Document:

EX-10.8 Agreement between Teva and Protalix

 

Exhibit 10.8

Portions of this exhibit have been omitted pursuant to a request for confidential treatment.
The omitted portions, marked by [***], have been separately filed with the Securities and Exchange
Commission.

AGREEMENT

made and signed on this 14 day of September, 2006

Between

Teva Pharmaceutical Industries Ltd.

a limited liability company incorporated under the laws of Israel, of 5 Basel Street, Petach Tiqva

49131, Israel

(“Teva”)

and

Protalix Biopharmaceuticals Ltd.

a limited liability company incorporated under the laws of Israel, of 2 Snunit St., Science Park

P.O. Box 455, Carmiel 20100 , Israel

(“Protalix”)

Teva and Protalix may be individually referred to as a “Party” and collectively as the “Parties”

WHEREAS, the Parties wish to carry out a Feasibility Program (as defined herein) to evaluate their
potential collaboration in the development and manufacturing of two Proteins (as such term is
defined below) on the basis of Protalix’s proprietary plant culture process, as more fully
described herein;

WHEREAS, the Parties agree, that following the completion of such Feasibility Program, Teva shall
have the option, but not the obligation, to enter into further collaboration with Protalix
regarding the development of Licensed Products (as defined herein), all as more fully set forth
herein and in accordance with the terms and conditions of this Agreement;

WHEREAS, the Parties agree that in the event that Teva shall exercise the aforementioned option to
enter into the collaboration regarding the development of Licensed Products, Protalix shall grant
to Teva and Teva shall acquire from Protalix, the License (as defined herein), all subject to and
in accordance with the terms and conditions of this Agreement; and

WHEREAS, Protalix agrees to grant Teva a right of first look at Protalix’s proprietary product(s)
for the treatment of Gauchers Disease, to enable Teva to evaluate its interest in negotiating and
obtaining the GCD License (as such term is defined herein), all subject to and in accordance with
the terms and conditions set out hereinbelow.

NOW, THEREFORE, the Parties, agree as follows:

	1.	 	Preamble and Definitions

	 	1.1.	 	The Preamble and Annexes hereto form an integral part of this Agreement.

 

			
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	 	1.2.	 	In this Agreement the terms below shall bear the meanings assigned to them
below and other capitalized terms shall bear the meaning assigned to them in their
parenthetical definition, unless specifically stated otherwise:

	 	1.2.1.	 	“Additional Patents” - shall mean the patents and patent
applications listed in Annex 1.2.1, which constitute all of the patents and
patent applications that are proprietary to Protalix and existing on the
Effective Date, other than the Platform Patents and patent application number
[***]entitled [***], and any patent that may be issued thereon.
	 
	 	1.2.2.	 	“Affiliate” shall mean, with respect to any Party, any person,
organization or entity directly or indirectly controlling, controlled by or
under common control with, such Party. For purposes of this definition only,
“control” of another person, organization or entity shall mean the ability,
directly or indirectly, to direct the activities of the relevant entity, and
shall include, without limitation (i) ownership or direct control of fifty
percent (50%) or more of the outstanding voting stock or other ownership
interest of the other organization or entity, or (ii) direct or indirect
possession, of the power to elect or appoint fifty percent (50%) or more of
the members of the governing body of the organization or other entity.
	 
	 	1.2.3.	 	“Annual Protalix Payment” shall bear the meaning assigned to such
term in Section 10.5 below.
	 
	 	1.2.4.	 	“API” shall mean the bulk Proteins’ active pharmaceutical
ingredient.
	 
	 	1.2.5.	 	“API COGS” shall bear the meaning assigned to such term in Section
10.4 below.
	 
	 	1.2.6.	 	“Backup Manufacturing File” shall bear the meaning assigned to
such term in Section 10.7 below.
	 
	 	1.2.7.	 	“Breakthrough Technology” shall bear the meaning assigned to such
term in Section 13.2 below.
	 
	 	1.2.8.	 	“Budget” shall bear the meaning assigned to such term in Section
4.14 below.
	 
	 	1.2.9.	 	“Combination Product” shall mean a product which comprises (a) a
Licensed Product and (b) at least one other active ingredient, which, if
administered independently of the Licensed Product, would have a clinical
effect.
	 
	 	1.2.10.	 	“Change of Control” shall bear the meaning assigned to such term
in Section 11.5 below.
	 
	 	1.2.11.	 	“Commercial GCD Services” shall bear the meaning assigned to such
term in Section 14A.6 below.
	 
	 	1.2.12.	 	“Development Plan” shall bear the meaning assigned to such term
in Section 4.4 below.
	 
	 	1.2.13.	 	“Effective Date” shall bear the meaning assigned to such term in
Section 15.1 below.
	 
	 	1.2.14.	 	“EU” shall mean the member countries of the European Union, from
time to time.
	 
	 	1.2.15.	 	“EU Market” shall mean all of Spain, the UK, Italy, Germany and
France.

 

			
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	 	1.2.16.	 	“Evaluation Period” shall bear the meaning assigned to such term
in Section 14.2 below.
	 
	 	1.2.17.	 	“External Development Expenses” shall bear the meaning assigned
to such term in Section 4.14.2 below.
	 
	 	1.2.18.	 	“External Manufacturing Expenses” shall bear the meaning assigned
to such term in Section 10.4 below.
	 
	 	1.2.19.	 	“Exclusive Manufacturing Term” shall bear the meaning assigned to
such term in Section 10.1 below.
	 
	 	1.2.20.	 	“Escrow Agent” shall bear the meaning assigned to such term in
Section 10.7(A) below.
	 
	 	1.2.21.	 	“Feasibility Program(s)” shall bear the meaning assigned to such
term in Section 3.1.1 below.
	 
	 	1.2.22.	 	“Final Feasibility Report” shall bear the meaning assigned to
such term in Section 3.1.7 below.
	 
	 	1.2.23.	 	“First Commercial Sale” shall mean, with respect to any Licensed
Product the first commercial sale to a third party, in exchange for cash or
some equivalent to which value can be assigned, after the obtaining of all
necessary regulatory and other approvals required in order to commercially
sell and market the Licensed Product in the country in which the sale is made,
other than the sale of the Licensed Product for experimental, testing,
compassionate or promotional purposes.
	 
	 	1.2.24.	 	“Further Sublicense” and “Further Sublicensee” shall bear the
meaning assigned to such terms in Section 6.3 below.
	 
	 	1.2.25.	 	“GCD License” shall bear the meaning assigned to such term in
Section 14.1 below.
	 
	 	1.2.26.	 	“GCD Product” shall bear the meaning assigned to such term in
Section 14.1 below.
	 
	 	1.2.27.	 	“GCD Services” shall bear the meaning assigned to such term in
Section 14A.1 below.
	 
	 	1.2.28.	 	“Innovator” shall mean the first to market with a specific
proprietary Product.
	 
	 	1.2.29.	 	“Internal Expenses” shall bear the meaning assigned to such term
in Section 4.14.1 below.
	 
	 	1.2.30.	 	“IP” shall mean (i) all inventions, materials, compounds,
compositions, substances, methods, processes, techniques, know-how,
technology, data, information, discoveries and other results of whatsoever
nature, and any patents, copyrights, proprietary intellectual or industrial
rights directly or indirectly deriving therefrom, as well as provisionals,
patent applications (whether pending or not), and patent disclosures together
with all reissuances, continuations, continuations in part, revisions,
extensions, and reexaminations thereof; (ii) all trademarks, service marks,
copyrights, designs, trade styles, logos, trade dress, and corporate names,
including all goodwill associated therewith; (iii) any work of authorship,
regardless of copyrightability, all

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	 	 	 	compilations, all copyrights; and (iv) all
trade secrets, confidential information and proprietary processes.
	 
	 	1.2.31.	 	“License” shall bear the meaning assigned to such term in Section
6.1 below.
	 
	 	1.2.32.	 	“Licensed Information” shall bear the meaning assigned to such
term in Section 6.1 below.
	 
	 	1.2.33.	 	“Licensed Product(s)” shall bear the meaning assigned to such
term in Section 6.1 below.
	 
	 	1.2.34.	 	“Major Countries” shall mean the United States of America,
Canada, the EU Market, China, Japan, Israel, Mexico, India, Australia and New
Zealand.
	 
	 	1.2.35.	 	“Manufacturing Know-how” shall bear the meaning assigned to such
term in Section 10.7 below.
	 
	 	1.2.36.	 	“Market Advantage” shall [***]
	 
	 
	 	1.2.37.	 	“Milestone” shall bear the meaning assigned to such term in
Section 8.1 below.
	 
	 	1.2.38.	 	“Milestone Payments” shall bear the meaning assigned to such term
in Section 8.1 below.
	 
	 	1.2.39.	 	“Net Sales” shall mean with respect to a Licensed Product, the
total gross amounts [***] in respect of such Licensed Product, as established in a
bona fide arms-length transaction with an unrelated third party, less the
following items (as they apply to such Licensed Product): (i) quantity and/or
cash discounts actually allowed or taken; (ii) customs, duties, sales and
similar taxes, if any, imposed on the Licensed Product, to the extent
applicable to such sale and included in the invoice in respect of such sale;
(iii) amounts actually allowed or credited by reason of rejections, return of
goods (including as a result of recalls), any retroactive price reductions or
allowances specifically identifiable as relating to the Licensed Product; (iv)
amounts incurred resulting from government mandated rebate programs (or any
agency thereof); (v) third party (a) rebates, (b) freight, postage, shipping
and applicable insurance charges, to the extent the same are separately

 

			
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	 	 	 	itemized on invoices and actually paid as evidenced by invoices or other
appropriate supporting documentation, and (c) chargebacks or similar price
concessions related to the sale of the Licensed Product; (vi) bad debts
deriving from Net Sales in respect of which Royalty Payments were paid to
Protalix pursuant hereto, (vii) royalties paid to third parties
[***] in respect of the use of such third party’s
intellectual property rights (provided that in no event shall the amounts
deducted in respect of such third party royalties under (vii) result in the
reduction of the Royalty Payments to Protalix to less than [***]of the Net
Sales attributable to any particular Licensed Product, (without derogating
from any lower royalty rates as determined by Sections 8.2(a) or 8.2(b)
below), and (vi) reasonable quantities of samples, provided the quantity of
Licensed Product actually utilized for purposes of such samples shall not
exceed [***] of the volume of annual Licensed Product sales during any given
year during this Agreement. All of the foregoing shall be calculated in
accordance with U.S. GAAP.
	 
	 	 	 	[***]
	 
	 	 	 	In addition, the Net Sales shall be furthermore adjusted and reduced in the
event that a Licensed Product is sold as part of a Combination Product as set
forth in Section 8.4 hereto.
	 
	 	 	 	With respect to sales which are not at bona fide arms-length and/or are not in
the ordinary course of business, the term “Net Sales” shall mean the total
amount that would have been due in an arms-length sale made in the ordinary
course of business and according to the then current market conditions for such
sale or, in the absence of such current market conditions, according to market
conditions for sale of products similar to the Licensed Products. If Licensed
Products are sold or supplied in a currency other than United States Dollars
then the sum of Net Sales shall first be determined in the currency in
which such Licensed Products were invoiced and then converted into equivalent
United States Dollars at the middle market rate of such foreign currency as
quoted in the Financial Times at the close of business of the last business day
of the quarter with respect to which the payment is made.
	 
	 	1.2.40.	 	“Non-Platform IP” — shall mean all Licensed Information and Teva
IP, other than Platform IP.
	 
	 	1.2.41.	 	“Other IP” shall mean any and all IP developed within the
framework of the collaboration hereunder (including both the performance of
the Feasibility Program and the performance of Stage 2, in the event that Teva
exercises its option to have Stage 2 performed), which is neither Platform IP
nor Protein IP.
	 
	 	1.2.42.	 	“Platform IP” — shall mean Protalix’s existing and future
proprietary recombinant plant culture process and technologies directly
related to such process, and improvements thereto, as may be further developed
in the course

 

			
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of the collaboration, or otherwise, by or for Protalix, at any
time prior to the expiration of [***] following the First
Commercial Sale of the first Licensed Product. The list of patents and patent
applications included under the Platform IP, existing as of the date of
execution of this Agreement is attached hereto as Annex 1.2.42 (the “Platform
Patents”).

All additional patent applications/ patents that may be filed by or for Protalix
to cover portions of the Platform IP at any time prior to the expiration of
[***] following the First Commercial Sale of the first Licensed
Product, shall be immediately reported by Protalix to Teva and shall be included
in the term ‘Platform Patents’ as of the time of such report.

	 	1.2.43.	 	“Protalix Competitor” shall mean: [***]
	 
	 	1.2.44.	 	“Protein(s)” each of the two (2) therapeutic proteins as
selected by Teva and agreed upon by Protalix (such agreement not to be
unreasonably withheld, conditioned or delayed), expressed in plant
cell-expression system, to be described in Annex 1.2.44 hereto, as
might be substituted subject to the terms of this Agreement.
	 
	 	1.2.45.	 	“Protein IP” — shall mean any and all IP developed during the
collaboration hereunder (including both the performance of the Feasibility
Program and the performance of Stage 2, in the event that Teva exercises its
option to have Stage 2 performed), which relates specifically to the Proteins
and which is not Platform IP. Notwithstanding the foregoing, any patent(s)
related to the Platform IP that specifically
and directly and solely relates to one or both of the Proteins shall be
considered part of the Protein IP, and not Platform IP.
	 
	 	1.2.46.	 	“ROFL” shall bear the meaning assigned to such term in Section
14.1 below.
	 
	 	1.2.47.	 	“ROFO” “ROFO Notice” and “ROFO Period” shall bear the meanings
assigned to such terms in Section 3.2.1 below.
	 
	 	1.2.48.	 	“Royalty Payments” shall bear the meaning assigned to such term
in Section 8.2 below.
	 
	 	1.2.49.	 	[***]
	 
	 	1.2.50.	 	“Stage 2” shall bear the meaning assigned to such term in Section
3.4 below.
	 
	 	1.2.51.	 	“Stage 2 Notice” and “Stage 2 Notice Period” shall bear the
meaning assigned to such terms in Section 3.4 below.
	 
	 	1.2.52.	 	“Sublicence” shall mean any right granted, license given, or
agreement entered into, by Teva and/or its Affiliates to or with any other
person or entity

	 		
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	 	 	 	(whether or not such grant of rights, license given or
agreement entered into is described as a sublicence or otherwise), permitting
any use of the Licensed Information (or any part thereof) or any right to
research, develop, make, have made, register, import, manufacture, use, sell,
offer for sale, produce, sublicense, commercialize and/or distribute the
Proteins and/or the Licensed Products for any indication; and the term
“Sublicensee” shall be construed accordingly.
	 
	 	1.2.53.	 	“Teva Competitor” shall bear the meaning ascribed to such term in
Section 11.5 below.
	 
	 	1.2.54.	 	“Teva IP” shall bear the meaning assigned to such term in
Section 11.6 below.

	 	1.3.	 	In this Agreement, words importing the singular shall include the plural and
vice-versa and words importing any gender shall include all other genders and
references to persons shall include partnerships, corporations and unincorporated
associations.
	 
	 	1.4.	 	The words “including” and “includes” mean including, without limiting the
generality of any description preceding such terms.
	 
	 	1.5.	 	In the event of any discrepancy between the terms of this Agreement and any of
the Annexes hereto, the terms of this Agreement shall prevail.

2. General Scope 

	 	2.1.	 	The Parties hereby agree to collaborate in the development, and the
manufacturing of the Proteins, on the basis of the Platform IP.
	 
	 	2.2.	 	The collaboration in respect of the development of the Licensed Products shall
initially be carried out through the performance of the Feasibility Program.
Following completion of same, should Teva so elect at its sole and exclusive
discretion, the collaboration shall continue by way of the development of Licensed
Products.
	 
	 	2.3.	 	The commercialization of the Licensed Products shall be performed solely by
Teva (or any third party on its behalf in accordance herewith), without the
collaboration of Protalix, under the License granted to Teva hereunder.

	3.	 	The Collaboration

	 	3.1.	 	The Feasibility Program – Stage 1

	 	3.1.1.	 	Protalix shall carry out a feasibility program in respect of each
of the Proteins in accordance with the protocol and time schedule as agreed
between the Parties to be attached hereto within thirty (30) days of the
Effective Date as Annex 3.1.1 (the “Feasibility Program”). An outline of the
activities to be performed by Protalix under the Feasibility Program, as
currently envisaged, is attached hereto as Annex 3.1.1A. The Feasibility
Program will mainly consist of producing [***]. One (1) Protein shall be
agreed upon between the Parties, within thirty (30) days of the

 

			
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	 	 	 	Effective
Date, and shall be described in Annex 1.2.44 (the “First Protein”) and the
other Protein (the “Second Protein”) shall be selected by Teva by [***] following the execution hereof, and agreed upon by
Protalix, such agreement not to be unreasonably withheld.
	 
	 	3.1.2.	 	Protalix shall begin performing the Feasibility Program in respect
of the First Protein immediately after the First Protein is selected by the
Parties, and, shall begin performing the Feasibility Program in respect of the
Second Protein, as soon as practicable, but no later than four (4) weeks
following the selection of Second Protein by Teva and its approval by
Protalix, as aforementioned.
	 
	 	3.1.3.	 	Each Feasibility Program will be carried out by Protalix at its
sole cost and expense in accordance with a budget reasonably determined by it
in accordance with industry standards, and based on the Feasibility Program. A
Feasibility Program may be adjusted with the consent of the R&D Committee (as
defined below) from time to time. A non-binding estimate of the resources and
expenses that Protalix expects to dedicate to, and incur in the conduct of
each Feasibility Program (inclusive, inter alia, of the estimated costs of
FTEs and materials) will be submitted to the R&D Committee at the beginning of
each Feasibility Program and an updated non-binding estimate pertaining to the
remainder of the Feasibility Program shall be submitted twelve (12) months
following commencement of each Feasibility Program. Protalix shall keep
separate records of the expenses actually incurred by it in the conduct of
each Feasibility Program and shall provide Teva and the R&D Committee with
detailed quarterly reports of its expenses. For the avoidance of doubt, it is
clarified that any major deviation by Protalix from the activities set forth under a Feasibility Program shall require
the prior written approval of the R&D Committee. Any material increase in
the cost of the conduct of the Feasibility Program deriving solely from
an agreed change in the activities included in the Feasibility Program
will be discussed and negotiated in good faith between the management of
both Parties.
	 
	 	3.1.4.	 	Protalix shall complete each Feasibility Program within [***]. Any extension of such time period that may be
requested by Protalix, with respect to each or any Protein, must be approved
in advance and in writing by Teva, which approval shall not be unreasonably
withheld. For avoidance of doubt, Protalix shall bear all costs and expenses
related to the performance of the Feasibility Program until its completion
regardless of the term of its duration.
	 
	 	3.1.5.	 	At the end of each calendar quarter during the course of the
performance of each Feasibility Program, Protalix shall provide Teva with
periodic progress reports regarding the progress of such Feasibility Program,
in a form to be agreed in advance between the Parties.
	 
	 	3.1.6.	 	Teva’s representative(s) on the R&D Committee may, from time to
time, request updates regarding the progress of Stage 1, in addition to the
periodic progress reports, and Protalix shall provide any additional update
that Teva’s representative(s) on the R&D Committee may reasonably request.
	 
