Document:

Exhibit 10.12

 

SECOND ADDENDUM AGREEMENT

Dated: 18/1/2009

 

BY AND BETWEEN

 

YEDA RESEARCH AND DEVELOPMENT COMPANY LTD.

of P.O. Box 95, Rehovot 76100, Israel

(hereinafter “Yeda”)

 

and

BRAINSWAY, INC.

a company duly registered under the laws of the state of Delaware, U.S.A

(hereinafter “the Company”)

 

	
WHEREAS
    	
Yeda and the Company   are parties to a Research and Licence Agreement dated 2 June 2005 (the “R&L Agreement”); and
    
	
 
    	
 
    
	
WHEREAS
    	
The Research Period   defined under the R&L Agreement commenced on 2 June 2005 and ended   on 1 June 2008 (the “Original   Research”); and
    
	
 
    	
 
    
	
WHEREAS
    	
an Additional Research   was performed in parallel with the Original Research, between 1   June 2007 and until 31 May 2008, pursuant to the First Addendum Agreement,   signed between the parties on 19.08.07 (the “First   Addendum” and the “Parallel   Research”) ; and
    
	
 
    	
 
    
	
WHEREAS
    	
the parties wish to   extend the Parallel Research, in accordance with all terms and conditions set   out herein below.
    

 

NOW THEREFORE IT IS AGREED BY THE PARTIES HERETO AS FOLLOWS:

 

	
1.
    	
Terms and phrases   included in this Second Addendum Agreement (“this   Addendum”) which are defined in the R&L Agreement or in the   First Addendum shall have the same meaning attributed to them therein unless   otherwise expressly defined in this Addendum.
    

 

	

    	
 
    	

    
	
 
    	
 
    	
 
    
	
 
    	
Ref.: 09-2595-08-28
    	
No.: 106296_001
    

 

1

 

	
2.
    	
This   Addendum,  the R&L Agreement and the First Addendum shall be   read as one and shall represent the complete current understanding between   the parties with respect to the subject matter hereof. Subject to the   modifications   contained  herein,  the  provisions of   the  R&L Agreement and  the  First Addendum   thereto shall remain unaltered and in full force and effect.
    
	
 
    	
 
    
	
3.
    	
The above preamble and   the appendices attached hereto forms an integral part of this Addendum.
    
	
 
    	
 
    
	
4.
    	
The Parallel Research   will be extended by an additional research period of 4 (four) months   commencing on 20.12.08 and ending on 20.04.09 (the “First Extension Period”).
    
	
 
    	
 
    
	
5.
    	
The  research  during  the   First  Extension Period  will be performed  in   accordance with the research plan, attached hereto as Appendix A (the “First Extension Research Plan”).
    
	
 
    	
 
    
	
6.
    	
The budget for the   First Extension Period will amount to US$ 16,606 (sixteen thousand, six   hundred and six US  Dollars), as more fully specified in Appendix B attached hereto (the “First Extension Budget”).
    
	
 
    	
 
    
	
7.
    	
The First Extension   Budget (plus VAT, as prescribed by law), will be paid to Yeda in 2 (two)   equal instalments of US$ 8,303 (eight thousand, three hundred and three US   Dollars) + VAT each. The first such instalment will be paid to Yeda upon the   date of signature hereof, and the second such instalment will be paid to Yeda   no later than 20/02/2009. Yeda shall issue an invoice in respect of each   payment, as aforesaid, following its full receipt.
    
	
 
    	
 
    
	
8.
    	
The updated list of   Patents that are licensed to the Company under the R&L Agreement and   pursuant to the First Addendum will be specified in a separate agreement.
    

 

	

    	
 
    	

    

 

2

 

	
9.
    	
Notwithstanding the   date of signature hereof, this Addendum shall be effective retroactively, as   of August 20, 2008.
    
	
 
    	
 
    
	
10.
    	
For the avoidance of   doubt, Yeda’s rights in and to any results generated under the supervision of   the Scientist, in the course of the performance of the Parallel Research at   the Institute, including Yeda’s rights in the research performed under  the   Scientist’s supervision pursuant to this Second Addendum (according to the   First Extension Research Plan), shall be subject to the License granted to   the Company under the R&L Agreement, mutatis   mutandis.
    

 

IN WITNESS WHEREOF THE PARTIES HERETO HAVE SET THEIR SIGNATURES.

 

	

    	
 
    	

    	
 
    	

    
	
Prof. Mudi Sheves
    	
 
    	
C.E.O.
    	
 
    	
BRAINSWAY, INC.
    
	
Chairman
    	
 
    	
 
    	
 
    	
 
    
	
YEDA   RESEARCH AND  DEVELOPMENT   COMPANY LTD.
    	
