Document:

Exhibit 10.1

 

CONFIDENTIAL TREATMENT

 

LICENSE AGREEMENT

 

This LICENSE AGREEMENT (this “Agreement”), effective as of June 2,
2004 (the “Effective Date”), is between CUBIST PHARMACEUTICALS, INC., a corporation organized and
existing under the laws of Delaware (together with its Affiliates referred to
herein as “CUBIST”) and XTL BIOPHARMACEUTICALS LTD., a corporation organized and
existing under the laws of Israel (together with its Affiliates referred to
herein as “XTL”).  XTL and CUBIST are sometimes hereinafter
referred to each as a “Party” and
collectively as the “Parties.”

Background

 

XTL has developed monoclonal antibodies that are
active against Hepatitis B using XTL Know-How and has rights to XTL Patent
Rights.  CUBIST desires to obtain a
license under the XTL Patent Rights and XTL Know-How upon the terms and
conditions set forth herein in order to Obtain Regulatory Approval and
commercialize such monoclonal antibodies, and XTL desires to grant such a
license.  In consideration of the
foregoing premises and the mutual covenants herein contained, the Parties
hereby agree as follows:

 

Terms

 

Section 1.                                          DEFINITIONS.

 

1.1                               Defined
Terms.  Unless specifically set
forth to the contrary herein, the following terms, whether used in the singular
or plural, shall have the respective meanings set forth below:

 

“Additional HBV Products”
shall mean any and all compounds, products, methods or systems, other than a
Product or a Directly Competitive Product, in any formulation for the treatment
or prevention of Hepatitis B, that is Controlled by XTL as of the Effective
Date or at any time during the term of this Agreement.

 

“Affiliate”
shall mean, with respect to any Person, (a) any other Person of which fifty
percent (50%) or more of the securities or other ownership interests
representing the equity, the voting stock or general partnership interest are
owned, controlled, or held, directly or indirectly by, or under common
ownership or control with, such Person; or (b) any other Person that, directly
or indirectly, owns, controls, or holds fifty percent (50%) or more of the
securities or other ownership interests representing the equity, the voting
stock or, if applicable, the general partnership interest, of such Person.

 

“Aggregate Designated Costs”
shall have the meaning set forth in Section 7.4.

 

“Approved Third Party
Licenses” shall have
the meaning set forth in Section 12.10(c).

 

“Change of Control”
shall mean, with respect to either Party, that a Third Party shall have become
the beneficial owner of securities representing at least fifty percent (50%) or
more of the aggregate voting power of the then outstanding voting securities of
such Party, or any sale by such Party of all or substantially all of such Party’s
assets; provided that in no event shall the sale
by a Party of securities in connection with a financing or offering undertaken
to raise working capital be deemed to be a Change of Control unless, as a
result of such financing or offering, a Person owns 50% or more of the voting
power of the Party.

 

“Code” shall
have the meaning set forth in Section 13.6(d).

 

“Combination Product”
shall mean (a) any product, or biologic or pharmaceutical composition
comprising, among other things, at least two distinct active ingredients, one
of which shall be a Product and at least one of the other active ingredients is
not a Product, or (b) two or more products, or biologic or pharmaceutical
compositions that are marketed and sold together in the same package, where at
least

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

1

 

one of such products, or biologic or pharmaceutical compositions is a
Product and at least one of the other products, or biologic or pharmaceutical
compositions are not Products (including, without limitation, (i) a
pharmaceutical or biologic composition containing an active ingredient distinct
from the active ingredient of such Product, (ii) a delivery device or (iii) a
delivery system).

 

“Commercialize”
shall mean all activities relating to the commercialization of a Product
including, without limitation, promotion, marketing, sales and distribution,
whether conducted by a Party or for such Party by another, and “Commercialization” shall be
interpreted accordingly.

 

“Commercially
Reasonable Efforts” means (a) with respect to any objective by
any Party, commercially reasonable, diligent, good faith efforts to accomplish
such objective as such Party would normally use to accomplish a similar
objective under similar circumstances; and (b) with respect to any CUBIST
objective to Obtain Regulatory Approval of or Commercialize any Product,
efforts and resources normally used by such Party with respect to a product
owned by such Party or to which such Party has similar rights which is of
similar market potential at a similar stage in the development or life of such
product, taking into account all relevant factors in all relevant
jurisdictions, taken as a whole, including, but not limited to, issues of
safety, efficacy, product profile, the competitiveness of the marketplace, the
proprietary position of the product (including whether the Product is
reasonably likely to infringe the intellectual property or other proprietary
rights of a Third Party in any jurisdiction), the regulatory structure involved
and the Regulatory Approval for the Product in each jurisdiction (including but
not limited to, the extent of the indications for such Product has been
approved), the level of reimbursement available for the Product in each
jurisdiction, and the perceived market potential of the Product (including the
anticipated profitability of the Product).

 

“Consent Agreement”
shall mean that certain Consent and Amendment Agreement by and among CUBIST,
XTL, and Yeda executed on or about the Effective Date.

 

“Contract Year”
shall mean each twelve month period during the term of this Agreement
commencing on January 1, and ending on December 31; provided that the first Contract Year during the term of
this Agreement will commence on the Effective Date and end on December 31
and the last Contract Year during the term of this Agreement will commence on January 1
and end upon expiration or termination of this Agreement.

 

“Control”
shall mean with respect to (a) any item of information or (b) any intellectual
property right or (c) any HBV Antibody (including any intellectual property or
other proprietary right embodied therein or related thereto, including without
limitation any method or process of manufacturing thereof or any use thereof),
the possession of the right (whether directly or indirectly and whether by
ownership, license or otherwise, other than pursuant to this Agreement) by a
Party to grant to the other Party access or a license as provided in this
Agreement under such item of information or intellectual property right without
violating the terms of any agreement or other arrangements existing before or
after the Effective Date between such Party and any Third Party, and the term “Controlled” shall be interpreted
accordingly.

 

“Coordinator”
shall have the meaning set forth in Section 3.2.

 

“CUBIST Designated Costs”
shall mean, with respect to any period, the Designated Costs attributed to
CUBIST.

 

“CUBIST Indemnitees”
shall have the meaning set forth in Section 11.3(b).

 

“CUBIST Inventions”
shall have the meaning set forth in Section 12.1.

 

“CUBIST Know-How”
shall mean all inventions (including without limitation all CUBIST Inventions),
discoveries, improvements, methods, processes, formulas, materials, data,
know-how, technology, trade secrets and information, whether or not patentable,
that (a) are owned or Controlled by CUBIST as of the Effective Date or at any
time during the term of this Agreement, (b) are not, as of the Effective Date
or at any time thereafter, in the public domain or generally known or available
to the public or disclosed in any CUBIST Patents, and (c) are necessary or
useful to Obtain Regulatory Approval, manufacture, market, promote, sell,
import or export Products in the Territory.

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

2

 

“CUBIST Patents”
shall mean any and all Patents that: (a) are owned or Controlled by CUBIST as
of the Effective Date or at any time during the term of this Agreement; and (b)
claim or cover any invention (including, without limitation, any CUBIST
Invention), discovery, improvement, method, process, formula, material, trade
secret, technology, data or information, solely to the extent necessary or
useful to Obtain Regulatory Approval, manufacture, market, promote, sell,
import or export Products in the Territory; provided,
however, that the CUBIST Patents are all to the extent and only to the extent
that CUBIST has the right to grant licenses or sublicenses thereunder.

 

“CUBIST Trademark”
shall mean any Trademark Controlled by CUBIST.

 

“Designated Costs”
shall mean the direct costs and expenses, in Dollars, excluding any general and
administrative overhead costs and expenses, actually incurred from and after
the Effective Date in performing those activities that are necessary or
advisable to Obtain Regulatory Approval for a commercially viable formulation
of HepeX-B for the prevention of recurrent Hepatitis B infections in liver
transplant patients in the Territory. 
Subject to the foregoing provisions of this definition, Designated Costs
shall include: internal human resources costs of either Party (calculated
using actual local salary and employee benefit rates for each Full Time
Equivalent), expenses paid to contractors, consultants or other third parties
(such as testing laboratories, clinical consultants, clinical research
organizations, contract manufacturing organizations and preclinical
laboratories), including costs and expenses associated with regulatory fees
(such as PDUFA fees), laboratory supplies, office supplies, travel expenses,
and reasonable allocations of facility and information technology costs.  Designated Costs shall not include expenses
for corporate overhead, profit margin, expenses for market research,
manufacture or supply for commercial use, commercial launch and other
Commercialization activities, post-marketing studies not required as a
condition to Obtaining Regulatory Approval in the Territory, or participation
on the Joint Alliance Team.  If the
Parties are unable to agree whether a particular cost or expense is a
Designated Cost, either Party may submit the matter to the dispute resolution
procedures set forth in Section 14.

 

“Directly Competitive Product”
shall mean any pharmaceutical or biologic composition (other than a Product
Commercialized by or for CUBIST or its Affiliates or Sublicensees) that
contains an HBV Antibody in any formulation for the treatment or prevention of
Hepatitis B.

 

“Disagreement
Notice” shall have the meaning ascribed to it in Section 2.2.

 

“Dollars”
shall mean U.S. dollars.

 

“ECACC”
shall mean the European Collection of Cell Cultures.

 

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

 

“First Commercial Sale”
shall mean, with respect to a Product, any transfer for value in an arm’s-length
transaction to a Third Party distributor, agent or end user in a country or
jurisdiction after obtaining all necessary Regulatory Approvals as may be
necessary for such transfer in such country or jurisdiction.

 

“HBIg” shall
mean the immunoglobulin product containing polyclonal antibodies (derived from
human plasma) to hepatitis B surface antigen, and occasionally referred to as “HBIg”.

 

“HBV Antibody”
shall mean any and all human or humanized monoclonal immunoglobulins, including
intact immunoglobulin molecules and any portion or fragment of an
immunoglobulin molecule, [*], that is directed to and binds to the Hepatitis B
virus or any portion of the Hepatitis B virus.

 

“HepeX-B”
shall mean, without regard to the actual trade name used, any Product
containing the human monoclonal antibody [*], and the human monoclonal antibody
[*], and no other antibodies or fragments of other antibodies.

 

“HepeX-B Plan”
shall have the meaning set forth in Section 5.2.

 

“ICC” shall
have the meaning set forth in Section 14.2(a).

 

“ICC Rules”
shall have the meaning set forth in Section 14.2(a).

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

3

 

“IND” shall
mean an Investigational New Drug Application, or its foreign equivalent,
regarding Product filed with a Regulatory Authority.

 

“Joint Alliance Team”
shall have the meaning set forth in Section 3.1.

 

“Joint Invention”
shall have the meaning set forth in Section 12.1.

 

“Joint Patent”
shall have the meaning set forth in Section 12.2.

 

“Know-How Royalty Rate”
shall have the meaning set forth in Section 10.2.

 

“Legal Opinion”
shall mean a legal opinion that satisfies each of the following conditions: (a)
is addressed to CUBIST for CUBIST’s benefit, (b) provides that CUBIST’s
exercise of its rights and licenses under, and its activities under and
pursuant to, this Agreement, to Obtain Regulatory Approval, make, have made,
use, promote, market, sell, have sold, offer to sell, import, export, and
Commercialize HepeX-B, would not infringe or misappropriate the intellectual
property rights addressed in that opinion (including by literal infringement
and infringement under the doctrine of equivalents and/or other applicable
legal standards), or that such intellectual property rights are invalid or
unenforceable, (c) is provided by a nationally recognized United States law
firm reasonably acceptable to both Parties, and (d) was obtained in connection
with a joint defense agreement pursuant to which such nationally recognized law
firm enters into an attorney-client relationship with both XTL and CUBIST for
the purpose of providing such legal opinion.

 

“Losses”
shall have the meaning set forth in Section 11.3(a).

 

“Marketing Inquiry”
shall have the meaning ascribed to it in Section 2.2.

 

“Major Markets”  shall mean the United States of
America, the United Kingdom, Spain, Italy, France, Germany and Japan.

 

“Milestone Event”
shall have the meaning set forth in Section 9.2(a).

 

“Net Sales”
shall mean the aggregate gross sales [*] by CUBIST from sales of a Product sold
directly by CUBIST or its Affiliate to a Third Party (that is not an Affiliate
or Sublicensee of CUBIST unless the Affiliate or Sublicensee is the end user of
the Product) after deducting, if not previously deducted, from the amount
received the following amounts related specifically to such sales and not
otherwise recovered or reimbursed to CUBIST or its Affiliate: (a) trade and
quantity discounts in amounts customary in the trade and actually allowed and
taken; (b) returns, rebates, credits and allowances in amounts customary in the
trade; (c) chargebacks paid on sale or dispensing of Product; and (d) sales or
excise taxes, freight, postage, transportation, insurance charges, custom
duties and other governmental charges.

 

For purposes of clarification, sales of a Product sold
directly by a Sublicensee shall not be included in the calculation of Net
Sales, and amounts received by CUBIST and its
Affiliates for the sale of Products among CUBIST and its Affiliates for resale
shall not be included in the computation of Net Sales hereunder.

 

In the event that a Product is sold as a component of
a Combination Product, then Net Sales shall be determined by multiplying the
Net Sales of the Combination Product by the fraction A/(A+B) where A equals the average selling price of such
Product sold separately in finished form and B
equals the aggregate average selling price of the relevant other product
sold separately in finished form, in each case
in the relevant country in which sales were made.  In the event that no separate sale of either
Product or the relevant other product is made during the applicable royalty
reporting period and in the relevant country in which the sale of the
Combination Product was made, then Net Sales shall be determined by multiplying
the Net Sales of the Combination Product by a fraction (C/(C+D)), where C equals CUBIST’s standard fully-absorbed cost
of Product and D equals the standard
fully-absorbed cost of the relevant other product, in each case determined in accordance with United States generally
accepted accounting principles for the relevant country in which sales were
made.  If the relevant other product is
sold separately in finished form and Product is not, then Net Sales shall be
determined by

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

4

 

multiplying the Net Sales of the Combination Product by the fraction (E
– B)/E, where E equals the average selling
price of the Combination Product for the country in which sales were made.

 

“Obtain Regulatory Approval”
shall mean those actions required or advisable to prepare and submit
commercially viable Products for Regulatory Approval as soon as reasonably
practicable, including without limitation formulation, modification and
refinement activities, determination of dosage, conducting clinical trials, and
labeling the Products.

 

“OCS” shall
have the meaning set forth in Section 11.2(h).

 

“OCS
Technology” shall have the meaning set forth in Section 12.1.

 

“Patent Royalty Rate”
shall have the meaning set forth in Section 10.1.

 

“Patents”
shall mean (a) unexpired letters patent (including inventor’s certificates)
which have not been revoked or cancelled by a government agency or held invalid
or unenforceable by a court of competent jurisdiction, from which no appeal can
be taken or has been taken within the required time period, including without
limitation any substitution, extension, registration, confirmation, reissue,
re-examination, renewal or any like filing thereof; (b) pending applications
for letters patent, including without limitation any provisional application,
utility application, continuing prosecution or continuation application,
divisional application, reissue application and/or continuation in part thereof
and (c) any foreign or international equivalents or counterparts of such
unexpired letters patent and pending applications for letters patent.

 

“Person”
shall mean any individual, entity, association, corporation, partnership,
limited liability company, government (or agency or subdivision thereof),
trust, joint venture, or proprietorship.

 

“Product(s)”
shall mean any or all pharmaceutical or biological composition(s) containing an
HBV Antibody Controlled by XTL as of the Effective Date or any time thereafter
during the term of this Agreement, alone or in combination with another
antibody, antibody fragment or other active compound, for all indications, in
any formulation, by any route of administration, including without limitation,
HepeX-B.  Each distinct formulation of any of the items
referred to in the foregoing sentence shall be treated as a separate Product.

 

“Proprietary Information”
shall mean all inventions, discoveries, improvements, processes, formulas,
materials, know-how and trade secrets, and all other scientific, clinical,
regulatory, marketing, financial and commercial information or data, whether
communicated in writing or orally or by sensory detection, which is provided
by, or on behalf of, one Party to the other Party in connection with this
Agreement.

 

“Recalculated Royalties”
shall have the meaning set forth in Section 10.1.

 

“Regulatory Approval”
shall mean any approvals (including supplements, variations, amendments, pre-
and post-approvals), licenses, registrations or authorizations of any national,
state or local regulatory agency, department, bureau, commission, council or
other governmental entity, necessary for the sale, import or Commercialization
of Products in the Territory.

 

“Regulatory Authority”  shall mean the FDA or any foreign counterpart of the FDA,
as applicable.

 

“Retroactive Payment
Quarter” shall have the meaning set forth in Section 10.1.

 

“Retroactive Royalty
Country” shall have the meaning set forth in Section 10.1.

 

“Retroactive Royalty Year”
shall have the meaning set forth in Section 10.1.

 

“Retroactive Valid Claim”
shall have the meaning set forth in the definition of Valid Claim.

 

“Sublicensee”
shall mean, without derogating from the Consent Agreement, any Person (other
than an Affiliate of CUBIST) to whom CUBIST grants a sublicense to the license
rights granted by XTL to CUBIST hereunder.

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

5

 

“Sublicensee Revenues”
shall mean the aggregate upfront, milestone, royalty and other payments
actually received by CUBIST or its Affiliates from each of its Sublicensees
(other than XTL, if applicable) with respect to XTL Technology or Products,
excluding payments made to reimburse CUBIST for any verifiable costs actually
incurred by CUBIST in connection with (a) activities to Obtain Regulatory
Approval, manufacture, market, promote, sell, offer to sell, import or export
Product and (b) the transaction contemplated between CUBIST and such
Sublicensee.

 

“Territory”
shall mean all countries of the world.

 

“Third Party”  shall mean a Person other than
CUBIST or XTL or an Affiliate of either Party.

 

“Third Party Infringement
Claim” shall have the meaning set forth in Section 12.6(a).

 

“Third Party Transaction”
shall have the meaning set forth in Section 2.3.

 

“TM Infringement”
shall have the meaning set forth in Section 12.5.

 

“Trademark”
shall mean any word, phrase, slogan, design, symbol or product packaging used
or intended to be used to identify the Products or distinguish them from
competitive or related products, and shall include any application to register
or registration of or common law rights of the foregoing.

 

“Unlicensed Product”
shall mean, with respect to any given country or jurisdiction within the
Territory, any pharmaceutical or biological composition containing an HBV
Antibody (except for HBIg), for sale or use for the treatment or prevention of
Hepatitis B infection or re-infection in such country within the
Territory, other than as a result of any license, sublicense, distribution
or other arrangement with respect to a
Product or the rights or licensees granted by XTL to CUBIST hereunder granted
or entered into by CUBIST or any of its Affiliates or distributors.

 

“Valid Claim”
shall mean an unexpired claim of an issued patent within XTL Patents which has
not been found to be invalid or unenforceable by a court or other competent
authority in the subject country, from which decision no appeal is taken or can
be taken.  In the event a claim in a
pending patent application Controlled by XTL issues in a country and such
issued claim has not been found to be invalid or unenforceable by a court or
other competent authority in the subject country, from which decision no appeal
is taken or can be taken, such claim shall retroactively be deemed a Valid
Claim  in such country for the purposes
of royalty and Sublicensee Revenues payments under Section 10.1(b) and Section 10.3(e)
as of the date the applicable patent application was filed in such country (a “Retroactive Valid Claim”).

 

“XTL Activities”
shall have the meaning set forth in Section 5.1(b).

 

“XTL Designated Costs”
shall mean, with respect to any period, the Designated Costs attributed to XTL.