	 	3.1.7.	 	Not later than sixty (60) days after the completion of the
performance of

 

			
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	 	 	 	each Feasibility Program in respect of each Protein, Protalix
shall provide Teva with a written report detailing the results of such
Feasibility Program in respect of each Protein, in a form acceptable to Teva
(each, a “Final Feasibility Report”).
	 
	 	3.1.8.	 	After receipt by Teva of each Final Feasibility Report, if Teva
wishes to receive further information from Protalix it shall so advise
Protalix by written notice specifying such additional information requested
(the “First Notice”), to be delivered to Protalix no later than sixty (60)
days as of the date of provision to Teva of the Final Feasibility Report.
Protalix will provide such additional information within a reasonable time,
but not later than sixty (60) days following receipt of the First Notice (the
“Initial Response”). In the event that following receipt of the Initial
Response, Teva wishes to receive further information from Protalix, it shall
so advise Protalix by written notice specifying such additional information
requested (the “Second Notice”), to be delivered to Protalix no later than
forty five (45) days as of the date of provision to Teva of the Initial
Response. Protalix will provide such additional information within a
reasonable time but not later than forty five (45) days following receipt of
the Second Notice (the “Additional Response”). In the event that following
receipt of the Additional Response, Teva wishes to receive further information
from Protalix, it shall so advise Protalix by written notice specifying such
additional information requested (the “Third Notice”), to be delivered to
Protalix no later than thirty (30) days as of the date of provision to
Teva of the Additional Response. Protalix will provide such additional
information within a reasonable time but not later than thirty (30) days
following receipt of the Third Notice (the “Final Response”). In the
event that the Initial Response, together with the Additional Response
and the Final Response provide the full and complete information
reasonably requested by Teva, then following submission of the Final
Response Protalix shall not be required to provide any additional
information to Teva in connection with the Final Feasibility Report.
	 
	 	3.1.9.	 	Protalix shall NOT be entitled to subcontract its obligations to
perform the Feasibility Programs to any third party whatsoever without the
prior written approval of Teva, which approval shall not be unreasonably
withheld.
	 
	 	3.1.10.	 	Without limiting the generality of the second sentence of Section
16.6, the Parties hereby acknowledge that Protalix has not guaranteed that
Stage 1 will be successful or achieve any specific results at all or within
the specified time period.

	 	3.2.	 	Right of First Offer

	 	3.2.1.	 	Until the lapse of a [***] period from the Effective
Date or until the selection by Teva of the Second Protein, whichever comes
first (the “ROFO Period”) Protalix shall refrain from entering into an
agreement with any third party the purpose of which is the development or
commercialization of any [***] protein utilizing the Platform IP,
unless Protalix shall first offer Teva in writing to select such protein as
the Second Protein (the “ROFO” and the “ROFO Notice”, respectively). Upon
receipt of the ROFO Notice Teva will have the right, within thirty (30) days
of the date of the

 

			
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	 	 	 	ROFO Notice, to select such protein as the Second Protein,
by written confirmation of such selection which selection Protalix shall be
deemed as being in agreement with. Protalix shall immediately notify Teva in
writing of the commencement of any negotiations with any third party regarding
the development or commercialization of any [***] protein during the
ROFO Period, and any such notice shall be deemed as a ROFO Notice pursuant to
this Section 3.2.1, it being understood and agreed that Protalix shall not be
required to divulge the identity of such third party or any other detail of
such negotiations. The ROFO Notice shall in both cases be accompanied by any
Protalix’s available information in respect of such [***] protein.
	 
	 	3.2.2	 	For the avoidance of doubt, Protalix shall not be required to offer
any protein to Teva more than once pursuant to this Section 3.2.

	 	3.3.	 	Substitution of a Protein

The Parties acknowledge and declare that their joint goal is that the
performance of the Feasibility Program will result in the development of two
(2) Proteins (within the timeframe envisaged hereunder) suitable, in
technological and marketing terms, for implementation of Stage 2 (as such
term is defined below). In furtherance thereof, the Parties may, at
any time during the performance of a Feasibility Program, by mutual consent (which
consent shall not be unreasonably withheld by either Party), and following
the recommendation of the R & D Committee, decide upon the substitution of
the Protein in respect of which such Feasibility Program is being conducted
if the Parties are not satisfied with the results. Moreover, Teva, at its
sole discretion, shall be entitled to substitute the Protein(s) in respect of
which a Feasibility Program has been or is being conducted by another
protein, by instructing Protalix to cease the performance of a Feasibility
Program in progress, and to begin the performance of a Feasibility Program in
respect of a different protein to be selected by Teva as per the procedure
set out below, in each of the following events (i) during the first twelve
(12) months from the commencement of a certain Feasibility Program, for any
reason; or (ii) prior to the expiry of thirty (30) days after receipt by
Teva of the Final Feasibility Report, Initial Response, Additional Response
or Final Response (as the case may be), Teva reaches a decision that based on
scientific reasons it requires substitution of a certain Protein. Teva’s
right to substitution under (i) and (ii) above shall exist only once with
respect to each Protein, and Teva shall be required to propose two new
proteins, each of which must be Contractually Free (as such term is defined
below), and Protalix shall have the right to choose one of them. Following
such selection, such new protein shall become a Protein for the purposes
hereof, and Protalix shall begin the performance of the Feasibility Program
in respect of the replacement Protein as shall be agreed between the Parties
at Protalix’ sole cost and expense. In any event, the replacement of one
Protein with another as set forth in this Section shall be subject to the
refund by Teva of the direct costs actually incurred by Protalix in the
performance of the Feasibility Program, until the date of mutual consent as
to, or the notice of, replacement (as the case may be), and winding down of
the Feasibility Program in respect of the Protein that was replaced (provided

 

			
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that such winding down costs shall be mitigated by Protalix to the maximum
extent reasonably possible), which costs shall be evidenced by invoices and
other supporting documentation that shall be provided to Teva.

For the purposes of this Section, the term “Contractually Free” shall mean,
in respect of any protein, that no third party has been granted any rights by
Protalix in respect of such protein, whether pursuant to an agreement or a
term sheet or other similar legally binding document, that would preclude or
limit Protalix’s ability to grant Teva the rights granted hereunder if such
protein were to become a Protein.

	 	3.4.	 	Teva’s Option for Stage 2

Within two (2) months of the later of receipt by Teva of each Final Feasibility Program
Report, Initial Response, Additional Response or Final Response in conformance with
Section 3.1.8 above (if at all) (the “Stage 2 Notice Period”), Teva, at its sole
discretion, shall notify Protalix in writing in respect of each Protein, if it wishes
to enter into the product development stage in respect of such Protein (“Stage 2”) (the
“Stage 2 Notice”).

During the Stage 2 Notice Period Teva’s representatives shall have the right to visit
and audit Protalix’s facilities for the sole purpose of evaluating its interest in
entering
into Stage 2, at times to be coordinated in advance between the Parties.

In the event that Teva does not provide Protalix with the Stage 2 Notice during the
Stage 2 Notice Period with respect to any specific Protein, but provided that Protalix
furnishes all of the information duly requested by Teva pursuant to Section 3.1.8
above, then this Agreement shall expire forthwith with respect to such Protein in which
case, other than as to the obligations of confidentiality as set forth in Section 20
below and the obligation to return documentation as set forth in Section 15.6 below:
(i) Teva shall not be obligated in any manner towards Protalix with respect to such
Protein; and (ii) Protalix shall not be obligated in any manner towards Teva with
respect to such Protein.

4. Product Development — Stage 2 

	 	4.1.	 	In the event that Teva elects to exercise its option to initiate the
performance of Stage 2 of the collaboration as to one or both Proteins, Stage 2
shall be carried out by the Parties in accordance with Development Plans (defined
below) to be determined pursuant to this Section 4.
	 
	 	4.2.	 	Teva shall prepare preliminary development plans (the “Preliminary Plan(s)”),
in consultation with Protalix within [***] of Teva exercising its option
to initiate the Stage 2 collaboration. The Preliminary Plan(s) shall include
projected Licensed Product development activities, timelines and obligations of each
Party up to the completion of Phase I clinical trials in respect of the relevant
Protein.
	 
	 	4.3.	 	Stage 2 shall commence, as to each Protein (as applicable), immediately upon
the relevant Preliminary Plan being presented to the R&D Committee (or in its
absence to Protalix) which shall be given the opportunity to comment thereon prior
to implementation, provided that in no event shall such entitlement to comment

 

			
	[***]	 	Omitted pursuant to a confidential treatment request. The confidential portion has been
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	 	 	 	derogate in any way from the full and sole discretion of Teva in respect of all
aspects of the Preliminary Plan(s) (and the Development Plan(s)) and the performance
thereof.
	 
	 	4.4.	 	The Preliminary Plan shall be updated from time to time but not less often
than once every six (6) months, by Teva, in consultation with the R & D Committee,
as per the progress of the different development phases (the Preliminary Plan so
updated being referred to hereinafter as the “Development Plan(s)”). The
Development Plan shall incorporate detailed development activities in respect of the
Licensed Product for the upcoming phase. Teva, in consultation with Protalix will
consider and determine Phase II clinical trial target activities, timelines and the
Parties’ obligations, which will become specific obligations of the Parties.
Notwithstanding the foregoing, Teva may update the Development Plan, at Teva’s
discretion, in consultation with the R&D Committee, at any time and from to time, to
reflect progress made as per the Development Plan. Without derogating from any of
the above, the outline of the activities of the Parties under the Development Plan,
as currently envisaged, is attached hereto as Annex 4.4.
	 
	 	4.5.	 	The Development Plan shall specify the activities, timelines and division of
responsibilities between Teva and Protalix in respect of the performance of the
Stage 2 collaboration. Teva and Protalix shall each make commercially
reasonable efforts consistent with their respective normal business practices to
each pursue their obligations under the Development Plan, and shall each diligently
perform its tasks as set forth in the Development Plan. Without derogating from the
foregoing, in the course of the performance of Stage 2, Protalix shall be obligated
to provide Teva with manufacturing information as may be reasonably required by
Teva solely for the purpose of Teva’s pursuing clinical development, and obtaining
regulatory approvals for and commercializing, Licensed Products.
	 
	 	4.6.	 	At the end of each calendar quarter during the course of the performance of
Stage 2, each Party shall provide the other Party with periodic progress reports
regarding the progress of such Party’s activities under Stage 2, in a form to be
agreed between the Parties. Each Party may, from time to time, request updates
regarding the progress of the other Party’s activities during Stage 2, in addition
to the periodic progress reports, and pursuant to any reasonable request, the other
Party shall provide same.
	 
	 	4.7.	 	In addition, Protalix shall provide Teva, at Teva’s request, with reports, in
an agreed form, including financial reports in the format required by the Office of
the Chief Scientist (“CSO”) which Teva may be required to provide to the CSO in
order to obtain CSO support for Stage 2, in addition to the periodic progress
reports to be provided hereunder.
	 
	 	4.8.	 	Each Party shall perform its obligations under the Development Plan in
accordance with all applicable laws and regulations, and each Party shall procure
the receipt of all approvals and consents necessary for the performance of such
Party’s obligations under the Development Plan. Without derogating from the
foregoing, it is clarified that approvals and consents necessary for the performance
by Protalix of its portion of the Development Plan and specifically related to the
Protein but also usable by Protalix in respect of other proteins shall be procured
by Protalix and the costs of same shall be allocated between Teva and Protalix in
accordance with the relative use of same in respect of the relevant Protein.

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	 	4.9.	 	Teva’s representatives shall have the right to visit and audit Protalix’s
facility where Licenced Product is manufactured, at times to be coordinated between
the Parties in advance, once Protalix commences the manufacture of clinical
quantities of Licensed Product, but not more often than twice every calendar year.
	 
	 	4.10.	 	Teva shall provide Protalix with copies of all regulatory filings and
approvals, investigational new drug (IND), chemistry manufacture and control (CMC)
files, new drug applications (NDA), drug master files, clinical protocols and
reports, and all modifications thereto, as well as material correspondence with
regulatory authorities. Teva shall keep Protalix currently informed about the
progress made towards obtaining regulatory approval of the Licensed Products in each
country and shall provide Protalix with written status reports on a quarterly basis.
Teva shall also notify Protalix, in writing, immediately upon the receipt of
regulatory approval of any Licensed Product in each country.
	 
	 	4.11.	 	No later than [***] prior to the commencement by Teva of Phase III
clinical trials in respect of the Licensed Product(s), Protalix shall provide to
Teva (or shall instruct the Escrow Agent to release to Teva) the Backup
Manufacturing File.
	 
	 	4.12.	 	Protalix shall not be entitled to subcontract all or part of its tasks under
the Development Plan, without Teva’s prior written consent. Should Protalix wish to
do so, Protalix shall so notify the R&D Committee and Teva in writing, and Teva
shall have the right, at its sole discretion (but shall not be obligated), to
perform such tasks as Protalix’s subcontractor, on the condition that Teva shall
perform same over a reasonable time period no longer than the time period that it
would take another reasonable third party to perform such task(s). For the sake of
clarity, in the event that Teva shall elect not to perform as Protalix’s
subcontractor, and Protalix shall use a permitted subcontractor that is not Teva,
Protalix shall bear all responsibility and liability vis-à-vis Teva arising from the
performance by such subcontractor. To the extent Teva wishes to subcontract any part
of its tasks under the Development Plan to any third party, it shall so notify the
R&D Committee, it being understood and agreed that no subcontract by Teva shall be
made to a Protalix Competitor, except if and to the extent that Protalix is not
capable of performing the same service for Teva at a competitive market price. For
the sake of clarity and without limiting the foregoing, in the event that Teva shall
use a subcontractor for the performance of any of its obligations hereunder, Teva
shall bear all responsibility and liability vis-à-vis Protalix arising from the
performance by such subcontractor.
	 
	 	4.13.	 	The Parties hereby acknowledge that neither Party has guaranteed that Stage 2
will be successful or achieve any specific results or that any regulatory approvals
shall be granted with respect to the Licensed Products.
	 
	 	4.14.	 	From the commencement of the performance of Protalix’s obligations under
Stage 2, Teva shall bear all actual costs incurred or expended by Protalix directly
related to the performance of Protalix’s activities included in Stage 2, according
to the budget proposed by Protalix and pre-approved in writing by Teva (the
“Budget”), as follows:

	 	4.14.1.	 	[***]

	 		
	[***]	 	Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.

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	 	4.14.2.	 	[***].

	 	4.15.	 	The amounts of the Budget described above shall be paid by Teva every [***]
months on a [***] rolling basis, whereby [***] of the relevant Budget for each [***]
shall be paid upfront at the beginning of such [***] period and the balance shall be
paid at the end of the relevant [***], unless only part of the relevant tasks were
carried out during such period, in which case the balance shall be adjusted
accordingly. All payments shall be made against receipt of a proper tax invoice.
	 
	 	4.16.	 	For the avoidance of doubt, it is clarified that (i) any in-licensing of
third party technology by Protalix for the purposes of the performance of the
Feasibility Programs or the Development Programs (or any one of them) and/or for the
incorporation of such third party technology into the process of the development or
manufacture of the Proteins and/or (ii) any use of third party technology (including
that of [***] already licensed to Protalix) by Protalix in the
performance of the Feasibility Programs (or any one of them) or in the development
or manufacture of the Proteins, shall require the prior written agreement of Teva,
and shall not be in-licensed or used, as applicable, in the event that such prior
written agreement of Teva is not provided. Payments to third parties in respect of
such licenses shall be borne and paid by [***]. For the avoidance of doubt,
any such approval by Teva rendered in the course of a Feasibility Program, shall
continue to apply during the Development Program and thereafter for as long as the
third party technology is in use in relation to Licensed Products commercialized by
Teva, its Affiliates, Sublicensees or Further Sublicensees, and may not be retracted
by Teva.
	 
	 	4.17.	 	Protalix shall be obligated to manufacture the Proteins, both for development
and commercial purposes for the sole consideration provided in Section 4.14 above
and 10 below, in such quantities as shall be set forth in the Feasibility Program
(during Stage 1) and the Development Plan (during Stage 2), and thereafter, as per
orders placed by Teva pursuant to a separate manufacturing and supply agreement (the
“Supply Agreement‘) to be entered into between the Parties by no later than the
initiation of Phase III regulatory clinical trials in respect of a Licensed Product.
Protalix shall manufacture the Proteins in accordance with applicable regulatory
requirements (such as GMP and GLP, as determined by Teva in consultation with
Protalix) and shall be fully responsible for its manufacturing activities (and those
of

 

			
	[***]	 	Omitted pursuant to a confidential treatment request. The confidential portion has been
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	 	 	 	any third party on its behalf). The Supply Agreement shall govern the procedures
for ordering and deliveries, lead time for deliveries, quality assurance,
specifications and all other matters related to the manufacture and supply of the
API by Protalix in accordance with the relevant regulatory requirements as shall be
determined by Teva in consultation with Protalix, reflecting the commercial terms
set out in Section 10.4 hereunder. Key elements of the Supply Agreement shall be set
forth in Annex 4.17 which shall be attached hereto within thirty (30) days
of the Effective Date.
	 
	 	4.18.	 	Any deviation from the approved Budget for Stage 2 shall require notification
to Teva in advance, provided that any such deviation in excess of
[***] shall also require the prior approval of Teva.

5. Research and Development Committee

	 	5.1.	 	The Parties shall form a Research and Development Committee (the “R & D
Committee”), that shall be active for the duration of the Feasibility Program and the
Development Plan. During Stage 1 the R & D Committee shall have the charter to adjust
and amend the Feasibility Program (per Protein), as required for scientific or
technological reasons. During Stage 2 the R & D Committee shall monitor the
performance of the Development Plans, the research and other activities being
conducted thereunder, and shall issue its recommendations in writing to the Parties,
but shall have no decision making authority. The R&D Committee shall be comprised of
four (4) members, having one vote each, of which two (2) shall be appointed by each
Party, including one co-chairperson appointed by each Party. Only employees of the
Parties can be appointed to serve on the R&D Committee. The R&D Committee shall meet
periodically (but in any event no less than quarterly) during the performance of the
Feasibility Program and Development Plan.
	 
	 	 	 	In the event that, during the term of a Feasibility Program, the members of the R&D
Committee cannot agree on an issue within the scope of its authority within thirty
(30) days of its initial consideration, the matter shall be referred by either
co-chairpersons in writing to one (1) expert, the identity of whom shall be mutually
agreed upon, for a reasoned determination in writing. In the event that, during the
term of the Development Plan, the members of the R&D Committee cannot agree on a
recommendation to be made to Teva, then the members appointed by Teva shall have a
casting vote in respect of such recommendation.
	 
	 	5.2.	 	At each R&D Committee meeting, at least one (1) member appointed by each Party
present in person or by telephone shall constitute a quorum. Each Party shall have
equal voting power, whether represented by one or two Committee members, on all
matters before the R&D Committee.