 
    	
 
    	
 
    	
 
    

 

3

 

APPENDIX A

Research Program for Additional Research Period

Investigation of theta burst stimulation in preclinical models of major

depression: Development of a novel antidepressant intervention

 

Brief description of the project and the scientific and technological background

 

The World Health Organization (WHO) reports that major depressive illness is the leading cause of disability and estimates that in 2020 depression will reach the 2nd position among major contributors to the global burden of disease. An estimated 5.8% of men and 9.5% of women will experience a depressive episode in any given year and depression is associated with increased mortality including suicide and profoundly affects the quality of life, productivity, the autonomy and social integration of patients. While the therapeutic armamentarium developed over the past few decades has transformed the treatment of major depressive disorder, treatment-resistant depression remains a fundamental clinical problem, with up to 30% of patients not even partially responding and low percentages remitting with antidepressant treatment (Keller et al 1992; Rush and Thase 1997). Moreover, in randomized controlled trials of nonresistant, uncomplicated major depressive disorder, only 50-60% respond to an antidepressant medication, and of this group, only 2/3 (or 35% of the initial group) attain remission. The need to frequently augment or switch treatment is recognized (Thase and Rush 1997). Therefore, treating therapy-resistant depression and preventing chronic depressive conditions constitute major clinical issues. These have generated tremendous interest not only in novel principles of pharmacological treatment, but also in novel non-pharmacological approaches such as repetitive transcranial magnetic stimulation (rTMS) and vagus nerve stimulation (VNS).

 

 

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To date, preclinical and clinical evidence have been accumulated supporting the antidepressant action of rTMS of the prefrontal cortex (PFC) in treatment-resistant depression (Gershon et al 2003). About 25 small placebo-controlled clinical studies have been published, mainly investigating rTMS as add-on treatment in therapy-resistant depression. Three meta-analyses confirmed a significant antidepressant effect of two weeks high frequency rTMS treatment compared to placebo rTMS (Burt et al 2002; Martin et al 2003). However, effect sizes have been modest to moderate and the clinical significance of its therapeutic effects is questionable. Very recently, data of two large multicenter trials have been presented (O’Reardon et al 2006; Herwig et al 2006). In the U.S. multicenter trial a significant antidepressant effect superior to placebo has been reported in medication-free and treatment-resistant patients. However, the response and remission rates for active vs. placebo rTMS were 24% vs. 15% and 17.5% vs. 8%, respectively (O’Reardon et al 2006), i.e. much lower than reported for electroconvulsive therapy (ECT): 40 to 72 % (Burt et al 2002). The second multicenter trial unfortunately failed to show a significant difference between active and sham rTMS adjunctive to antidepressant medication (Herwig et al 2006).

 

Among others two main reasons for the modest clinical effectiveness of rTMS in previous trials can be discussed: 1) Concerns over safety have limited human studies to relatively low frequencies of stimulation (usually <20 Hz) (Wassermann 1998), whereas animal studies often use much higher frequencies such as the theta burst paradigms (3–5 pulses at 100 Hz repeated at 5 Hz) in order to induce long-lasting alterations in localized brain connectivity such as long-term potentiation (LTP) or depression (LTD) (Larson and Lynch 1986; Huemmeke et al 2002), 2) The depth of direct stimulation by standard rTMS coils (usually figure-8) is limited to regions at the cortex surface (Nadeem et al 2003; Zangen et al 2005) and compared to ECT standard rTMS may not be effective enough in therapeutically modulating regional brain activity altered in deeper lateral and medial regions of the PFC in depression (Drevets 2001; Mayberg et al 2005).

 

We have recently developed a novel coil that allows stimulation of deep brain regions directly (Roth et al. 2002) and proved its ability to stimulate deep brain regions (Zangen et al. 2005) with minimal side effects (Levkovitz et al. 2006). This coil can even induce short-lasting positive cognitive effects in healthy volunteers (Levkovitz et al. 2006). In addition, a new stimulation paradigm, i.e. theta burst (TB) rTMS mimicking TB protocols used in animal models for inducing long-term potentiation (LTP) or long-term depression (LTD), has been reported exhibiting more robust and stable effects on cortical excitability compared to standard rTMS protocols. Both recent achievements, deep rTMS and TB rTMS, represent promising avenues for optimizing the efficacy of rTMS as therapeutic intervention.

 

 

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However, the efficacy of such novel rTMS approaches as a treatment for depressive disorders has still to be evaluated. It is not known what would be the optimal brain region to stimulate as well as the optimal stimulation parameters for achieving the best (and fastest) therapeutic effect with least side effects. These issues, as well as the neurochemical effects of such electromagnetic stimulation can be addressed, at least in part, by investigation of behavioral and neurochemical outcome induced by repeated electrical stimulation of specific brain regions in animal models of depressive behavior, using similar parameters as those used for TMS. Such investigation is necessary to facilitate the establishment of rTMS as a potential alternative treatment for depression and may be relevant for other non-pharmacological approaches such as DBS (Mayberg et al. 2005). It is not possible to induce localized stimulation with TMS in rats as the minimal size of coils that can produce an effective field, stimulates a very large portion of the rat brain. Therefore, in order to learn which brain region should be targeted and what the optimal stimulation parameters in animal models are, it is necessary to insert electrodes into specific brain regions and study the effect of repeated sub-convulsive electrical stimulation treatment. The goal of the preclinical track of the proposed project is to further investigate the antidepressant effects of repeated sub-convulsive electrical stimulation of PFC regions as well as other reward-related brain regions.

 

Objectives and expected significance of the research

 

Objectives

 

The main objective of this preclinical development using animal model for depressive behavior is to develop a more effective antidepressant intervention compared to standard rTMS, using the TB stimulation. The major hypotheses tested in this project is that prefrontal deep TB stimulation is safe and exerts a higher short-term efficacy in treating depressive behavior compared to standard repeated 20Hz stimulation.