 

“XTL Indemnitees”
shall have the meaning set forth in Section 11.3(a).

 

“XTL Inventions”
shall have the meaning set forth in Section 12.1.

 

 “XTL Know-How” shall mean all
inventions (including without limitation all XTL Inventions), discoveries,
improvements, methods, processes, formulas, materials, data, know-how, technology,
trade secrets and information, whether or not patentable, that (a) are owned or
Controlled by XTL as of the Effective Date or at any time during the term of
this Agreement, (b) are not, as of the Effective Date or at any time
thereafter, in the public domain or generally known or available to the public
or disclosed in any XTL Patents, and (c) are necessary or reasonably useful to
Obtain Regulatory Approval, manufacture, market, promote, sell, import or
export Products in the Territory.

 

“XTL Licensor Payments”
shall mean any amounts that are required to be paid to Yeda pursuant to the XY
Agreement as supplemented by the Consent Agreement, or any amounts that XTL is
required to pay to any other Third Party licensors pursuant to written
agreements entered into prior to the Effective Date which are identified on Exhibit
E to the extent that such payments are required (a) with

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

6

 

respect to sales of Product, or (b) with respect to milestone or
royalty payments that XTL receives, or is deemed to have received under XTL’s
agreements with such Third Parties, from CUBIST.

 

“XTL Patents”
shall mean any and all Patents that: (a) are owned or Controlled by XTL as of
the Effective Date or at any time during the term of this Agreement; and (b)
claim or cover any invention (including, without limitation, any XTL
Invention), discovery, improvement, method, process, formula, material, trade
secret, technology, data or information, solely to the extent necessary or
reasonably useful to Obtain Regulatory Approval, manufacture, market, promote,
sell, import or export Products in the Territory (including, without limitation,
those Patents listed on Exhibit A); provided,
however, that the XTL Patents are all to the extent and only to the extent that
XTL has the right to grant licenses or sublicenses thereunder.

 

“XTL Technology”
shall mean XTL Patents and XTL Know-How.

 

“XTL Trademarks”
shall mean the trademarks Controlled by XTL as of the Effective Date and set
forth on Exhibit B hereto.

 

“XY Agreement”
shall mean that certain Research and License Agreement between Xenograft
Technologies Ltd. (now known as XTL Biopharmaceuticals Ltd.) and Yeda Research
and Development Company Ltd. (hereinafter “Yeda”)
executed on or about April 7, 1993, as amended on or about August 31,
1995, January 25, 1998, and January 26, 2003 and as further amended
as of the Effective Date.

 

“Yeda
Technology” shall have the meaning set forth in Section 12.1.

 

Section 2.                                          LICENSE;
DILIGENCE; RIGHT OF FIRST NEGOTIATION.

 

2.1                               License
Grant.  Subject to the terms and
conditions of this Agreement and the provisions of the Consent Agreement, XTL
hereby grants to CUBIST the exclusive right and license (even as to XTL),
including the right, subject to the Consent Agreement, to sublicense (which
includes the sublicense to XTL under Section 2.5 below), under the XTL
Technology and XTL Trademarks to Obtain Regulatory Approval, make, have made
(including under Section 3.3 below), use, promote, market, sell, have
sold, offer to sell, import or export Products in the Territory.  CUBIST (excluding Cubist Affiliates) may
grant sublicenses of the rights licensed to CUBIST pursuant to this Section 2.1
(subject to the limitations and obligations imposed pursuant to the Consent
Agreement). Any sublicense by CUBIST to a Sublicensee of the rights licensed by
XTL to CUBIST hereunder shall be consistent with the terms and conditions of
this Agreement and the Consent Agreement, and shall include an obligation for
the Sublicensee to comply with the obligations of this Agreement applicable to
Sublicensees, including, without limitation, the applicable obligations
contained in Section 4.1(b) pertaining to reports, Section 8.1
pertaining to confidentiality and Section 8.5 pertaining to records and
audits.  CUBIST hereby agrees to remain
liable for performance under this Agreement by all Sublicensees (including
CUBIST Affiliates).

 

2.2                               CUBIST
Diligence.  (a)  Subject to, and in accordance with, the terms
and conditions of this Agreement and all requirements of applicable laws, rules
and regulations, CUBIST shall use Commercially Reasonable Efforts to Obtain
Regulatory Approval for HepeX-B in each of the Major Markets, and subsequent to
obtaining Regulatory Approval in a Major Market, to Commercialize HepeX-B in
such Major Market.  The sole remedy of
XTL for any breach by CUBIST of its obligations under this Section 2.2
with respect to any Major Market is to terminate CUBIST’s rights and licenses
under this Agreement with respect to such Major Market pursuant to Section 13.4.  In the event CUBIST breaches its obligations
under Section 2.2 with respect to [*] or more Major Market countries, XTL shall
also have the right pursuant to Section 13.4 to terminate CUBIST’s rights
and licenses under this Agreement with respect to each country that is not a
Major Market country in which CUBIST is not then using Commercially Reasonable
Efforts to Obtain Regulatory Approval for HepeX-B, and subsequent to obtaining
Regulatory Approval in such country, to Commercialize HepeX-B in such
country.  For the avoidance of doubt,
CUBIST shall not be considered to be in violation of its diligence obligations
under this Section 2.2 if the failure to use Commercially Reasonable
Efforts as required under this Section 2.2 is caused in material part by
the wrongful acts or omissions of XTL or any breach of this Agreement by XTL.

 

(b)                                  CUBIST shall be
deemed to have used Commercially Reasonable Efforts for all purposes of this Section 2.2
at all times following such time as CUBIST (and its Affiliates and
Sublicensees) has achieved worldwide Net Sales and Sublicensee Revenues which,
combined, exceed the aggregate

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

7

 

amount of $50,000,000. 
Notwithstanding anything to the contrary in this Agreement, the “safe
harbor” provisions of this Section 2.2(b) are not intended to set minimum
standards of performance by CUBIST, and CUBIST shall be entitled to demonstrate
that other efforts with respect to the Product should be deemed to be
Commercially Reasonable Efforts.

 

(c)                                  As set forth in Section 2.2(a),
the parties agree that XTL’s sole and exclusive remedy with respect to a
material breach by CUBIST of its obligations set forth in Section 2.2(a)
shall be to terminate the rights and licenses granted by XTL to CUBIST under
this Agreement with respect to those jurisdictions within the Territory in
which CUBIST shall have failed to use Commercially Reasonable Efforts; provided that within sixty (60) days after receipt of any
report provided by CUBIST under Section 4.1(b), XTL shall have delivered
to CUBIST written notice (a “Disagreement Notice”)
of such failure, which notice shall set forth in reasonable detail the nature
of the alleged failure; provided
further that such failure has not been cured or waived within 60 calendar days
following delivery of such notice.  If
XTL does not deliver a Disagreement Notice under this Section 2.2(c)
within such sixty (60) day period, CUBIST shall be deemed to be in full
compliance with the terms of Section 2.2(a) with respect to the time
period covered by such CUBIST report. 
XTL shall not bring, commence, continue or prosecute any claim, legal
action or proceeding under, in relation to, arising out of or in connection
with a breach of Section 2.2(a), except as set forth in Section 2.2(d).

 

(d)                                  If XTL and CUBIST are
not able to resolve their disagreement with respect to CUBIST’s compliance with
Section 2.2(a) within sixty (60) days after CUBIST’s receipt of a
Disagreement Notice, then either XTL or CUBIST, acting alone, may at any time
following receipt of such Disagreement Notice by delivery to the other party of
a written notice indicating such party’s election to have the disagreement
resolved by arbitration (a “Marketing Inquiry”),
cause the matter to be submitted to binding arbitration under Section 14.2;
provided that (i) the arbitrators shall
be entitled to review and resolve only whether or not CUBIST failed to
materially comply with its obligations under Section 2.2(a) during the
applicable reporting period of time that is the subject of the Marketing
Inquiry, and (ii) the arbitrators shall be individuals who are knowledgeable in
the field of the development, manufacture, and sale of drugs and drug products,
and shall have no current or prior business relationships with any of XTL,
CUBIST, or any of their respective Affiliates.

 

2.3                               Rights
to Additional HBV Product.  
Subject to the limitation set forth below in this Section 2.3, in
the event that XTL intends to grant a license or sublicense (or to otherwise
transfer rights other than pursuant to a Change of Control of XTL) to a Third
Party to obtain regulatory approval or commercialize Additional HBV Products (a
“Third Party Transaction”), XTL
shall so notify CUBIST (and shall provide together with such notice all such
information necessary or useful to CUBIST to determine whether to exercise its
rights under this Section 2.3 with respect to the Additional HBV Products
as is in XTL’s possession or control) prior to entering into negotiations or
discussions with such Third Party Transaction. 
If, within [*] days after CUBIST has received such notice (and
information) from XTL, CUBIST notifies XTL in writing that it wishes to
negotiate to obtain a license or sublicense (or otherwise acquire rights to)
such Additional HBV Products, then the Parties shall negotiate in good faith
for a period of [*] days to see if the Parties can reach agreement on
commercially reasonable terms pursuant to which XTL would license or sublicense
(or otherwise transfer rights to) such Additional HBV Products to CUBIST.  During the [*] day period in which CUBIST and
XTL are negotiating pursuant to this Section 2.3, such negotiations shall
be exclusive and XTL cannot carry on discussions or negotiations with any Third
Party regarding the grant of a license or sublicense (or other transfer of
rights) to such Third Party to obtain regulatory approval or commercialize
Additional HBV Products in any country or jurisdiction within the
Territory.  If XTL and CUBIST cannot
reach agreement on such terms within such [*] days, then XTL shall be free to
enter into negotiations and discussions with such Third Party, and enter into a
Third Party Transaction; provided,
however, in no event will XTL enter into an agreement with such Third Party to
obtain regulatory approval or commercialize such Additional HBV Products on
terms, considered in the totality of the circumstances, any less favorable than
the terms last offered or proposed by CUBIST pursuant to the preceding
provisions of this Section 2.3 without providing CUBIST with written
notice of such terms and giving CUBIST [*] days to accept them.  Notwithstanding anything expressed or implied
in the foregoing provisions of this Section 2.3, in the event of a Change
of Control of XTL, CUBIST’s rights under this Section 2.3 shall terminate
with respect to any Additional HBV Product of which CUBIST was informed by XTL
in writing pursuant to Section 15.4 (without copies to legal counsel) at
least thirty (30) days prior to the Change of Control of XTL; provided that if CUBIST notifies XTL in writing that it
wishes to negotiate to obtain a license or sublicense (or otherwise acquire
rights to) such Additional HBV Product within [*] days after XTL informed
CUBIST of such Additional HBV Product, CUBIST’s rights under this Section 2.3
shall 

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

8

 

not terminate with respect to such Additional HBV Product unless and
until XTL has negotiated in good faith for a period of up to [*] days and has
failed to reach agreement on commercially reasonable terms pursuant to which
XTL would license or sublicense (or otherwise transfer rights to) such
Additional HBV Product to CUBIST.

 

2.4                               Directly
Competitive Product.  During the
term of this Agreement and until the earlier to occur of (a) the first
anniversary of the effective date of expiration or termination of this
Agreement in its entirety, and (b) the effective date of [*]; XTL shall not
develop, research, market, sell, distribute or otherwise Commercialize a
Directly Competitive Product in the Territory, nor will XTL provide any
services, data or information to any Third Party in the furtherance of, or with
respect to, any of the foregoing; provided,
however, that the restrictions in this Section 2.4 shall not apply in any
jurisdictions with respect to which Cubist’s rights and licenses granted by XTL
under this Agreement have been terminated pursuant to Section 2.2.

 

2.5                               Sublicensing.  (a)  If CUBIST proposes to sublicense to a Third
Party any rights to distribute promote, market or sell Product in the United
States and/or in more than [*] Major Markets in the European Union, then CUBIST
will notify XTL in writing thereof.  If,
within [*] days after XTL has received such notice from XTL, XTL notifies
CUBIST in writing that it wishes to negotiate to become CUBIST’s Sublicensee
with respect to the activities to distribute, promote, market or sell Product
described in CUBIST’s notice with respect to such countries, then the Parties
shall negotiate in good faith for a period of [*] days to see if the Parties
can reach agreement on commercially reasonable terms pursuant to which XTL
would serve as such Sublicensee.  During
the [*] day period in which CUBIST and XTL are negotiating pursuant to this Section 2.5,
such negotiations shall be exclusive and CUBIST cannot carry on discussions or
negotiations with any Third Party regarding the opportunity to serve as such
Sublicensee in such countries.  If XTL
and CUBIST cannot reach agreement on such terms within such [*] days, then
CUBIST shall be free to enter into negotiations and discussions with such Third
Party, and grant such a sublicense to such Third Party; provided,
however, in no event will CUBIST grant such a sublicense to such Third Party on
terms, considered in the totality of the circumstances, any less favorable to
CUBIST than the terms last offered or proposed by XTL pursuant to the preceding
provisions of this Section 2.5 without providing XTL with written notice
of such terms and giving XTL [*] days to accept them.

 

(b)                                  Without limiting
clause (a) above, if CUBIST proposes to sublicense to a Third Party any rights
to distribute promote, market, and sell Product [*], then CUBIST will notify
XTL in writing thereof and thereafter, XTL, to the extent that it remains so
interested, shall be included among the interested parties with whom CUBIST
holds discussions for such rights until such time as CUBIST selects the party
with whom it wishes to enter into negotiations for a definitive agreement for
such rights.  XTL acknowledges that
beyond inclusion and participation in the discussions for such rights, XTL has
no additional right or expectation whatsoever, and CUBIST has no additional obligation
to XTL in respect of such rights under this Section 2.5(b).

 

(c)                                  Notwithstanding
anything expressed or implied in this Section 2.5, in the event of a
Change of Control of CUBIST, XTL’s rights under this Section 2.5 shall
terminate (except with respect to any separate written agreement entered into
between CUBIST and XTL prior to the effective date of such Change of Control; provided that CUBIST has promptly complied with the notice
provisions set forth in this Section 2.5 prior to such Change of Control).

 

2.6                               Trademarks.  XTL hereby grants CUBIST an exclusive,
royalty-free license under its entire right, title and interest in and to the
XTL Trademarks, if any, to use and display the XTL Trademarks in connection
with the Commercialization of Product within the Territory.  CUBIST shall not be obligated to use XTL
Trademarks, and shall be free to select, create and use its own trade names and
marks for its use, in connection with the Commercialization of Product in the
Territory.

 

Section 3.                                          COORDINATION.

 

3.1                               Joint
Alliance Team.

 

(a)           Within thirty (30) days after the Effective Date,
CUBIST and XTL shall establish a committee to exchange information regarding,
and to discuss activities to Obtain Regulatory Approval and manufacture and
supply of Product in the Territory (the “Joint Alliance Team”),
which shall (i) monitor

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

9

 

activities to Obtain Regulatory Approval under the HepeX-B Plan, (ii)
discuss, formulate, and recommend proposed modifications to the HepeX-B Plan
for review by CUBIST and XTL, (iii) serve as a forum for the review and
discussion of the Parties’ efforts to Obtain Regulatory Approval and efforts to
manufacture Product, (iv) serve as a vehicle to facilitate the transfer to
CUBIST of certain information, data and technology related to Products, and (v)
serve as a forum for the discussion of disputes between the Parties before
resorting to the dispute resolution mechanism in Section 14 of this
Agreement.

 

(b)           The Joint Alliance Team shall be composed of named
representatives of CUBIST and named representatives of XTL.  Each Party shall appoint its respective
representatives to the Joint Alliance Team from time to time, and may
substitute one or more of its representatives, in its sole discretion,
effective upon notice to the other Party of such change.  Of the initial representatives to be
designated by each Party, there shall be expertise in preclinical development,
process development, regulatory activities, clinical development, and
manufacturing and supply matters.  The
Parties shall be free to change their representatives from time to time and at
any time.  Each representative serving on
the Joint Alliance Team shall have appropriate technical credentials,
experience and knowledge, and ongoing familiarity in the specific area of such
representative’s expertise. The chief business officer, or his/her designee, of
each Party shall serve as co-chair to the Joint Alliance Team. Additional
representatives or consultants may from time to time, by mutual consent of the
Parties, be invited to attend Joint Alliance Team meetings, subject to
compliance with the provisions of Section 8.1 of this Agreement.  The co-chairpersons shall be responsible for
calling meetings, preparing and circulating an agenda in advance of each
meeting, and preparing and issuing minutes of each meeting within thirty (30)
days thereafter.

 

(c)           The Joint Alliance Team shall hold meetings at such times
as it elects to do so, but in no event shall such meetings be held less
frequently than once every three (3) months unless otherwise agreed by the
Parties.  The first meeting of the Joint
Alliance Team shall be held no later than sixty (60) days after the Effective
Date.  Meetings of the Joint Alliance
Team may be held by audio or video teleconference with the consent of each
Party; provided that at least two (2) meetings
per year shall be held in person, one (1) per year at the location of each
party or such other location as the Parties may mutually agree.  Each Party shall be responsible for all of
its own expenses of participating in the Joint Alliance Team.  The co-chairpersons will alternate
responsibility for preparing minutes of each meeting of the Joint Alliance
Team, which minutes will not be finalized until the co-chairperson that did not
prepare such minutes reviews and confirms the accuracy of such minutes in
writing.

 

(d)                                  The Joint Alliance
Team shall operate by consensus.  If the
Joint Alliance Team is unable to reach consensus on any particular issue,  CUBIST shall have the right in its sole
discretion to make the final decision. 
The Joint Alliance Team shall not have the power resolve any disputes
concerning the validity, interpretation or construction of, or the compliance
with or breach of, this Agreement, which disputes shall be resolved pursuant to
Section 14.  The rights and
responsibilities of each Party shall be governed by this Agreement, including
the exhibits hereto, and the Joint Alliance Team shall not have any power to
amend, modify or waive compliance with this Agreement.

 

(e)                                  Notwithstanding
anything express or implied to the contrary in this Agreement, CUBIST may
terminate the Joint Alliance Team and its functions hereunder, in whole or in
part, in its sole discretion upon thirty (30) days’ prior written notice to
XTL.  Upon termination of the Joint
Alliance Team, CUBIST shall assume sole responsibility to update the HepeX-B
Plan from time to time in accordance with Section 5.2.

 

3.2          Coordinators.  Each
Party shall appoint a designee (a “Coordinator”)
to coordinate its activities under this Agreement.  The Coordinators shall serve as primary
contacts between the Parties with respect to this Agreement.  Each Party shall notify the other Party
within thirty (30) days of the date of this Agreement of the appointment of its
Coordinator and shall notify the other Party as soon as practicable upon
changing such appointment.  The
Coordinator appointed by each Party shall be responsible for (a) preparing
such Party’s representatives serving on the Joint Alliance Team for meetings of
the Joint Alliance Team, (b) coordinating the distribution and exchange of
information to, from and among such Party’s representatives serving on the
Joint Alliance Team, and (c) assisting in the coordination of the
day-to-day activities of such Party’s representatives serving on the Joint
Alliance Team so that the Joint Alliance Team can function effectively and such
representatives can more effectively discharge their responsibilities as
members of the Joint Alliance Team.