6. License Grant

	 	6.1.	 	Subject only to the provision of the Stage 2 Notice by Teva, Protalix hereby
grants Teva, and Teva hereby accepts from Protalix, an exclusive world-wide license
under the Platform IP, the Protein IP and the Other IP owned by or licensed to
Protalix (collectively, the “Licensed Information”) to research, develop, make, have
made, register, import, manufacture, use, sell, offer for sale, produce, sublicense,
commercialize, distribute the Proteins and/or pharmaceutical products embodying,

 

			
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	 	 	 	based on or using the Proteins (the “Licensed Products”) for all indications (the
“License”) and for no other purposes whatsoever.

	 	6.1A	 	To the extent that the Parties shall mutually agree that any Additional Patents are
reasonably required to be licensed to Teva in order for Teva to commercialize any
Licensed Product(s), then the same shall be added to the list of the Platform Patents and
as of such time shall be deemed as being covered by the License hereunder, as part of the
Platform IP, provided that at the relevant point in time an exclusive license in respect
of such Additional Patent has not already been granted to a third party by Protalix, it
being understood and agreed, however, that any such Additional Patents may not be
sub-licensed by Teva on a stand alone basis.

	 	6.2.	 	From the Effective Date and at all times prior to [***] with respect to any particular Protein, Protalix shall not, without
Teva’s prior written consent, grant or enter into any agreement, arrangement or
commitment according to which a third party is granted any rights which may derogate
from or hinder Teva’s ability to exercise Teva’s option to obtain the License.

	 	6.3.	 	Teva shall have the right to grant (whole or partial) Sublicenses to third
parties (and such third parties shall be entitled to grant further Sublicenses
(each, a “Further Sublicense” and the term “Further Sublicensee” shall be construed
accordingly) and so on under the License, on terms and conditions consistent with
the terms of this Agreement and Teva shall be entitled to determine the commercial
terms of any such Sublicense, all provided that under no circumstances may any
Sublicense or Further Sublicense be granted to a Protalix Competitor, unless such
Sublicense or Further Sublicense is not granted in respect of the core technology of
Protalix (for example, but without limitation, a Sublicense or Further Sublicense
may be granted in respect of the marketing and/or distribution of the Licensed
Products(s) even to a Protalix Competitor), and provided further that all of
Protalix’s rights hereunder shall be ensured and, without limiting the generality of
the foregoing, that, with respect to each Sublicense or Further Sublicense
agreement: (i) Teva notifies Protalix immediately upon signature thereof, and
provides Protalix with the name of the Sublicensee or Further Sublicensee and the
scope and territory of the Sublicense or Further Sublicense; (ii) each such
Sublicense and Further Sublicense agreement (a) provides that the Sublicense or
Further Sublicense thereunder shall immediately terminate upon termination of the
License hereunder for any reason, and (b) restricting the right to grant a Further
Sublicense to a Protalix Competitor. The grant of any Sublicenses and Further
Sublicenses shall not derogate from the rights of Protalix and/or the obligations of
Teva under this Agreement. Without limiting the foregoing or any of Teva’s
obligations hereunder relating to the grant of Sublicenses or Further Sublicenses
pursuant hereto, Teva shall be entitled to conduct or to perform any activity in
respect of the Licensed Products by means of any third party sub-contractor, and
such conduct shall not be considered to be a grant of a sublicense, provided it
shall notify the R&D Committee and/or Protalix of any such subcontract and provided
further that under no circumstances may Teva subcontract any of its tasks or
obligations hereunder to a Protalix Competitor unless such subcontract is made not
in respect of the core technology of Protalix (i.e. Teva shall be entitled to
conduct marketing or distribution activities through subcontractors which are
Protalix Competitors). For the sake of clarity and without limiting the foregoing,
in the event that Teva shall use a subcontractor, Teva shall bear all responsibility
and liability vis-à-vis Protalix arising from the performance by such subcontractor.

 

			
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7. Commercialization of Licensed Products

	 	7.1.	 	Teva undertakes, at its own expense, to make such commercially reasonable
efforts to commercialize the Licensed Products as are consistent with the commercial
efforts generally applied to products of similar potential at similar stages in
their life cycles, by Teva.
	 
	 	7.2.	 	Teva shall provide Protalix with a non-binding sales forecast for each of the
Major Countries, in writing, in respect of each Licensed Product, by no later than
[***] prior to the anticipated date of the first regulatory approval in
respect thereto. Such report shall be updated by Teva, in writing, on
a [***] basis. Moreover, each sales forecast shall be accompanied by a report of Teva’s
and its Affiliates launch dates and main regulatory filings on a [***] basis
with respect to the Licensed Products. Teva shall also provide Protalix with similar
information with regard to such launch dates and filings in territories in which
Sublicensees and Further Sublicensees have conducted similar activities, to the
extent available to Teva.
	 
	 	7.3.	 	For the removal of doubt, nothing contained in this Agreement shall be
construed as a warranty by Teva that any efforts to be exerted by Teva in connection
with this Agreement, including without limitation any development or any
commercialization to be carried out by it in connection with this Agreement, will
actually achieve their aims or any other results or succeed, and Teva makes no
warranties whatsoever as to any results to be achieved in consequence of the
carrying out of any such development, commercialization, efforts or activities.
Furthermore, Teva makes no representation to the effect that the commercialization
of the Licensed Products, or any part thereof, will succeed, or that it shall be
able to sell the Licensed Products in any quantity.

8. Milestones and Royalty Payments 

	 	8.1.	 	In consideration for the grant of the License, Teva shall make the following
milestone payments to Protalix, upon achievement of the relevant
milestones on a [***] basis (each, a “Milestone”) (the “Milestone Payments”):

	 	8.1.1.	 	[***]
	 
	 	 	 	[***]
	 
	 	 	 	[***]

 

			
	[***]	 	Omitted pursuant to a confidential treatment request. The confidential portion has been
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	 	8.1.2.	 	[***]
	 
	 	 	 	[***]
	 
	 	 	 	[***]
	 
	 	 	 	[***]
	 
	 	 	 	[***]

 

			
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	 	8.2.	 	In addition, in consideration for the grant of the License, Teva shall,
throughout the Royalty Term (as such term is defined below), pay to Protalix
royalties at the following rates on annual Net Sales, during each calendar year in
respect of each Licensed Product, on a [***] (the “Royalty Payments”), as specified in this Section 8.2 below:

(a) [***]

(b) [***]

(c) [***]

(d) [***]

(e) [***]

[***]

	 	8.3.	 	[***].

	 	8.4.	 	Notwithstanding the foregoing, in the event that any
[***] is sold
in the form of a Combination Product, then the proportion of such Combination
Product to

 

			
	[***]	 	Omitted pursuant to a confidential treatment request. The confidential portion has been
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	 	 	 	be attributed to Net Sales that are subject to the Royalty Payments (the
“Relevant Proportion”) shall be calculated as
provided below.

Provided that both active ingredients of the Combination Product are sold on a
stand-alone basis at the time in question, the Relevant Proportion shall be as follows:
[***].

	 	8.5.	 	Payments to Protalix pursuant to this Section 8 will be due and payable
hereunder until the expiration of [***]years after the First Commercial Sale in any
country calculated on [***] basis (in
each case, the “Royalty Term”).

	 	8.6.	 	Following the expiry of the Royalty Term, [***], Teva
shall have a fully paid up license to continue to exploit the License without
having to make Royalty Payments with respect thereto.

9. Payment Terms and Reporting in Respect of the License

	 	9.1.	 	As of the achievement of the first Milestone pursuant to Section 8.1.1 above,
and for the duration of the Royalty Terms, Teva shall submit to Protalix, no later
than [***] after the end of each [***], [***] reports
setting out all amounts owing to Protalix in respect of the [***] to
which the report refers, and with respect to each Licensed Product, (i) the Net
Sales [***],
including a breakdown of Net Sales according to country and currency of sales, (ii)
amounts deducted as royalties to third parties pursuant to Section 1.2.39(vii),
(iii) total Milestone Payments and Royalty Payments due to Protalix in respect of
such [***] or, if no such payments are due to Protalix in respect of such
[***], a statement that no payments are due; and (iv) any calculations
made in relation to Combination Products. Teva shall submit to Protalix, by no
later than [***] after the end

 

			
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of each [***], an [***] report
setting out any adjustments in Royalty Payments pursuant to Section 9.2A. Each such
report shall be signed by the relevant financial executive of the Global Products
division of Teva.

All such reports, as well as all other reports provided hereunder, shall be treated as
Confidential Information pursuant to Section 20 below.

	 	9.2.	 	Amounts payable to Protalix in terms of Section 8 shall be paid to Protalix
(i) in respect of Royalty Payments, on a [***] basis, and no later than [***] after the end of each [***],
commencing with the first
[***] in which Net Sales are made, (ii) in respect of Milestone Payments,
within [***] following the achievement of the applicable Milestone.
	 
	 	9.2A	 	Notwithstanding, the [***] payments of Royalty Payments shall be paid based on
the assumption that no Market Advantage exists. Not later than [***] following the end
of a [***], Teva shall pay Protalix the additional nominal amounts of Royalty
Payments due in the event Market Advantage existed during such [***].
	 
	 	9.3.	 	Each payment due to Protalix hereunder shall be paid by wire transfer of
immediately available funds to an account designated by Protalix in writing.
	 
	 	9.4.	 	Teva shall maintain and shall cause its Affiliates to maintain, complete and
accurate records of Licensed Products sold under this Agreement, any amounts payable
to Protalix in relation to such Licensed Products and which records shall contain
information to reasonably permit Protalix to confirm the accuracy of any payments
made to Protalix. Teva shall retain and shall cause its Affiliates to retain such
records relating to a given calendar year for at least
[***] after the
conclusion of that calendar year, during which time Protalix shall have the right,
at its expense, to cause an independent, certified public accountant to inspect such
records during normal business hours for the sole purpose of verifying any payments
delivered under this Agreement. Such accountant shall not disclose to Protalix any
information other than information relating to the accuracy of reports and payments
delivered under this Agreement. In the event that any audit performed under this
Section 9.4 reveals an underpayment in excess of [***]in any calendar year, and if
such underpayment is proven to the satisfaction of a mutually agreed external
auditor (it being agreed that absent such mutual agreement as to the identity of the
auditor within thirty (30) days of a Party’s written notice to the other Party that
it wishes to have such external auditor appointed, the external auditor shall be one
of the ‘big four’ accounting firms), then Teva shall bear the full cost of such
audit. Protalix may exercise its rights under this Section only once every year and
only with reasonable prior notice to Teva, and the relevant Affiliate and subject to
prior coordination. Any such audit shall be made during Teva’s or the relevant
Affiliate’s normal business hours and shall not unreasonably interfere with the
business of Teva or the relevant Affiliate, and shall be completed within a
reasonable time. Teva shall promptly transfer to Protalix any payment due pursuant
to such auditor’s audit. Such payment shall bear interest as set forth in Section
23.17.
	 
	 	9.5.	 	Without derogating from the provisions of the preceding Section 9.4, Protalix
shall have the right to request that Teva inspect records of Licensed Products sold
under this Agreement by Sublicencees and Further Sublicensees, for the sole purpose
of verifying any payments delivered under this Agreement, in which case Teva shall
exert its reasonable commercial efforts to perform such audit. In the event that any
audit performed under this Section 9.5 reveals an underpayment in excess of [***],

 

			
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	 	 	 	and if such underpayment is proven to the satisfaction of a mutually agreed external
auditor (to be appointed in accordance with the procedure set out in Section 9.4
above), then Teva shall bear the full cost of such audit. In any other event (of
overpayment or underpayment of less [***], Protalix shall bear the full cost of such
audit. Protalix may exercise its rights under this Section only once every year.
Teva or Protalix, as applicable, shall immediately pay to the other Party any
underpayment or overpayment together with interest provided in Section 23.17 below.
	 
	 	9.6.	 	Protalix shall maintain, and shall cause its Affiliates to maintain, complete
and accurate records of both its Internal Expenses and External Development
Expenses, as well as records of costs incurred in the performance of each
Feasibility Program (for the event that Teva reimburses Protalix for same pursuant
to the substitution of a Protein), which records shall contain information to
reasonably permit Teva to confirm the accuracy of any payments made to Protalix.
Protalix and/or its Affiliates shall retain such records relating to a given
calendar year for at least seven (7) years after the conclusion of that calendar
year, during which time Teva shall have the right, at its expense, to cause an
independent, certified public accountant to inspect such records during normal
business hours for the sole purpose of verifying any payments delivered under this
Agreement. Such accountant shall not disclose to Teva any information other than
information relating to the accuracy of reports and payments delivered under this
Agreement. In the event that any audit performed under this Section 9.6 reveals an
overpayment in excess of [***]in respect of any Protein, and if such overpayment is
proven to the satisfaction of a mutually agreed external auditor (to be appointed
in accordance with the procedure set in Section 9.4 above), then Protalix shall
bear the full cost of such audit and shall promptly pay to Teva such overpayment
together with interest as provided in Section 23.17 below. Teva may exercise its
rights under this Section only once every year and only with reasonable prior
notice to Protalix, and subject to prior coordination. Any such audit shall be made
during Protalix’s or the relevant Affiliate (as applicable) normal business hours
and shall not unreasonably interfere with the business of Protalix or the relevant
Affiliate (as applicable) and shall be completed within a reasonable time.

10. Bulk (API) Manufacturing Terms

	 	10.1.	 	Notwithstanding Section 6 above, Protalix shall retain the exclusive right to
manufacture the API and to continuously supply same to Teva and its Affiliates,
Sublicensees and Further Sublicensees, for the Licensed Products, during the first
[***] years following the First Commercial Sale of the first Licensed Product on a
per Protein basis (the “Exclusive Manufacturing Term”). Teva shall be responsible
for the formulation of the API into finished Licensed Product. Without derogating
from any other visit and audit right under this Agreement, as from [***]
prior to the expected commencement of the Exclusive Manufacturing Term, Teva’s
representatives shall have the right to visit and audit Protalix’s facilities where
the API is being manufactured, during normal business hours, and following prior
coordination with Protalix.
	 
	 	10.2.	 	Following the expiry of the Exclusive Manufacturing Term, Teva shall have the
right to manufacture the API [***] in its own facility or elsewhere, or through any third party which is not a
Protalix Competitor, at its sole discretion, subject to the appropriate undertakings
by the transferee of non-disclosure and non-use other than the supply to Teva and
its

 

			
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	 	 	 	Affiliates, Sublicensees and Further Sublicensees, and shall use the
Manufacturing Know-how (as such term is defined below) solely for such purpose.
	 
	 	10.3.	 	Without derogating from the above, Teva may elect, at its sole discretion, to
continue receiving Protalix’s manufacturing services after expiration of the
Exclusive Manufacturing Term. In such event, Protalix undertakes to perform such
manufacturing services, for the sole consideration set forth in Section 10.4
hereinafter.
	 
	 	10.4.	 	As of the First Commercial Sale, Teva shall pay Protalix consideration based
on the actual direct cost of the manufacturing of the API incurred by Protalix to be
calculated pursuant to the Supply Agreement as shall be mutually
agreed [***]:

	 	10.4.1.	 	[***].
	 
	 	10.4.2.	 	[***].

[***].

	 	10.5.	 	Notwithstanding the foregoing, in the event that the annual payments to
Protalix that consist of the [***] (calculated according to Section
10.4 above) plus the Royalty Payments on a [***] basis during any given
calendar year (the “Annual Protalix Payment”), shall exceed the amount of [***] of
the aggregate amount of annual Net Sales in such calendar year on a [***]
basis (the “Ceiling Amount”), then the Annual Protalix Payment, in respect of the
[***], shall be reduced to an amount equal to the Ceiling Amount,
provided that in no event shall the Annual Protalix Payment in respect of the
[***], be reduced to an amount less than [***] calculated on the
basis of [***]. Any over payment by Teva shall be set-off, by written notice from
Teva to Protalix, detailing the calculation of such over-payment, from the upcoming
Royalty Payment due to Protalix hereunder.
	 
	 	10.6.	 	The Parties hereby acknowledge and agree that a back-up manufacturing
facility should be available in respect of the Proteins. Not later than six (6)
months prior to the commencement of Phase III clinical trials to be performed in
respect of the First Licensed Product on a per Protein basis, the Parties shall
mutually agree on the site at which such back-up manufacturing facility shall be
located, and the Party by whom such facility shall be established.

	 	10.7.	 	(A) Protalix shall transfer, on a per-Protein basis, to an agreed third party
(the “Escrow Agent”), by not later than date of the completion of Phase I (last
patient out) as set forth in the Development Plan, a complete file (the “Back-Up
Manufacturing File”) consisting of all engineering schemes, standard operating
procedures, protocols, plans, master manufacturing file, know how and any other
information, tangible or intangible, whether in writing, electronic form or
otherwise, and any updates thereof, which is reasonably necessary for Teva in

 

			
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order
to establish its own internal manufacturing facility and manufacture the API (the
“Manufacturing Know-how”). Concurrently with the transfer of the Back-Up
Manufacturing File to the Escrow Agent, a copy of the table of contents of such file
shall be transferred to the R&D Committee. Teva may request, based on such table of
contents, that the Back-Up Manufacturing File be reviewed by a mutually agreed
industry expert (the “Industry Expert”) who may recommend in writing that the file
be supplemented, as may be reasonably required and Protalix shall supplement such
file as recommended within sixty (60) days
from the receipt by Protalix of such written recommendation. The Industry Expert
shall be bound by confidentiality undertakings to Protalix no less stringent
than those contained in Section 20 hereof and shall not disclose to Teva any
information relating to or contained in the Back-Up Manufacturing File. The
Industry Expert shall sign a non-disclosure agreement to such effect.

(B) Subject to the terms of this Section 10.7(B), the Escrow Agent shall be
authorized to release the Back-Up Manufacturing File to Teva, solely upon the terms
and conditions set out in a tri-party agreement to be executed between the Parties
and the Escrow Agent, in the form to be attached hereto within thirty (30) days of
the Effective Date hereof (the “Escrow Agreement”). Such Escrow Agreement shall
determine that the Back-Up Manufacturing File shall be released to Teva upon the
earlier of: (i) [***]; (ii) the occurrence
of a material breach by Protalix of its manufacturing obligations hereunder, which
breach is not rectified within sixty (60) days of receipt by Protalix of Teva’s
written notice specifying the breach; and (iii) the grant of a winding-up order or
the appointment of a receiver in respect of Protalix, or the grant of an attachment
order on all, or a substantial portion of, Protalix’s assets, which is not set aside
within ninety (90) days of the issuance thereof. The Back-Up Manufacturing File as
may be duly released to Teva pursuant to the Escrow Agreement may be utilized by
Teva solely for the establishment and operation of a facility for the manufacture of
the API. Following release of the Back-Up Manufacturing File to Teva, on the grounds
stated in (ii) or (iii) above, Teva shall be entitled to manufacture the API also
through a Protalix Competitor.

(C) Teva shall reimburse Protalix, for its reasonable expenses directly incurred and
associated with the preparation by Protalix of the Back-Up Manufacturing File for
submission to the Escrow Agent and for its costs associated with the services of the
Escrow Agent and the Industry Expert pursuant hereto (pursuant to invoices submitted
by the Escrow and Industry Expert and paid by Protalix). 