 

The need for this project now and expected significance of the research

 

According to critical meta-analyses and the results of recent multicenter-trials the effectiveness of rTMS in depression remains modest compared to ECT which is still the most effective antidepressant intervention to date. At this stage, current research should not only investigate the standard rTMS protocols, but also focus on developing more powerful novel rTMS approaches in order to increase the

 

 

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antidepressant efficacy of rTMS. Very recently, major achievements in developing rTMS methodology have been made: 1) Theta burst (TB) rTMS (e.g. 3 pulses at 50 Hz repeated at 5 Hz) mimicking TB protocols used in animal models in order to induce LTP/LTD-like effects and 2) novel stimulation coils, termed H-coils, for deep rTMS (Zangen et al 2005). TB rTMS has been recently applied over the primary motor cortex in humans and reported to induce more robust and stable effects on cortical excitability in comparison with standard rTMS (Huang et al 2005). In addition, a newly developed deep rTMS system, which allows direct stimulation of over 5 cm in depth from the cortex surface (while standard TMS is limited to depth of 1-2 cm) was recently tested for its safety in healthy subjects (Zangen et al 2005; Levkovitz et al 2006). The basic concept of H-coils is that the rapid decrease in the electric field as a function of distance from the coil can be minimized by inducing summation of several coil elements carrying a current in a common direction and by minimizing any radial components of the coil (Roth et al 2002; Zangen et al 2005). These advances made in rTMS methodology are very promising and should now be tested for their application in clinical treatment protocols. Moreover, the combination of both deep rTMS and theta burst stimulation may allow to directly stimulate deeper prefrontal areas at comparably lower intensities and may exert more robust and stable effects on neurobiological and clinical measures. Thus, the proposed project will further develop these approaches in preclinical models.

 

Comprehensive description of the methods and plan of operation

 

The widely used rat model for depressive behavior induced by chronic mild stress (CMS) is established in the lab at the Weizmann Institute since 2004. Several behavioral paradigms are used to evaluate model behaviors of motivation and anhedonia. In our setup, CMS induces anhedonia-like behavior as observed in a sucrose preference test and in sexual behavior testing and reduced exploration of novel environments. Our preliminary results indicate that repeated sub-convulsive electrical stimulation (SCES) of deep, but not superficial layers of the prefrontal cortex (10 daily sessions, 50 × 5 sec trains of 20 Hz, intertrain interval 20 sec) induces partial normalization of the behavioral deficit in CMS animals. These parameters are similar to those used with rTMS, however pulse duration is 0.2 msec (vs. 0.2-0.4 msec in TMS) and intensity is set at 400 μA. Sham control groups undergo the same surgical procedures and are connected to the stimulation cables

 

 

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daily without activation. In the first year we will expand this study and replicate these results in additional groups of animals. We will measure neurochemical alterations induced by our stimulation protocol in the hippocampus and reward-related brain sites. These will include measurements of brain-derived neurotrophic factor (BDNF) levels as well as monoamine release measured by microdialysis (Zangen et al 2001). BDNF levels in the hippocampus are upregulated by ECT and standard antidepressant drugs and associated with brain plasticity necessary for long-term behavioral changes. BDNF levels in the hippocampus are decreased in depressed subjects and upregulated by chronic antidepressant treatment in both humans and animal models. We found reduced BDNF levels in the hippocampus of CMS animals and partial normalization of BDNF levels by ECT or SCES treatment of the ventral PFC of CMS animals. By the end of the first year, we will start with the evaluation of TB stimulation. TB stimulation will be applied to superficial and deep layers of different PFC regions for 10 days. Two established TB protocols (continuous and intermittent TB) (Huang et al 2005) and new upcoming protocols will be compared regarding their action on behavioral and biochemical measurements. Eight different groups of animals (n=10 /group) will undergo surgery and be tested as described above, without additional control (non-CMS) groups. The effect of continues vs. intermittent TB protocols will be tested in different groups implanted with electrodes in either the dorsal or the ventral PFC.

 

Methods: Rats (n=10 /group) will be implanted under anesthesia with a monopolar stimulating electrode into either the dorsal or the ventral PFC. Four groups of rats (sham and real stimulation for each brain site) will undergo the CMS protocol and another four groups will serve as non-CMS controls to evaluate behavioral and neurochemical profiles for control animals and the effect of stimulation. Stimulation will be preformed as described previously (Zangen and Shalev 2003). SCES treatment will be applied for 10 days with 50 trains/day, 5 sec trains of 0.2 msec, 20 sec intertrain interval, 1 or 20 Hz rectangular cathodal pulses of either 0 (sham), or 400 μA. The behavioral measurements will include the swim test using our modified protocol and analysis tool (Gersner et al 2005), the two bottle choice test for anhedonia-like behavior, an automatic exploration test using an Actimot system (TSE, Germany), and an automatic baseline locomotion test over 7 days within the home cages using 16 InfraMot units (TSE, Germany). We will also test the effect of electrical stimulation on learning and spatial memory using the Morris Maze test.