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

10

 

3.3                               Non-exclusive
Right of Negotiation for Manufacturing Rights.   Subject to the provisions of this Section 3.3,
CUBIST hereby grants XTL a non-exclusive right of negotiation during the term
of this Agreement to obtain all or any portion of the rights to manufacture and
supply Product in the Territory.  In the
event that CUBIST proposes to engage a Third Party manufacturer to manufacture
and supply Product in the Territory, then CUBIST will notify XTL in writing
thereof and thereafter, XTL, to the extent that it remains so interested, shall
be included among the interested parties with whom CUBIST holds discussions for
the right to manufacture Products in the Territory until such time as CUBIST
selects the party with whom it wishes to enter into negotiations for a
definitive agreement for such rights. 
XTL acknowledges that beyond inclusion and participation in the
discussions for such rights, XTL has no additional right or expectation
whatsoever, and CUBIST has no additional obligation to XTL in respect of such
non-exclusive negotiation rights.  CUBIST
shall consider commercially reasonable criteria in selecting its Third Party
manufacturers, including without limitation, the Product specifications, the
cost of goods sold, regulatory requirements and prior experience and
performance.  Without limiting the
generality of the foregoing, XTL acknowledges that CUBIST shall have complete
liberty to select its manufacturing partners, and to determine all
manufacturing activities, as CUBIST, in its sole discretion, sees fit, but
consistent with CUBIST’s obligations to use Commercially Reasonable Efforts as
set forth in Section 2.2. Notwithstanding anything expressed or implied to
the contrary in this Section 3.3, XTL shall be afforded the opportunity to
participate in such negotiations only once during the term of this Agreement
and in the event that XTL foregoes its non-exclusive right of negotiation for
the manufacture and supply of a particular Product, or if XTL participates in
such negotiations but is not selected by CUBIST, then XTL’s non-exclusive rights
under this Section 3.3 shall terminate. XTL’s rights under this Section
3.3 will terminate upon a Change of Control of CUBIST (except with respect to
any separate written manufacturing agreement entered into between CUBIST and
XTL prior to the effective date of such Change of Control; provided
that CUBIST has promptly complied with the notice provisions set forth in this Section 3.3
prior to such Change of Control).

 

3.4                               Independence.  Subject
to the terms of this Agreement, the activities and resources of each Party
shall be managed by such Party, acting independently and in its individual
capacity.  The relationship between
CUBIST and XTL is that of independent contractors, and neither Party shall have
the power to bind or obligate the other Party in any manner, other than as is
expressly set forth in this Agreement.

 

Section 4.                                          INFORMATION
SHARING.

 

4.1                               Product
Information.  (a)           During
the term of this Agreement, XTL shall have an ongoing obligation to transfer to
CUBIST all information, including technical data, in XTL’s possession or
Control and related to the Product as CUBIST may reasonably require; provided that in the event that XTL is unable to transfer
any information or technology to CUBIST required to be transferred under this
Agreement, upon CUBIST’s written request, XTL shall arrange for the prompt
transfer of such information or technology to an Israeli subsidiary of CUBIST
at XTL’s expense.  On the first business
day of each quarter during the term of this Agreement, XTL shall provide CUBIST
with a written report detailing the activities undertaken by XTL under the
HepeX-B Plan and the results obtained from such activities.  At any time during the term of this
Agreement, upon reasonable request by CUBIST, XTL shall deliver to CUBIST or
its designee copies of all files in the possession or control of XTL or its
agents that relate to the Product or activities undertaken by XTL under the
HepeX-B Plan.  During the term of this
Agreement and for one (1) year thereafter, XTL shall maintain all data and
other records in XTL’s possession that are obtained or generated by XTL, its
Affiliates or its Third Party service providers in the course of providing
services under the HepeX-B Plan (collectively, “Records”)
in a safe and secure manner and in accordance with all applicable laws and
regulations.  XTL shall make available
all Records to CUBIST for examination and duplication, during normal business
hours and at mutually agreeable times. 
During the term of this Agreement, XTL shall provide CUBIST with reasonable
access to pertinent XTL employees or members of Third Party contractors that
are engaged in the activities undertaken by XTL under the HepeX-B Plan or have
experience with or information related to any Products.  For the purposes of calculating Designated
Costs, XTL’s activities under this Section 4.1(a) (with the exception of
XTL’s obligation to transfer information or technology to an Israeli subsidiary
of CUBIST) in connection with HepeX-B shall be considered to be activities
necessary or advisable to Obtain Regulatory Approval for a commercially viable
formulation of HepeX-B for the prevention of recurrent Hepatitis B infections
in liver transplant patients in the Territory.

 

(b)                                  On or before February 1st
and August 1st of each Contract Year, CUBIST shall provide

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

11

 

to XTL written progress reports summarizing in reasonable detail CUBIST’s
activities to Obtain Regulatory Approval during the six- (6) month period
ending on the preceding December 31st and June 30th,
respectively, as well as anticipated activities to be undertaken during the
subsequent six-month period.  CUBIST
shall also notify XTL in writing of any material developments as a result of
CUBIST’s activities to Obtain Regulatory Approval within thirty (30) days
thereafter.

 

4.2                               Pre-Clinical
and Clinical Data; Regulatory Filings. 
XTL will provide to CUBIST all relevant pre-clinical or clinical
information (including without limitation that with respect to Product safety)
relating to or in connection with Product in a timely fashion and to permit
CUBIST to comply with any applicable law or regulation.  No later than five (5) days after the
Effective Date, XTL will provide CUBIST copies of all regulatory filings, INDs,
and orphan drug designations, and the results of all pre-clinical and clinical
testing of Products performed by or on behalf of XTL.  On an ongoing basis during the term of this
Agreement, XTL will provide to CUBIST (i) all information in XTL’s possession
or control regarding pre-clinical testing and clinical testing performed or to
be performed by or on behalf of XTL with respect to the Products (including,
without limitation, information concerning the design and plans with respect to
such pre-clinical testing or clinical testing) as such information becomes
available, (ii) the results of all pre-clinical and clinical testing performed
by or on behalf of XTL with respect to the Products as such information becomes
available, (iii) all information in XTL’s possession regarding Products
necessary or useful for making regulatory filings in the Territory with respect
to Products as such information becomes available, and (iv) copies of all
regulatory filings made by or on behalf of XTL with respect to Products
promptly after such regulatory filings are made.  CUBIST shall have a right of access, a right
of reference and the right to use and incorporate all information provided to
it pursuant to this Section 4.2 in its applications for Regulatory
Approval of Products within the Territory and for all other purposes related to
Obtaining Regulatory Approval, manufacture and Commercialization of
Products.  For the purposes of calculating
Designated Costs, XTL’s activities under this Section 4.2 in connection
with HepeX-B shall be considered to be activities necessary or advisable to
Obtain Regulatory Approval for a commercially viable formulation of HepeX-B for
the prevention of recurrent Hepatitis B infections in liver transplant patients
in the Territory.

 

4.3                               No
Retained Rights.  Notwithstanding
anything expressed or implied in the foregoing provisions of this Section 4
to the contrary, nothing in this Section 4 or elsewhere in this Agreement
is intended to diminish the scope of the exclusive rights licensed by XTL to
CUBIST pursuant to Section 2 or to suggest that, from and after the
Effective Date, XTL retains any rights to Obtain Regulatory Approval for,
manufacture, use or Commercialize any Product for the prevention or treatment
of Hepatitis B, except to the extent necessary for XTL to perform its
obligations under the HepeX-B Plan in accordance with the provisions of this
Agreement.

 

Section 5.                                          REGULATORY
APPROVAL ACTIVITIES.

 

5.1                               Regulatory
Approval Activities.  (a)  Subject to, and in
accordance with, the terms and conditions of this Agreement and all
requirements of applicable laws, rules, and regulations, XTL shall use
Commercially Reasonable Efforts to conduct its activities to Obtain Regulatory
Approval set forth in the HepeX-B Plan; provided,
however, that subject to Section 5.1(b), XTL shall not have any obligation
to perform activities to Obtain Regulatory Approval under the HepeX-B Plan or,
prior to the first iteration of the HepeX-B Plan, under the guidelines attached
as Exhibit C (other than the XTL Activities and such other XTL
obligations as are expressly set forth in this Agreement) to which XTL has not
consented if (i) prior to the first iteration of the HepeX-B Plan, CUBIST
attempts to impose obligations that materially deviate in scope from the
guidelines set forth in Exhibit C, (ii) the initial HepeX-B Plan
materially deviates in scope from the guidelines attached in Exhibit C,
and/or (iii) material changes are made to the HepeX-B Plan without XTL’s prior
written consent; provided that in all cases, XTL
may not refuse to provide any data or information pursuant to Sections 4.1(a)
or 4.2.  XTL hereby acknowledges and
agrees that it shall not be entitled to engage in any activities to Obtain
Regulatory Approval with respect to any Product intended for treatment or
prevention of Hepatitis B, unless and until such activities have been
incorporated into the HepeX-B Plan and CUBIST shall have provided written
consent to XTL engaging in such development activities.  The Parties shall use Commercially Reasonable
Efforts to minimize the costs and expenses incurred by them as a result of the
performance of their obligations under this Section 5.  Notwithstanding anything in this Section 5
or elsewhere in this Agreement to the contrary, XTL shall cease any activities
to Obtain Regulatory Approval, including any pre-clinical and clinical activity
for Products, upon receipt of written notice from CUBIST to cease such
activity, or as soon as practicable thereafter.

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

12

 

(b)                                  If and to the extent
requested by CUBIST and included in the HepeX-B Plan, XTL shall use
Commercially Reasonable Efforts to deliver to CUBIST the following
(collectively, as described in Exhibit D and as revised from time to
time by mutual written consent of the Parties, the “XTL
Activities”): (i) a commercially viable method to manufacture
Product using [*], including development and implementation of a testing plan
to demonstrate comparability to Products produced from [*]; (ii) a commercially
viable, concentrated parenteral formulation of Product for both intravenous and
subcutaneous injection; (iii) complete the phase 2b study and the PK/PD
bridging study for HepeX-B undertaken by XTL and underway as of the Effective
Date.

 

5.2.                            HepeX-B
Plan.  All activities of the
Parties (including allocation of responsibilities of each Party or its
designee) contemplated under this Agreement to Obtain Regulatory Approval,
including without limitation, pre-clinical and clinical Product activities, any
XTL Activities requested by CUBIST, and all scientific, clinical, manufacturing,
regulatory and other activities to be undertaken for a commercially viable
Product, and a budget for the foregoing, shall be set forth in a plan, as
modified from time to time (the “HepeX-B Plan”).  In addition, the HepeX-B Plan will indicate
whether any budgeted costs are Designated Costs.  Within [*] days after the Effective Date, the
Joint Alliance Team shall propose a detailed initial HepeX-B Plan for each
Party’s review.  An initial guideline
identifying major concepts for inclusion in the HepeX-B Plan is attached as Exhibit
C; if requested by CUBIST, any or all of the XTL Activities shall also be
included in the HepeX-B Plan.  The Joint
Alliance Team will propose recommended changes to the HepeX-B Plan at least
[*].  No modification to the HepeX-B Plan
will be effective unless and until approved by CUBIST and provided to XTL
pursuant to Section 15.4 (without copies to legal counsel).  CUBIST will have the sole right to determine
whether to [*] CUBIST’s sole discretion, but subject to [*].  XTL has the right to review [*] to the
HepeX-B Plan for the purpose of (a) [*] under the HepeX-B Plan should
constitute [*]; and (b) to [*] under the modified HepeX-B Plan (other than XTL
Activities) as contemplated in Section 5.1(a).  XTL shall have [*] days from receipt of any
proposed modified HepeX-B Plan pursuant to Section 15.4 (without copies to
legal counsel) to inform CUBIST whether it disputes the categorization of any
such costs as Designated Costs.  If XTL
timely informs CUBIST that [*], the Parties shall then have [*] business days
to discuss [*], and if the Parties cannot agree after good faith discussions
whether any [*], the matter shall be resolved in accordance with the dispute
resolution process set forth in Section 14.  If XTL does not inform CUBIST within [*] days
after receipt of any proposed modified HepeX-B Plan that it agrees to [*]
proposed under the modified HepeX-B Plan as contemplated in Section 5.1(a),
XTL will be deemed to have elected [*].

 

5.3                               Use of
Data by XTL. All data generated by XTL from any activities
engaged in by XTL pursuant to, and in accordance with, the provisions of this Section 5
shall not be used by XTL and its Affiliates, except to support Regulatory
Approval in the Territory of Product or to Commercialize Product in the Territory
without the prior written consent of CUBIST, which shall not be unreasonably
withheld.

 

5.4                               Costs and
Expenses.  The costs and
expenses incurred by both Parties in connection with any and all activities
engaged in pursuant to, and in accordance with, the provisions of this Section 5,
shall be allocated in the manner set forth in Section 7.

 

5.5                               Health
Hazards. Each Party will notify the other Party of any material health
hazards with respect to Products that may impact employees involved in the activities
to Obtain Regulatory Approval, manufacture, production or supply of Products as
soon as practicable, and in any event within forty-eight (48) hours, after such
Party becomes aware of such hazards.

 

5.6                               XTL
Compliance.  In connection
with any activities undertaken by XTL to Obtain Regulatory Approval in
connection with any Product, XTL shall comply with all applicable laws, rules
and regulations regarding such activities, as such laws, rules and regulations
are in effect where such activities are undertaken.

 

5.7                               No
Debarred Personnel.  In the course of the development of
Product or any component thereof, XTL has not used prior to the Effective Date,
and neither XTL nor CUBIST shall not use during the term of this Agreement, the
services of any employee, consultant, contractor, or clinical investigator that
has been debarred by the FDA or any other Regulatory Authorities or that is the
subject of debarment proceedings by the FDA or any other Regulatory Authority.

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

13

 

Section 6.                                          REGULATORY
ACTIVITIES

 

6.1                               Regulatory Activities.  Subject to, and in accordance with, the terms
and conditions of this Agreement (including Section 6.3), and all
requirements of applicable laws, rules, and regulations, CUBIST shall be
responsible for filing and obtaining Regulatory Approvals for Products in the
Territory.  XTL shall not be entitled to
engage in any regulatory activities with respect to any Product without the
prior written consent of CUBIST.  XTL
shall use Commercially Reasonable Efforts to assist CUBIST in complying with
all requirements of applicable laws, rules, and regulations related to
Regulatory Approval of Product in the Territory.  Notwithstanding anything in this Section 6
or elsewhere in this Agreement to the contrary, XTL shall cease any regulatory
activity and all attempts to Obtain Regulatory Approval with respect to any
Product upon receipt of written notice from CUBIST to cease such activity, or
as soon as practicable thereafter.

 

6.2                               Regulatory
Approvals.  To the extent
permitted by applicable laws, rules and regulations,  CUBIST shall file in its own name, and own, all
drug, biologic and device approval applications and Regulatory Approvals for
Products in the Territory, and shall be solely responsible for all
communications with Regulatory Authorities in such countries relating thereto.
Upon CUBIST’s reasonable request, XTL shall cooperate with and assist CUBIST in
the communication with any Regulatory Authority or in the preparation and
submission of any regulatory filing regarding Product, and will provide such
information and data in XTL’s possession or control that is necessary to Obtain
Regulatory Approval.  If XTL is required
by applicable laws or regulations or a Regulatory Authority having jurisdiction
in the Territory to disclose information directly to such Regulatory Authority
relating to Product, XTL shall notify CUBIST in writing of the requirement and
the particulars of the information required to be disclosed, and XTL shall
coordinate with CUBIST in making any such disclosure.  Further, with respect to any such required
disclosures, CUBIST shall have the right to be present and to participate at
all face-to-face meetings and scheduled conference calls between XTL and such
Regulatory Authority with respect to Product and CUBIST shall have the right to
lead any such face-to-face meetings or scheduled conference calls.  Promptly after the Effective Date, XTL shall
transfer and assign to CUBIST any and all such drug, biologic and device
approval applications, INDs, orphan drug designations or Regulatory Approvals
held by XTL as of the Effective Date.

 

6.3                               Costs and
Expenses. The costs and expenses incurred by both Parties in
connection with any and all regulatory activities engaged in pursuant to, and
in accordance with, the provisions of this Section 6, shall be allocated
in the manner set forth in Section 7.

 

Section 7.                                          PRODUCT
COSTS AND EXPENSES.

 

7.1                               Collaboration
Support.  The Parties acknowledge
that XTL will incur costs from and after the Effective Date in furtherance of
its activities set forth in the HepeX-B Plan. 
Subject to the last sentence of this Section 7.1, CUBIST shall pay
XTL $2,000,000 in contemplation of costs, of which (a) [*] after the Joint
Alliance Team’s initial presentation of the HepeX-B Plan for approval, unless
CUBIST dissolves the Joint Alliance Team prior to such initial presentation, in
which case, CUBIST will pay such amount within [*] days after [*]; (b) [*]
shall be paid on or prior to [*]; and (c) [*] shall be paid on the last
business day of [*].  Notwithstanding
anything to the contrary express or implied in this Section 7.1, CUBIST
shall have no obligation to make any payment under this Section 7.1 if XTL
is in material breach of its obligations under this Agreement.

 

7.2                               Overall
Designated Costs. The Parties shall use Commercially Reasonable Efforts
to minimize the Designated Costs.  It is
the intent of the Parties, to the extent practicable, to endeavor to limit the
Designated Costs to not more than $33,900,000.

 

7.3                               Designated
Costs.  (a)  In addition to the payments under Section 7.1,
and subject to Section 7.4, CUBIST shall bear all Designated Costs; provided that
any XTL Designated Costs are incurred in the performance of activities that are
set forth in an approved HepeX-B Plan in effect as of the time XTL incurred
such Designated Costs or became obligated to incur such Designated Costs.  XTL shall submit quarterly invoices in
Dollars to CUBIST no later than [*] after the end of each quarter which set
forth in reasonable detail the XTL Designated Costs for the immediately
preceding quarter.  If not previously
approved by CUBIST in writing, CUBIST shall inform XTL within [*] days of
receipt of an invoice whether it disputes the categorization of any such costs
listed in such invoice as Designated Costs. 
The Parties shall have [*] business days to discuss such costs, and if
the Parties cannot agree after good faith discussions whether any itemized
costs listed in such invoice are Designated Costs, the matter shall be

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

14

 

resolved in accordance with the dispute resolution process set forth in
Section 14.  CUBIST shall not be
responsible for any costs set forth in an invoice that are not Designated
Costs.  Subject to the immediately
preceding sentence and Section 7.4 below, CUBIST shall reimburse
Designated Costs that are not subject to a good faith dispute within [*] days
after receipt of such invoice.

 

(b)                                  CUBIST
shall provide to XTL, no later than [*] days after the end of each quarter, a
report which sets forth in reasonable detail the CUBIST Designated Costs for
the immediately preceding quarter.  XTL
shall inform CUBIST within [*] days of receipt of any such report whether it
disputes the categorization of any such costs listed in such invoice as Designated
Costs.  The Parties shall have [*]
business days to discuss such costs, and if the Parties cannot agree after good
faith discussions whether any itemized costs listed in such report are
Designated Costs, the matter shall be resolved in accordance with the dispute
resolution process set forth in Section 14.