11. Intellectual Property Rights 

	 	11.1.	 	The Parties agree that, as between the Parties, Protalix does and shall own
all rights, title and interest in and to the Platform IP. The Parties acknowledge
that certain of the Platform IP that might be developed by or for Protalix or a
subsidiary of Protalix (if such shall exist) following the Effective Date may be
subject to contractual limitations vis-à-vis third parties. Such limitations (which
by their nature, would apply to the Proteins and/or the Licensed Products) shall
apply to Teva only if and to

 

			
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	 	 	 	the extent Teva shall approve them in writing in
advance. Otherwise, Protalix shall be fully responsible for such contractual
limitations whether monetary or other.
	 
	 	11.2.	 	In the event that during the collaboration hereunder, any subsidiary of
Protalix or any company with which Protalix merges (if such shall exist) shall
generate or own any IP that if generated or owned by Protalix would have been
considered part of the Licensed Information hereunder, then Protalix shall
immediately notify Teva of such IP and shall act immediately and ensure that such IP
shall be licensed to Protalix (or directly to Teva) and will become part of
the Licensed Information, licensed to Teva as provided hereunder, at no additional
cost to Teva. Such IP shall be classified as Platform IP, Protein IP or Other IP in
accordance with the terms hereof as if it had been generated by Protalix in the
first place.
	 
	 	11.3.	 	All rights, title and interest in and to the Protein IP and Other IP
developed during the performance of the Feasibility Program, will be owned by
Protalix (“Protalix’s Protein and Other IP”). For avoidance of doubt, Protalix’s
Protein and Other IP will be considered part of the Licensed Information, and as
such, covered by the License hereunder.
	 
	 	11.3A	 	In the event that there is any portion of Platform IP that specifically and
directly relates (but does not solely relate) to one or more of the Proteins, and
Protalix shall seek patent protection in respect of such portion of the Platform IP,
then, to the extent possible: the Parties shall co-operate in order that the patent
protection sought shall be filed in a manner that will split/ distinguish between
patents covering Platform IP that solely relates to the Proteins and other Platform IP.
The patent applications/ patents filed in respect of Platform IP that solely relates to
the Proteins(s) shall be considered part of the Protein IP, and not Platform IP.
	 
	 	11.4.	 	Notwithstanding the above, in the event that a Change of Control of Protalix
is effected following the commencement of Stage 2, such that a Teva Competitor
acquires Control of Protalix, Teva shall have the right, at its sole discretion, to
receive an assignment of all Protalix Protein and Other IP without any assignment
fee. Protalix’s Protein and Other IP so assigned to Teva shall be treated hereunder
as Teva IP (as defined below) for all intents and purposes, provided however that
the economic benefits to Protalix under this Agreement, including inter alia, its
right to receive Royalty Payments and Milestone Payments, shall not be diminished as
a result of such assignment, in any way.
	 
	 	11.5.	 	A “Change of Control” means (i) the sale of all or substantially all of the
assets of Protalix, or (ii) any transaction between Protalix or its shareholders and
another entity/ies as a result of which another company/ies, or another company/ies’
ultimate shareholder/s, directly or indirectly shall own more than fifty percent
(50%) of the shares of Protalix or its successor, or has/ve the power to elect more
than half of Protalix’s or its successor’s directors. A
“Teva Competitor” means [***].
	 
	 	11.6.	 	All Protein IP and Other IP developed as of the date on which Teva provides
the Stage 2 Notice, by or for Protalix, jointly by or for both Parties, or by or for
Teva, shall be exclusively owned by Teva, and Teva shall have all right, title and
interest thereto (the “Teva IP”).

	 		
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	 	11.7.	 	Teva hereby grants Protalix a non-exclusive, royalty-free, perpetual license
to use such portion of the Other IP included in the Teva IP that shall be developed
solely by Protalix’s employees, for any purpose that is not related in any manner to
the manufacturing, developing, selling and/or commercialization of the Proteins or
the Licensed Products (which Teva IP, for the avoidance of doubt, shall include any
Other IP that may be assigned to Teva pursuant to Section 11.4 above).
	 
	 	11.8.	 	Except as otherwise set forth in this Agreement, Teva and Protalix shall
retain their respective unrestricted rights to make, have made, use and sell all
such data, information, discoveries or inventions that are or may be owned by them,
provided however that Protalix shall not be entitled to sell, pledge (other than in
the ordinary course of business for the receipt of credit-lines) or assign any
portion of the Licensed Information without prior written approval by Teva.
	 
	 	11.9.	 	Each Party hereto undertakes to sign, execute and deliver all documents and
papers that may be required, and perform such other acts as may be reasonably
required in the circumstances, in order to ensure the division of the intellectual
property rights between the Parties in accordance with the terms of this Section 11,
as well as the filing of any and all patents arising hereunder and the registration
of the License granted hereunder.

12. Prosecution and Protection of Intellectual Property

Patent Filing

	 	12.1.	 	Throughout the term of the License granted hereunder, [***]shall be
obligated, at its own expense, to file, record, prosecute, and maintain all patent
rights with respect to the [***] in the countries as set forth in Annex 12.1
attached hereto (the “Current Countries”). In addition, throughout the
performance of the Feasibility Program only, [***] shall be obligated to file,
record, prosecute and maintain, all patent rights with respect to the [***] in all
the Major Countries. In addition, [***] shall have the right, at its own expense, to
file, record, prosecute, and maintain all patent rights with respect to the [***],
in all other countries which are not the Current Countries.
	 
	 	12.2.	 	Notwithstanding 12.1 above, as of the provision of Stage 2 Notice by [***],
[***] shall, at [***] expense and as long as this Agreement is in effect, file,
record, prosecute and maintain all patent rights with respect to the [***], in the
Major Countries, and, at its discretion, in the other countries of the world.
	 
	 	12.3.	 	Each Party shall provide the other Party with a prior written notice
regarding filing of each patent application which is filed pursuant to section 12.1
or 12.2, and shall furthermore give reasonable consideration to the comments
received by the other with respect to the filing of such patents. Each Party shall
provide the other with reasonable information relating to the prosecution of such
Party’s IP [***], and the maintenance and other proceedings relating thereto
including, without limitation, by providing copies of substantive communications,
notices, actions, search reports and third party observations submitted to or
received from patent offices. Provision of all such documentation and information
from one Party to the other shall be at no cost to the receiving Party.
	 
	 	12.4.	 	In the event that [***] fails to file, record, prosecute or maintain all
patent rights with respect to the [***] in all the Current Countries or, as
applicable throughout the

 

			
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	 	 	 	performance of the Feasibility Program, the [***] in any
of the Major Countries, which failure constitutes a breach of its obligations under
Section 12.1 above, then [***] shall be entitled to terminate this Agreement and
to any other remedy provided to it under law.
	 
	 	12.5.	 	If [***] elects not to file, record, prosecute or maintain all patent
rights with respect to the [***] in countries other than the Current Countries or,
as applicable, [***], in any country of the world which is not one of the Major
Countries, [***] shall notify [***]in writing of such election to allow [***], in
its sole discretion, to file and/or continue to prosecute such patent application
and/or maintain such patent in such country at its own cost and expense. In such
event, for as long as [***] continues to prosecute and maintain such patents,
then, in respect of such country, [***] shall not be obligated to pay [***] in such
country protected or to be protected by such patent until such time as [***] out of
pocket expenses incurred in prosecuting and/or maintaining such patents are
recouped. [***] shall notify [***] in writing of [***] election as aforesaid. For
the avoidance of doubt, it is hereby clarified that should [***] assume control
over the prosecution and maintenance of such patents as aforesaid, then at any time
thereafter [***] may, in its sole discretion, cease the prosecution and maintenance
of such patents, upon prior written notice to [***].
	 
	 	12.6.	 	If [***] elects not to file, record, prosecute or maintain all patent
rights with respect to the [***] in any of the Major Countries, [***] shall notify
[***] in writing of such election to allow [***], in its sole discretion, to file,
record and/or continue to prosecute such patent application and/or maintain such
patent in such country. In such event, for as long as [***] continues to file,
record, prosecute and maintain such patents or patent applications and notifies
[***] of same, then, in respect of such country, with respect to the [***] in any
of the Major Countries, [***] shall reimburse [***] for [***] out of its patent
expenses.
	 
	 	12.7.	 	Nothing contained herein shall be deemed to be a warranty by either of the
Parties that they can or will be able to obtain patents on patent applications
included in the Licensed Information or that any such patents will afford adequate
or commercially worthwhile protection.

Patent Enforcement

	 	12.8.	 	In the event that either Party hereto becomes aware of any product that is
made, used, or sold or any action that it believes infringes or misappropriates the
Licensed Information applicable to the Licensed Products or the Teva IP
(collectively, “Product IP”), such Party will promptly advise the other of all the
relevant facts and circumstances known to such first-mentioned Party in connection
with such infringement or misappropriation.
	 
	 	12.9.	 	Prior to the provisions of a Stage 2 Notice, with respect to [***], [***]
shall, at its own expense, enforce the [***], or any part thereof, against
infringement or misappropriation, bring an action against any third party suspected
of infringement or misappropriation of same and control the defense of any
counterclaim or declaratory judgment action (or other action) relating thereto;
[***] will fully cooperate with [***] at [***] expense, with respect to the
investigation and prosecution of such alleged infringement or misappropriation
including the eventual joining of [***] as a party to such action, as may be
required by the law of the particular forum where enforcement is being sought. Any
recovery obtained as a result of such action shall

 

			
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	 	 	 	be applied first to the
documented costs and expenses actually incurred by [***], and [***] shall retain any
and all remaining amounts recovered.
	 
	 	12.10.	 	As of provision of the Stage 2 Notice, with respect to the [***], [***] shall have
the first right, but not the obligation, to bring an action against any third party
suspected of infringement or misappropriation of same, and to control the defense of
any counterclaim or declaratory judgment action alleging invalidity or
non-infringement (or other action) relating thereto. If [***]elects to bring such
action against a third party, [***] will fully cooperate with [***], at [***]
expense, with respect to the investigation and prosecution of such alleged
infringement or misappropriation, including the joining of [***] as a party to such
action, as may be required by the law of the particular forum where enforcement is
being sought. Any recovery obtained as a result of such action shall be split, after
the deduction of the documented costs and expenses actually incurred by [***], so
that [***] will be entitled to [***] and [***] shall retain [***] out of the amounts
which constitute compensation for loss of sales. All other amounts shall be retained
by [***].
	 
	 	 	 	As of provision of the Stage 2 Notice [***] may, at its own expense, enforce the [***],
or any part thereof, against infringement or misappropriation, bring an action against
any third party suspected of infringement or misappropriation of same and control the
defense of any counterclaim or declaratory judgment action (or other action) relating
thereto if [***] fails, within sixty (60) days after becoming aware of such
infringement, or receiving notice from [***] of such infringement, to take reasonable
action to investigate such alleged infringement. [***] will fully cooperate with [***],
at [***] expense, with respect to the investigation and prosecution of such alleged
infringement or misappropriation including the joining of [***] as a
party to such action, as may be required by the law of the particular forum where
enforcement is being sought. Any recovery obtained as a result of such action taken by
[***] shall be retained by [***] in full.
	 
	 	12.11.     	 	Each Party shall execute all necessary and proper documents, take such actions as
shall be appropriate to allow the other Party to institute and litigate such
infringement actions referred to in this Section 12, and shall otherwise cooperate
in the institution and litigation of such actions (including, without limitation,
consenting to being named as a party thereto). Each Party, in litigating any such
infringement actions, shall keep the other Party reasonably informed as to the
status of such actions.

Patent Infringement

	 	12.12.     	 	As of the provision of Stage 2 Notice by Teva, in the event that either Teva or
Protalix, or both of them, are sued by a third party alleging that the
commercialization of the Licensed Products infringes upon any intellectual property
rights of such third party the Party being so sued shall immediately give the other
Party notice of same.
	 
	 	 	 	Teva shall have the right to defend against such action, on behalf of both Parties, as
aforesaid within twenty (20) business days from the date the relevant suit becomes known
to Teva, and any expenses or costs incurred by Teva in connection with such action(s),
and any costs or amounts awarded to the counterparties in such action(s) shall be fully
borne by Teva and any recovery in such action shall be retained by Teva in full. In the
event that Teva does not exercise its right to defend in a certain country, then
Protalix shall be entitled to defend against such claim at its own cost and

 

			
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	 	 	 	expense in
such country and any recovery in such action shall be retained by Protalix
in full. In addition, in such event that Protalix defends against such claim, Protalix
shall have the right to terminate the License provided hereunder in respect of such
country (in which the defense is taken) only with respect to the certain Licensed
Product as to which the claim relates.

General

	 	12.13.	 	A Party shall be deemed to have met its obligation to file, record, prosecute,
maintain, enforce and defend patents in accordance with Section 12 above if its
decision is commercially reasonable solely in view of the foreseeable impact of any
action or inaction on the development or commercialization of Licensed Products.
For the sake of clarity, such obligations shall apply to the Platform Patents only
in respect of actions that may be taken in the Current Countries after the
Effective Date.
	 
	 	12.14.	 	Protalix and Teva will reasonably co-operate in the defense of any claims brought
against the other Party pursuant to this Agreement and shall voluntarily join any
such litigation if so required by law. Protalix and Teva will execute all documents
reasonably necessary for the relevant Party to defend against such action, and shall
provide documents and help with making contact with witnesses that are or were their
employees, consultants or otherwise connected to them, whose testimony — in the
judgment of the attorneys handling the law suit (or Teva’s or Protalix’s counsel in
the event the proceedings will be brought only on the name of one Party) — is
necessary to allow such litigation to go forward.
	 
	 	12.15.	 	In no event shall either Party enter into any settlement, consent order, consent
judgment or any voluntary disposition of such action that would adversely affect the
rights of the other without the prior written consent of such other Party, which
consent shall not be unreasonably withheld.

13. New Breakthrough Technology

	 	13.1.	 	Should Protalix develop on its own or receive a license to Breakthrough
Technology, Protalix shall notify Teva thereof as soon as practicable, and provide
Teva with all information related thereto, and enter into discussions with Teva, in
good faith, with a view towards granting Teva or procuring the grant to Teva of an
exclusive worldwide license to utilize such Breakthrough Technology as it relates
solely to the Proteins and/or the Licensed Products, but shall not be bound to such
discussions if Teva did not initiate negotiation with Protalix in such respect for a
period exceeding [***] of its provision of such information to Teva as
provided above.
	 
	 	13.2.	 	The license to the Breakthrough Technology shall be granted by Protalix to
Teva in return for [***], as shall be
discussed and agreed in good faith between the Parties.

For the purposes hereof, the term “Breakthrough Technology” means any [***].

 

			
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14. Right of First Look – GCD Product

	 	14.1.	 	Protalix hereby grants Teva and Teva hereby accepts from Protalix a right of
first look (the “ROFL”) at Protalix’s proprietary product based on
glucocerebrosidase which is currently under development, for the treatment of
Gauchers Disease and for other clinical indications (the “GCD Product”), to enable
Teva to evaluate its interest in obtaining an exclusive, worldwide license to
develop, commercialize, manufacture, market, distribute and sell the GCD Product for
all indications, including without limitation Gauchers Disease (the “GCD License”).
	 
	 	14.2.	 	The period of time during which the ROFL shall be valid, is referred to
hereunder as the “Evaluation Period”. The Evaluation Period shall start as of the
Effective Date and shall automatically terminate, on a per country basis, upon: (x)
Protalix exclusively licensing the GCD Product (with respect to all indications) to
one or more third parties in all of the Major Countries, or (y) the commercial
launch of the GCD Product by Protalix in all of the Major Countries, provided
Protalix fully complied with the provisions of this section 14. If licenses to third
parties in respect of the Major Countries subsequently terminates, the ROFL to Teva
shall be reinstated pursuant to the terms of this Section 14.
	 
	 	14.3.	 	Throughout the Evaluation Period, Protalix shall submit to Teva within thirty
(30) days after the end of each calendar quarter, a written report briefly
describing all updates in its research and development activities in relation to the
GCD Product and the results thereof. Notwithstanding the above, if a material event
has occurred relating to the development of the GCD Product then Protalix shall so
notify Teva promptly.
	 
	 	14.4.	 	At any time or times during the Evaluation Period Teva may notify Protalix in
writing, that it wishes to negotiate the terms and conditions of the GCD License
(the “Notice”). In such event, Protalix shall be bound to an exclusive negotiation
period of [***] as of the date of the Notice (the “Negotiation Period’)
during which time the Parties shall act in good faith and endeavor to finalize the
terms and conditions of a license agreement to govern the grant to Teva of the GCD
License (the “GCD License Agreement”). If the Parties fail to execute GCD License
Agreement by the expiry of the Negotiation Period, the Parties shall endeavor to
finalize the GCD License Agreement as soon as possible thereafter, without Protalix
being barred, however, from negotiating with any third party. The exclusive [***] Negotiation Period shall not occur more than [***]. For the
avoidance of doubt, under no circumstances shall Protalix be barred from launching
or commercially selling the GCD Product by itself and/or through an Affiliate, and
for as long as Protalix intends to do so in any Major Country (as evidenced by a
board resolution), Protalix shall not be required to conduct negotiations with Teva
following receipt of any Notice pursuant to this Section 14.4, in respect to such
Major Country. Protalix shall provide Teva with a copy of such board resolution, at
its request.
	 
	 	14.5.	 	During the Negotiation Period: (i) Teva shall have the right to evaluate the
GCD Product to determine its interest in receiving the GCD License, and to receive
all data and information related to the GCD Product generated or
received by Protalix prior to the commencement of or during the Negotiation Period,
excluding only information regarding commercial terms related to previous
negotiations with third parties; (ii) Protalix shall not grant any third party any
rights to or in respect of the GCD Product

 

			
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	 	 	 	which may interfere with the grant of the GCD License to Teva or provide any third party with any information relating to
the GCD Product.

	 	14.6.	 	Without derogating from the above, should a third party show interest in
acquiring a license for the GCD Product for any indication from Protalix at any time
during the Evaluation Period except during a Negotiation Period, and Protalix will
decide to enter into negotiations with such third party (the “Third Party
Negotiation Period”), Protalix shall so notify Teva immediately in writing, and will
disclose to Teva all updated information regarding the GCD Product available during
and throughout the Third Party Negotiation Period such that Teva may be able to
negotiate in parallel with full and complete updated GCD Product information
disclosed. For the avoidance of doubt, Protalix shall not be entitled to accept an
offer from any third party in connection with the licensing of GCD Product for any
indication unless Protalix has first complied with the terms of this Section 14.
	 
	 	14.7.	 	In the event that, at the time Teva exercises its right to enter into the
Negotiation Period, Protalix is already in a Third Party Negotiation Period, then,
notwithstanding the exclusivity provision set forth above, Protalix may continue
negotiating with such third party ONLY, but not with any other third party or parties
(for so long as the Negotiation Period is in effect).
	 
	 	14.8.	 	It is hereby agreed that in the event that the Parties will agree upon a
definitive agreement with respect to the GCD License, such agreement shall include a
provision setting out a mechanism whereby Protalix will not compete with Teva through
a second generation GCD Product.

14A Services by Teva regarding the [***]

	 	14A.1	 	Teva will provide Protalix with  [***]
with respect to the [***] for the performance of Phase III clinical trials, as set
forth in Section 14A.3 below, all in accordance with applicable regulatory requirements
(collectively, the “[***] Services”).
	 