 

 

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After the behavioral battery will be completed, animals will be sacrificed, brains will be removed and neurochemical alterations in specific brain regions will be measured. BDNF levels will be measured by ELISA in hippocampal homogenates. In different groups of animals, the acute effects of stimulation protocols on monoamine release in the nucleus accumbens will be measured using in vivo microdialysis (Zangen et al 2001; Zangen and Hyodo 2002). These behavioral and neurochemical measurements as well as the CMS model and SCES are already established in the lab.

 

Project schedule

 

	
Research task
    	
 
    	
Beginning
   month
    	
 
    	
Beginning
   Year
    	
 
    	
End month
    	
 
    	
End Year
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Testing the behavioral effects of stimulation at   20Hz in sub-regions of the PFC in the CMS model as compared to shams and to   normal controls
    	
 
    	
6
    	
 
    	
2007
    	
 
    	
12
    	
 
    	
2007
    	
 
    
	
Testing neurochemical effects of stimulation at 20Hz   in sub-regions of the PFC in the CMS model as compared to shams and to normal   controls
    	
 
    	
9
    	
 
    	
2007
    	
 
    	
3
    	
 
    	
2009
    	
 
    
	
Testing the behavioral effects of continues and   intermittent TB stimulation in sub-regions of the PFC in the CMS model as   compared to shams
    	
 
    	
10
    	
 
    	
2007
    	
 
    	
12
    	
 
    	
2007
    	
 
    
	
Testing the neurochemical effects of continues and   intermittent TB stimulation in sub-regions of the PFC in the CMS model as   compared to shams
    	
 
    	
12
    	
 
    	
2007
    	
 
    	
5
    	
 
    	
2009
    	
 
    

 

9

 

APPENDIX B

 

The First Extension Budget (attached)

 

10

 

	
Date
    	
 
    
	
Company
    	
Brainsway
    
	
Principal   Investigator
    	
Dr. Abraham   Zangen
    
	
Research   period
    	
4   months 20.12.08 - 20.04.09
    
	
Personnel
    	
 
    

 

	
Name
    	
 
    	
Position
    	
 
    	
Total Annual
   Salary
    	
 
    	
% of
   Employment
    	
 
    	
Employment
   Term(months)
    	
 
    	
Project Cost
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
$
    	
 
    	
 
    	
 
    	
 
    	
 
    	
$
    	
 
    
	
 
    	
 
    	
Hour bases employee
    	
 
    	
22,000
    	
 
    	
100
    	
%
    	
4
    	
 
    	
7,333
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
—
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
—
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
—
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
—
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
—
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
—
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
—
    	
 
    
	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
—
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
—
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
—
    	
 
    
	
Sub   Total
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
7,333
    	
 
    
	
Consumables,   chemicals, small equipment
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
1,200
    	
 
    
	
Animals
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
3,500
    	
 
    
	
Computers
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Travel
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Fix equipment (please   specify)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Others   (please specify)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Net   Budget
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
12,033
    	
 
    
	
WIS   Overhead (27.5% of Total, 38% of Net)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
4,573
    	
 
    
	
Total   Budget (Including Overhead)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
16,606
    	
 
    

 

 

11Exhibit 10.13

 

THIRD ADDENDUM AGREEMENT

Dated: March 23,  2010

 

BY AND BETWEEN

 

YEDA RESEARCH AND DEVELOPMENT COMPANY LTD.

of P.O. Box 95, Rehovot 76100, Israel

(hereinafter “Yeda”)

 

and

BRAINSWAY. INC.

a company duly registered under the laws of the state of Delaware, U.S.A

(hereinafter “the Company”)

 

	
WHEREAS
    	
Yeda and the Company   are parties to a Research and Licence Agreement dated 2 June 2005 (the “R&L Agreement”); and
    
	
 
    	
 
    
	
WHEREAS
    	
The Research defined   under the R&L Agreement was extended by two Research extensions, pursuant   to the First Addendum Agreement dated: August 19, 2007 and the Second   Addendum Agreement, dated: March 5, 2009 (collectively, the “Extensions”); and
    
	
 
    	
 
    
	
WHEREAS
    	
the parties wish to   define in this Third Addendum Agreement (“this   Agreement”) the terms and conditions which shall apply (as between   the parties) to the two inventions jointly developed by the parties (inter alia), and to set out certain   provisions regarding royalties to be payable in respect of a particular   Product, all as set out herein below.
    

 

NOW THEREFORE IT IS AGREED BY THE PARTIES HERETO AS FOLLOWS:

 

1.                   Terms and phrases used in this Agreement which are defined in the R&L Agreement shall have in this Agreement the same meaning as that attributed to them in the R&L Agreement, unless otherwise expressly defined in this Agreement.

 

2.                   This Agreement, the R&L Agreement and the Extensions shall be read as one and shall represent the complete current understanding between the parties with respect to the subject matter hereof. Subject to the modifications contained herein and in the Extensions, the provisions of the R&L Agreement shall remain unaltered and in full force and effect.