 

7.4                               CUBIST
Designated Costs Cap.  Notwithstanding
anything express or implied to the contrary contained herein, CUBIST shall be
responsible for up to $33,900,000 of the Designated Costs (whether incurred by
CUBIST or XTL).  Thereafter, the Parties
shall each bear fifty percent (50%) of the Designated Costs in excess of
$33,900,000.  From and after the date
that the aggregate amount of undisputed Designated Costs is equal to or greater
than $33,900,000, after receipt of each invoice from XTL, CUBIST shall
determine the aggregate Designated Costs for such quarter by adding the
undisputed XTL Designated Costs for such quarter (to the extent such Designated
Costs are in excess of the aggregate Designated Costs of $33,900,000) plus the
undisputed CUBIST Designated Costs for such quarter (to the extent such
Designated Costs are in excess of the aggregate Designated Costs of
$33,900,000) (the sum of the XTL Designated Costs and the CUBIST Designated
Costs for such quarter referred to herein as the “Aggregate
Designated Costs”).  If
the undisputed XTL Designated Costs for such quarter are greater than fifty
percent (50%) of the Aggregate Designated Costs for such quarter, then CUBIST
shall pay to XTL an amount equal to (i) the XTL Designated Costs for such
quarter minus (ii) the result of the Aggregate Designated Costs for such
quarter divided by two (2).  CUBIST shall
pay such amount within [*] days of receipt of the invoice for XTL Designated
Costs for such quarter.  If the
undisputed CUBIST Designated Costs for such quarter are greater than fifty
percent (50%) of the Aggregate Designated Costs for such quarter, then XTL
shall pay to CUBIST an amount equal to (I) the CUBIST Designated Costs for such
quarter minus (II) the result of the Aggregate Designated Costs for such
quarter divided by two (2).  CUBIST shall
deliver an invoice to XTL for such amount, which invoice shall set forth in
reasonable detail the CUBIST Designated Costs for the immediately preceding calendar
quarter.  XTL may either make such
payment within [*] days of receipt of the invoice or [*] under [*] hereunder
such that the [*] are no less than the [*], until XTL’s share of Designated
Costs is offset in full.  A one-time fee
of [*] shall be assessed on every amount that [*] pursuant to this Section 7.4.  In addition, interest shall accrue pursuant
to Section 10.8 on all [*] that XTL [*] pursuant to this Section 7.4
beginning [*] months after XTL’s receipt of CUBIST’s invoice therefor.  XTL shall have no obligation to pay any
Designated Costs that have not been [*] as of the termination or expiration of
this Agreement.  XTL shall have no
obligation to share in any Designated Costs incurred [*], and interest shall
cease to accrue with respect to any previously incurred Designated Costs.  For the avoidance of doubt, XTL’s obligation
to share in any Designated Costs under this Section 7.4 shall be limited
to HepeX-B, unless otherwise agreed by the Parties in writing.

 

7.5                               Practices.  XTL will perform its activities under the
HepeX-B Plan in accordance with then current Good Laboratory Practices, Good
Clinical Practices (as required of a sponsor of a clinical trial), and Good
Manufacturing Practices, if and to the extent required by the HepeX-B Plan, and
in such event, XTL will include in each agreement with each of its
subcontractors, if any, performing any such activities contemplated under the
HepeX-B Plan a requirement that such subcontractors perform its activities in
accordance with then current Good Laboratory Practices, Good Clinical
Practices, and Good Manufacturing Practices, as and if applicable.

 

Section 8.                                          CONFIDENTIALITY;
PUBLICATION; RECORDS.

 

8.1                               Nondisclosure
Obligation.  All Proprietary
Information disclosed by or on behalf of one Party to the other Party under
this Agreement that is marked “confidential” or “proprietary”, and in the case
of oral information, is summarized in a writing that is marked “confidential”
or “proprietary” and delivered to the other Party within thirty (30) days of
disclosure of such information, shall be maintained in confidence by the
receiving Party and shall not be disclosed to a non-Party or used for any
purpose whatsoever without the prior written consent of the other Party, except
to the extent that such Proprietary Information:

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

15

 

(a)                                  is known by recipient
at the time of its receipt, and not through a prior disclosure by or on behalf
of the disclosing Party, as documented by contemporaneous business records;

 

(b)                                  is properly in the
public domain through no fault of the recipient;

 

(c)                                  is subsequently
disclosed to a receiving Party by a Third Party who may lawfully do so and is
not directly or indirectly under an obligation of confidentiality to the
disclosing Party, as documented by written business records in existence prior
to the receipt of such information from the disclosing Party;

 

(d)                                  is developed by the
recipient independently of, and without reference to or use of, Proprietary
Information received from the disclosing Party;

 

(e)                                  is required to be
disclosed to governmental or other regulatory agencies in order to obtain
patents, to obtain approval to conduct clinical trials or to market Products,
or to comply with applicable governmental or stock exchange or quotation system
regulations; provided, however, that such
disclosure may be only to the extent reasonably necessary to obtain patents or
approval, or to comply with laws or regulations as appropriate and that
confidential treatment will be sought to the extent reasonably practicable;

 

(f)                                    is disclosed to
actual or potential permitted sublicensees or permitted assignees and/or other
third parties (1) for the purpose of conducting activities under this Agreement
(or for such actual or potential permitted sublicensees or permitted assignees
and/or other third parties to determine their interest in performing such
activities) in accordance with this Agreement or (2) for the purpose of
allowing the Party making such disclosure to effectively exploit its rights
under this Agreement and obtain all of the benefits under this Agreement to
which such Party is entitled as contemplated by this Agreement; provided, however, that such actual or potential permitted
sublicensees or permitted assignees and/or other third parties have agreed to
be bound by confidentiality obligations substantially equivalent to the terms
herein for no less than five years from the date of disclosure;

 

(g)                                 is disclosed to
employees, officers, directors, consultants, agents, investors or potential
investors of, or lenders or potential lenders to, the Party making such
disclosure; provided, however, that such employees,
officers, directors, consultants, agents, investors, potential investors,
lenders and potential lenders have agreed to be bound by confidentiality
obligations substantially equivalent to the terms herein for no less than five
years from the date of disclosure; and provided
further that notwithstanding the provisions set forth above in this subsection (g),
neither Party shall disclose Proprietary Information of the other Party to
potential investors or potential lenders except to the extent that such
disclosure is made in the context of such potential investors’ or potential
lenders’ due diligence investigation of the Party making such disclosure;

 

(h)                                 is used by the
receiving Party for the purpose of conducting activities under this Agreement
in accordance with its respective terms or is used by the receiving Party for
the purpose of allowing the receiving Party to effectively exploit its rights
under this Agreement and obtain all of the benefits under this Agreement to
which such receiving Party is entitled as contemplated by this Agreement; or

 

(i)                                    is required to be
disclosed by law, regulation or court order; provided
that notice is promptly delivered to the other Party in order to provide an
opportunity to challenge or limit the disclosure obligations; and provided  further that
such disclosure may be only to the extent reasonably necessary to comply with
the applicable law, regulation or court order.

 

The disclosing Party shall identify any Proprietary Information
delivered to the receiving Party that is confidential information of a Third
Party and the disclosing Party shall inform the receiving Party of any
restrictions, limitations and qualifications imposed on such Proprietary
Information by such Third Party.  XTL
agrees that with respect to any CUBIST Proprietary Information disclosed to
Yeda as contemplated by the XY Agreement and the Consent Agreement, that XTL
shall mark all such CUBIST Proprietary Information as “confidential” or “proprietary”,
and in the case of oral information, XTL shall summarize such CUBIST Proprietary
Information in a writing that is marked “confidential” or “proprietary” and
deliver such summary to Yeda within thirty (30) days of disclosure of such
CUBIST Proprietary Information.

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

16

 

8.2                               No
Disclosure of Terms.  Either
Party may disclose the existence of this Agreement, but, except to the extent
otherwise provided below in this Section 8.2, neither Party shall disclose
the terms of this Agreement without the prior written consent of the other
Party.  Notwithstanding the foregoing,
either Party may disclose the terms of this Agreement pursuant to the provisions
of subparagraphs (b), (e), (f) (with financial terms redacted), (g), or (i) of Section 8.1
to the same extent as if the terms of this Agreement were Proprietary
Information of the non-disclosing Party.

 

8.3                               No
Publication.  XTL shall not
publish or publicly present any information (a) relating to this Agreement, (b)
any activities conducted under or in relation to this Agreement, or (c)
relating to any Product, in all cases without the prior written consent of
CUBIST. Neither Party shall make public use of the other Party’s name or
identifying marks except as otherwise permitted under this Agreement, with the
prior written consent of the other Party or as required by applicable law or
regulation.  CUBIST shall not use the
names of Yeda, the Weizmann Institute of Science, Rehovot, or Professor Yair
Reisner in any advertising, sales literature, or promotional material unless
(i) the prior written approval of Yeda thereto has been obtained or (ii) such
use or disclosure is to governmental authorities for the purposes of obtaining
approval or permission for the exercise of its license rights to any XTL
Technology licensed to XTL pursuant to the XY Agreement or is in the
fulfillment of any legal duty owed to any governmental authority or is required
by applicable law.  Nothing in this Section 8.3
shall limit XTL’s ability to apply for any patent protection.

 

8.4                               Press
Releases, Etc.  Notwithstanding
anything set forth in Section 8.1, 8.2 or 8.3 above to the contrary, XTL
may not issue any news release or other public announcement relating to this Agreement
or to the Parties’ performance hereunder, without the prior written consent of
CUBIST, which shall not be unreasonably withheld or delayed, except to the
extent required by applicable law, regulation or stock exchange or quotation
system requirement; provided that
XTL uses Commercially Reasonable Efforts to submit to CUBIST a draft of such
news release or public announcement at least five (5) days prior to the date of
planned issuance thereof and shall review and consider in good faith any
comments provided by CUBIST.  CUBIST may
issue any news release or other public announcement relating to Product without
the prior written consent of XTL, subject to the confidentiality provisions of
Sections 8.1, 8.2 and 8.3; provided,
however, that CUBIST may not issue any news release or other public
announcement relating to this Agreement or to XTL’s performance hereunder,
without the prior written consent of XTL, which shall not be unreasonably
withheld or delayed, except to the extent required by applicable law,
regulation or stock exchange or quotation system requirement; and provided
further that, unless precluded by applicable law, regulation or stock exchange
or quotation system requirement, CUBIST will use Commercially Reasonable
Efforts to submit to XTL a draft of such news release or public announcement at
least five (5) days prior to the date of planned issuance thereof so as to
afford XTL the opportunity to object if such proposed press release would
violate applicable Israeli law, regulation or stock exchange or quotation
system requirement.  In the event of such
objection, the parties will diligently cooperate to arrive at a revised draft
of such proposed press release that does not so violate such applicable Israeli
law, regulation or stock exchange or quotation system requirement.

 

8.5                               Records;
Audit Rights.  Each Party shall
keep or cause to be kept full and accurate books of account and records
containing all particulars that may be necessary to determine, in a manner
consistent with generally accepted accounting principles in the United States,
the sums or credits due under this Agreement, including, but not limited to Designated Costs, Net Sales and
Sublicensee Revenues.  At the written
request (and expense) of either Party, the other Party and its Affiliates, and
in the case of CUBIST, its licensees and sublicensees shall permit an
independent certified public accountant appointed by such Party and reasonably
acceptable to the other Party, accompanied by representatives of the financial
department of the audited Party at reasonable times, upon reasonable notice and
no more frequently than once per Contract Year, to examine only those records
as may be necessary to determine the correctness or completeness of any report
or payment made under this Agreement, including but not limited to Designated Costs, Net Sales and
Sublicensee Revenues (including a breakdown of the components thereof so as to
enable calculation of royalties payable to Yeda under the XY Agreement), with
respect to any Contract Year ending not more than [*] prior to such Party’s
request.  Results of any such examination
shall be (i) made available to both Parties, (ii) limited to information
necessary to report any error in any payment or report made under this
Agreement and (iii) subject to the provisions of this Section 8. The Party
requesting the audit shall bear the full cost of the performance of any such
audit, unless such audit discloses a variance of more than [*] from the amount
of the original report, royalty or payment calculation.  In such case, the Party being audited shall
bear the 

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

17

 

full cost of the performance of such audit.

 

Section 9.                                          LICENSE
AND MILESTONE PAYMENTS.

 

9.1                               Consideration
for License.  In consideration
for the licenses granted to CUBIST under Section 2, CUBIST shall make a
cash payment to XTL of USD $1,000,000 within three (3) business days after
the Effective Date of this Agreement.

 

9.2                               Milestones.  (a) 
Subject to the terms and conditions in this Agreement (including,
without limitation, the provisions of Sections 9.2(b), 9.2(c) and 9.3 below),
CUBIST shall make cash payments to XTL in the respective amounts set forth
below upon attainment of the milestones events (each a “Milestone
Event”)  set forth below:

 

	
  Milestone Event

  	
   

  	
  Payment Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  USD $

  	
  3,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  USD 

  	
  [*]

  	
   

  

 

(b)                                  CUBIST shall promptly
notify XTL in writing upon the achievement of any of the milestones set forth
above in Section 9.2(a) and CUBIST shall have [*] days after the
occurrence of the Milestone Event to make the corresponding milestone payment
due.  All milestone payments shall be in
Dollars.

 

(c)                                  CUBIST shall make
only one of the payments set forth in Section 9.2(a) and only upon the
first achievement of the applicable Milestone Event by the first iteration of
HepeX-B to achieve such milestone.  After
the achievement of a given Milestone Event and the payment required to be made
by CUBIST pursuant to Section 9.2(a), no further payment shall be due or
owed by CUBIST in connection with any Milestone Event, regardless of how many
times the same Milestone Event is achieved by different or multiple
Products.  If the first achievement of
the Milestone Event occurs after December 31, 2008, then no payment shall
be due or owed by CUBIST pursuant to Section 9.2(a).

 

9.3                               Reduction
of Milestone Payments.  Notwithstanding
any provision in this Section 9 or elsewhere in this Agreement to the
contrary, CUBIST shall be entitled to reduce payments required pursuant to Section 9.2
above as set forth in Section 7.4, Section 11.3, or Section 12.10,
or pursuant to the Consent Agreement, as further contemplated under Section 10.4.

 

Section 10.                                   ROYALTIES.

 

10.1                        Royalties
on Net Sales of HepeX-B covered by a Valid Claim.  (a)                                      For
each Contract Year during the term of this Agreement, CUBIST shall pay to XTL,
subject to the terms and conditions of this Agreement (including, without
limitation, the provisions of Sections 10.2, 10.4, 10.5 and 10.9), a royalty
with respect to Net Sales of HepeX-B sold by CUBIST or its Affiliates, in any
and all countries where the manufacture, use or sale of HepeX-B are covered by
a Valid Claim in such country (each a “Patent Country”),
equal to:

 

(i)                                    if Net Sales of
HepeX-B in Patent Countries during such Contract Year are equal to or less than
[*], ten percent (10%) of the aggregate Net Sales for HepeX-B sold in Patent
Countries during such Contract Year, and

 

(ii)                                if Net Sales of HepeX-B
in Patent Countries during such Contract Year are greater than [*], then the
lesser of (A) the Patent Royalty Rate, and (B) seventeen percent (17%);
multiplied by the aggregate Net Sales for HepeX-B sold in Patent Countries during
such Contract Year.

 

For purposes of this Section 10, the “Patent Royalty Rate” shall equal:

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

18

 

	
  [*

  	
   

  
	
   

  	
   

  
	
   

  	
  ]

  

 

For purposes of illustration only, if aggregate Net Sales of HepeX-B in
Patent Countries during a Contract Year is equal to [*], then the Patent
Royalty Rate shall equal to [*], or [*].

 

(b)                                  In the event of the
issuance of a Retroactive Valid Claim in a country that was not a Patent
Country prior to such filing (the “Retroactive Royalty
Country”), for each Contract Year during which the application
for the Retroactive Valid Claim was pending (but in no event more than [*]
prior to the date of issuance of such Retroactive Valid Claim in the
Retroactive Royalty Country), through the date of issuance (each such Contract
Year, a “Retroactive Royalty Year”),
CUBIST shall recalculate the aggregate royalties payable under Sections 10.1(a)
and 10.2 for each such Retroactive Royalty Year by including the Net Sales of
such Retroactive Royalty Country in the calculations for Patent Countries under
Section 10.1(a), and reducing by such amount the Net Sales in the
calculations for Know-How Countries under Section 10.2 (collectively the “Recalculated Royalties”).  CUBIST will pay to XTL, subject to the terms
and conditions of this Agreement (including, without limitation, the provisions
of Sections 10.2, 10.4, 10.5 and 10.9), a retroactive royalty with respect to
each Retroactive Royalty Year in an amount equal to (i) the Recalculated
Royalties, minus (ii) any amounts paid or payable to XTL under Section 10.1(a)
and Section 10.2 for such Retroactive Royalty Year prior to effecting any
setoffs or offsets under this Agreement. 
For the first Retroactive Royalty Year, such retroactive payment will
only apply for Net Sales effected after the effective date of filing of the
application for the Retroactive Valid Claim. 
Such retroactive royalty payments will be paid in [*], each [*] after
each of the next [*] (each a [*]; provided that
if such aggregate payment together with amounts payable under Section 10.3(e)
for the same Retroactive Valid Claim(s) exceeds [*] of the royalties paid or
payable prior to effecting any setoffs or offsets under this Agreement for the
Contract Year immediately preceding the Contract Year in such Retroactive Valid
Claim issued, then CUBIST may elect to pay such retroactive royalty payments in
[*] after each of the next [*].  If
CUBIST elects to pay in [*], interest shall accrue pursuant to Section 10.8
on all such retroactive royalty payments beginning on the thirty-first (31st)
day after the [*] that are then unpaid.

 

10.2                        Know-How
Royalties.  Notwithstanding any
provision in this Section 10 or elsewhere in this Agreement to the
contrary but subject to Section 10.4(a), for each Contract Year during the
term of this Agreement, CUBIST shall pay to XTL a royalty with respect to
annual Net Sales of HepeX-B sold by CUBIST or its Affiliates in any country
where the manufacture, use or sale of HepeX-B is not covered by a Valid Claim
in such country (each a “Know-How Country”)
in an amount equal to:

 

(a)                                  if Net Sales of
HepeX-B in the Territory during such Contract Year are equal to or less than [*]
of the aggregate Net Sales for HepeX-B sold in Know-How Countries during such
Contract Year, and

 

(b)                                  if Net Sales of
HepeX-B in the Territory during such Contract Year are greater than $[*], then
the lesser of (i) the Know-How Royalty Rate, and (ii) [*]; multiplied by the
aggregate Net Sales for HepeX-B sold in all Know-How Countries during such
Contract Year.

 

For purposes of this Section 10, the “Know-How Royalty Rate” shall equal:

 

 

	
  [*

  	
   

  
	
   

  	
   

  
	
   

  	
  ]

  

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

19

 

For purposes of illustration only, if aggregate Net
Sales of HepeX-B by CUBIST or its Affiliates during a Contract Year in the
Territory is equal to [*] (representing [*] of aggregate Net Sales in Patent
Countries and $[*] of aggregate Net Sales in Know-How Countries), then the
Know-How Royalty Rate under this Section 10.2 shall equal [*], or [*]].

 

10.3                        Royalties
on Net Sublicensee Revenues.  (a)  Subject to
Sections 10.3(b), (c) and (d), for each Contract Year during the term of this
Agreement, CUBIST shall pay to XTL, subject to the terms and conditions of this
Agreement, an amount equal to [*] of the aggregate annual Sublicensee Revenues
for such Contract Year.