	 	14A.2	 	The price of the [***] Services shall be [***] in the aggregate, and such price shall
be invoiced on a [***] basis, and paid within thirty (30) days of the end of the [***]
during which Protalix receives an invoice from Teva, subject to performance of such [***]
Services. Any material increase in the cost of the [***] Services stated above will be
discussed and negotiated in good faith between the management of both Parties.
	 
	 	14A.3	 	The [***] Services shall entail the provision of
[***].

 

			
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Teva shall compile the requisite batch production documentation or a batch master
file and provide the same to Protalix.

14A.4 The comprehensive timeline and the detailed description of the [***] Services shall be
attached hereto as Annex 14A.4 within thirty (30) days of the Effective Date.

14A.5 Teva will provide Protalix with any regulatory documentation in its possession in
respect of the [***] Services, as may be required pursuant to an audit by regulatory
authorities and as may required for the submission of a CMC file (for example Media Fill,
Closure Integrity test, etc.). Protalix’s QA representatives and/or regulatory QP persons
shall have the right to visit and audit Teva’s [***] site for the sole purpose of
regulatory audit at times to be coordinated in advance between the Parties, but only to the
extent required by the relevant regulatory authorities for the conduct of the Phase III
clinical trials.

14A.6 Following the completion of the performance of the [***] Services, Protalix shall have
the option to request that Teva continue the performance of the [***] with respect to the [***] on a
commercial basis (the “Commercial [***] Services”), and in the event that Protalix shall
request that Teva perform the Commercial [***] Services, the terms of same (including the
pricing of batch production) shall be negotiated in good faith between the Parties, to
reflect a competitive market price at the relevant time. For the avoidance of doubt, it is
clarified that Teva shall only be required to provide the Commercial [***] Services in the
event that both Parties hereto agree on the terms of the provision of same.

14A.7 At any time, Protalix may request that Teva transfer to Protalix a technology
transfer file, and in such event Teva shall promptly provide the same to Protalix. The
reasonable costs of such transfer, as demonstrated by Teva, shall be reimbursed to Teva by
Protalix within thirty (30) days of the receipt from Teva of an invoice in respect of same,
along with supporting documentation.

15. Term and Termination 

	 	15.1.	 	This Agreement shall be effective from the date of receipt of all necessary
corporate approvals of Teva required in respect of this Agreement (the “Effective
Date”) and shall continue in full force and effect until terminated in accordance
with the terms hereof. For the avoidance of doubt, Protalix hereby acknowledges that
the approval of the Board of Directors of Teva is required,
and that in the event that such approval is not received, this Agreement shall have
no force or effect whatsoever.
	 
	 	15.2.	 	Teva shall have the right to terminate this Agreement for any reason with
respect to both or any specific Protein (the “Terminated Protein”), by providing
Protalix with

	 		
	[***]	 	Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.

 - 32 - 

 

	 	 	 	thirty (30) days prior written notice of such decision. In the event
that only one Protein is terminated, this Agreement shall remain in full force and
effect with respect to the remaining Protein which is not a Terminated Protein. No
compensation from Teva to Protalix shall be due as a result of such termination.
	 
	 	15.3.	 	Upon the termination of this Agreement by Teva pursuant to Section 15.2
above, with respect to any specific Protein, the following shall apply:

	 	15.3.1.	 	the License granted to Teva by Protalix, with regard to
Licensed Products based on such Protein shall be terminated;
	 
	 	15.3.2.	 	Teva shall provide Protalix with a report summarizing its
development activities and the results up to termination.

	 	15.4.	 	Without derogating from any other remedies that either Party hereto may have
under the terms of this Agreement or at law, each Party hereto shall have the right
to terminate this Agreement forthwith upon the occurrence of any of the following:

	 	(i)	 	the commission of a material breach by the other
Party hereto of its obligations hereunder, and such other
Party’s failure to remedy such breach within sixty (60) days
after being requested in writing to do so by the non-breaching
Party; or
	 
	 	(ii)	 	the other Party’s liquidation, whether voluntarily
or otherwise, or its entering into any arrangement with its
creditors.

	 	15.5.	 	Notwithstanding anything to the contrary in this Agreement, to the extent
that a Party (the “Respondent”) reasonably and in good faith disagrees with any
assertion by the other Party (the “Claimant”) that there has been a material breach
of this Agreement by Respondent, and Respondent provides written notice to Claimant
of its disagreement and the basis for its belief (a “Rebuttal Notice”) within
fifteen (15) days after Respondent receives notice from Claimant of a breach, this
Agreement will remain in effect and any termination of this Agreement further to
Section 15.4(i) hereunder will be suspended pending resolution of such disagreement
between the Parties as provided in Section 23.18 below. The Parties will attempt to
resolve such disagreement as expeditiously as possible and Respondent will continue
to comply with the provisions of this Agreement, to the extent that they are not the
subject of the disagreement between the Parties. For the avoidance of doubt, it is
clarified that nothing in this Section 15.5 shall derogate from Teva’s right of
termination pursuant to Section 15.2, at any time and for any reason.
	 
	 	15.6.	 	Upon termination of this agreement for whatever reason, each Party shall
immediately return to the other party all materials, reports, updates,
documentation, written instructions, notes, memoranda, discs or records or other
documentation or physical matter of whatsoever nature or description provided by
the other Party, except in the event that such material is owned by such Party
pursuant to the terms of this Agreement, and provided that each Party shall be
allowed to retain one (1) copy for archival purposes.
	 
	 	15.7.	 	In the event that following termination of this Agreement for convenience or
breach by Teva, Protalix shall request the license to utilize the Teva IP for the
sole purpose of the further development, manufacturing, commercialization, marketing
and sale of a Licensed Product, then Teva will enter into discussions with Protalix,
in good faith, with a view towards granting Protalix such license, but shall not be
bound to grant

 - 33 - 

 

	 	 	 	such license. Such license to the Teva IP shall be granted by Teva in
return for reasonable consideration by industry standards, as shall be discussed and
agreed in good faith between the Parties. For the avoidance of doubt, following
termination of this Agreement pursuant to Section 15.4 due to a breach hereof by
Protalix, Teva shall not be required to enter into discussions with Protalix
regarding any request of Protalix to grant any license to the Teva IP.

	 	15.8.	 	Upon termination hereof for any reason, each Party shall be entitled to
collect any debt then owed to it by the other Party.
	 
	 	15.9.	 	Save as explicitly stipulated otherwise in any Agreement, any provision, that
by its nature, is intended to survive termination, shall survive the termination or
expiration of this Agreement.

16. Representations

	 	16.1.	 	Each Party hereby represents to the other Party that:

	 	16.1.1.	 	it has the full power and authority to enter into this
Agreement and to perform its obligations hereunder, and that subject to
Section 15.1 with respect to Teva, that all corporate approvals have been
obtained.
	 
	 	16.1.2.	 	entering this Agreement shall not constitute a breach of any
agreement, contract, understanding and/or obligation, including such
Party’s documents of incorporation, that it is currently bound by, and as
long as this Agreement is in effect and without derogating from the rights
to terminate the Agreement pursuant to Section 15 above, such Party shall
not undertake any obligations which conflict with its obligations under
this Agreement.

	 	16.2.	 	In addition, Protalix hereby represents and warrants that:

	 	16.2.1.	 	it is the sole and exclusive owner of the existing Platform
Patents, and the existing Platform IP, and that all right, title and
interest therein and thereto vest in Protalix, and that no third party,
other than the CSO to the extent applicable, has any rights whatsoever
(including the right to receive royalties or any other compensation) in
respect of the existing Platform Patents, and the existing Platform IP;
	 
	 	16.2.2.	 	No third party, has or shall have any rights whatsoever
(including the right to receive royalties or any other
compensation) in respect of any results of the Feasibility Program
and Stage 2 activities to be conducted by or for Protalix, except
as might be agreed pursuant to Section 4.16;
	 
	 	16.2.3.	 	To the best of its knowledge, the performance of Protalix’s
obligations under this Agreement, and the exploitation of the Platform IP
do not infringe upon any third party intellectual property rights
currently existing;
	 
	 	16.2.4.	 	it has the right and authority, as the proprietor of the
Platform IP, to grant the License;
	 
	 	16.2.5.	 	it has no knowledge of any legal suit or proceeding by a
third party against Protalix contesting the ownership or validity of the
Licensed

 - 34 - 

 

	 	    	 	Information or any part thereof or contesting the possible
exploitation of the License granted hereunder (including as it relates to
the commercialization of the Licensed Products) as infringing upon any
third party intellectual property rights;

	 	16.2.6.	 	it shall not, during the term of this Agreement, perform any
work or other activities on or in respect of the Proteins, except in the
course of the collaboration hereunder;
	 
	 	16.2.7.	 	it has the financial capacity to carry out all its
obligations hereunder, including, the performance of the Feasibility
Programs in accordance with the timelines set forth therein;
	 
	 	16.2.8.	 	other than in respect of the Platform IP, it has not received
and hereby undertakes that it shall not receive any funding from the CSO
in respect of the Licensed Information, the Feasibility Programs or the
performance thereof, or the performance of any other of its obligations
under this Agreement; and in respect of the Platform IP, Protalix shall
bear any and all amounts due to the CSO;
	 
	 	16.2.9.	 	it has the necessary experience and expertise to perform each
of the Feasibility Programs, and its share of the Development Plan during
Stage 2;
	 
	 	16.2.10.	 	Protalix does not have any Affiliates; and that
	 
	 	16.2.11.	 	in carrying out its undertakings and responsibilities
pursuant to this Agreement, Protalix shall comply with all applicable laws
and regulations, licenses, permits, approvals and procedures.

16.3. In addition, Teva hereby represents and warrants that in carrying out its
undertakings and responsibilities pursuant to this Agreement, Teva shall comply, and
shall require that its Affiliates, Sub-licensees and Further Sub-licensees comply,
with all applicable laws and regulations, licenses, permits, approvals and
procedures.

16.4. Without derogating from any of the remedies available to either Party
hereunder or under applicable law, if either Party shall become aware of the
inaccuracy of any of the above representations, such Party shall immediately
notify the other Party of such in writing.

16.5. Both Teva and Protalix represent that they shall perform their obligations
hereunder diligently, expeditiously and to the best of their abilities.

16.6. Except as otherwise expressly provided in this Agreement, no Party makes any
warranty with respect to any technology, patents, goods, services, rights or other
subject matter of this Agreement and each Party hereby disclaims warranties of
merchantability, fitness for a particular purpose and non-infringement with respect
to any and all of the foregoing. Without derogating from the generality of the
foregoing, nothing contained in this Agreement is a warranty or representation by
Protalix or Teva that any efforts to be exerted by Protalix or Teva in connection
with this Agreement including without limitation any development activities to be
performed by it hereunder, or any part thereof, will actually achieve their aims or
succeed, and the Parties make no warranties whatsoever as to any results to be
achieved in consequence of the carrying out of any such efforts or activities; and
that any patents will be issued with respect to

 - 35 - 

 

the patent applications that are or
may constitute part of the list of Platform Patents, or that patents obtained on any
of the said patent applications are or will be valid or will afford proper
protection or that the Licensed Information will be commercially exploitable or of
any other value.

17. Indemnification 

17.1. Teva shall indemnify, defend, and hold harmless each of Protalix and its
directors, officers, employees, and agents and its respective successors, heirs and
assigns (the “Protalix Indemnitees”), from and against any liability, damage, loss,
or expense (including reasonable attorney’s fees and expenses of litigation)
incurred by or imposed upon any of Protalix Indemnitees in connection with any
claims, suits, actions, demands or judgments (“Claims”) arising pursuant to a breach
of a representation or warranty of Teva hereunder and/or concerning the use of any
Licensed Information by Teva, or any of its Affiliates or Sub-licensees or Further
Sub-licensees, or concerning any Licensed Product that is developed, tested, made,
used, or sold pursuant to any right or license granted by Protalix to Teva under
this Agreement (except in cases where, and to the extent that, such Claims are
finally proven to result from the gross negligence and/or willful misconduct on the
part of any of the Protalix Indemnitees and/ or any misrepresentation by Protalix
hereunder).

17.2. Teva’s undertakings under Section 17.1 above shall be subject to: (a) receipt
of prompt written notice of any Claim by the Protalix Indemnitee (provided, however,
that the failure to give such notice shall not affect Teva’s indemnification
undertakings provided hereunder except to the extent Teva shall have been actually
prejudiced as a result of such failure), (b) the cooperation of the Protalix
Indemnitee(s) regarding the response to and the defense of any such Claim, and (c)
Teva’s right, by written notice to the Protalix Indemnitees, to assume the defense
of the Claim or represent the interests of the Protalix Indemnitees in respect of
such Claim, that shall include the right to select and direct legal counsel and
other consultants to
appear in proceedings on behalf of the Protalix Indemnitees and to propose,
accept or reject offers of settlement, all at its sole cost; provided
however, that no such settlement shall be made without the written
consent of the Protalix Indemnitees, such consent not to be unreasonably
withheld or delayed. Nothing herein shall prevent the Protalix Indemnitees from
retaining their own counsel and participating in their own defense at their own
cost and expense.

17.3. Protalix shall indemnify, defend, and hold harmless each of Teva and its
directors, officers, employees, and agents and its respective successors, heirs and
assigns (the “Teva Indemnitees”), from and against any liability, damage, loss, or
expense (including reasonable attorney’s fees and expenses of litigation) incurred
by or imposed upon any of Teva Indemnitees in connection with any claims, suits,
actions, demands or judgments (“Claims”) arising pursuant to a breach of a
representation or warranty of Protalix hereunder and/or concerning the research,
development or manufacturing activities of Protalix hereunder (except in cases
where, and to the extent that, such Claims are finally proven to

 - 36 - 

 

result from the
gross negligence and/or willful misconduct on the part of any of the Teva
Indemnitees and/ or any misrepresentation by Teva hereunder).

17.4. Protalix’s undertakings under Section 17.3 above shall be subject to: (a)
receipt of prompt written notice of any Claim by the Teva Indemnitee (provided,
however, that the failure to give such notice shall not affect Protalix’s
indemnification undertakings provided hereunder except to the extent Protalix shall
have been actually prejudiced as a result of such failure), (b) the cooperation of
the Teva Indemnitee(s) regarding the response to and the defense of any such Claim,
and (c) Protalix’s right, by written notice to the Teva Indemnitees, to assume the
defense of the Claim or represent the interests of the Teva Indemnitees in respect
of such Claim, that shall include the right to select and direct legal counsel and
other consultants to appear in proceedings on behalf of the Teva Indemnitees and to
propose, accept or reject offers of settlement, all at its sole cost;
provided however, that no such settlement shall be made without the
written consent of the Teva Indemnitees, such consent not to be unreasonably
withheld or delayed. Nothing herein shall prevent the Teva Indemnitees from
retaining their own counsel and participating in their own defense at their own cost
and expense.

18. Insurance

Each Party hereto shall maintain, for the term of this Agreement and thereafter,
insurance sufficient to cover its obligations under this Agreement and under law as it
customarily maintains for similar activities in the regular course of its business.
Protalix’s insurance obligations with respect to the manufacturing of the API will be
included in the Supply Agreement. Teva may fulfill its obligation hereunder to obtain
insurance by the maintenance of appropriate self insurance regardless of the nature or
title thereof.

19. Limitation of Liability 

IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER OR ANY OF
ITS AFFILIATES FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, SPECIAL, PUNITIVE OR EXEMPLARY
DAMAGES (INCLUDING, WITHOUT LIMITATION, LOST PROFITS, BUSINESS OR GOODWILL) SUFFERED OR
INCURRED BY SUCH OTHER PARTY OR ITS AFFILIATES, WHETHER BASED UPON A CLAIM OR ACTION OF
CONTRACT, WARRANTY, NEGLIGENCE OR TORT, OR OTHERWISE, ARISING OUT OF THIS AGREEMENT.

20. Confidentiality 

20.1. Other than as expressly set forth herein, Teva and Protalix undertake to
treat and to maintain and to ensure that their Representatives (as defined below)
shall treat and maintain, in strict confidence and secrecy any information disclosed
by either Party under this Agreement, whether disclosed in oral or visual form or in
writing and shall keep in confidence the existence and contents of this Agreement
(the “Confidential Information”) and shall not disclose, publish, or disseminate in
any manner, any Confidential Information including, without limitation, any aspect
thereof which may have been disclosed prior to the signature hereof to a third party
other than those of its Representatives with a need to know same for the purpose of
performing its obligations under this Agreement (the “Purpose”).

 - 37 - 

 

In addition, each
Party shall undertake to treat and maintain (and to ensure that its Representatives
treat and maintain) in strict confidence and secrecy and to prevent any unauthorized
use, disclosure, publication, or dissemination of the Confidential Information,
except for the Purpose. Each Party agrees to be responsible for any use or
disclosure of Confidential Information of any of its said Representatives.

20.2. Each Party shall:

	 	20.2.1.	 	safeguard and keep secret all Confidential Information, and
will not directly or indirectly disclose to any third party the
Confidential Information without written permission of the other.
	 
	 	20.2.2.	 	in performing its duties and obligations hereunder, use at
least the same degree of care as it does with respect to its own
confidential information of like importance but, in any event, at least
reasonable care.

20.3. The undertakings and obligations under Sections 20.1 and 20.2 above shall not
apply to any part of the Confidential Information which:

	 	20.3.1.	 	was known to the recipient of the Confidential Information
(“Recipient”) prior to disclosure by the disclosing Party (“Discloser”);
	 
	 	20.3.2.	 	was generally available to the public prior to disclosure to
the Recipient;
	 
	 	20.3.3.	 	is disclosed to Recipient by a third party who is not bound
by any confidentiality obligation, having a legal right to make such
disclosure;
	 
	 	20.3.4.	 	has become through no act or failure to act on the part of
the Recipient public information or generally available to the public;
	 
	 	20.3.5.	 	was independently developed by Recipient without reference to
or reliance upon the Confidential Information;
	 
	 	20.3.6.	 	is required to be disclosed by Recipient by law, by court
order, or governmental regulation (including securities laws and/or
exchange regulations), provided that the Recipient gives Discloser
reasonable notice prior to any such disclosure and cooperates (at
Discloser’s expense) with Discloser to assist Discloser in obtaining a
protective order or other suitable protection from disclosure (if
available) with respect to such Confidential Information.

20.4. Teva and Protalix acknowledge that the respective Confidential Information is
of special and unique significance to each of them and that any unauthorized
disclosure or use of the Confidential Information could cause irreparable harm and
significant injury to the Discloser that may be difficult to ascertain. Accordingly,
any breach of this Agreement may entitle the aggrieved Party in addition to any
other right or remedy that it may have available to it by law or in equity, to
remedies of injunction, performance and other relief, including recourse in a court
of law.

20.5. Each Party agrees to inform the other Party of any breach or threatened
breach of the provisions hereof by its Representatives.

 - 38 - 

 

20.6. The provisions relating to confidentiality in this Section 20 shall remain in
effect during the term of this Agreement and for a period of three (3) years after
its termination.

20.7. “Representatives” shall mean employees, officers, agents, subcontractors,
consultants, and/or any other person or entity acting on either Party’s behalf,
individually or collectively and which shall be exposed to Confidential Information.