 

	
L/88017/4000/1328773/1
    	
Act: 110904_007
    
	
09-2595-09-35
    	
 
    

 

 

 

3.                   The above preamble and the appendices attached hereto form an integral part of this Agreement.

 

The 2005 Patent

 

4.                   The parties hereby acknowledge and declare as follows:  

 

a.                        To the best of the parties’ knowledge, the right and title to PCT patent application, publication number WO/2006/134598, entitled: “TRANSCRANIAL MAGNETIC STIMULATION SYSTEM AND METHOD” and any corresponding patent application and in any patents granted in respect of any of the foregoing patent applications (Yeda’s Ref. 2005-117, as more fully specified in Appendix A hereto, hereinafter, collectively: the “2005 Patent”) vests in its three co-owners, as follows:

 

i.                            Yeda (which ownership rights are derived from the inventorship interest of the Scientist); and

ii.         The Company (which ownership rights are derived from the inventorship interest of its employees: Dr. Yiftach Roth and Mr. David Hazani and from the inventorship interest of Prof. Pedro C. Miranda of the university of Lisbon, which according to the Company’s representation was assigned to the Company  in a Deed of Assignment signed by Prof. Miranda on September 14, 2005); and

iii.                      the NIH (which ownership rights are derived from the inventorship interest of its employee, Mr. Mark Hallett).

 

b.                        The Company hereby represents that by virtue of a certain amendment agreement signed between the Company and the NIH on October 4, 2008 (“the NIH Amendment”), in which the NIH granted to the Company an exclusive license in and to the NIH’s rights under the 2005 Patent — the NIH has also granted its consent to include the 2005 Patent in the License granted by Yeda to the Company. Subject to the aforesaid, it is hereby agreed (as between Yeda and the Company) that Yeda’s rights in the 2005 Patent shall be part of the Licensed Information under the R&L Agreement and as such licensed to the Company under the Licence. In consideration for the aforesaid, the Company undertakes and agrees that:

 

	

    	

    

 

2

 

i.                            it shall pay Yeda royalties and/or sublicensing receipts in respect of its commercial use of the 2005 Patent, as if the 2005 Patent were one of the Patents included in the Licensed Information under the Licence, in accordance with clause 9 to the R&L Agreement but subject (where applicable) to the provisions of clause 6 below.

 

ii.                         The terms “Patent” or “Patents”, wherever used in the R&L Agreement, including in the definitions of “License”, “Products”, “Sublicence” and “Sublicencee”, shall be deemed to include the 2005 Patent. In addition, in clauses 7, 10.1, 10.2, 13.1.1 and 13.2.2 , “Patent” or “Patents”, wherever used, shall be deemed to include the 2005 Patent; and iii. any sublicence, assignment or transfer of the Company’s rights in the 2005 Patent to any third party shall be subject to all provisions included in the R&L Agreement in respect of a Sublicence and/or an assignment and/or transfer of any Patent as more fully specified therein and mutatis mutandis.

 

iii.                      without derogating from any other remedy or relief granted to Yeda under the R&L Agreement or by law, the Company hereby undertakes, that in any case of a material breach by the Company of its aforementioned obligations (specified in this sub-section (b) above) that is not cured by the Company within the notice period set forth in Section 13.3 of the R&L Agreement — it shall immediately, upon first written demand from Yeda, assign to Yeda all of its rights and title in the 2005 Patent, and in such event, all provisions of clauses 5(b) and 5(c) below, shall apply to the Company’s rights and title in the 2005 Patent, mutatis mutandis.

 

iv.                     Yeda agrees that, notwithstanding the provisions of Section 6.1 of the R&L Agreement the Company shall prosecute and maintain the 2005 Patent, provided that the Company shall consult with Yeda and keep Yeda informed of any development in regard thereof and instruct its outside patent counsel to copy Yeda on all correspondence related thereto. The Company represents that a similar understanding in this regard was reached with the NIH within the NIH Amendment. It is also agreed, between Yeda and the Company, that Yeda shall not bear any costs, fees or expenses in respect of the prosecution and/or maintenance of the 2005 Patent.

 

	

    	

    

 

3

 

The 2008 Patent

 

5.                   The Parties hereby acknowledge, agree and declare as follows:

 

a.                        All right and title to the invention entitled: “SYSTEM AND METHODS FOR CONTROLLING ELECTRIC FIELD PULSE PARAMETERS USING TRANSCRANIAL MAGNETIC STIMULATION” (Yeda’s Ref. 2008-128) that was invented by the Scientist (Prof. Abraham Zangen of the Institute), together with Dr. Yiftach Roth, Mr. Vadim Chudnovsky, Mr. Noach Safra and Mr. David Hazani — all employees of the Company, pursuant to the Scientist’s consultancy services for the Company, under the Consultancy Agreement signed by the Scientist and the Company on April 1st, 2009, and any patent application filed in respect thereof, or any patent ensuing therefrom (as more fully specified in Appendix B hereto, hereinafter, collectively, the “2008 Patent”) shall vest exclusively in Yeda and shall be deemed to be included as a Patent under the R&L Agreement and shall be licensed to the Company as one of the Patents, as defined in the R&L Agreement and subject to all terms and conditions thereof, provided that all obligations of the Company, as specified in sub-sections (b) and (c) below, are fully met.

 

b.                        The Company undertakes that forthwith upon Yeda’s request, all rights derived from the Company’s employees’ inventorship interest in the 2008 Patent shall be assigned and transferred to Yeda, at the Company’s expense, and the Company and/or its employees shall reasonably cooperate with Yeda and/or its representatives with regard to the preparation and prosecution of patent applications relating thereto, including by signing all documents which Yeda and/or its representative shall reasonably request them to sign, from time to time, for the said purpose.