 

(b)                                  Notwithstanding
anything to the contrary in Section 10.3(a) above, but subject to the
other terms and conditions of this Agreement, for each Contract Year during the
term of this Agreement, CUBIST shall pay to XTL an amount equal to (i) [*] of
the aggregate annual Sublicensee Revenues for such Contract Year with respect
to rights to Commercialize Product in the United States of America, and (ii) if
CUBIST sublicenses rights to Commercialize Product in more than [*] European
Major Markets, CUBIST shall pay to XTL [*] of the aggregate annual Sublicense
Revenues for such Contract Year with respect to rights to Commercialize Product
in the [*] European Major Market country in which CUBIST has sublicensed rights
to Commercialize Product.  In the event
it is not clear which of several countries are the [*] European Major Market
countries in which CUBIST has sublicensed rights to Commercialize Product,
CUBIST shall have the right in its sole discretion to identify which [*] of
those countries are the [*] European Major Market countries; provided that such determination may not be subsequently
changed by CUBIST without XTL’s prior written consent.  To the extent that Sublicensee Revenues are
applicable to more than one country listed above, the percentage of such
Sublicensee Revenues that CUBIST shall be required to pay to XTL shall be
calculated based on an appropriate weighted average of the applicable countries.

 

(c)                                  With respect to
Sublicensee Revenues that relate solely to Know-How Countries in a particular
Contract Year, the amount payable by CUBIST to XTL under Sections 10.3(a) or
10.3(b) will be reduced by [*].

 

(d)                                  With respect to
Sublicensee Revenues (other than Sublicensee Revenues based on sales) from a
particular Sublicensee that relate to both Patent Countries and Know-How
Countries in a particular Contract Year, the amount payable by CUBIST to XTL
under Sections 10.3(a) and 10.3(b) will be reduced by a percentage between [*]
(in the event that all countries are Know-How Countries) calculated using a
weighted average.  The weighted average
shall be based on the reasonable estimate provided in good faith by CUBIST to
XTL within thirty (30) days after execution of the underlying sublicense
agreement of [*].  If XTL disputes such
good faith estimate, then XTL may submit the matter to the dispute resolution
procedures set forth in Section 14.

 

(e)                                  For each Retroactive
Royalty Year applicable for a particular country that was not a Patent Country
during such Retroactive Royalty Year absent such Retroactive Valid Claim,
CUBIST will pay to XTL, subject to the terms and conditions of this Agreement
(including, without limitation, the provisions of Sections 10.2, 10.4, 10.5 and
10.9), a retroactive royalty in an amount equal to (i) the amounts that would have
been payable with respect to such country under Sections 10.3(a), (b), or (d),
minus (ii) any amounts paid or payable to XTL under Section 10.3 with
respect to such country prior to effecting any setoffs or offsets.  For the first Retroactive Royalty Year, such
retroactive payment will only apply for Sublicensee Revenues received after the
effective date of filing of the application for the Retroactive Valid
Claim.  Such retroactive royalty payments
will be paid in [*] after each of the next [*]; provided
that if such aggregate payment together with amounts payable under Section 10.1(b)
for the same Retroactive Valid Claim(s) exceeds [*] of the royalties paid for
the Contract Year immediately preceding the Contract Year in such Retroactive
Valid Claim issued, then CUBIST may elect to pay such retroactive payments in
[*].  If CUBIST elects to pay in [*],
interest shall accrue pursuant to Section 10.8 on all such retroactive
royalty payments beginning on the thirty-first (31st) day after the
[*] that are then unpaid.

 

10.4                        Setoffs and Offsets.  (a)  Notwithstanding any provision in
this Section 10 or elsewhere in this Agreement to the contrary but subject
to Section 10.4(b), CUBIST shall be entitled to reduce payments otherwise
required pursuant to this Section 10 pursuant to Section 7.4, 11.3,
or 12.10, or pursuant to the Consent Agreement. 
In addition, notwithstanding any provision in this Agreement to the
contrary except Section 10.4(b), for any given country within the
Territory, CUBIST shall have no obligation to make

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

20

 

payments
to XTL under Section 10.2 or 10.3 for any Contract Year with respect to a
country where Product is not covered by a Valid Claim, if the aggregate unit
sales of Unlicensed Products during such Contract Year by all Third Parties in
such country constitute more than [*] of the market share on a per unit basis
with respect to all unit sales of both such Unlicensed Products and HepeX-B in
such country.  CUBIST shall have no
obligation to make payments to XTL under Section 10.2 or Section 10.3
for any Contract Year in any country within the Territory:  (i) that is not a [*]; (ii) where HepeX-B is
[*]; and (iii) where unit sales of Unlicensed Product that is also covered by a
Valid Claim by all Third Parties in such country constitute more than [*] of
the market share on a per unit basis with respect to all unit sales of both
such Unlicensed Product and HepeX-B.

 

(b)                                  With respect to any
amount payable by CUBIST to XTL under Section 9 or Section 10, in no
event may CUBIST setoff or offset amounts under Section 7.4, Section 11.3,
or Section 12.10 or pursuant to the Consent Agreement against such payment
in an amount exceeding such amount payable. 
Setoffs and offsets permitted pursuant to Section 9.3, Section 11.3,
and Section 10.4 will be applied in the following order:  (i) first to reductions pursuant to [*]; and
(ii) second to reductions pursuant to [*]; (iii) third to reductions pursuant
to [*]; and (iv) fourth to reductions pursuant to [*]; provided
that in no event will such offsets or setoffs reduce any such payment to an
amount less than the amount of the XTL Licensor Payment applicable for such
payment period.  Any amounts setoff or
offset amounts that are not actually setoff or offset against a particular
payment amount, will be carried forward to the next milestone or royalty
payment period.

 

(c)                                  XTL shall use any XTL
Licensor Payment amount received under this Section 10.4 for the sole and
exclusive purpose of paying such Third Parties; if XTL fails to use such
amounts for such purpose, and does not remedy such failure as soon as
reasonably practicable, and in any event no later than [*] days after receipt
of written notice from CUBIST, and except as otherwise agreed in the Consent
Agreement with respect to Yeda, CUBIST may withhold XTL Licensor Payment
amounts from subsequent payments under Section 9 or Section 10 to
apply against any setoffs or offsets under Section 7.4, Section 11.3,
or Section 12.10.

 

(d)                                  It is agreed that the
references to the Consent Agreement in the definition of the XTL Licensor
Payments and in Sections 9.3 and 10.4(a) and (b) shall not derogate from the rights
of Yeda under the Consent Agreement, and for the purpose of those rights, shall
be deemed not to have been made.

 

10.5                        Term
of Royalties.  XTL’s right to
receive (and CUBIST’s obligation to pay) royalties under this Section 10
with respect to any country in the Territory shall expire (and Net Sales in
such country after expiration will not be applied in the calculation of any
royalty rates hereunder) upon the later of (a) ten (10) years from the First
Commercial Sale of HepeX-B in such country, or (b) the expiration of the last
to expire Valid Claim, if any, covering the manufacture, use, or sale of
HepeX-B in such country; provided that if there is no such Valid Claim in such
country, then the period described in clause (a) above shall control; and further
provided that if clause (a) controls and
if the XY Agreement requires XTL to pay royalties with respect to sales of
HepeX-B under this Agreement for up to an additional two (2) years after such
ten (10) year period, then during such additional period, CUBIST will pay
directly to Yeda on behalf of XTL, such royalty amount to which Yeda is
entitled under the XY Agreement and the Consent Agreement, calculated as if
CUBIST were to continue to pay to XTL the amounts due to XTL under this
Agreement and the Consent Agreement during the said two (2) year period.  In the event that, in accordance with the
provisions of this Section 10.5, the right of XTL to receive (and CUBIST’s
obligation to pay) royalties under this Section 10 in connection with
sales of HepeX-B in any country in the Territory expires, CUBIST shall
nevertheless remain obligated to pay accrued royalties to XTL in connection
with all sales of HepeX-B in such country that occurred prior to the effective
date of such expiration.

 

10.6                        Royalty
Payments and Reports.  Royalties
shall be calculated by converting all applicable Net Sales and Sublicensee
Revenues into Dollars in accordance with the provisions of Section 10.8
below and applying the appropriate royalty percentages set forth in, or
determined in accordance with, Section 10.1 or Section 10.2 or Section 10.3,
as applicable.  During the term of this
Agreement, royalties accrued to XTL pursuant to this Section 10 shall be
paid within [*] days after the close of each Contract Year.  Royalty payments shall be made in
Dollars.  Within [*] days of the end of
each Contract Year, CUBIST shall furnish to XTL a report showing: (i) the
calculation of Net Sales for HepeX-B that were sold in the Territory on a
country-by-country basis during such Contract Year, (ii) the calculation of
Sublicensee Revenues attributed to HepeX-B that was sold in the Territory on a
country-by-country basis during such

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

21

 

Contract Year, (iii) royalties accrued to XTL pursuant to Section 10.1
and pursuant to Section 10.2 during such Contract Year, and (v) the
currency exchange rates used in determining the amount of Dollars payable to
XTL.  If no royalty payments are due for
any Contract Year hereunder, CUBIST shall so report.  All reports delivered pursuant to this Section 10.6
and any information that can be derived therefrom shall constitute Proprietary
Information of CUBIST for purposes of Section 8.1.

 

10.7                        Exchange
Rate.  The rate of exchange to be
used in computing Designated Costs, Net Sales and Sublicensee Revenues in each
country within the Territory shall be made at the average rate of exchange for
such country’s currency published in the Wall Street Journal
(New York Edition) for the last business day of each month in the applicable
period.

 

10.8                        Interest
on Overdue Payments. Any amounts not paid by CUBIST or XTL when due
under this Agreement shall be subject to interest from and including the date
payment is due through and including the date upon which CUBIST or XTL has made
such payment calculated at the annual rate equal to the prime rate plus [*]
percent, as prime is reported in the Wall Street Journal (New
York Edition), as determined for each month on the last business day of the
previous month.  For the avoidance of
doubt, this Section 10.8 shall not apply to amounts XTL has elected to
have CUBIST offset against future payments pursuant to Section 7.4.

 

10.9                        Taxes.  If CUBIST is required by law, rule or
regulation to withhold taxes from any payments due to XTL from CUBIST
hereunder, CUBIST will (i) deduct those taxes from the remittable amount, (ii)
pay the taxes to the proper taxing authority, and (iii) send evidence of the
obligation together with proof of payment to XTL within thirty (30) business
days following that payment. CUBIST will provide to XTL such assistance as XTL
may reasonably require at XTL’s expense (including without limitation
submission of documents to relevant revenue authorities) in claiming exemption
from any such withholding requirements or seeking deductions under any double
taxation or other similar treaty or agreement from time to time in force.  In the event that XTL delivers to CUBIST an
opinion from legal counsel reasonably acceptable to CUBIST that tax withholding
is not required, CUBIST shall not make such withholding, in which case, XTL
shall, pursuant to the procedures in Section 11.3, indemnify, defend and
hold harmless the CUBIST Indemnitees with respect to any Losses resulting from
a Third Party claim arising out of CUBIST’s not making such withholding.  Without limiting the generality of the
foregoing provisions of this Section 10.9, but subject to the immediately
preceding sentence, CUBIST shall be responsible for all taxes imposed on or
attributable to it under applicable law, and XTL shall be responsible for all
taxes imposed on or attributable to it under applicable law.

 

10.10                 Products
other than HepeX-B.  (a) If, at any time during the term of this Agreement before
sales of HepeX-B are being made by CUBIST or a Sublicensee, CUBIST ceases to
conduct any material activities to Obtain Regulatory Approval for HepeX-B,
CUBIST shall be obligated, at all times during the remainder of the term of
this Agreement, under the diligence requirements under Section 2.2 with
respect to at least one other Product.

 

(b)                                  Prior to
Commercializing any Product other than HepeX-B (irrespective of whether sales
of HepeX-B are made or not): (i) by written notice to XTL, CUBIST may elect to
abide by the royalty provisions of this Section 10 with respect to such
Product, and references to “HepeX-B” in Section 10, except with respect to
this Section 10.10, will be deemed to include such Product, except that
CUBIST shall have the right to make setoffs and offsets pursuant to Section 10.4
only with respect to Designated Costs, infringement claims and payments
pursuant to Third Party licenses in connection with HepeX-B, which CUBIST could
not setoff or offset against royalties or milestones otherwise payable to XTL
with respect to HepeX-B; or (ii) if requested by CUBIST, the Parties agree to
negotiate in good faith the financial terms and diligence obligations
associated with such Product to account for any material increases in costs and
expenses with respect to such Product.

 

(c)                                  In the event CUBIST
invokes clause (ii) of Section 10.10(b), if after good faith negotiation,
the Parties are unable to mutually agree upon financial terms for such Product,
then the matter shall be submitted to the dispute resolution procedures set
forth in Section 14.  In the event
of arbitration, the arbitrator will determine commercially reasonable financial
terms in light of (i) any additional costs required to Obtain Regulatory Approval
for such new Product, (ii) the anticipated market for such new Product, (iii)
the commercial viability of HepeX-B and the respective investment of the
Parties in HepeX-B, and (iv) financial and due diligence terms for other
similarly situated products in the marketplace.

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

22

 

Section 11.                                   RISK
ALLOCATION.

 

11.1                        Mutual
Representations and Warranties. 
Each Party hereby represents and warrants to the other Party that:

 

(a)                                  it is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated, and has full corporate power and
authority and the legal right to own and operate its property and assets and to
carry on its business as it is now being conducted and as contemplated in this
Agreement;

 

(b)                                  it has the corporate
power and authority and the legal right to enter into this Agreement and
perform its obligations hereunder; it has taken all necessary corporate action
on its part required to authorize the execution and delivery of this Agreement
and the performance of its obligations hereunder; and this Agreement has been
duly executed and delivered on behalf of such Party, and constitutes a legal,
valid and binding obligation of such Party that is enforceable against it in
accordance with its terms;

 

(c)                                  it has not entered,
and will not enter, into any agreement with any Third Party that is in conflict
with the rights granted to the other Party under this Agreement, and has not
taken and will not take any action that would in any way prevent it from
granting the rights granted to the other Party under this Agreement, or that
would otherwise materially conflict with or adversely affect the rights granted
to the other Party under this Agreement; and

 

(d)                                  its performance and
execution of this Agreement will not result in a breach of any other contract
to which it is a party.

 

11.2                        XTL
Representations and Warranties. 
XTL represents and warrants that:

 

(a)                                  XTL has not taken any
action or omission to encumber any of its right, title and interest in and to
the XTL Technology in the Territory in any way that would have a material
adverse effect on the rights and licenses granted to CUBIST hereunder;

 

(b)                                  XTL has sufficient
rights in and to the XTL Patents and XTL Know-How to grant the rights set forth
in this Agreement to CUBIST, and XTL will do all such things and take all such
actions as may be necessary to maintain such sufficient rights in good standing
during the term of this Agreement, including the payment of any amounts and the
performance of any obligations to any Third Party licensor of XTL Technology as
required under any agreement or arrangement with any such Third Party
(including without limitation the XY Agreement);

 

(c)                                  XTL has not
misappropriated the trade secrets (or, to XTL’s knowledge after due and
reasonable investigation, infringed) the intellectual property rights of any
other Person in its activities to Obtain Regulatory Approval hereunder, and, to
XTL’s knowledge after due and reasonable investigation, the exercise of the
licenses granted to CUBIST under the XTL Patents and XTL Know-How, including to
Obtain Regulatory Approval, Commercialize, or manufacture Products in the
Territory do not infringe any patent rights Controlled by any Third Party which
such patent is granted or published as a patent application on or prior to the
Effective Date;

 

(d)                                  XTL is unaware of any
activities by any Third Party that would constitute infringement of any XTL
Patents or misappropriation of any XTL Know-How;

 

(e)                                  XTL is not aware of
any claims, judgments or settlements against or owed by XTL and has not
received notice of any pending or threatened claims or litigation relating to
Product, the XTL Patents or XTL Know-How;

 

(f)                                    to XTL’s knowledge,
after due and reasonable investigation, XTL has not used, prior to the
Effective Date, in connection with HepeX-B, the services of any employee,
consultant or clinical investigator that has been debarred by the FDA or any
other regulatory authority or is the subject of debarment proceedings by the
FDA or any other regulatory authority;

 

(g)                                 XTL has obtained the
consent of the Office of the Chief Scientist of Israel (the “OCS”) to the transfer out of Israel
of manufacturing rights as detailed under this Agreement by XTL and no

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

23

 

provision of this Agreement, including the license grant set forth in Section 2.1,
or the performance by either Party of their respective obligations hereunder
will violate or be in conflict with any statute, regulation, rule, judgment,
order, decree or injunction of any governmental agency or body  of Israel;

 

(h)                                 CUBIST is not and will
not be liable to OCS for any loan or obligation incurred by XTL without CUBIST’s
prior express, written consent;

 

(i)                                    neither the
execution and delivery of this Agreement by XTL nor the performance of its
obligations  hereunder will constitute a
violation of, or be in conflict with, or constitute or create a default or
accelerate or adversely affect any obligations under, any agreement or
commitment to which XTL is a party or by which any XTL Patent or XTL Know-How
is subject, including without limitation the XY Agreement;

 

(j)                                    there is no fact
known to XTL that has not been disclosed in writing to CUBIST (i) that could
reasonably be expected to have a material adverse effect upon the right to the
XTL Patents or the XTL Know-How granted hereunder, or (ii) that could
reasonably be expected to materially and adversely affect the ability of XTL to
perform its obligations under this Agreement;

 

(k)                                XTL owns or Controls
the human monoclonal antibody [*], as referred to and described in [*], and the
human monoclonal antibody [*], as referred to and described in [*]; and

 

(l)                                    to XTL’s actual
knowledge, (i) any clinical studies of HepeX-B undertaken by or on behalf of
XTL complied with applicable then current Good Clinical Practices, (ii) any
HepeX-B manufactured by or on behalf of XTL for use in humans complied with
applicable then current Good Manufacturing Practices and (iii) any pre-clinical
activities undertaken by or on behalf of XTL and intended by XTL for inclusion
in an application for Regulatory Approval complied with applicable then current
Good Laboratory Practices.

 

11.3                        Indemnity.  (a) 
CUBIST hereby agrees to defend, hold harmless and indemnify XTL and its
agents, directors, officers and employees (the “XTL
Indemnitees”) from and against any and all suits, claims,
actions, demands, liabilities, expenses and/or losses, including, without
limitation, reasonable legal expenses and attorneys’ fees (collectively “Losses”) resulting directly or
indirectly from a claim of a Third Party with respect to: (i) the manufacture,
handling, storage, use, promotion, sale, offer for sale, distribution,
importation or exportation of Products by or on behalf of CUBIST or its
Sublicensees (other than by XTL or other than such Losses that result from
claims arising out of an XTL indemnification obligation under Section 11.3(b)),
(ii) a material breach of any of the provisions of this Agreement by CUBIST or
any of its agents or employees; or (iii) the negligence, recklessness, or
willful misconduct by CUBIST or any of its agents or employees in the
performance of any obligations of CUBIST under this Agreement.  The foregoing indemnification obligations will not apply in
the event and to the extent that such Losses arose as a result of any XTL
Indemnitee’s negligence, willful misconduct, or breach of this Agreement.

 

(b)                                  XTL hereby agrees to
defend, hold harmless and indemnify CUBIST and its agents, directors, officers,
employees, Sublicensees and distributors (the “CUBIST
Indemnitees”) from and against any and all Losses resulting
directly or indirectly from a claim of a Third Party with respect to: (i) a
material breach of any of the provisions of this Agreement by XTL or any of its
agents or employees; (ii) the negligence, recklessness, or willful misconduct
by XTL or any of its agents or employees in the performance of any obligations
of XTL under this Agreement; (iii) the
infringement of any Third Party intellectual property right which such
intellectual property is issued or published prior to the Effective Date caused
by Obtaining Regulatory Approval, Commercialization, or the manufacture, use,
promotion, marketing, sale, offer for sale, importation or exportation of HepeX-B
in the Territory by CUBIST and its sublicensees or distributors; or (iv) the
misappropriation of any Third Party intellectual property right by XTL or any
of its agents or employees which is known after due and reasonable
investigation as of the Effective Date.