20.8. Notwithstanding the foregoing, each Party may disclose the terms of this
Agreement to the extent required, in the reasonable opinion of such Party’s legal
counsel, to comply with applicable laws, as well as to Sub-licensees and prospective
and current investors, pursuant to appropriate non-disclosure arrangements, provided
however that prior to any disclosure, the disclosing Party shall consult with the
non-disclosing Party, and the non-disclosing Party shall have the right to delete
business sensitive issues.

21. Publication

Neither Party shall issue any press release, make any public statement or advertise any
information pertaining to this Agreement, or to the collaboration hereunder, without the
prior written approval of the other, except as required by applicable
law.

Without
derogating from the foregoing, disclosure required under applicable law and regulations
shall not be subject to the written consent of the other Party, however the disclosing
party shall give the other sufficient notice, as far as practicable under law, of such
required disclosure as to enable the non-disclosing Party time to object to such
disclosure.

22. Independent Parties

22.1. This Agreement shall not make either Party the agent or legal representative
of the other Party. Neither Party is granted any right or authority to assume or to
create any obligation or responsibility, expressed or implied, on behalf of or in
the name of the other Party, with regard to any manner or thing whatsoever, unless
otherwise specifically agreed upon in writing.

22.2. Protalix hereby agrees that its employees, officers, agents, subcontractors,
consultants, and/or any other person or entity acting on Protalix behalf,
individually or collectively, shall be the sole responsibility of Protalix and shall
not be considered at any time as Teva employees and shall not have any claims
against Teva whatsoever.

23. Miscellaneous

23.1. The headings in this Agreement are intended solely for convenience or
reference and shall be given no effect in the interpretation of this Agreement.

23.2. All amounts required to be paid pursuant to this Agreement are final and
inclusive of all taxes and/or duties, of whatsoever nature, except for VAT, which
are now or may hereafter be imposed with regard to this Agreement.

23.3. All payments to be made hereunder shall be made by the due date for payment
as provided herein, in US Dollars or in New Israeli Shekels (“NIS”), as converted
from US Dollars as per the representative rate of the US Dollar against the NIS

 - 39 - 

 

 last published by the Bank of Israel prior to the actual date of payment.

23.4. If applicable laws require that taxes be withheld from any amounts due to
Protalix under this Agreement, Teva shall (a) deduct these taxes from the remittable
amount, (b) pay the taxes to the proper taxing authority, and (c) deliver to
Protalix a statement including the amount of tax withheld and justification
therefor, and such other information as may be necessary for tax credit purposes.

23.5. Teva shall be entitled to set-off from any amounts due to Protalix hereunder,
any amounts not exceeding the amounts of any damage caused to Teva, including
without limitation, as a result of Protalix’s breach hereunder.

23.6. Teva shall be entitled to perform any and all of its obligations arising
under the terms of this Agreement and to exploit any and all of its rights arising
under the terms of this Agreement either directly or through its Affiliates,
provided that Teva remains liable to the performance of all of its obligations
hereunder.

23.7. Without derogating from Teva’s right to grant Sublicenses hereunder, neither
Party may assign its rights or its obligations hereunder, in whole or in part,
except with the prior written consent of the other Party. Notwithstanding the
foregoing, (i) provided that Teva remains liable to the performance of all of its
obligations hereunder, Teva may assign its rights and obligations hereunder to an
Affiliate thereof, and such assignment may be made by Teva, at Teva’s sole
discretion, either in respect of the entire Agreement, or with respect to the rights
and obligations related to any part of this Agreement; and (ii) Protalix may assign
its rights and obligations hereunder to any party
acquiring all of the business to which this Agreement pertains, other than to a
Teva Competitor.

23.8. Should any part or provision of this Agreement be held unenforceable or in
conflict with the applicable laws or regulations of any applicable jurisdiction, the
invalid or unenforceable part or provision shall, provided that it does not go the
essence of this Agreement, be replaced with a revision which accomplishes, to the
extent possible, the original commercial purpose of such part or provision in a
valid and enforceable manner, and the balance of this Agreement shall remain in full
force and effect and binding upon the Parties.

23.9. This Agreement and the annexes attached hereto, constitute the entire
agreement between the Parties with respect to its subject matter and supersede all
prior agreements, arrangements, dealings or writings between the Parties, including
without limitation, the Outlines of Teva — Protalix Co-Operation executed between
the Parties on March 19, 2006. This Agreement may not be varied except in writing
signed by the Parties’ authorized representatives.

	 	23.10.	 	Defined terms used in this Agreement and in the annexes shall have the meanings
ascribed thereto herein and therein. References to Section numbers in this Agreement
and in the annexes are to sections of this Agreement. References to Paragraphs in
the annexes are to paragraphs in the respective annex in which the reference is made
or in other annexes, if so specified.
	 
	 	23.11.	 	No waiver of a breach or default hereunder shall be considered valid unless in
writing and signed by the Party giving such waiver and no such waiver shall be
deemed a waiver of any subsequent breach or default of the same or similar nature.

 - 40 - 

 

	 	23.12.	 	VAT will be added, where applicable, to all payments to be made hereunder and
shall be paid against proper invoices.
	 
	 	23.13.	 	Each Party agrees to execute, acknowledge and deliver such further documents and
instruments and do any other acts, from time to time, as may be reasonably
necessary, to effectuate the purposes of this Agreement.
	 
	 	23.14.	 	None of the provisions of this Agreement shall be enforceable by, any person who
is not a party to this Agreement.
	 
	 	23.15.	 	The remedies afforded to any of the Parties hereto, whether hereunder, or under
applicable law or otherwise, shall be cumulative in nature and not alternative.
	 
	 	23.16.	 	Any notice, declaration or other communication required or authorized to be given
by any Party under this Agreement to any other Party shall be in writing and shall
be personally delivered, sent by facsimile transmission (with a copy by ordinary
mail in either case) or dispatched by courier addressed to the other Party at the
address stated below or such other address as shall be specified by the Parties
hereto by notice in accordance with the provisions of this Section. Any notice shall
operate and be deemed to have been served, if personally delivered, sent by fax or
by courier on the next following day.
	 
	 	 	 	Teva’s and Protalix’s addresses for the purposes of this Agreement shall be as
follows

If to Teva:

Teva Pharmaceutical Industries Ltd.

Attention: Dr. Ram Petter

5 Basel Street, Petah Tiqva 49131

Israel

Telephone: 972-3-9267683

Facsimile: 972-3-9267309

With a copy (that will not constitute notice) to:

Teva Pharmaceutical Industries Ltd.

Attention: General Counsel, Legal Department

5 Basel Street, Petah Tiqva 49131

Israel

Telephone: 972-3-926-7297

Facsimile: 972-3-926-7429

If to Protalix Bio-Pharmaceuticals Ltd.

Protalix Bio-Pharmaceuticals Ltd.

2 Snunit St., Science Park, P.O. Box 455, Carmiel 20100

Israel

Attention: C.E.O.

Telephone: 972-4-9889488

Facsimile: 972-4-9889489

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	 	23.17.	 	Any payment not received when due pursuant hereto shall bear interest from the due
date until the date of actual payment at the rate of [***] (or such other percentage, if lower, as shall not exceed the maximum rate permitted by
law).
	 
	 	23.18.	 	This Agreement shall be governed and interpreted according to the laws of the
State of Israel. Any dispute arising from this Agreement shall be resolved
exclusively by the competent Courts of Tel Aviv-Jaffa, Israel, and by no other court
or jurisdiction.
	 
	 	23.19.	 	This Agreement may be executed in any number of counterparts (including
counterparts transmitted by fax), each of which shall be deemed to be an original,
but all of which taken together shall be deemed to constitute one and the same
instrument.

IN WITNESS WHEREOF, each Party has caused this Agreement to be executed by its duly
authorized representative:

	 	 	 	 	 	 	 	 	 
	TEVA PHARMACEUTICAL INDUSTRIES LTD.
	 	 	 	Protalix Bio-Pharmaceuticals Ltd.

	 
	 	 	 	 	 	 	 	 
	signature:

	 	 /s/ Amir Elstein
	 	 
	 	signature:
	 	 /s/ David Aviezer
	 

	 	 
	 	 	 	 	 	 
	 	 
	name:

	 	      Amir Elstein
	 	 	 	name:
	 	 David Aviezer
	 

	 	 
	 	 	 	 	 	 
	 	 
	designation:

	 	 Group VP, Global Specialty Pharmaceutical
Products
	 	 	 	designation:
	 	           CEO
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	signature:

	 	 /s/ Keren Siemon
	 	 	 	signature:	 	 
	 

	 	 
	 	 	 	 	 	 
	 	 
	name:

	 	      Keren Siemon
	 	 	 	name:	 	 
	 

	 	 
	 	 	 	 	 	 
	 	 
	designation:

	 	Sr. Director BD and Finance, Global
	 	 	 	designation:	 	 
	 

	 	Specialty	 	 	 	 	 	 
	 

	 	Pharmaceutical Products	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	                        Date: 14 September 2006
	 

	 	                        Date: 14 September 2006
	 	 	 	 	 	 

 

			
	[***]	 	Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.

 - 42 - 

 

Annex 1.2.1

List of Additional Patents

[***]

 

			
	[***]	 	Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.

 - 43 - 

 

Annex 1.2.42

Platform Patents

[***]

 

			
	[***]	 	Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.

 - 44 - 

 

Annex 1.2.44

Proteins

[***]

 

			
	[***]	 	Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.

 - 45 - 

 

Annex
3.1.1

Feasibility Program

 - 46 - 

 

Annex 3.1.1A

Outline of the Feasibility Program

[***]

 

			
	[***]	 	Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.

 - 47 - 

 

Annex 4.4

Outline of the activities of the Parties under the Development Plan

[***]

 

			
	[***]	 	Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.

 - 48 - 

 

Annex 4.17

Key elements of the Supply Agreement

 - 49 - 

 

Annex 8.2

[***]

 

			
	[***]	 	Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.

 - 50 - 

 

Annex 12.1 

Current Countries

[***]

 

* The list above is subject to further review by Teva

 

			
	[***]	 	Omitted pursuant to a confidential treatment request. The confidential portion has been
filed separately with the Securities and Exchange Commission.

 - 51 - 

 

Annex 14A.4

Timeline and detailed Description of the GCD Services

 - 52 -EX-10-9 Unprotected Lease Contract

 

Exhibit 10.9

[Translation from Hebrew]

Unprotected Lease Contract

Made and executed in Tel Aviv this 28th October, 2003

	 	 	 
	Between:

	 	Engel Science Parks (99) Ltd.
	 

	 	66 Hahistadrut Blvd., Haifa Bay

By Yitzchak Yaacovinsky
	 

	 	The party authorized to undertake and sign in the name of the Lessor

(hereinafter: “the Lessor”)
	 

	 	of the first part
	 
	 	 
	And:

	 	Metabogal Ltd.
	 

	 	P.O.Box 432, Kiryat Shmonah, Zip code 11013

(hereinafter: “the Lessee”)
	 

	 	of the second part

	 	 	 
	WHEREAS

	 	The Lessor has contracted with the Israel Lands Administration by
agreement whereby it acquired the development rights in the plot
known as Block 18984, Parcels 187 (part of), 188 (part), 190 (part
of), 191 (part of), 192 (part of), 193 (part of), 194 (part of),
199 (part of) and 206 (part of) in Carmiel, plot/s no. 1,
according to Detailed Plan no. C/8880, in Carmiel, (hereinafter: “the Land”) all pursuant to the Development Agreement and the
Appendices thereto attached to this Agreement and marked as
(Appendix “A”); and
	 
	 	 
	WHEREAS

	 	The Lessor intends to establish a science park on the Land,
consisting of industrial buildings for leasing (hereinafter: “the
Science Park”); and
	 
	 	 
	WHEREAS

	 	The Lessor is the proprietor of development rights from the Israel
Lands Administration under a Development Agreement and is entitled
to effect transactions with the Land, including leasing buildings
that it will construct thereon, as set out below in this Agreement
and there is nothing by law or agreement or otherwise to prevent
the Lessor from entering into this Agreement; and
	 
	 	 
	WHEREAS

	 	The destination of the premises is compatible with the Purpose of
the Lease; and
	 
	 	 
	WHEREAS

	 	The Lessor declares that the Development Contract has not been
rescinded by the Israel Lands Administration and is about to be
further extended; and
	 
	 	 
	WHEREAS

	 	The Lessee is desirous to lease the Premises (as hereinafter
defined) from the Lessor under an unprotected lease according to
the Tenants Protection Laws, and the Lessor is prepared to grant
such a lease of the Premises to the Lessee, subject to all of the
conditions hereinafter contained;

 

2

IT IS THEREFORE AGREED, DECLARED AND STIPULATED BETWEEN THE PARTIES AS FOLLOWS:

	1.	 	Preamble 
	 
	 	 	The preamble to this Contract and the Appendices thereto will constitute an integral part
hereof.
	 
	2.	 	Interpretation 

	 	2.1	 	The headings to the clauses in this Contract are set out for ease of reference
only and do not constitute part of the Contract nor will they be applied for purposes of
interpretation.
	 
	 	2.2	 	Save where the context or the meaning otherwise requires, everything stated in
the singular includes the plural and vice-versa, and everything stated in the masculine
includes the feminine and vice-versa.
	 
	 	2.3	 	Unless the context otherwise requires, the following words shall bear the
meanings set out opposite them when used in this Contract:

	 	 	 	 	 
	 

	 	“the Premises” -
	 	means the gross area of some 750sq.m., situated on the
ground floor of Building no. 1 of the industrial building distended to be
constructed by the Lessor and/or on its behalf, on the Land, within the boundaries
of the Science Park in Carmiel. The Premises will consist of offices according to
the specification attached, and be totally finished and have a basic
infrastructure, but be without installations and furniture.

The Premises will be constructed in accordance with plans, the
Lessor’s specification and the Lessee’s specification
respectively attached hereto as Appendices “B”, “C” and “D”.
The Lessor’s and the Lessee’s specification will be
hereinafter collectively called – “the Specification”.

The area of the Premises for the purpose of determining the
rent will be set in accordance with an actual survey
thereafter, after construction is completed.

	3	 	Term of the Lease, Purpose thereof and Non-applicability of the Tenants Protection
Laws

	 	3.1	 	Term of the Lease

	 	3.1.1	 	The Lessor hereby leases to the Lessee and the Lessee hereby takes
on lease from the Lessor the Premises for a term of 5 years, commencing on 15.2.04
and expiring on 14.2.09 (hereinafter: “the Lease Term”).
	 
	 	 	 	If and to the extent the actual delivery date is deferred by reason of that
stated in clause 5.1 hereof, the date of the commencement of the Lease Term will
be deemed to be the date of actual delivery, and the expiration date of the Lease
Term will be correspondingly deferred.

 

3

	 	 	 	Subject to the agreed time schedule mentioned in clause 19.9, the Lessor will, in
respect of each day of deferral of the date of the commencement of the Lease
Term, pay the Lessee an amount equal to twice the amount of the Rent plus VAT,
calculated on a daily basis as from the date prescribed above for the
commencement of the Lease Term until the actual date of the commencement of the
Lease Term. The deferral of the date of commencement of the Lease Term by reason
of any act or omission of the Lessee will not obligate the Lessor to make such
payment and the date of the commencement of the Lease will remain unchanged.
	 
	 	3.1.2	 	Notwithstanding the foregoing in relation to the Lease Term, the
Lessee will be entitled to terminate the Lease Term by four months prior notice,
during the periods and on the following terms and conditions:

	 	3.1.2.1	 	After 3 years of the lease, against payment of the sum of NIS. 150,000
(plus VAT) in addition to the rent that has been paid in respect of such
three-year lease.
	 
	 	3.1.2.2	 	After 4 years of the lease, against payment of the sum of NIS. 75,000
(plus VAT) in addition to the rent that has been paid in respect of such
four-year lease.

	 	 	 	The sums mentioned in the above sub-clause will be linked to the residential
construction inputs index, the base index being that known on the date of the
execution of this Contract, the operative index being that which will be known on
the date of the making of the payment according to this clause.
	 
	 	3.1.3	 	The Lessee hereby undertakes to open the Premises for regular
business activity and carry on in the Premises for the entire duration of the
Lease Term, a business the purpose of which is set out below.
	 
	 	3.1.4	 	Subject clause 3.1.2 above, the cessation by the Lessee of the use
of the Premises or quitting the same prior to the expiration of the Lease Term
will not release it from fully performing its undertakings, including payment of
the rent and the remaining payments payable by it under this Contract until the
expiration of the Lease Term, except in a case where an alternative tenant is
found for the Premises whose identity has been agreed to by the Lessor, in which
case the Lessee will be released from the performance of its undertakings under
this Agreement from the date on which a contract is forged with the alternative
tenant and thereafter.
	 
	 	 	 	It is clarified that the Rent will be paid by the expiration of the Lease Term or
until an alternative tenant is found who is acceptable to and approved by the
Lessor, whichever is the earlier.
	 
	 	 	 	The Lessor’s approval will not be unreasonably withheld save that where the
Lessor will have agreed to an alternative tenant that has been found by the
Lessee, the Lessee will remain liable, jointly with the alternative tenant, for
the performance of the undertakings under this Agreement.

 

4

	 	3.2	 	Purpose of the Lease
	 
	 	 	 	The Lessee hereby leases the Premises for the management of a business in the field of
biotechnology including the management of biotechnology laboratories, research,
development and production of medications and the Lessee is prohibited from making any
other use whatsoever of the Premises.
	 
	 	3.3	 	Non-applicability of the Tenants Protection Laws 

	 	3.3.1	 	There was no tenant entitled to occupy the Premises on the date of
the commencement of the Tenants Protection Law (Consolidated Version), 5732-1972.
	 
	 	3.3.2	 	The Lessee hereby declares that it has not been requested to pay nor
has it paid any key money or payments which could be construed as key money and
that all the works, alterations, improvements and enhancements that will be made
in the Premises, if at all, are not and will not be fundamental alterations and
further that the provisions of Part Three of the Tenants Protection Law
(Consolidated Version), 5732-1972 dealing with key money, will not apply to the
Contract.
	 
	 	3.3.3	 	The Lease, the Lessee and the Premises are not protected according
to the provisions of the Tenants Protection Law (Consolidated Version), 5732-1972
nor according to the provisions of any other law protecting tenants or occupiers
in any manner whatsoever and such Laws as amended and the regulations promulgated
now or hereafter thereunder do not and will not apply to the building and/or the
Lease and/or the Lessee and/or the Premises and/or this Contract.
	 
	 	3.3.4	 	The Lessee will not be entitled, when quitting the Premises, to any
payment whatsoever either in the form of key money or in any other form.
	 
	 	3.3.5	 	For the avoidance of any doubt the Lessee hereby declares and
warrants that if in the future any claims are raised to the effect that the
engagement under this Contract is protected according to the Tenants Protection
Law or any other law, the Lessee will compensate the Lessor in respect of any
damage that will be incurred by it, including the difference between the value of
the property at the expiration of the Lease Term as occupied, and the value
thereof in the open market, as vacant property.

	4.	 	Rent

	 	4.1	 	The Lessee undertakes to pay the Lessor monthly rent pursuant to the following
conditions and dates:

	 	4.1.1	 	The Lessee will pay for the duration of the Lease Term the sum of $9
per month for each sq.m., of the area of the Premises.
	 