 

c.                         The Company acknowledges that all patent applications, as of the date of this Third Addendum Agreement, in respect of the 2008 Patent shall be filed in the name of Yeda, except in cases where Yeda deems it necessary that the patent applications be filed in the name of the inventors, and then assigned to Yeda. Where a patent application has been filed in the name of the inventors, the Company undertakes to fully cooperate with Yeda and its representatives, at their request, and obligate its employees to sign any document reasonably required for effecting the assignment to Yeda. Patent applications in respect of the 2008 Patent already filed prior to the date hereof, which have not been filed in the name of Yeda as a sole owner, shall be assigned to Yeda.

 

	

    	

    

 

4

 

d.                        The 2008 Patent shall be subject to all provisions of the R&L Agreement, and, inter alia, to the provisions of clause 6 (“PATENTS; PATENT INFRINGMENT”) thereof. However, notwithstanding the provisions of clause 6.1 of the R&L Agreement, it is hereby agreed that the outside patent counsel to be retained by Yeda for the preparation, filing and prosecution of the 2008 Patent, shall be the patent counsel administrating the patent-portfolio of the Company. However, if Yeda shall have an objection to the identity of a certain patent counsel (based on reasonable grounds), then, the parties shall consult each other in good faith, and the matter shall be mutually decided.

 

Product Royalties

 

6.                   The parties acknowledge that the Deep TMS system for treatment of depression, currently undergoing clinical trials, as more particularly described in clause 6.6 of the Company’s prospectus dated 26 February 2009 and in section 1 of the table in clause 6.13.4.1 therein (a copy of the relevant sections of the prospectus being attached herein as Appendix C) (“the Current Product”), falls within the scope of “Products”, as such term is defined in the R&L Agreement, and that the provisions of the R&L Agreement accordingly apply thereto. The provisions of clause 9.1.2 of the R&L Agreement notwithstanding, it is however agreed that the Company shall pay Yeda in respect of the Current Product as follows (and not, for the avoidance of doubt, as set forth in clause 9.1.2 of the R&L Agreement):

 

a.                        a royalty of 1% (one percent) of Net Sales of Current Products by or on behalf of the Company or any Sublicensees; and

 

b.                        a one-time sum of US $50,000 (fifty thousand United States Dollars) immediately following the achievement by the Company of Net Sales of all Products (not only the Current Product) of an aggregate cumulative amount of US $10,000,000 (ten million United States Dollars).

 

	

    	

    

 

5

 

For the avoidance of doubt, any upgrade, improvement, or development of the Current Product (including, without limitation, the inclusion of the Multi Channel device, or the use of the Time Summation system, both as more fully described in clause 6.7 of the Company’s prospectus attached as Appendix C hereto) (that is not the Current Product) which will utilize, or which is based on (in whole or in part), or involves the use of, or is otherwise covered (in whole or in part) by, or falls within the scope of any claim under any Patent, including the 2005 Patent and/or the 2008 Patent, shall be subject to the provisions of the R&L Agreement, and the provisions of this clause 6 (other than this paragraph) shall not apply thereto and if the Current Product is not a U.S. DHHS Patent Protected Product, the royalties due in respect of Net Sales of Current Products incorporating any such upgrades, improvements or developments pursuant to the R&L Agreement shall be the royalties due in respect of Products which are not U.S. DHHS Patent Protected Products.

 

For the avoidance of any further doubt, the provisions of this Section 6 shall not apply to any Product which is not the Current Product, as herein defined.

 

General

 

7.                   For the avoidance of doubt, this Third Addendum Agreement constitutes the entire agreement between the parties hereto in respect of the subject-matter hereof, and supersedes all prior agreements or understandings between the parties relating to the subject-matter hereof (including, any previous correspondence in this regard, between the parties, or on their behalf) and may be amended only by a written document signed by both parties hereto.

 

8.                   For the avoidance of doubt, Yeda agrees, based on and subject to the accuracy of the representations and documents received from the Company, that the agreement dated June 16, 2009 entered into between the Company and ATID SRL, an Italian entity, for the marketing and promotion of the Current Product, a copy of which was provided to Yeda on October 11th, 2009 (“the ATID Agreement”) is not a Sublicence under the terms of and as defined in clause 1.2.11 of the R&L Agreement (as amended). For the avoidance of doubt, the parties agree that all payments that are received by the Company pursuant to the ATID Agreement in respect of the Current Product, including the “Acclimatization Period Monthly Fee” described in clause 5.2 thereof, and including amounts received by the Company pursuant to the ATID Agreement in respect of products ancillary to the Current Product, such as (but not limited to) electromagnetic stimulators which the Company may provide the client (at the client’s request) and biocompatible caps will be considered as Net Sales of Products (if the Deep TMS device is not a U.S. DHHS Patent Protected Product, of Products which are not U.S. DHHS Patent Protected Products) on which royalties will be due to Yeda pursuant to the R&L Agreement (as amended), provided only that amounts received by the Company in respect of electromagnetic stimulators ancillary to the Current Product which are bought by the Company off-the-shelf from an independent third party and resold or leased to customers shall (up to a maximum of US$40,000 per each unit of the Current Product) not be so included.

 

	

    	

    

 

6

 

IN, WITNESS WHEREOF THE PARTIES HERETO HAVE SET THEIR SIGNATURES.