 

(c)                                  XTL
hereby agrees to defend, hold harmless and indemnify CUBIST Indemnitees from
and against fifty percent (50%) of any and all Losses resulting directly or
indirectly from a claim of a Third Party with respect to: (i) the infringement of any Third Party intellectual
property right which such intellectual property is not issued or published
prior to the Effective Date caused by Obtaining Regulatory Approval,
Commercialization, and the manufacture, use, promotion, marketing, sale, offer
for sale,

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

24

 

importation or exportation of HepeX-B in the
Territory by CUBIST and its Sublicensees or distributors; and (ii) the
misappropriation of any Third Party intellectual property right by XTL or any
of its agents or employees which is not known or knowable as of the Effective
Date.

 

(d)                                  If either Party is
seeking indemnification under this Section 11.3 in connection with a Third
Party claim:  (i) it shall inform the
indemnifying Party of such Third Party claim giving rise to the obligation to
indemnify as soon as reasonably practicable after receiving notice of the
claim; (ii) except as provided in Section 11.3(d)(iii) with respect to
claims under Section 11.3(b)(iii), Section 11.3(b)(iv) or Section 11.3(c),
the indemnifying Party shall have the right to assume the defense of, and take
control of, any such Third Party claim for which it is obligated to indemnify
the indemnified Party under this Section 11.3, the indemnified Party shall
cooperate with the indemnifying Party (and its insurer) as the indemnifying
Party may reasonably request, the indemnified Party shall have the right to
participate, at its own expense and with counsel of its choice, in the defense
of any claim or suit that has been assumed by the indemnifying Party, and
neither Party shall have any obligation to indemnify the other Party in
connection with any settlement made without the indemnifying Party’s written
consent, provided that the indemnifying Party does not unreasonably withhold or
delay any such written consent; and (iii) with respect to claims under Section 11.3(b)(iii),
Section 11.3(b)(iv) or Section 11.3(c), CUBIST shall have the right
to assume the defense of, and take control of, any such claim, XTL will
cooperate with CUBIST as CUBIST may reasonably request, XTL shall have the
right to participate, at its own expense and with counsel of its choice, in the
defense of any such claim or suit that has been assumed by CUBIST, and XTL
shall not have any obligation to indemnify CUBIST in connection with any
settlement made without XTL’s written consent, provided that XTL does not
unreasonably withhold or delay any such written consent.

 

(e)                                  Notwithstanding
anything expressed or implied to the contrary in this Section 11, the
amount of any Losses subject to indemnification shall be reduced by the amount
of any insurance proceeds received by the indemnified Party with respect to
such Losses; and there shall be no obligation under this Agreement to indemnify
such indemnified Party for the amount of Losses so reduced.

 

(f)                                    XTL [*] under its
indemnification obligations as set forth in Section 11.3(b)(iii) and (iv)
and under Section 11.3(c), or [*] such that the [*] are no less than the
[*], until XTL’s indemnification payment obligations under Section 11.3(b)(iii)
and (iv) and under Section 11.3(c) are [*].  Interest shall begin to accrue on any such
XTL payment obligations commencing as of the date first due at a rate
determined in accordance with Section 10.8 on any such amounts [*].  XTL shall have no obligation to pay any
amounts under its indemnification obligations as set forth in Section 11.3(b)(iii)
and (iv) and under Section 11.3(c) that have not been [*] as of the
termination or expiration of this Agreement.

 

11.4                        Limitation
of Liability. EXCEPT (i) AS A RESULT OF ANY INFRINGEMENT BY A PARTY OF
THE INTELLECTUAL PROPERTY RIGHTS OF THE OTHER PARTY, (ii) AS A RESULT OF THE
FAILURE OF SUCH PARTY TO PERFORM AND OBSERVE ITS CONFIDENTIALITY OBLIGATIONS TO
THE OTHER PARTY UNDER THIS AGREEMENT OR (iii) PURSUANT TO A PARTY’S
INDEMNIFICATION OBLIGATIONS UNDER SECTION 11.3, NEITHER PARTY SHALL BE
LIABLE TO THE OTHER PARTY FOR LOST PROFITS OR FOR ANY INDIRECT, INCIDENTAL,
CONSEQUENTIAL, SPECIAL, PUNITIVE OR EXEMPLARY DAMAGES OF THE OTHER PARTY IN
CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT, HOWEVER CAUSED, UNDER ANY THEORY OF LIABILITY.

 

11.5                        Insurance.  XTL and CUBIST shall each procure and
maintain insurance, including product liability insurance, adequate to cover
its obligations hereunder and that are consistent with normal business
practices of prudent companies similarly situated.  It is understood that such insurance shall
not be construed to create a limit of the Parties’ liability with respect to
its indemnification obligations under this Section 11.  CUBIST and XTL shall provide each other with
written evidence of such insurance upon request (which evidence need not
necessarily be insurance certificates). 
CUBIST and XTL shall provide the other with written notice at least ten
(10) days prior to the cancellation, non-renewal or material change in such
insurance that materially adversely affects the other Party’s rights hereunder.

 

Section 12.                                   INTELLECTUAL
PROPERTY.

 

12.1                        Inventions.  (a) The entire right, title and interest in
and to all discoveries, improvements, processes, formulas, data, inventions,
enhancements, know-how and trade secrets, patentable or

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

25

 

otherwise, that arise from activities under this Agreement or that are
necessary or useful in connection with Obtaining Regulatory Approval,
manufacture, marketing, promotion, sale, import or export of Products, and that
were or are developed or invented: (i) solely by employees of CUBIST (“CUBIST Inventions”) shall be owned
solely by CUBIST; (ii) solely by employees of XTL (“XTL
Inventions”) shall be owned solely by XTL; and (iii) jointly by
employees of CUBIST and XTL (“Joint Inventions”) shall be owned jointly by CUBIST and
XTL; provided, however, that if
the joint ownership by CUBIST and XTL of any Joint Invention conceived using
technology funded in whole or in part by OCS (“OCS Technology”) would result in the
transfer of any rights outside of Israel in breach or violation of Section 19b1
of the Israeli Encouragement of Development and Research in Industry Law, 1984,
then such Joint Invention shall be solely owned by XTL, and XTL hereby grants
to CUBIST, for any such Joint Invention: (A) an exclusive, perpetual,
worldwide, irrevocable, fully paid up license (with the right to sublicense) to
Obtain Regulatory Approval, make, have made, use, promote, market, sell, have
sold, offer to sell, import or export Products, and (B) a co-exclusive
perpetual, worldwide, irrevocable, fully paid up license (with each Party
having the right to sublicense) for any and all other purposes.  Notwithstanding anything to the contrary
above, none of the foregoing shall serve to or require (x) CUBIST to assign or
transfer, or otherwise relinquish, any of CUBIST’s right, title or interest in
or to any CUBIST Invention, Joint Invention, CUBIST Patent, Joint Patent or
CUBIST Know-How without the prior written consent of CUBIST, or (y) XTL to
assign or transfer, or otherwise relinquish, any of XTL’s right, title or
interest in or to any XTL Invention, Joint Invention, XTL Patent, Joint
Patent  or XTL Know-How without the prior
written consent of XTL.  Commencing as of
the Effective Date, XTL shall not use any OCS Technology in the performance of
its obligations under this Agreement unless prior to such use (1) XTL notifies
CUBIST in writing of XTL’s intent to use OCS Technology, (2) XTL specifically
identifies the OCS Technology contemplated to be used and the purpose for which
XTL intends to use it, and (3) CUBIST gives its prior written consent to such
use of such OCS Technology.  Inventorship
shall be determined in accordance with U.S. patent law. All clinical data
collected pursuant to services paid for in whole or in part by CUBIST will be
owned by CUBIST.

 

(b)                                 Notwithstanding
anything to the contrary in this Agreement, in the case any CUBIST Invention,
XTL Invention or Joint Invention is conceived through the use of the Licensed
Technology or Licensed Patents (as such terms are defined under the XY
Agreement) (excluding the human monoclonal antibody [*], as referred to and
described in [*], and the human monoclonal antibody [*], as referred to and
described in [*], including any portions or fragments thereof) (collectively
the “Yeda Technology”), the parties shall
not [*], which shall include the terms and conditions for such registration or
use of the CUBIST Invention, XTL Invention or Joint Invention and relating to
the ownership thereof.  It is agreed,
without derogating from the Consent Agreement, that commencing as of the
Effective Date, XTL shall not use any Yeda Technology in the performance of its
obligations under this Agreement unless prior to such use (i) XTL notifies
CUBIST in writing of XTL’s intent to use Yeda Technology (in which case XTL
shall also deliver a copy of such notice to Yeda), (ii) XTL specifically
identifies the Yeda Technology contemplated to be used and the purpose for
which XTL intends to use it, and (iii) CUBIST gives its prior written consent
to such use of such Yeda Technology.

 

12.2                        Filing,
Prosecution and Maintenance of Patents. 
(a)  CUBIST
shall be entitled to file, prosecute and maintain in the Territory all patent
applications and patents that claim any CUBIST Inventions at its sole expense.

 

(b)                                  XTL
agrees to file, prosecute and maintain the XTL Patents at its sole expense, provided, however, that
XTL shall (i) use outside counsel reasonably acceptable to CUBIST, (ii)
provide CUBIST with all material documentation and correspondence from, sent to
or filed with patent offices in the Territory regarding any XTL Patent,
(iii) provide CUBIST with a reasonable opportunity to review and comment
upon all filings with such patent offices in advance of submissions to such
patent offices, and (iv) shall consider, in good faith, incorporating any
comments provided by CUBIST.  In the
event that XTL is unwilling, unable or otherwise fails to file or prosecute any
XTL Patent in any country in the Territory, CUBIST shall have the right, but
not the obligation, and XTL shall provide CUBIST with thirty (30) days written
notice to permit CUBIST to, file, prosecute and/or maintain such XTL Patent in
such country, and XTL shall execute such documents and perform such acts as may
be reasonably necessary to allow CUBIST to file, prosecute and maintain such
XTL Patent in such country in a timely manner; provided that in any
event any such XTL Patents shall always be registered in XTL’s name or in the
name of the relevant licensor of XTL as identified in writing to CUBIST by XTL.

 

(c)                                  With
respect to all filings, prosecution and maintenance of any Patent pursuant to
this

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

26

 

Section 12.2, the filing Party shall be responsible for payment of
all costs and expenses related to such Patent filing, prosecution or
maintenance.

 

(d)                                  With respect to any Joint Inventions,
CUBIST shall have the first right to file, prosecute and maintain in the
Territory, upon appropriate consultation with XTL, Patents that claim or cover
any Joint Invention (a “Joint Patent”);
however, in the event that CUBIST elects not to file any patent
application in the Territory with respect to any Joint Invention, XTL shall
have such right and upon exercise by XTL of such right, XTL shall have the right
to prosecute and maintain in the Territory, upon appropriate consultation with
CUBIST, the Joint Patents to which such Joint Invention relates.  Each of XTL and CUBIST shall execute such
documents and perform such acts as may be reasonably necessary to allow CUBIST,
in the first instance, and XTL, in the second instance, to file, prosecute and
maintain Joint Patents in any country within the Territory in a timely
basis.  CUBIST shall promptly give notice
to XTL of the grant, lapse, revocation, surrender, invalidation or abandonment
in the Territory of any Joint Patent being prosecuted by CUBIST.  XTL shall promptly give notice to CUBIST of
the grant, lapse, revocation, surrender, invalidation or abandonment of any Joint
Patent being prosecuted by XTL.

 

12.3                        Option
of the Parties to Prosecute and Maintain Patents.  Each Party shall give notice to the other
Party of any desire to cease prosecution of patent applications and/or
maintenance in the Territory of XTL Patents that such Party is then prosecuting
or maintaining, and, in such case, shall permit the other Party, in its sole
discretion, to continue such prosecution or maintenance in the Territory at its
own expense.  If the other Party then
elects to continue prosecution or maintenance in the Territory, each Party
shall execute such documents and perform such acts as may be reasonably
necessary to allow continuation of such prosecution or maintenance in the
Territory.

 

12.4                        Legal
or Administrative Proceedings. 
(a)  Each Party shall, within
ten (10) days of learning of such event, inform the other of any request for,
or filing or declaration of, any interference, opposition, reexamination,
revocation, nullity proceeding or declaration of non-infringement and/or
invalidity, whether by administrative or legal proceeding, sounding in equity
or in law (or the equivalent of any of the foregoing), whether initiated by a
Third Party or any patent office, in the Territory relating to any XTL
Patent.  XTL and CUBIST shall thereafter
consult and cooperate fully to determine a course of action with respect to any
such proceeding.  Each Party shall have
the right to review and comment upon any submission to be made in connection
with such proceeding and the Party responsible for prosecuting or maintaining
the Patent at issue in such proceeding shall consider, in good faith,
incorporating any comments provided by the other Party.

 

(b)                                  Neither Party shall
initiate any reexamination, interference, reissue, revocation, nullity or
declaration of non-infringement proceeding in the Territory with respect to XTL
Patents or Joint Patents without the prior written consent of the other Party.

 

(c)                                  In connection with
any interference, opposition, reexamination, revocation, nullity proceeding or
declaration of non-infringement and/or invalidity, whether by administrative or
legal proceeding, sounding in equity or in law (or the equivalent of any of the
foregoing), whether initiated by a Third Party or any Patent Office, in the
Territory relating to any XTL Patent or Joint Patent, XTL and CUBIST will
cooperate fully and will provide each other with any information or assistance
that either may reasonably request.  The
Parties shall keep each other informed of developments in any such action or
proceeding, including to the extent permissible by law and contracts, the
status of any settlement negotiations and the terms of any offer related
thereto.

 

(d)                                  XTL, in the case of
XTL Patents, shall bear the expense of any interference, opposition,
reexamination, revocation, nullity proceeding or declaration of
non-infringement and/or invalidity, whether by administrative or legal
proceeding, sounding in equity or in law (or the equivalent of any of the
foregoing), whether initiated by a Third Party or any Patent Office, relating
thereto.  The expenses of any
interference, opposition, reexamination, revocation, nullity proceeding or
declaration of non-infringement and/or invalidity, whether by administrative or
legal proceeding, sounding in equity or in law (or the equivalent of any of the
foregoing), whether initiated by a Third Party or any Patent Office, with
respect to Joint Patents shall be shared equally by the Parties.

 

(e)                                  This Section 12.4
applies to any proceeding before the United States Patent and Trademark Office
or similar patent authority in the Territory and to any proceeding before a
court, arbitration panel or similar body of competent jurisdiction.

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

27

 

12.5                        Enforcement.  (a)  Either
Party shall give written notice to the other Party of (i) any actual, alleged
or threatened infringement of any XTL Trademark or CUBIST Trademark or of any
unfair trade practices, trade dress imitation, passing off of counterfeit
goods, or like offenses, or any such claims brought by a Third Party against a
Product (hereinafter “TM Infringement”),
(ii) any infringement of any XTL Patent and/or CUBIST Patent, and/or Joint
Patent, and (iii) any misappropriation or misuse of XTL Know-How and/or CUBIST
Know-How and/or Joint Inventions; in each case that such Party has knowledge
of.  XTL and CUBIST shall thereafter
consult and cooperate fully to determine a course of action, including but not
limited to the commencement of legal action by either or both XTL and CUBIST,
to terminate any infringement of XTL Patents Joint Patents, or Joint Inventions
or to terminate any misappropriation or misuse of XTL Know-How.  CUBIST shall have the first right to initiate
and prosecute legal action anywhere in the Territory, at CUBIST’s expense and
in its own name, and, as necessary, in the name of XTL, with respect to XTL
Patents, XTL Know-How, Joint Patents, and Joint Inventions.  Subject to the provisions of this Section 12.5,
CUBIST shall control and conduct such legal action in its sole discretion,
including without limitation, the terms and conditions of any settlement.  In the event that CUBIST notifies XTL in
writing that it elects not to initiate and/or prosecute any such legal action,
or if CUBIST does not take material action to abate any such actual, alleged or
threatened infringement within ninety (90) days after the date of notice to
CUBIST of such actual, alleged or threatened infringement, XTL shall thereafter
have the right to initiate and prosecute such action in the Territory in its
own name.

 

(b)                                  For any infringement
action concerning XTL Patents or Joint Patents or any misappropriation or
misuse of XTL Know-How or Joint Inventions, in the event that CUBIST elects to
initiate or prosecute such action but is unable to do so solely in its own
name, XTL will join such action voluntarily, and at CUBIST’s expense, will
execute all documents necessary for CUBIST to initiate, prosecute and/or
maintain such action.  In the event that
XTL elects to be represented by its own counsel in connection with any matter
pertaining to such action, XTL shall pay all of the costs and expenses of its
own counsel.  In connection with any such
action, XTL and CUBIST will cooperate fully and will provide each other with
any information or assistance that either may reasonably request, provided, however, CUBIST
shall control and conduct such legal action in its sole discretion, including
without limitation, the terms and conditions of any settlement.  The Parties shall keep each other informed of
developments in any such action or proceeding, including to the extent
permissible by law and contracts, the status of any settlement negotiations and
the terms of any offer related thereto.

 

(c)                                  Any recovery of
damages or an award received by either or both of XTL and CUBIST in connection
with or as a result of any action contemplated by this Section 12.5 or Section 12.6
below, whether by settlement or otherwise, shall be shared in order as follows:

 

(i)                                     the
Party or Parties that prosecuted the action shall recoup all of its or their
costs and expenses incurred in connection with the action;

 

(ii)                                  the
other Party (to the extent that it did not prosecute the action) shall then,
from funds remaining, recover its costs and expenses incurred in connection
with the action to the extent that such costs and expenses are reasonably
incurred to comply with such Party’s obligations under Section 12.5 or to
the extent that such other Party participates in the prosecution of such action
but not as a party thereto; and

 

(iii)                               any amount remaining
shall be included for royalty payment purposes under Section 10.1 within
Net Sales in Patent Countries for the royalty period in which such amount was
received.

 

12.6                        Avoidance
of Third Party Infringement Claims.  If
a Product becomes the subject of a claim by a Third Party that the activities
undertaken to Obtain Regulatory Approval, manufacture, use, sell, Commercialize
or export or import Product constitutes, causes or results in infringement of
any patent rights of such Third Party or other related intellectual property
rights (any such claim, a “Third Party Infringement
Claim”), the Party first having notice of such Third Party
Infringement Claim shall promptly notify the other Party.  In the event that there is a Third Party
Infringement Claim that arises from the use or practice of any XTL Patents or
XTL Know-How in connection or associated with the activities undertaken to Obtain
Regulatory Approval, manufacture, use, sell, offer for sale, Commercialize,
export or import Product, the Parties shall confer in good faith as promptly as
practicable after both Parties become aware of such Third Party Infringement
Claim as to whether it is feasible to alter their approach

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

28

 

to their activities with respect to the Product so as to avoid such
Third Party Infringement Claim without adversely affecting their rights under
this Agreement.  In the event the Parties
determine in good faith that it is feasible to alter their approach to such
activities without adversely affecting their rights under this Agreement, the
Parties shall implement such alternative approach to such activities.

 

12.7                        Patent
Term Restoration and Regulatory Data Exclusivity.  The Parties shall cooperate with each other
in obtaining patent term restoration or extension, supplementary protection
certificates, or their equivalents, with respect to XTL Patents, CUBIST
Patents, Joint Patents, and regulatory data exclusivity and the like, with
respect to HepeX-B, in the Territory.