	 	4.1.2	 	The parties agree that in respect of each 11-month period of the
Lease, the Lessee will be exempt from paying rent for one month. The month of the
Lease without payment of the rent will be granted in relation to each year of the
Lease, in the seventh month of the Lease, that is to say – in each year of

 

5

	 	 	 	the Lease the Lessee will be exempt from payment of rent in respect of the period
between 15.4 – 14.5.

	 	4.1.3	 	The Lessee will deduct from the rent, amount mentioned, tax at
source as required by law, unless the Lessor produces to the Lessee a lawful
certificate regarding the exemption from deduction of tax at source.

	 	 	 	VAT will be added to the above rent against a lawful VAT receipt, at the rate in force
on the date on which each payment is made.
	 
	 	4.2	 	Payment of the rent will be made in new shekels according to the representative
rate of exchange of the dollar on the date on which each payment will be made pursuant
to the publications of the Bank of Israel.
	 
	 	4.3	 	Deleted.
	 
	 	4.4	 	The rent will be paid in quarterly installments in advance, on the
15th of each month of February, May, August, November.
	 
	 	4.5	 	Deleted.
	 
	 	4.6	 	Arrears in payment of the rent as well as arrears in any other payment imposed
upon the Lessee under this Contract exceeding 14 (fourteen) days, will constitute a
fundamental breach of this Contract.
	 
	 	4.7	 	Every sum which the Lessee is liable to pay under this Contract and which will
not have been paid on due date will bear interest on arrears at the maximum rate
customary for the time being in Bank Leumi le-Israel B.M., with respect to overruns of
unauthorized credit, from the date prescribed for payment under this Contract until the
date of actual payment, together with VAT as required by law. The interest rates will
vary during the period of the arrears in accordance with changes occurring from time to
time in the interest customary in Bank Leumi as stated. Nothing contained in this clause
shall derogate from any relief or other right conferred upon the Lessor according to the
provisions of this Contract or at law. In respect of the first three days of arrears, no
interest on arrears as stated above will be payable.

	5.	 	Acceptance of the Premises 

	 	5.1	 	The Lessor will place the Premises at the Lessee’s disposal in accordance with
the Execution Plans (as hereinafter defined) and the Specification attached hereto,
complete with connection to the electricity and water supply and after having duly
received a certificate from the Electric Corporation and the Lessee undertakes to accept
the same in such condition.
	 
	 	 	 	As part of the Lessor’s undertakings it undertakes to allocate to the Lessee, for the
duration of the actual Lease Term, 20 parking places adjacent to the entrance to the
Premises.
	 
	 	5.2	 	It is hereby agreed that by no later than 15.11.03, the parties will confirm in
writing the detailed Execution Plans in respect of the works that will be carried out by
the Lessor at the Premises (in this Agreement referred to as: “the

 

6

	 	 	 	Execution Plans”). The Execution Plans will be prepared based on the plans contained in
Appendix “B” to the Contract by and at the expense of the Lessor, except for plans in
respect of the Lessee’s dedicated purposes and any planning in excess of the Lessor’s
Specification will be borne by the Lessee. The Lessor’s Specification and the Lessee’s
Specification will be delivered to the Lessee at least 7 days prior to the date of the
approval thereof as stated above.

The Lessor will provide the Lessee with an assessment of the cost
differentials prior to commencing execution.
	 
	 	 	 	For the avoidance of any doubt it is hereby emphasized that the Lessor will not be
required to execute any work or alteration or improvement whatsoever in the Premises,
in addition to its undertakings in the Execution Plans and the Specification.
	 
	 	5.3	 	The parties agree that a delay of up to three months in the completion of the
development works surrounding the Premises does not constitute a breach of this
Agreement or a cause for any delay/refusal of the delivery of the Premises and/or the
taking of the possession thereof, all on the condition that the Lessee will be able to
make actual use of the Premises.
	 
	 	5.4	 	The parties will, 7 days prior to delivery of possession of the Premises, make a
memorandum of delivery within the scope of which the Lessee will itemize all the defects
and deficiencies in the Premises. The Lessor will rectify or make good, as appropriate,
everything that requires repair and completion by the date of the delivery of
possession.

	6.	 	Additional payments to be borne by the Lessee 

	 	6.1	 	The Lessee undertakes, in addition to the rent and the VAT, to pay all the taxes,
fees, levies and compulsory payments applicable now or hereafter to the Premises and/or
to the use thereof during the Lease Term including general municipal taxes and business
tax as well as expenses for the use of electricity, gas and telephone, and all the
remaining maintenance expenses of the Premises in the area of the Premises only
(including maintenance and cleaning) as well as the facilities serving the Premises,
(such as elevators, air-conditioning, fire-fighting systems and the like).
	 
	 	 	 	It is clarified that all the above payments and any other payment applicable to the
Premises or the construction thereof (including property tax, amelioration levies
and/or sewerage, drainage and water fees), as well as any payment in respect of the
period culminating with the date of the delivery of the possession to the Lessee, will
be borne and paid for by the Lessor.
	 
	 	 	 	The Lessee undertakes to transfer the municipal tax bill in respect of the Premises
into its name immediately after taking actual possession of the Premises.
	 
	 	 	 	It is clarified and agreed that the Lessee will also be liable for a proportionate
share equal to the floor area of the Premises compared with the total floor area of the
building in which the Premises are situated, of the cost of maintaining the common
areas for the building.

 

7

	 	 	 	It is clarified that the Lessee will bear the maintenance costs of the Premises
including all the installations and systems that are situated within the area of and
serve the Premises.
	 
	 	6.2	 	The Lessee will be liable also after the termination of the Lease Term, for the
payments mentioned in this clause above if the liability has been created following the
use or consumption made during the currency of the Lease Term, even if the liability or
the demand for payment has arrived after the expiration of the Lease Term.
	 
	 	6.3	 	The Lessee will pay the payments mentioned in this clause above immediately when
they fall due.
	 
	 	6.4	 	The parties will, on the date of the delivery of possession of the Premises, make
an accounting with respect to the alterations, additions and/or reductions that have
actually been made at the Premises compared with the Lessor’s Specification (Appendix
“C”) and which will be priced according to the full price thereof according to the Dekel
price list. The amount due to either of the parties following such accounting will be
paid by way of a reduction or addition to the first quarterly payment of the rent as
appropriate.
	 
	 	6.5	 	In the event of the Lessor making any payment which, by the provisions of this
Contract, is payable by the Lessee, the Lessee will be bound to pay the Lessor such
payment immediately upon the Lessor’s first demand, with the addition of exchange rate
differentials (if any) plus interest on arrears according to clause 9.2 hereof, computed
from the date of the making of the payment by the Lessor until the actual payment
thereof to the Lessor provided the Lessor has given 14 days’ advance notice of its
intention to make the payment and the Lessee has failed to pay the same.

	7.	 	Possession of the Premises during the Lease Term 

	 	7.1	 	The Lessee will keep the Premises in good and proper condition, keep the Premises
tidy and clean including the surroundings, installations and fittings thereof, and use
the same cautiously and carefully and fulfil the instructions of any competent authority
as they exist from time to time in connection with arrangements regarding cleanliness,
the removal of waste garbage, and keeping the drainage system and all the remaining
systems at the Premises in order.
	 
	 	7.2	 	The Lessee will repair at its own expense, any defect, malfunction or fault that
will be caused or come about or be discovered in the Premises and in any part thereof
belonging to the Lessee, including plumbing and various other repairs when they arise
and/or have been caused or discovered, except for repairs or damages that have been
caused by reason of fair wear and tear following the reasonable use of the Premises
and/or as a result of construction and/or infrastructure defects (including sewage,
electricity, water) in the construction of the Premises, the responsibility for which
will apply to the Lessor.
	 
	 	 	 	Repairs which are the Lessor’s responsibility will be repaired by it, failing which
they will be executed by the Lessee after notices as set out in this clause will have
been given, mutatis mutandis.

 

8

	 	7.3	 	If the need to make a repair arises that a party is responsible to fix according
to clause 7.2 above, the party liable for the repair will be bound to carry out the same
at its own expense, within a reasonable time of the date of discovery. Failure by the
party liable to carry out the repair will entitle the other party, that is not liable,
to carry out the same after giving 30 days’ prior written notice and all the repair
expenses will be borne by the party liable, who shall be under an obligation to
reimburse the party actually carrying out the repair for expenses, immediately upon
first demand with the addition of linkage differentials and interest on arrears
according to clause 9.2 hereof, computed from the date of payment for the repair until
the actual payment thereof, to the repairing party. Notwithstanding the foregoing it is
agreed that in the event of an urgent repair, the party entitled may carry out the same
after giving 24 hours’ prior notice to the other party.
	 
	 	7.4	 	The Lessee undertakes to comply with the provisions of any law including any Law,
Regulation, Order, By-law or instruction of any competent authority pertaining to the
management of its business at the Premises and in connection with the maintenance of the
Premises and the use thereof. The Lessee will also be responsible for paying any fine
that will be imposed following the failure to fulfil such instructions.
	 
	 	7.5	 	The Lessee undertakes not to effect any internal or external alteration at the
Premises nor make any addition thereto nor demolish any part of the Premises or any of
the installations thereof nor suffer any such alterations or additions or repairs or
demolition, to be made, without receiving the prior written consent of the Lessor, which
consent shall not be unreasonably withheld by the Lessor.
	 
	 	 	 	It is clarified that this clause will not apply to works at the Premises that will be
carried out by the Lessee or any person on its behalf within the scope of the “clean
room” installation in that part of the Premises that is designated for production.
	 
	 	7.6	 	It is expressly agreed that signage and advertising will only be made by
arrangement with the Lessor (including the architect of the building in which the
Premises are situated) and with its prior consent only, which consent will not be
unreasonably withheld by the Lessor.
	 
	 	7.7	 	Alterations made to the Premises with the Lessor’s consent, will require the
Lessee, at the end of the Lease Term, to reinstate the Premises to its former condition
before the alterations were made, or leave the same in its condition, all as decided and
notified by the Lessor. Upon such agreement by the Lessor being given to the alterations
remaining, the Lessee may not remove from the Premises or reinstate the alterations or
any part thereof that the Lessor has required remain at the Premises or make any
alteration therewith, and the alterations will, at the end of the Lease Term, pass into
the Lessor’s ownership and possession, without the Lessee being able to demand and/or
receive any compensation or payment for them.
	 
	 	7.8	 	The Lessor and each of its managers may enter upon the Premises by prior
arrangement, at any reasonable time acceptable in order to check the condition of the
Premises and carry out repairs, works, technical or other arrangements for the Premises
all this without unreasonably effecting the Lessee’s activity at the Premises.

 

9

	 	 	 	Nothing herein contained shall impose any duty whatsoever on the Lessor to carry out
anything which is mentioned in this Contract.
	 
	 	7.9	 	The Lessor will independently install, at its own expense, fire fighting and
safety measures as appearing in the plans and Specifications attached hereto as
Appendices “B” and “C”.
	 
	 	 	 	The Lessee will, at its own expense, fulfil the instructions of any competent authority
relating to the fire fighting arrangements and procedures, fire prevention, civil
defense and safety, to the extent these will be required in relation to the Premises
and the use made thereof, over and above those measures which will be installed by the
Lessor.

	8.	 	Assignment of rights 

	 	8.1	 	The Lessee undertakes to use the Premises personally only or with its employees
and the Lessee will be prohibited from authorizing any other person or persons to use
the Premises or any part thereof for consideration or otherwise, directly or indirectly.
	 
	 	8.2	 	The Lessee undertakes not to transfer and/or assign and/or convey and/or pledge
and/or charge in any manner whatsoever, without first receiving the written consent of
the Lessor (if and to the extent it will be granted) this Contract and/or any right
thereunder to any other party or parties, nor grant any leases of the Premises or any
part thereof by sub-lease or convey possession or use thereof or any part thereof to any
other person or persons for consideration or otherwise, in any manner whatsoever. Any
transfer and/or assignment and/or conveyance and/or pledge and/or charge that will be
made by the Lessee contrary to that stated above will be null and void ab initio and
devoid of any effect.
	 
	 	8.3	 	Notwithstanding the foregoing the Lessee will be entitled to share the use of the
Premises under this Agreement or sub-lease parts thereof to a parent, subsidiary or
affiliated company of the Lessee (as these terms are defined in the Companies Law, 1999)
without the need to obtain the Lessor’s consent provided that the Lessee will remain
liable for all its obligations under this Agreement.

	9.	 	Breaches and remedies
	 
	 	 	This Contract will be governed by the provisions of the Contracts (Remedies for Breach of
Contract) Law, 5731-1970 and the provisions of the Contracts (General Part) Law, 5733-1973.
	 
	10.	 	Licensing and Licences

	 	10.1	 	The Lessee hereby undertakes to obtain any licence it requires and ensure that
the business is carried on according to every licence that is required by law, including
from any municipal, governmental, local or other authority, for the purpose of operating
and managing the Lessee’s business at the Premises.
	 
	 	 	 	The Lessor will sign any document that will be required by the landlord [sic] in order
to obtain a business licence, but does not deviate from the conditions of this

 

10

	 	 	 	Agreement, within and by no later than 14 days after delivery thereof for signature to
the Lessor.
	 
	 	10.2	 	The Lessee shall ensure that throughout the entire Lease Term the licences and
approvals required in order to carry on and operate its business mentioned, will be
renewed.
	 
	 	10.3	 	For the avoidance of any doubt the Lessor is not responsible towards the Lessee
for obtaining licences or approvals from any authority except where failure to obtain
receipt of the licence results from any act or omission of the Lessor or of any person
on its behalf and where a duty attaches to the Lessor by law and/or this Agreement to
carry out or refrain from carrying out such act, as appropriate.
	 
	 	 	 	Without derogating from the Lessee’s undertaking mentioned above, the Lessor declares
that the Premises comply with the zoning thereof according to the Town Building Plan in
force in respect of the Land.

	11.	 	Insurance

	 	11.1	 	The Lessee hereby undertakes to insure at its own expense for the duration of the
Lease Term, the building of the Premises and the contents thereof against:

	 	11.1.1	 	Fire, explosion, earthquake risks.
	 
	 	11.1.2	 	Flooding, water damage of any kind.

	 	11.2	 	The Lessee hereby undertakes to insure at its own expense, for the duration of
the Lease Term, its activity at the Premises, with the following insurances:

	 	11.2.1	 	Third party liability insurance with liability limits that will not be less
than the amount equal to US$1,000,000 Million per event, and in the aggregate for
the insurance period, which will endure for the duration of the Lease Term.
	 
	 	11.2.2	 	Employers’ liability insurance.

The Lessee further undertakes to maintain at its own expense for the duration
of the Lease Term loss of rent insurance following the Premises being taken out
of use by reason of damage that has been caused thereto or to the contents
thereof by the risks set out in clause 11.1 above, for an indemnity period of
12 months. This insurance may be made by means of extending the fire insurance
policy to cover loss of rent.

	 	11.3	 	The Lessee undertakes to add the Lessor’s name as an additional insured in the
policies mentioned above.
	 
	 	11.4	 	The Lessee will produce to the Lessor upon demand, all the insurance policies
which have been issued as required by this Contract and also produce to the Lessor on a
regular basis every new policy that has been issued to it or any amendment thereto. The
Lessee will, upon the Lessor’s reasonable demand, add to or update and/or amend the
insurance policies to the Lessor’s satisfaction in order to comply with the criteria
prescribed in this clause 11, and the amounts will in any event be linked to the Index
each year.

 

11

	 	11.5	 	The Lessee will cause an express condition to be added to the insurance policy
whereby the insurer expressly waives any right of subrogation or other right under any
law to have recourse against the Lessor in a claim of subrogation or repayment or
indemnity in respect of direct or indirect damage that has been caused by reason of the
Lessor, if any such damage is caused.
	 
	 	11.6	 	The Lessor’s right of inspection and its exercise or right to refrain from
exercising its right to view the policies and demand any update, addition or change as
set out in clause 11.1 above, will not impose upon it any liability whatsoever with
respect to the policies, or the nature and validity thereof, or with respect to the
absence thereof.
	 
	 	11.7	 	The Lessee undertakes to comply with all of the conditions of the policies
mentioned above in this clause, punctually pay the insurance premiums and ensure that
the policies are renewed and remain in full force for the entire duration of the Lease
Term. Failure to renew the policies in the full value thereof, including linkage to the
Index for any reason whatsoever will constitute a fundamental breach of this Contract.
	 
	 	11.8	 	The policy will include a clause determining that it will not be varied,
cancelled or renewed without at least 30 days’ prior notice being given to the Lessor.

	12.	 	Liability of the Lessee 

	 	12.1	 	The Lessor, its agents and any person acting in its name and on its behalf will
not be responsible in any manner whatsoever with respect to any damage or harm that will
be caused to the Lessee or its property, subject as hereinafter provided.

It is hereby expressly agreed and declared that no liability will attach to the Lessor
of any kind whatsoever towards the Lessee in respect of any damage that has been caused
to the Premises or its contents or to any third party – for any reason whatsoever
regardless of whether the reasons for the damage or the malfunction are known or not,
with the exception of any wilful act of damage by the Lessor and/or by any person on
its behalf.
	 
	 	12.2	 	The Lessor will bear no responsibility whatsoever or liability with respect to
any physical damage or loss and/or damage to property of any kind whatsoever (whether
direct or indirect) that will be caused to the Lessee and/or its workers and/or those
employed by it and/or to its agents or customers or visitors or invitees or to any other
person who is found at the Premises or in any other area occupied by the Lessee with the
licence of the Lessor and/or any property of the Lessee, and the Lessee assumes total
responsibility for any damage of that kind and undertakes to compensate and indemnify
the Lessor against any damages that it will become liable for or compelled to pay
following damage of such kind, against any expense that it will lay out in connection
with such damage.

	13.	 	Grounds for eviction
	 
	 	 	Without derogating and/or detracting from any other provision herein contained, upon the
occurrence of any of the following events, the Lessor will be entitled to immediately
terminate the engagement and the Lease under this Contract, and demand the immediate vacation
of the Premises by the Lessee:

 

12

	 	13.1	 	If the Lessee is in arrears for more than 14 days in the payment of any amount
that has fallen due to the Lessor according to the provisions hereof, and under any law,
and the breach has not been cured within 5 days of receiving a written notice from the
Lessor to do so;
	 
	 	13.2	 	If a receiver (whether temporary or permanent) is appointed or receiver and
manager (whether temporary or permanent) or liquidator (temporary or permanent) for the
Lessee’s business or property or any part thereof and such appointment will not be
vacated within 60 days;
	 
	 	13.3	 	If the Lessee passes a resolution for dissolution or if any dissolution order is
issued against it and such order is not vacated within 60 days or if the Lessee reaches
a compromise or arrangement (within the meaning of the Companies Ordinance) with its
creditors or any of them;
	 
	 	13.4	 	If any final attachment is imposed over all the assets of the Lessee;
	 
	 	13.5	 	If the Lessee is in breach of any of the provisions contained in clause 8 above
and grants to any other person the right of use or any other right whatsoever in the
Premises or in any part thereof and such breach will not have been cured within 5 days
of the despatch of notice in writing by registered mail by the Lessor.