 

	

    	

    	

    
	
 
    	
 
    	
 
    
	
Prof. Mudi Sheves
    	
Amir Naiberg
    	
 
    
	
Chairman
    	
C.E.O.
    	
 
    
	
YEDA RESEARCH AND
    	
 
    	
BRAINSWAY, INC.
    
	
DEVELOPMENT COMPANY LTD.
    	
 
    	
 
    

 

 

7

 

APPENDIX A

 

Patent Card 2005-117

PATENT CARD

 

2005-117

 

Title: TRANSCRANIAL MAGNETIC STIMULATION SYSTEM AND METHODS

 

Inventors: ZANGEN Abraham, ROTH Yiftach, MIRANDA Pedro, HAZANI David, HALLETT Mark

 

	
Country
    	
 
    	
Application
    	
 
    	
Publication
    	
 
    	
Grant
    	
 
    	
Status
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
U.S.A
    	
 
    	
16/06/2005-11/153,905
    	
 
    	
21/12/2006 —   2006-0287566
    	
 
    	
—
    	
 
    	
Pending
    
	
Patent Cooperation   Treaty
    	
 
    	
15/06/2006 —   PCT/IL2006/000694
    	
 
    	
21/12/2006 —   WO/2006/134598
    	
 
    	
—
    	
 
    	
Published
    
	
Australia
    	
 
    	
15/06/2006-2006257210
    	
 
    	
—
    	
 
    	
—
    	
 
    	
Pending
    
	
Canada
    	
 
    	
15/06/2006-2,610,991
    	
 
    	
—
    	
 
    	
—
    	
 
    	
Pending
    
	
European Patent Office
    	
 
    	
15/06/2006-06756220.7
    	
 
    	
27/02/2008 — 1 890 762
    	
 
    	
—
    	
 
    	
Pending
    
	
Hong Kong
    	
 
    	
26/08/2008 - 08109499.9
    	
 
    	
—
    	
 
    	
—
    	
 
    	
Pending
    
	
Israel
    	
 
    	
15/06/2006-187698
    	
 
    	
—
    	
 
    	
—
    	
 
    	
Pending
    
	
Japan
    	
 
    	
15/06/2006-2008-516502
    	
 
    	
04/12/2008 —   2008-543416
    	
 
    	
—
    	
 
    	
Pending
    

 

 

8

 

APPENDIX B

 

Patent Card 2008-128

PATENT CARD

 

2008-128

 

Title: SYSTEM AND METHODS FOR CONTROLLING ELECTRIC FIELD PULSE PARAMETERS USING TRANSCRANIAL MAGNETIC STIMULATION

 

Inventors: ROTH Yiftach, ZANGEN Abraham, CHUDNOVSKY Vadim, SAFRA Noach, HAZANI David

 

	
Country
    	
 
    	
Application
    	
 
    	
Publication
    	
 
    	
Grant
    	
 
    	
Status
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
U.S.A
    	
 
    	
11/12/2008-12/332,459
    	
 
    	
—
    	
 
    	
—
    	
 
    	
Pending
    
	
Patent Cooperation   Treaty
    	
 
    	
11/12/2009 -   PCT/IB2009/055704
    	
 
    	
Pending
    	
 
    	
 
    	
 
    	
 
    

 

 

9

 

Appendix C

 

Copy of clauses 6.6. and 6.13.4.1 to the Company’s Prospectus

 

6.6                               The Deep TMS Device Developed by the Company

 

6.6.1                     The device developed by the Company, is designed for a non-intrusive treatment for common brain function disorders. The device is based on a unique structured electric coil, in it runs an electric current which varies rapidly, creating an electric field through which one can affect different areas in the depth of the brain by stimulation or repression of the nerves, depending on the operating frequency (Deep Transcranial Magnetic Stimulation) (Deep TMS).

 

The device developed by the Company is composed of an electric current provider which creates a rapidly varying electric current (stimulator), controlled by a computer. The electric current provider is an existing medical device, used for different medical purposes, and is an off-the-shelf-product being purchased by the Company. The electric current provider is connected to a special helmet containing the unique structured electric coil developed by the company (H-Coil). The Company has developed a number of coils having a different structure, all of which are based on the Company’s unique technology. For each disorder or disease the Company has developed a uniquely configured coil designed to affect the relevant neuronal structures related to that specific disorder or disease, based on Company’s technology (H-Coil).

 

The unique structure of the coils developed by the Company creates an electric field which affects the depth of the brain, using interference (summation) of multiple small electric fields with the same direction.  The coil simultaneously creates electric fields which are mostly parallel to the cranium and thereby increasing the penetration capability into the depth of the brain and the efficiency in the area chosen by the therapist. Unlike the existing surface TMS device, which creates an electromagnetic field which fades dramatically already at a depth of 2 cm, the Company’s developed Deep TMS device creates a magnetic field with a slower and more graduated fading rate, and thereby it is capable of affecting up to 6.5-7 cm within the depth of the brain in a manner that enables affecting and stimulation of almost every region of the human brain.

 

The capability to affect large ranges does not derive from the increase in the intensity of the coil’s electric current or electric field, but from the coil’s unique design, which enables a direct impact of the device on those deep areas of the brain which are responsible for causing the disorder or disease (like depression), as opposed to an indirect effect through a chain reaction.