 

12.8                        Patent
Marking.  CUBIST shall mark all
Products sold with appropriate patent numbers or indicia at XTL’s request to
the extent required and/or permitted by law.

 

12.9                        Trademarks.  (a)  CUBIST shall have the right to
determine appropriate trademark, trade dress and other related intellectual
property usage in connection with marketing Products under this Agreement.  CUBIST shall have the exclusive right to use
any trademarks in connection with marketing Products under this Agreement in
the Territory.

 

(b)                                  XTL agrees to file,
prosecute and maintain the XTL Trademarks at its sole expense, provided, however, that
XTL shall (i) use outside counsel reasonably acceptable to CUBIST, (ii)
provide CUBIST with all material documentation and correspondence from, sent to
or filed with trademark offices in the Territory regarding any XTL Trademark, (iii) provide
CUBIST with a reasonable opportunity to review and comment upon all filings
with such trademark offices in advance of submissions to such patent offices,
and (iv) shall consider, in good faith, incorporating any comments provided by
CUBIST.  In the event that XTL is
unwilling, unable or otherwise fails to file or prosecute any XTL Trademark in
any country in the Territory, XTL shall provide CUBIST with thirty (30) days
notice to permit CUBIST to file, prosecute and/or maintain such XTL Trademark
in such country, and XTL shall execute such documents and perform such acts as
may be reasonably necessary to allow CUBIST to file, prosecute and maintain
such XTL Trademark in such country in a timely manner.

 

(c)                                  With
respect to all filings, prosecution and maintenance of any Trademark pursuant
to this Section 12.9, the filing Party shall be responsible for payment of
all costs and expenses related to such Trademark filing prosecution or
maintenance.

 

12.10                 Third
Party Licenses.  (a)  The Parties shall
confer and discuss whether any license from a Third Party is necessary or
advisable to avoid, settle, resolve or satisfy any claim that the activities to
Obtain Regulatory Approval, make, have made, use, promote, market, sell, have
sold, offer to sell, import or export HepeX-B by CUBIST or its Sublicensees in
any country within the Territory infringes or misappropriates any intellectual
property rights of such Third Party. 
Prior to September 30, 2004, the Parties shall confer and agree
upon a strategy as to how to address any Third Parties, if any, then known to
the Parties from whom it would be necessary or advisable to obtain a license to
avoid, settle resolve, or satisfy any claim that the activities to Obtain
Regulatory Approval, Commercialize, manufacture, use, promote, market, sell,
offer, import or export of HepeX-B by CUBIST or its Sublicensees in any country
within the Territory infringes or misappropriates any intellectual property
rights of such Third Party (the “Strategy”).  To assist in devising the Strategy, CUBIST
shall engage the services of a nationally recognized law firm with sufficient
knowledge and expertise in the field of patent rights.  If the parties, after good faith discussion
and due consideration of the input of such law firm, are unable to mutually
agree upon the Strategy, then CUBIST may, acting in good faith, make final
decisions with respect to devising the Strategy.  The Strategy may be modified from time to
time pursuant to the mutual agreement of the Parties; provided
that if the parties, after good faith discussion and due consideration of the
input from the above-referenced law firm, are unable to mutually agree, then
CUBIST may, acting in good faith, make final decisions with respect to revising
the Strategy.

 

(b)                                  CUBIST shall be
responsible for obtaining licenses identified in the Strategy on commercially
reasonable terms.  CUBIST will provide
XTL with five (5) business days to review and [*] the scope of such license is
reasonably limited to permit CUBIST to exercise its rights and licenses under,
and its activities under and pursuant to, this Agreement to Obtain Regulatory
Approval, make, have made, use, promote, market, sell, have sold, offer to
sell, import, export, and Commercialize HepeX-B, and whether such license contains
commercially reasonable terms; such [*]. 
If XTL does not [*] within such [*], XTL will be deemed to have
[*].  CUBIST shall pay all amounts required
to be paid to the Third

 

*Confidential Treatment Requested. Material has been omitted and filed separately
with the Commission.

 

29

 

Parties pursuant to such licenses described in Section 12.10(b).  If and to the extent practicable, CUBIST
shall endeavor to use reasonable efforts to obtain a clause in any such license
permitting assignment of such license to XTL; provided
that in no event shall CUBIST be in breach of this Agreement or in any way
otherwise liable for any failure to obtain any such assignment clause in any
such license; and further provided that CUBIST will
have no obligation to include or accept an assignment clause that requires
CUBIST to retain or incur any further liability under such license subsequent
to such assignment.  XTL may not reject
any such license due to the failure of such license to contain such assignment
clause as contemplated under this Section 12.10(b).

 

(c)                                  With respect to
licenses obtained pursuant to Section 12.10(b) which were [*], or with
respect to which [*] (“Approved Third Party
Licenses”) wherein the intellectual property rights were
described in an issued patent or published in a patent application as of the
Effective Date, unless with respect to any such licenses that were not mutually
agreed-upon in the Strategy, XTL obtains a Legal Opinion, at XTL’s expense,
that is in form and substance reasonably acceptable to CUBIST (provided that CUBIST must notify XTL within thirty (30) days
after receipt of the executed Legal Opinion if CUBIST deems such Legal Opinion
to not be reasonably acceptable), CUBIST shall have the right to reduce
milestone and royalty payments otherwise owed to XTL pursuant to Sections 9 and
10 by the amounts paid to such Third Parties for such licenses such that the
reduced milestone and royalty payments are no less than the [*].  In the event that CUBIST cannot fully offset
such amounts against milestone and royalty payments otherwise owed to XTL,
unless paid by XTL, interest shall begin to accrue as of the date CUBIST first
makes such payment to such Third Party at a rate determined in accordance with Section 10.8
on any such amounts not able to be offset. 
CUBIST will reasonably cooperate with the law firm agreed to by the
Parties to provide such information as may be reasonably necessary to enable
the law firm to render its opinion.

 

After a Change of Control of CUBIST, (i) amounts
previously paid by CUBIST with respect to the licenses described under this Section 12.10(c),
plus any accrued interest through the date of the Change of Control, and not
yet paid by XTL or offset pursuant to this Section 12.10(c), will continue
to be offset against milestone and royalty payments otherwise owed to XTL
pursuant to Sections 9 and 10 before any other offsets pursuant to this
Agreement; provided that such milestones and
royalties shall not be reduced by more than fifty percent (50%), (ii) only
fifty percent (50%) of amounts required to be paid by CUBIST pursuant to such
licenses after a Change of Control of CUBIST shall be offset against milestone
and royalty payments otherwise owed to XTL pursuant to Sections 9 and 10 before
any other offsets pursuant to this Agreement; provided
that such milestones and royalties shall not be reduced by more than fifty
percent (50%), and (iii) interest shall cease to accrue on all amounts paid by
CUBIST pursuant to the licenses obtained or to be obtained under this Section 12.10(c)
but not otherwise offset as permitted under this Agreement.

 

(d)                                  With respect to
Approved Third Party Licenses wherein the intellectual property rights were
neither described in an issued patent nor published in a patent application as
of the Effective Date, unless with respect to any such licenses that were not
mutually agreed-upon in the Strategy, XTL obtains a Legal Opinion, at XTL’s
expense, that is in form and substance reasonably acceptable to CUBIST (provided that CUBIST must notify XTL within thirty (30) days
after receipt of the executed Legal Opinion if CUBIST deems such Legal Opinion
to not be reasonably acceptable), CUBIST shall have the right to reduce
milestone and royalty payments otherwise owed to XTL pursuant to Sections 9 and
10 by fifty percent (50%) of the amounts paid to such Third Parties for such
licenses such that the reduced milestone and royalty payments are no less than
the XTL Licensor Payments.  In the event
that CUBIST cannot fully offset such amounts against milestone and royalty
payments otherwise owed to XTL, unless paid by XTL, interest shall begin to
accrue as of the date CUBIST first makes such payment to such Third Party at a
rate determined in accordance with Section 10.8 on any such amounts not
able to be offset.    CUBIST will
reasonably cooperate with the law firm agreed to by the Parties to provide such
information as may be reasonably necessary to enable the law firm to render its
opinion.

 

After a Change of Control of CUBIST, (i) amounts
previously paid by CUBIST with respect to the licenses described under this Section 12.10(d),
plus any accrued interest through the date of the Change of Control, and not
yet paid by XTL or offset pursuant to this Section 12.10(d), will continue
to be offset against milestone and royalty payments otherwise owed to XTL
pursuant to Sections 9 and 10 before any other offsets pursuant to this
Agreement; provided that such milestones and
royalties shall not be reduced by more than fifty percent (50%), and (ii)
interest shall cease to accrue on all amounts paid by CUBIST pursuant to the
licenses obtained or to be obtained under this Section 12.10(d) but not
otherwise

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

30

 

offset as permitted under this Agreement.

 

(e)                                  XTL
shall have no obligation to pay any amounts incurred by CUBIST pursuant to the
Third Party licenses obtained under this Section 12.10, which amounts have
not been offset against milestone and royalty payments as of the termination or
expiration of this Agreement.

 

12.11                 Limitation.  Notwithstanding any other provision in
this Section 12, except with respect to the Patents listed in Exhibit A,
(a) neither Party shall be obligated to prepare, file, prosecute and maintain
Patents, or to bring or pursue enforcement proceedings or defend declaratory
judgment actions under this Section 12 if, and to the extent that, such Party
is not entitled to do so under its licenses from Third Parties, and (b) any
rights conveyed under this Section 12 permitting a Party to prepare, file,
prosecute and maintain certain Patents, or to bring and pursue enforcement
proceedings, or defend declaratory judgment actions shall be subject to all
applicable licenses from Third Parties, and are conveyed only to the extent
permitted under such agreements.  With
respect to Patents Controlled by XTL after the Effective Date, XTL shall
promptly notify CUBIST in writing if XTL is not entitled under its licenses to
such Patents from Third Parties to perform the activities listed in (a) above,
or if any rights listed in (b) above that have been conveyed to CUBIST are
restricted by XTL’s licenses from Third Parties to such Patents.

 

Section 13.                                   TERM
AND TERMINATION.

 

13.1                        Term.  This Agreement shall be effective as of the
Effective Date and remain in effect until the earlier of (a)  the effective date of termination pursuant to
Section 13.2 or Section 13.3 below, and (b) the expiration of the
term of this Agreement on the date on which CUBIST is no longer obligated,
pursuant to this Agreement, to make payment to XTL of any royalties in
connection with sales of Products in the Territory. In the event that the term
of this Agreement expires pursuant to clause (b) of this Section 13.1,
then the licenses granted by XTL to CUBIST shall survive such expiration and
shall be fully paid-up, royalty-free, perpetual and irrevocable licenses.

 

13.2                        Termination
by CUBIST.  (a)  This Agreement may be terminated by CUBIST at
any time during the term of this Agreement for any reason or no reason if
CUBIST gives at least one hundred and eighty (180) days prior written notice of
termination to XTL.

 

(b)                                  CUBIST may terminate
this Agreement upon twenty (20) days’ prior written notice to XTL if (i) in
CUBIST’s judgment continuation of the activities contemplated hereunder is
inappropriate, impractical, or inadvisable either for reasons of safety or
efficacy; or (ii) the emergence of any adverse event or side effect with the
Product is of such magnitude or incidence in the opinion of CUBIST to support
termination.  Upon CUBIST’s delivery of
such notice to XTL, CUBIST shall have no further obligations under this
Agreement except as provided under Section 13.5.

 

(c)                                  CUBIST may terminate
this Agreement pursuant to this Section 13.2 on a Product by Product or
country by country basis.

 

13.3                        Termination
By Either Party Upon Bankruptcy or Insolvency. This Agreement may be
terminated in its entirety by either Party by giving written notice of
termination to the other Party in the event that such other Party files or
institutes any bankruptcy, liquidation or receivership proceedings, or in the
event that such other Party makes an assignment of a substantial portion of the
assets of such other Party for the benefit of its creditors; provided, however, that, in the case of any involuntary
bankruptcy proceeding such right to terminate shall only become effective if
such other Party consents to the involuntary bankruptcy or such proceeding is
not dismissed within sixty (60) days after the filing thereof.

 

13.4                        Termination
for Breach.  (a)   If
either Party (the “Non-Breaching Party”)
believes that the other Party (the “Breaching Party”)
is in material breach of this Agreement with respect to one or more Products,
then the Non-Breaching Party may deliver notice of such breach to the Breaching
Party.  The Breaching Party shall have
thirty (30) days to cure such breach; provided that,
if cure cannot be reasonably effected within such thirty (30) day period, the
Breaching Party may elect to deliver to the Non-Breaching Party within such
thirty (30) day period a plan to cure such breach within a timeframe that is
reasonably prompt in light of the circumstances then prevailing, and the
Non-Breaching Party shall have the right to approve or reject in writing such
proposed plan in its absolute discretion. 
If the Non-Breaching Party approves in writing such proposed plan, then
the cure period will be extended in accordance with the terms of such plan and
the Breaching Party shall use Commercially Reasonable

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

31

 

 

Efforts to carry out such plan and cure the breach in
accordance with the provisions of such plan.

 

(b)   If the Breaching
Party fails to cure such breach as provided for in Section 13.4(a), the
Non-Breaching Party may terminate this Agreement either in its entirety or with
respect to one or more Products upon written notice to the Breaching Party; provided that, the Non-Breaching Party gives such written
notice of termination within six (6) months after the Breaching Party has
failed to cure such breach as provided for in Section 13.4(a).

 

(c)   If the Non-Breaching
Party gives notice of termination under this Section 13.4 and the
Breaching Party disputes whether such termination is proper under this Section 13.4,
then the issue of whether this Agreement may properly be terminated upon
expiration of the notice period (unless such breach is cured as provided in Section 13.4(a))
shall be resolved in accordance with Section 14 (Dispute Resolution).  If as a result of such dispute resolution
process it is determined that the notice of termination was proper, then such
termination shall be deemed to have been effective thirty (30) days following
the date of the notice of termination. 
If as a result of such dispute resolution process it is determined that
the notice of termination was improper, then no termination shall have occurred
and this Agreement shall remain in effect.

 

13.5                        Effect
of Expiration or Termination of this Agreement.  (a) 
In the event of termination or expiration of this Agreement, then,
except to the extent otherwise provided in this Section 13.5(a) and Section 13.5(f)
below, neither Party shall have any liability or obligation to the other Party
under this Agreement.  Notwithstanding
the foregoing sentence, the licenses granted to CUBIST under Section 2
shall survive expiration of this Agreement pursuant to Section 13.1(b),
and in such event, such licenses shall be deemed to be fully paid up,
irrevocable and perpetual.

 

(b)                                  In the event that
CUBIST terminates this Agreement pursuant to Section 13.4, then this
Agreement shall terminate, and, except to the extent otherwise provided in Section 13.5(f)
below, neither Party shall have any liability or obligation to the other Party
under this Agreement.

 

(c)                                  In the event that
CUBIST terminates this Agreement pursuant to Section 13.2, or in the event
that XTL terminates this Agreement pursuant to Section 13.4, then this
Agreement shall terminate, and, except to the extent otherwise provided in this
Section 13.5(c), Section 13.5(d) and Section 13.5(f) below,
neither Party shall have any further liability or obligation to the other Party
under this Agreement, including with respect to Section 9 and Section 10.  The licenses granted to CUBIST under Section 2
shall terminate.  Notwithstanding
anything to the contrary in this Section 13.5(c), in the event that CUBIST
terminates this Agreement pursuant to Section 13.2 or XTL terminates this
Agreement pursuant to Section 13.4, CUBIST shall have the right to sell in
the Territory all of its inventory of Products for a period of twelve (12)
months from the effective date of termination, subject to CUBIST’s payment
obligations under Section 10.

 

(d)                                  If requested by XTL
within ten (10) days after the effective date of a termination pursuant to Section 13.2
or a termination by XTL pursuant to Section 13.4, either with respect to
this Agreement in its entirety, or with respect to a particular Product in one
or more countries, CUBIST will: (i) transfer to XTL all INDs, Regulatory
Approval applications, Regulatory Approvals and orphan drug designations for
such terminated Products in the terminated countries in effect as of the time
of any such termination, (ii) subject to the scope of use limitations described
in clause (iii) below, provide to XTL a copy of all information, data, records
and reports (but specifically excluding know-how of CUBIST and CUBIST Patents)
in Cubist’s Control created or obtained in the performance of CUBIST’s or XTL’s
activities under this Agreement that are directly related to the Products (or
in the event of a termination with respect to a particular Product, such
terminated Product) and necessary or reasonably useful for XTL to Obtain Regulatory Approval and
Commercialize the Products (or in the event of a termination with
respect to a particular Product, such terminated Product) in the terminated
countries (collectively, the “Data”), and
(iii) grant to XTL a non-exclusive license in the terminated countries in and
to the Data solely for the purpose of using and incorporating the Data in its
applications for and in the maintenance of Regulatory Approval of Products (or
in the event of a termination with respect to a particular Product, such
terminated Product) within the terminated countries and to Obtain Regulatory
Approval, manufacture and Commercialize Products (or in the event of a
termination with respect to a particular Product, such terminated Product) in
the terminated countries, and (iv) if permitted under any Third Party licenses
obtained by CUBIST after the Effective Date pursuant to the Strategy, CUBIST
will assign to XTL such licenses, or if any such license covers countries other
than the terminated countries will grant to XTL a sublicense under such 

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

32

 

license with respect to the terminated countries, to Obtain Regulatory
Approval, make, have made, use, promote, market, sell, have sold, offer to
sell, import or export HepeX-B in the terminated countries; provided that if any such license requires consents of the
Third Party licensor to effect such assignment, CUBIST will request such
consent and if such consent is not provided or is otherwise qualified, CUBIST
will have no obligation to assign such license. 
In addition, upon any such termination, CUBIST shall either (y)
negotiate in good faith with XTL to enter into an agreement to supply such
terminated Product to XTL on commercially reasonable terms, or (z) if such
termination terminated this Agreement in its entirety, provide to XTL all
biological materials in CUBIST’s Control created or obtained under this
Agreement with respect to Products (subject to CUBIST’s sell-off rights with
respect to inventory under Section 13.5(c)), and a copy of all
information, data, records and reports (but specifically excluding know-how of
CUBIST and CUBIST Patents) in Cubist’s Control created or obtained in the
performance of CUBIST’s or XTL’s activities under this Agreement that are
directly related to the terminated Products and necessary or reasonably useful
for XTL to
manufacture such terminated Products, and such data and information shall be
deemed to be included within the Data.  Notwithstanding
the foregoing, CUBIST will have no obligation to assign or otherwise transfer
to XTL any INDs, Regulatory Approval applications, Regulatory Approvals or
orphan drug designations if any of the foregoing are in effect with respect to
any country other than the terminated countries.  XTL and CUBIST will negotiate in good faith
with respect to mutually agree upon reasonable and appropriate compensation to
CUBIST for the commercial value received as a result of the transfers and
licenses provided as set forth in this Section 13.5(d); if the Parties are
unable to so mutually agree within ninety (90) days after the effective date of
termination of this Agreement the Parties shall refer the matter to the dispute
resolution process set forth in Section 14, and in any arbitration, the
arbitrator will take into consideration, among other factors, the investment of
CUBIST in creating or obtaining the Data and the Parties’ investment in
obtaining such transferred INDs, Regulatory Approval applications, Regulatory
Approvals and orphan drug designations, and amounts paid by CUBIST but offset
under Section 10.4 with respect to any assigned Third Party licenses.

