group any
employee,  worker, manager or director of any member of Party A's Group, whether
or not such person would commit any breach of his contract of  appointment  with
any member of Party A's Group by reason of his leaving service.
<PAGE>

                     Article 7 Effectiveness of the Contract

This Contract shall become effective after signing by both parties.

                          Article 8 Additional Clauses

8.1 The  heading  of  each  Article  hereof  is  inserted  for  the  purpose  of
convenience  only and shall not  prejudice  the meaning or  construction  of the
provisions hereof.

8.2 This Contract shall have two copies. Party A and Party B shall each hold one
copy which shall have the same effect.

In view of the above, Party A and Party B have signed this Contract.

Party A:

For and on behalf of
Global Pharmatech, Inc

/s/ Xiaobo Sun
------------------------------------
Name: Xiaobo Sun
Title: CEO and President

Party B:  Junhui (Jason) Peng

/s/ Junhui Peng
------------------------------------

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