 

The treatment is conducted by attaching the helmet, which contains the coil, to the patient’s head. In the beginning of the treatment, the therapist activates the device for the purpose of providing a few pulses in order to determine the personal motor stimulation threshold typical for that specific patient.

 

After determining the forgoing threshold, the helmet is placed in the area suitable for the treatment. During the treatment, which is approximately 15-20 minutes length, the device is activated about 20 to 40 times for periods of approximately two seconds. The treatment is given for a period of about 4 weeks consecutively. It is possible to operate the  device in different frequencies  according to the therapist’s  discretion.  An electromagnetic field which operates at a frequency of less than 1 hertz suppresses the activity in the treated area of the brain by slowing down the interaction between the neurons inside the brain. A magnetic field which operates at a frequency of 10 hertz and over has a stimulating influence upon cells’ activities.

 

Such treatment is not dependent upon a patient’s anesthetization and does not cause more than minor discomfort, such that during the treatment a patient can engage in different activities such as reading a book or watching television. Based on trials conducted by the Company, there were no significant side-effects to the patients, except for some minor headaches which lapsed within a short time, up to a few hours after the treatment, and also two incidents of short seizures which are a known side-effect.

 

Moreover, the device includes an integral cooling system. Since the coil and the electric current provider tend to heat as a result of the electric current passing through them in high frequency, a cooling system is needed in order to prevent any damage to the device. In most of the existing TMS devices there is no cooling system, and therefore the therapist must keep a block of dry-ice nearby and every now and then dip the coil in the ice for cooling, in a way that prevents a relatively long sequence of treatments. In the device developed by the Company, the cooling system is integral, keeping a relatively low temperature throughout the treatment, and thereby preventing damage to the system and discomfort for the patient.

 

 

 

6.6.2.                  Based on the foregoing technology, in 2003 the Company developed a prototype of the device. All of the clinical trials conducted by the Company are being performed by this prototype. The device includes a cart on which the stimulator, cooling system and controlling computer are assembled. Attached to the cart is an adjustable arm with the helmet and coil. The helmet is attached with a cable to the stimulator and with a tube to the cooling system.

6.6.3.                  The configuration, development and manufacturing of the device are performed by a subcontractor, while the stimulator and computer, which are off-the-shelf products, are bought and assembled by the Company. The Company has commercial usage rights in the device’s configuration that is designed for the Company.

The Company estimates, that a serial production of the device,  assuming all development and clinical trials succeed and the device will be licensed, will be performed by subcontractors, while the stimulator will be bought by the Company from an outside source or will be manufactured by self-production. For details about the development of the Multi-Channel device please see section 6.7 of the prospectus.

 

6.13.4              Royalties

 

6.13.4.1    The following are details about the royalties’ rates, which to the Company’s knowledge, Brainsway Inc. shall be required to pay for revenues derived from the application of the patents:

 

	
 
    	
 
    	
Product
    	
 
    	
PHS
    	
 
    	
Yeda
    	
 
    	
Chief Scientist
    	
 
    	
Other Inventor
    
	
1.
    	
 
    	
Product based on first   patent
    	
 
    	
3% of the sales —   up to sales in the amount of US$10,000,000; 2% of the sales - from sales   volume exceeding US$10,000,000. For details please see Section 6.13.2.6.
    	
 
    	
1.5% of the sales — up   to sales in the amount of US$10,000,000; 1% of the sales - from sales volume   exceeding US$10,000,000. For details please see section 6.13.3.6.
    	
 
    	
—
    	
 
    	
—
    
	
2.
    	
 
    	
Product based only on   second patent
    	
 
    	
2% of the sales — up to   sales in the amount of US$10,000,000; 1% of the sales — from sales volume   exceeding US$10,000,000. For details please see section 6.13.2.6.
    	
 
    	
3% of sales — up to   sales in the amount of US$10,000,000; 2% of sales — from sales   volume exceeding US$10,000,000. For details please see section 6.13.3.6.
    	
 
    	
3% for the first 3   years beginning on the commencement of the sales, 4% starting on the   beginning of the fourth year and until the end of sixth year, 5% starting on   the beginning  of seventh year until reaching  an aggregated amount equals to the grant   plus interest*.
    	
 
    	
0.045% from net sales   of the company.
    
	
3.
    	
 
    	
Product based on both   the first and the second patents
    	
 
    	
3% of the sales — up to   sales in the amount of US$10,000,000; 2% of sales — from sales volume exceeding   US$10,000,000. For details please see section 6.13.2.6.
    	
 
    	
1.5% of sales — up   to sales in the amount of US$10,000,000; 1% of sales — from sales volume   exceeding US$10,000,000. For details please see section 6.13.3.6.
    	
 
    	
3% for the first 3   years beginning on the commencement of the sales, 4% starting on   the beginning of fourth year until the end of the sixth year, 5% starting on   the beginning of seventh year until reaching an aggregated amount equals to   the grant plus interest*.
    	
 
    	
—
    

 

* If the Company will receive an approval from the Office of the Chief Scientist for the production of the products based on the US patents, the Company will be obliged to increase the rate of the royalties as stated in the Research and Development Law and the regulations promulgated thereunder.

 

2

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