	 	 	It is clarified that the termination of the engagement and eviction of the Lessee in the
circumstances mentioned above will not terminate or detract from any obligation of the Lessee
to fulfil all of its financial obligations under this Contract, for the entire duration of
the Lease Term.
	 
	14.	 	Vacation of the Premises 

	 	14.1	 	The Lessee undertakes, upon the expiration of the Lease Term or the termination
of the Lease and/or the rescission of this Contract for any reason, to vacate the
Premises and surrender possession thereof to the Lessor, the Premises being clear and
vacant of any person and thing belonging to the Lessee, in clean and orderly condition
as the Lessee received the same from the Lessor, subject to fair wear and tear. Should
the Lessor demand, as stated in clause 7.6 above, that supplementary works, alterations
and additions that have been made by the Lessee in the Premises, if at all, will be left
by it at the Premises, then any improvement, enhancement, addition which is permanently
affixed to the Premises – even if these were installed and added to the Premises by and
at the expense of the Lessee, will be left by the Lessee at the Premises.
	 
	 	14.2	 	In the event of the Lessee failing to vacate the Premises on the date specified
above, then, in addition to the Lessor’s right to sue for eviction from the Premises,
and in addition to any other right that the Lessor may have according to this Contract
or at law, and without derogating from any right or relief conferred upon the Lessor
stated above, the Lessee will pay the Lessor for the period commencing on the date it
ought to have vacated the Premises until the date on which it vacates the Premises, an
amount equal to twice the amount of the rent, plus interest on arrears according to
clause 9.2 above, and Value Added Tax, computed on a daily basis, from the date of
creation of the liability to pay until the full and actual payment to the Lessor, and
which would have been payable according to this Contract had the Lease been extended
according to the conditions hereof. The

 

13

	 	 	 	above payment has been set and agreed as proper user fees and/or fixed and pre-agreed
damages as estimated in advance by the parties in accordance with their prior
calculations.
	 
	 	14.3	 	It is hereby stipulated and agreed between the parties that nothing contained
above in this clause shall confer upon the Lessee any right to continue to occupy the
Premises (against payment of the agreed compensation) and/or constitute any waiver on
the part of the Lessor of any of its rights and/or derogate from the Lessor’s right to
obtain any other remedy or relief, including, but without derogating from the generality
of the foregoing, the ejection or removal of the Lessee from the Premises.

	15.	 	Charge or pledge by the Lessor 

	 	15.1	 	The Lessor may pledge and/or charge this Contract in whole or in part, assign any
of its rights thereunder to others, transfer the whole or part thereof in any form
whatsoever as the Lessor deems fit, from time to time, either for the purpose of
obtaining financing or for any other purpose, all at the Lessor’s absolute discretion,
all this being without derogating from the Lessee’s rights under this Contract of Lease.
	 
	 	15.2	 	The Lessor may assign all or any of its rights in the Premises, transfer all or
partial ownership thereof, at its absolute and exclusive discretion, without requiring
the Lessee’s consent, and the Lessee accepts in advance and expressly any such act which
will be effected by the Lessor, unconditionally, and the Lessee will have no claim or
demand or action of any kind whatsoever against the Lessor or its successors, subject to
the Lessee’s rights under this Agreement not being affected.

	16.	 	Lessor’s Remedies in respect of Breach 

	 	16.1	 	Without derogating from that stated in clause 9 above, and further to this clause
and the specific remedies appearing in this Contract, the provisions of the Contracts
(Remedies for Breach of Contract) Law, 5731-1970 will apply to a breach of this
Contract, as well as the provisions of the Contracts (General Part) 5733-1973.
	 
	 	16.2	 	If the Lessee fails to keep the Premises in proper condition or fails to repair
that necessary in the Premises and/or fails to return the Premises to the Lessor at the
expiration of the Lease Term in proper condition or if any damage is caused whatsoever
to the Premises during the Lease Term, and has not been rectified by the Lessee, then,
in addition to any other right that the Lessor may have in such a case pursuant to the
provisions of this Contract and/or at law, the Lessor may effect any repair or do any
act that it deems fit in order to repair the damage or restore the condition to what it
was previously, at the Lessee’s expense and after giving the Lessee seven days prior
written notice and the Lessee has failed to rectify the breach within the 7 day period
mentioned. The Lessee will reimburse the repair expenses against presentation of
invoices for the repair.
	 
	 	16.3	 	Deleted.

 

14

	 	16.4	 	In the event of a termination of the rights of the Lessee under this Contract by
reason of a breach thereof by the Lessee, the Lessor will be entitled to any additional
remedy that it has by law on account of the breach, including the remedy of
compensation, or injunctive or mandatory orders. Notwithstanding anything stated herein
and in addition thereto, in the event of a breach by the Lessee by reason of which the
Lessee has been evicted from the Premises prior to the expiration of the Lease Term, the
Lessee will be required to pay the Lessor, for the period from the date of the eviction
until the expiration of the Lease Term, damages at the rate of double the amount of the
rent which applied prior to the termination of the Lease, all subject as provided in
clause 3.1.4 above, and subject to the fact that if the Premises will be re-leased to an
alternative lessee according and subject to the provisions of this Agreement, only the
difference between the rent prescribed by this Contract and the rent that will be
charged from the alternative tenant, will be paid by the Lessee.

	17.	 	Guarantees — Collateral 

	 	17.1	 	To secure the performance by the Lessee of its undertakings under this Agreement,
the Lessee will deposit with the Lessor on the date of the signature of this Agreement,
an autonomous bank guarantee payable upon demand, linked to the Consumer Price Index,
according to the details contained in this Contract, or deposit an amount equal to six
months rent, or a guarantee of the directors and shareholders of the Lessee
(hereinafter: “the Guarantee” or “the Deposit”).
	 
	 	17.2	 	It is hereby expressly agreed and declared between the parties that the giving of
the Guarantee or the Deposit to perform the terms of this Contract does not amount to
any waiver on the part of the Lessor of any right to any other relief against the
Lessee, whether such relief is set out in the body of this Contract or is available to
the Lessor by virtue of any law existing at the time of the execution of this Contract
or will exist in Israel on the date of the breach.
	 
	 	 	 	The Lessor will give the Lessee seven days prior notice of its intention to exercise
the Guarantee or realize the Deposit.
	 
	 	17.3	 	The forfeiture of the Guarantee or the Deposit will not derogate from the
Lessor’s right to sue for and receive against the Lessee any other relief.
	 
	 	17.4	 	The Lessee will, at the expiration of the Lease Term and on the date of the
surrender of the Premises to the Lessor, furnish the Lessor with certifications
according to its demand in writing, indicating that all the payments and the fees which
it was subject to have been paid by it up till the date of the surrender of the Premises
or in relation to such period.
	 
	 	17.5	 	It is expressly agreed that in the event of the Lessee becoming liable to vacate
the Premises, the Lessor will be entitled to give notice to and demand from the Electric
Corporation and the municipality the disconnection of the electricity and water supply
to the Premises.

	18.	 	Option 

	 	18.1	 	It is hereby agreed that as long as vacant areas remain on the floor on which the
Premises are situated, the Lessee will be entitled to demand to increase the area of

 

15

	 	 	 	the Premises by no more than an additional 450sq.m., on the conditions of the Lease
under this Contract.
	 
	 	 	 	It is clarified that the Lessee will have a first right of refusal in relation to the
leasing of the adjacent areas and that these areas will not be leased until the Lessee
has been given notice by the Lessor seeking to lease the same to any third party, 30
days in advance. The Lessee will notify the Lessor within 30 days of its wish to take a
lease of those areas.
	 
	 	18.2	 	An option is granted to the Lessee to lease an additional 1,000sq.m., in Building
no. 2, when it will be erected (and without this option amounting to any representation
or assurance and/or undertaking regarding the construction thereof) on conditions
identical to those of the Lease under this Agreement.
	 
	 	 	 	Upon a decision being taken to construct Building no. 2, the Lessor will notify the
Lessee of its intention to embark upon the construction of the second building, and the
Lessee will be given a 30-day option to advise if it wishes to exercise its right to
lease an additional area, as stated above.

	19.	 	General 

	 	19.1	 	The option will be afforded to the Lessee to place on the roof of the building of
the Premises, without any further payment, installations such as: air-conditioning
units, a generator, gas containers, air purification units, etc.
	 
	 	19.2	 	Use of the elevator (to ascend to the roof of the building) and payment of the
maintenance and use thereof will be done in accordance with a direct arrangement between
the Lessee and the Ort Braude College, without reference to and any involvement of the
Lessor.
	 
	 	 	 	The Lessee gives notice that it is aware and knows that it is under an obligation to
arrange this matter directly with the Ort Braude College and will have no claims or
demands against the Lessor regarding the use of the elevator and/or the costs that will
be required of it in respect of the use and maintenance thereof.
	 
	 	19.3	 	No delay or grant of time or lack of response, lack of action or lack of taking
any measures on the part of the Lessor will be construed in any form or manner as a
waiver on its part of its rights under this Contract against a continuing or further
breach on the part of the Lessee, unless the Lessor has waived any of its rights
expressly and in writing.
	 
	 	19.4	 	All payments paid by the Lessee under this Contract will be made by the Lessee to
the Lessor by means of a bank transfer to the bank account instructed by the Lessor to
the Lessee in writing.
	 
	 	19.5	 	The addresses of the parties for the purposes of to this Contract appear at the
head of this Contract. If the parties or any of them change their addresses they will
give notice in writing to the other party of the new address in Israel and such address
will from that time onwards serve as the address of that party for the purposes of this
Contract.

 

16

	 	19.6	 	Any notice that will be sent by one party to the other pursuant to the Contract
will be sent by registered mail or delivered personally, and will be deemed to have been
delivered within a reasonable time of notice arriving at the addressee.
	 
	 	19.7	 	The stamping expenses of this Contract will be borne by the parties to this
Agreement in equal shares.
	 
	 	19.8	 	The conditions of this Contract reflect the conditions stipulated between the
parties in full and supersede any engagement, assurance, representation and undertaking
formerly made by the parties prior to the execution of this Contract. No change of this
Contract or any addition thereto if at all will be binding unless made in writing and
signed by all parties.
	 
	 	19.9	 	Notwithstanding that stated in this Agreement and/or in the Plans, the Lessor
undertakes to induce, at its own expense, in the part of the Premises that are
designated to be a production zone according to the Plans, the making of passages
(“shafts”) to the roof for the use of the Lessee’s infrastructure conduits, between the
Premises and the roof, in a ceiling area of up to 6sq.m., according to the definition of
the Lessee’s requirements. It is further agreed that in the period preceding the
commencement of the Lease Term, the Lessee or any person on its behalf may, (but will
not be obliged) to carry out works at the Premises, at its own expense, for the purpose
of installing “clean rooms” in that part of the Premises designated to be a production
zone, as from 10 January, 2004 onwards. The Lessor undertakes to complete the
installation of the electricity and water supply infrastructures to the Premises that
are required to carry out such installation, until such date. It is further agreed that
in the period preceding the commencement of the Lease Term, the Lessee or any person on
its behalf will be entitled (but not obliged) to effect at the Premises at its own
expense, installation works for furniture and laboratory infrastructure at the Premises,
as from 1 February, 2004 onwards.
	 
	 	19.10	 	The Lessor undertakes to grant the Lessee a right to use the internal security
shelter room situated on the floor of the Premises, subject to the provisions of any law
applicable in this respect in consideration of monthly user fees in an amount equal to
$3 (three) per sq.m., (gross) per month (plus VAT). These user fees will be subject to
the provisions of this Agreement in all matters pertaining to the rent mutatis mutandis.

	20.	 	Approved enterprise 

	 	20.1	 	It is agreed that the Lessee will deliver to the Lessor the original application
that it will personally prepare for the purpose of filing the same with the authorities
in order to obtain a certificate of an “approved enterprise”.
	 
	 	 	 	The application will be filed by the Lessor shortly after receiving the necessary
documents, as stated.
	 
	 	20.2	 	If and to the extent the application for the approved enterprise that will be
filed on behalf of the Lessee will in fact be approved, the Lessee will be credited with
the rent on a monthly basis and with a proportionate share of the benefit that the
Lessor will receive at the rate which the area of the total areas of the building (and

 

17

	 	 	 	that part linked thereto) bears to the area of the Premises (and that part linked
thereto).
	 
	 	 	 	It is clarified and agreed that in such a case, the bank guarantee that has been
deposited with the Lessor according to the provisions of clause 17.1 will similarly
serve to secure to indemnify of the Lessor in relation to the monies that it may be
required to repay to the State, if it is compelled to repay them, as a result of a
breach by the Lessee of the conditions for obtaining the definition of “approved
enterprise”.

In witness whereof the parties have set their hands at the time and place first above written:

	 	 	 	 	 
	/s/ Yitzhak Yankopanski
 

The Lessor

	 	/s/ David Aviezer
 

The Lessee
	 	 
	Engel Science Parks (99) Ltd.

	 	Metabogal Ltd.	 	 

 

 

Engel

Construction and Development Group

66 Hahistadrut Blvd., Haifa Bay, Tel: 04-8422777; Fax: 04-8419333

	 	 	 
	 

	 	27 May, 2003
	 

	 	Carmiel – Science Park /10610

			
	 	 	 
	Dr. David Aviezer, CEO	 	 
	Metabogal Laboratories Ltd.,	 	 
	Kiryat Shmonah 
	 	By fax: 08-9762596

RE: Science Park, Carmiel –Lease Offer

Further to our meeting, the offer to plan which was submitted to us by the architect, Hanoch
Shapira and approved by you in principle, I am offering you the ground floor of Building no. 1
(part of) in an area of some 800sq.m., with complete finish, at office level.

The specification will include plasterboard partitions between the offices with acoustic insulation
as required by the Standard, minimum acoustic ceilings, natural porcelain granite flooring,
fluorescent lighting to the level of 500 lumen, electricity sockets for plugs every 4sq.m.,
communication sockets for computers – one every 8 sq.m., telephone sockets – one every 8 sq.m.,
air-conditioning at office level, mini-central air-conditioners and/or central air-conditioning,
as decided by the Company. Factory internal doors, aluminum entrance door of the same type of the
Building’s curtain walls.

Maintenance of all the areas and facilities serving and/or situated in the area of the Premises to
be done by yourself and at your responsibility.

Maintenance of common areas in proportion to the areas leased by the tenants.

At your request one of the elevators will go to the roof of the Building.

Any addition that will be required beyond the above specification will be priced and added to the
rent in accordance with the duration of the lease.

The term of the lease will be five years.

The lease price will be $9.5/sq.m.

Estimated population of the Building -October-November 2003.

Please contact me with any further information you may require.

Yours faithfully,

/s/ Yitzchak Yaacovinsky

Yitzchak Yaacovinsky (Eng.)

Assistant CEO for Leasing and Operations

			
	c.c.	 	Menachem Rosenblum- _____Engineer

Yael Miller, accountant – Engel

Eyal Floumin, Chief Engineer – Engel

 

 

Supplement to the Unprotected Lease Contract

Made and signed this 18th April, 2005

	 	 	 
	Between:

	 	Engel Science Parks (99) Ltd.
	 

	 	66 Hahistadrut Bldv., Haifa Bay

By Yossi Ashkenazi
	 

	 	The party authorized to undertake and sign in the name of the Lessor

(hereinafter: “the Lessor”)
	 

	 	of the first part
	 
	 	 
	And:

	 	Protalix Ltd.
	 

	 	2 Snonit Road, Science Park, P.O.B. 455, Carmiel 20100

(hereinafter: “the Lessee”)
	 

	 	of the second part

	 	 	 
	WHEREAS

	 	A Lease Contract including Appendices was signed between the
parties on 28 October, 2003, (hereinafter: “the Contract”) to
lease a property situated on the ground floor of Building no. 1 of
the building known as “Science Park” – industrial buildings in
Carmiel (hereinafter: “the Premises”) that have been erected by
the Lessor; and
	 
	 	 
	WHEREAS

	 	The Lessee is desirous leasing, and the Lessor has agreed to lease
an additional measured area of 239sq.m., (196sq.m., of principal
area + 43sq.m., of ancillary area) from the Lessor (hereinafter:
	 

	 	“the Additional Area”), which, together with the Premises
according to the original contract will constitute the entire
balance of the area on the ground floor of Building no. 1;

It is therefore agreed, declared and stipulated between the parties as follows:

	1.	 	The Lessor hereby leases to the Lessee and the Lessee hereby leases from the Lessor an
additional area in the Science Park, as described below, so that “the Premises” as defined in
clause 2.3 of the Original Contract, will from henceforth be called, a measured area of
1,177sq.m., constituting the entire ground floor of Building no. 1, and after reducing the
area of the lobby used by Ort for an entrance to their property as marked on the plan attached
hereto this Supplement (hereinafter: “the New Premises Area”).
	 
	2.	 	The Additional Area of the lease according to the Supplement together with the Lease under
the Original Agreement will both expire on 30 April, 2010 (hereinafter: “the New Lease Term”).
	 
	3.	 	The additional rent relating to the Additional Area according to this Supplement will be as
follows:
	 
	 	 	In respect of 196 sq.m., of principal area, the Lessee will pay the sum of $5.5 (in words:
five and a half U.S. dollars) per sq.m., per month and in respect of 43sq.m., of ancillary
area, the Lessee will pay the sum of $3 (in words: three U.S. dollars) per sq.m., per month
(hereinafter: “the Additional Rent”).

 

2

	 	 	The Additional Rent will be paid from 1.5.2005 onwards until the expiration of the New Lease
Term, according to this Supplement.
	 
	 	 	It is clarified that clause 4.1.2 of the Original Agreement does not apply to payment of the
Additional Rent in respect of the Additional Area according to this Supplement.
	 
	4.	 	The Additional Area will be conveyed to the Lessee upon the signature of this Supplement, in
its condition “as is” as of today, the planning of the adaptations and supplemental work in
the additional leased area to be carried out by, at the expense of and according to the
discretion of the Lessee, under the supervision and escorted by the Lessor’s representatives.
	 
	5.	 	For the Additional Leased Area according to this Supplement, the Lessor will designate 7
additional parking places for the use of the Lessee.
	 
	6.	 	An option is hereby granted to the Lessee for five years with respect to the entire Premises,
including the New Premises Area which will commence from the expiration of the New Lease Term,
that is, from 1.5.2010 and end on 30.4.2015 (hereinafter: “the Option Term”).
	 
	 	 	The Lessee will be required to give notice of its wish to exercise the Option Term, not less
than 60 days prior to the expiration of the New Lease Term, according to this Supplement.

	 
	 	 	The rent during the Option Term, will be equal to the New Rent in respect of the New Premises
Area. In the last month of the Lease preceding the commencement of the Option Term – with the
addition of 7.5% (in words: seven and a half percent) linked according to the provisions of
the Original Agreement and to be paid in accordance with the terms thereof.
	 
	7.	 	The clauses of the Original Contract will apply in full to this Supplement, including the
relative Appendices, except for the changes arising from the above clauses.

In witness whereof the parties have set their hands at the time and place first above written:

	 	 	 	 	 
	/s/ Yossi Ashkenazi

 

The Lessor

	 	/s/ David Aviezer
 

The Lessee
	 	 
	Engel Science Parks (99) Ltd.

	 	Protalix Ltd.

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