 

(e)                                  In the event this
Agreement is terminated due to the rejection of this Agreement by or on behalf
of a Party under Section 365 of the United States Bankruptcy Code (the “Code”), and the equivalent
provisions, if any, of the bankruptcy laws of other countries in which CUBIST
exercises the license granted hereunder, all licenses and rights to licenses
granted under or pursuant to this Agreement by one Party to the other are, and
shall otherwise be deemed to be, for purposes of Section 365(n) of the
Code, and any such equivalent law, licenses of rights to “intellectual property”
as defined under Section 101(35A) of the Code.  The Parties agree that the licensed Party, as
a licensee of such rights under this Agreement, shall retain and may fully
exercise all of its rights and elections under the Code, and any such
equivalent law, and that upon commencement of a bankruptcy proceeding by or
against a Party under the Code, the other Party shall be entitled to a complete
duplicate of or complete access to, any such intellectual property and all
embodiments of such intellectual property. 
Such intellectual property and all embodiments thereof shall be promptly
delivered to the other Party (i) upon any such commencement of a bankruptcy
proceeding upon written request therefor by a Party, unless the Party elects to
continue to perform all of its obligations under this Agreement or (ii) if not
delivered under (i) above, upon the rejection of this Agreement by or on behalf
of the Party upon written request therefor. 
The foregoing is without prejudice to any rights either Party may have
arising under the Code or other applicable law.

 

(f)                                    Termination of this
Agreement shall not relieve either Party of any obligation of such Party
accruing prior to such termination.  Any
termination of this Agreement shall be without prejudice to the rights of
either Party against the other accrued or accruing under this Agreement prior
to termination.  The provisions of Section 1,
Section 8.2, Section 8.3, Section 8.4, Section 11.3, Section 11.4,
Section 12.1, Section 13, Section 14 and Section 15 shall
survive the termination of this Agreement. 
Section 8.1 and Section 8.5 shall survive termination of this
Agreement for a period of five (5) years.

 

(g)                                 CUBIST shall reimburse
XTL for all non-cancelable out-of-pocket expenses XTL incurs after a
termination of this Agreement (by CUBIST pursuant to Section 13.2, or by
XTL pursuant to Section 13.4) with respect to Third Party service
providers contracted by XTL to assist in the performance of XTL’s obligations
hereunder; provided that (i) such obligations are
set forth in a written agreement between XTL and such Third Party service
provider, (ii) the terms and provisions of such written agreement, including
those relating to such non-cancelable expenses, are commercially reasonable,
(iii) XTL has used commercially reasonable efforts to minimize such
non-cancelable expenses; and (iv) such non-cancelable expenses relate solely
and directly to the performance of XTL obligations under this Agreement.

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

33

 

Section 14.                                   DISPUTE
RESOLUTION.

 

14.1                        Escalation.
The Parties recognize that disputes as to certain matters may from time to time
arise during the term of this Agreement which relate to either Party’s rights
and/or obligations hereunder.  It is the
objective of the Parties to establish procedures to facilitate the resolution
of disputes arising under this Agreement in an expedient manner by mutual
cooperation and without resort to litigation. 
To accomplish this objective, the Parties agree to follow the procedures
set forth in this Section 14.1 if and when a dispute arises under this
Agreement.  Any dispute arising under
this Agreement shall, by either Party providing written notice to the other
Party, be referred to the respective chief executive officers of the Parties
for attempted resolution by good faith negotiations within  fourteen (14) days after such notice is
received.  In the event that the
designated officers are not able to resolve such dispute within such fourteen
(14) day period, and do not agree to extend the time period for resolving the
dispute, or if the terms and conditions of the resolution or settlement of the
dispute are breached, the dispute shall be submitted for mediation by a
mutually acceptable Third Party within thirty (30) days after expiration of the
previous fourteen (14) day period, unless the Parties agree to extend the
period for submitting the dispute for mediation.  In the event that such dispute is not
resolved within thirty (30) days after such dispute is submitted for mediation,
unless the parties otherwise agree to extend the time period for resolving the
dispute, then such dispute shall be resolved by arbitration pursuant to the
provisions of Section 14.2. Pending resolution of any dispute covered by
this Section 14.1, both Parties will continue their performance under this
Agreement of any obligations (including, without limitation, payment
obligations) that are not the subject of such dispute.

 

14.2                        Arbitration.  (a) Any claim, dispute, or controversy
arising out of or relating to this Agreement that is not resolved in accordance
with the provisions of Section 14.1 and that the Parties agree to submit
to binding arbitration pursuant to this Section 14.2 will be submitted by
the parties to arbitration under rules then in effect (“ICC
Rules”) of the International Chamber of Commerce (“ICC”) in New York City, New York,
U.S.A. as modified herein or by agreement of the Parties.  Any such arbitration shall be conducted in
New York City, New York, U.S.A. by three (3) arbitrators.  Each Party shall select one (1) arbitrator
and such arbitrators shall jointly appoint the third arbitrator who shall act
as the chairman.  If either Party fails
to appoint an arbitrator within thirty (30) days of a request by the other
Party, or if the arbitrators selected by the parties cannot agree on a chairman
within thirty (30) days after they have been selected, then either Party may
request the ICC to appoint such co-arbitrator (for the non-responsive Party) or
the chairman.  Such appointment shall be
binding on the Parties.  Each Party
irrevocably and unconditionally (i) consents to the jurisdiction of any such
proceeding and waives any objection that it may have to personal jurisdiction
or the laying of venue of any such proceeding; and (ii) knowingly and
voluntarily waives its rights to have disputes tried and adjudicated by a judge
and jury except as otherwise expressly provided herein. The Parties will
cooperate with each other in causing the arbitration to be held in as efficient
and expeditious a manner as practicable. Unless the Parties agree otherwise,
they shall be limited in their discovery to directly relevant documents.  Responses or objections to a document request
shall be served twenty (20) days after receipt of the request.  The arbitrators shall resolve any discovery
disputes.  Nothing herein shall prevent
the Parties from settling any dispute by mutual agreement at any time.

 

(b)                                  The arbitration shall
be of each Party’s individual claims only, and no claim of any other Party
shall be subject to arbitration in such proceeding.  Except as otherwise required by law, the
Parties and the arbitrator(s) shall maintain as confidential all information or
documents obtained during the arbitration process, including the resolution of
the dispute.  The arbitration shall be
conducted in English language.

 

(c)                                  The arbitrator(s)
shall not have the authority to award any injunctive relief or to award
exemplary or punitive damages, and the Parties expressly waive any right to
such damages.  The arbitrator(s) shall
have the authority to award actual money damages (including interest on unpaid
amounts from the date due).  The costs
and expenses of the arbitration, but not the costs and expenses of the Parties,
shall be shared equally by the Parties; provided that
the non-prevailing Party in any arbitration shall pay the other Party’s costs
and expenses (including travel expenses) and reimburse such Party for its
portion of the arbitration costs. In the event that neither Party wins totally,
reimbursement shall be made proportionally in accordance with the ICC
Rules.  Any award rendered by the
arbitrator(s) shall be final and binding upon the Parties.  Judgment upon the award may be entered in any
court of competent jurisdiction.  If a
Party fails to proceed with arbitration, unsuccessfully challenges the
arbitration award, or fails to comply with the arbitration award, the other
Party is entitled to costs,

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

34

 

including reasonable attorneys’ fees, for having to compel arbitration
or defend or enforce the award.

 

Section 15.                                   MISCELLANEOUS.

 

15.1                        Force
Majeure.  Neither Party shall be
held liable or responsible to the other Party nor be deemed to have defaulted
under or breached the Agreement for failure or delay in fulfilling or
performing any term of the Agreement when such failure or delay is caused by or
results from causes beyond the reasonable control of the affected Party
including, but not limited to, earthquakes, fire, floods, embargoes,
insurrections, riots, civil commotions, strikes, lockouts or other labor
disturbances, acts of God, acts of war or terrorism, or acts, omissions or
delays in acting by any governmental authority or the other Party.  The affected Party shall notify the other
Party of such force majeure circumstances as soon as reasonably practical.

 

15.2                        Assignment.  Neither party may assign its rights or
obligations hereunder without the prior written consent of the other party
which will not be unreasonably withheld or delayed; provided
that either may assign this Agreement to one of its Affiliates, or pursuant to
a merger, consolidation or sale of substantially all of its assets or stocks or
other ownership interests without such prior written consent.  The Parties agree that the issue of whether
prior written consent to an assignment was unreasonably withheld or delayed by
a Party shall be governed by the laws of the Commonwealth of Massachusetts
without reference to any rules of conflicts of laws.  This Agreement will bind and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.

 

15.3                        Severability.  In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby, unless the absence of the invalidated provision(s) adversely affect
the substantive rights of the Parties. 
The Parties shall in such an instance use their best efforts to replace
the invalid, illegal or unenforceable provision(s) with valid, legal and
enforceable provision(s) that, insofar as practical, implement the purposes of
this Agreement.

 

15.4                        Notices.  All notices or other communications that are
required or permitted hereunder shall be in writing and sufficient if delivered
personally, sent by telecopier (and promptly confirmed by personal delivery,
registered or certified mail or overnight courier), sent by
internationally-recognized overnight courier, addressed as follows:

 

 

	
  If to CUBIST, to:

  	
  If to XTL, to:

  
	
  CUBIST Pharmaceuticals, Inc.

  65 Hayden Avenue

  Lexington, MA 02421

  Attention: Chief Executive Officer

  Telecopier No.: (781) 861-1412

  	
  XTL Biopharmaceuticals Ltd.

  Building 3

  Kiryat Weizmann

  Rehovot 76100

  Israel Attention: Chief Executive Officer

  Telecopier No.: (972) 8.940.5017

  
	
   

  	
   

  
	
  With a copy to:

  	
  With a copy to:

  
	
  CUBIST Pharmaceuticals, Inc.

  65 Hayden Avenue

  Lexington, MA 02421

  Attention: General Counsel

  Telecopier No.: (781) 860-1407

  

  And

  

  Bingham McCutchen LLP

  150 Federal Street

  Boston, MA 02110

  Attention: Julio E. Vega, Esq.

  Telecopier No.: (617) 951-8736

  	
  Heller Ehrman White & McAuliffe LLP

  4350 La Jolla Village Drive, 7th Floor

  San Diego, CA 92122

  Attention: Stephen C. Ferruolo

  Telecopier No.: (858) 450-8499

  

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

35

 

or to such other address as the Party to whom notice is to be given may
have furnished to the other Party in writing in accordance herewith.  Any such communication shall be deemed to
have been given when delivered if personally delivered or sent by telecopier on
a business day, on the business day after dispatch if sent by
internationally-recognized overnight courier.

 

15.5                        English
Language.  All notices,
disclosures or information delivered or made available by either Party or its
employees and agents to the other Party and its employees or agents pursuant to
this Agreement shall be made in English. 
The English language version of this Agreement shall control
notwithstanding the translation of this Agreement into any other language.

 

15.6                        Applicable
Law.  Except as otherwise
expressly set forth in Section 15.2, this Agreement shall be governed by
and construed in accordance with the laws of the United States and the State of
New York without reference to any rules of conflict of laws.  The Parties irrevocably consent to the
exclusive personal jurisdiction (except as to actions for the enforcement of a
judgment, in which case such jurisdiction shall be non-exclusive) of the
federal and state courts located in New York, New York, and venue in New York,
New York.

 

15.7                        Entire
Agreement.  The Agreement
contains the entire understanding of the Parties with respect to the subject
matter hereof.  All express or implied
agreements and understandings, either oral or written, heretofore made are
expressly merged in and made a part of the Agreement.  Except as expressly set forth in this
Agreement, the Agreement may be amended, or any term hereof modified, only by a
written instrument duly executed by both Parties.

 

15.8                        Headings.  The captions to the several sections hereof
are not a part of the Agreement, but are merely guides or labels to assist in
locating and reading the several sections hereof.

 

15.9                        Independent
Contractors.  It is expressly
agreed that CUBIST and XTL shall be independent contractors and that the
relationship between the two Parties shall not constitute a partnership, joint
venture or agency.  Neither CUBIST nor
XTL shall have the authority to make any statements, representations or commitments
of any kind, or to take any action, which shall be binding on the other,
without the prior consent of the other Party.

 

15.10                 Waiver.  The waiver by either Party hereto of any
right hereunder or the failure to perform or of a breach by the other Party
shall not be deemed a waiver of any other right hereunder or of any other
breach or failure by said other Party whether of a similar nature or otherwise.

 

15.11                 Counterparts.  The Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

15.12                 Waiver
of Rule of Construction.  Each
Party has had the opportunity to consult with counsel in connection with the
review, drafting and negotiation of this Agreement.  Accordingly, the rule of construction that
any ambiguity in this Agreement shall be construed against the drafting Party
shall not apply.

 

15.13                 Third
Party Beneficiaries.  Except as
otherwise expressly provided in this Agreement, nothing herein expressed or
implied is intended or shall be construed to confer upon or to give to any
Third Party any rights or remedies by reason of this Agreement.  Except as otherwise expressly provided in
this Agreement, there are no intended Third Party beneficiaries under or by
reason of this Agreement.

 

[The remainder of this page is intentionally left
blank.]

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

36

 

IN WITNESS WHEREOF, the Parties have executed this
License Agreement as of the Effective Date.

 

	
  XTL BIOPHARMACEUTICALS LTD.

  	
  CUBIST PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Martin Becker

  	
   

  	
  By:

  	
  /s/ Oliver Fetzer

  	
   

  
	
  Name: Martin Becker

  	
   

  	
   

  	
  Name: Oliver Fetzer

  
	
  Title: CEO and President

  	
   

  	
   

  	
  Title: SVP, Corporate Development and CBO

  
							

 

[SIGNATURE PAGE TO LICENSE AGREEMENT]

 

37

 

Exhibit A

 

(XTL Patents as of the Effective Date)

 

	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Note that confidential
treatment has been requested and three (3) pages of material from this Exhibit
A has been omitted and filed separately with the Commission.

 

Antibody 17 Patents

 

	
  Antibody

  	
  19

  

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

38

 

[Combination]

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

39

 

Exhibit B

(XTL Trademarks)

 

Note that confidential
treatment has been requested and one (1) page of material from this Exhibit B
has been omitted and filed separately with the Commission.

 

	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

 

Exhibit C

(HepeX-B Plan Guidelines)

 

Note that confidential
treatment has been requested and one (1) page of material from this Exhibit C
has been omitted and filed separately with the Commission.

 

Exhibit C provides guidelines for developing the detailed HepeX-B
Plan.  The Guidelines outline the
scientific, clinical, regulatory and manufacturing activities that are
currently contemplated to be required to Obtain Regulatory Approval for a
commercially viable formulation of HepeX-B for the prevention of recurrent
Hepatitis B infections in liver transplant patients in the US and the EU.  A preliminary budget for 2004 and 2005 is
included and subject to change as the detailed HepeX-B Plan is developed.  These guidelines are subject to section 5.2
of the Agreement.  Activities include:

 

[*]

 

It is contemplated that the HepeX-B Plan will also [*].  However, the Parties recognize that additional
activities [*] may also be required, and cannot be specified at this stage.

 

[*]

 

 

Note: There might be some redundancy in costs identified in [*].  The preliminary budget does not include costs
of [*]

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

 

Exhibit D

(XTL Obligations)

 

Specific XTL obligations are identified in the
following activities:

 

1.               Complete production
of material for [*]

 

2.               Complete the
development of an [*] of HepeX-B

 

3.               Complete the
following clinical studies

 

a.               [*]

 

i.      [*] to be completed by April 2005

 

ii.   [*] to be completed by April 2006

 

b.              [*] to be completed
by January 2005

 

Complete production of material for
[*]

 

[*]

 

[*] clones [*] and for [*]were selected and adapted to [*].  [*] produced were [*] and found similar to
the [*] produced in [*].

 

[*] for each [*] was produced by [*].

 

[*]: Preparation of a [*] consisting
of [*] was completed. The [*] was tested by [*], and passed all [*] required by
[*]; however, a [*] result was obtained by [*] with the [*].  [*] will perform necessary testing to
demonstrate that the results do not represent an [*] (e.g., [*] of three [*] to
a study using [*].  [*] will deliver a
[*] that is fully compliant with [*] and is acceptable for entry to [*] (i.e.,
must pass [*] testing) by [*]. 
Additionally, [*] will provide [*] with all reports and data associated
with the [*].

 

[*]: Preparation of a [*] consisting
of [*] was completed. The [*] was tested by [*], and passed all [*] required by
[*] in light of the [*] test result obtained above, [*] will perform all tests
that may be necessary (in the same manner as is being done for the [*]) should
the [*] in any relevant [*].  [*] will
deliver a [*] that is fully compliant with [*]-required tests and is acceptable
for entry to [*] (i.e., must pass [*] testing) by [*]. Additionally, [*] will
provide [*] with all reports and data associated with the [*].

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

 

[*]

 

About [*] was produced in [*]. Material was [*] is stored until [*].
The [*] described above must be complete prior to release of this material [*],
which is to be completed by [*]. If the [*] does not meet the requirements
described above, this lot of [*] (i.e. the lot produced from the [*]) must be
rejected. [*] will provide [*] with the [*] and all [*] associated with its
production (e.g., batch records, results of in-process testing).

 

Production of [*] is expected to start during [*]. The retesting of the
[*] described above must be complete prior to [*] of this [*], which is to be
completed by [*]. If the [*] does not meet the requirements described above,
[*] (i.e. the lot produced from the [*]) must be [*].[*] will provide [*] with
the [*] associated with its [*].

 

Purified [*] will be formulated in the same [*] and will be vialed in
the [*]. Because the [*] studies are not [*] and [*] must be done with the [*]
formulated in [*], as was done in earlier studies.

 

[*] will have completed real [*] for each [*] produced at [*].

 

[*] will provide to [*] all records and data in [*] possession or
control that are associated with the [*] work to enable [*] to continue [*],
including [*] and full [*].

 

The material manufactured at [*] is intended for use in the [*]
referenced below and this [*] must be comparable (based upon acceptance
criteria) [*] must so that the [*] may be included in this [*].

 

[*]

 

[*]

 

[*] will develop an [*] to [*] the [*] for the HepeX-B [*] (based on [*]).[*] will provide [*] with all [*] reports and data related to this [*], as well as [*] and
subsequent technical support.

 

In addition to performing [*] on the [*] will also aid in [*] for
all other [*] previously developed
for and relevant to the HepeX-B program.

 

Complete development of an [*] for HepeX-B

 

[*] studies were performed at [*] to develop a [*] at a high
concentration [*]. [*] was completed. 
[*] were selected in which the [*]. [*] will provide [*] with all
records, including final study reports, relating to the [*] and the [*].  [*] development for [*] will be completed by
[*]. [*] will provide [*] with all records, including final study reports,
relating to the [*] and the [*].  Until
further testing to [*] is completed, the [*] must be [*] separately for [*].

 

By [*] will complete an [*] on the [*] in combination at one [*] in the
same [*].

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

2

 

Complete the following clinical
studies:

 

Clinical
Activities [*] Synopsis

 

	
  Name of
  Sponsor:

  [*]

  	
   

  	
  Name of
  Active Ingredient:

  HepeX-BÔ

  	
   

  	
  Study number:

  [*]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title of study: A [*] Study to
  Compare the [*] of HepeX-BÔ, a Mixture of
  Two Monoclonal Antibodies, as Compared to [*] for Treatment of [*]

  
	
   

  
	
  Investigators: Approximately
  [*]investigators in [*]

  	
   

  
	
  Study centers: [*]

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Study period: Approximately [*] ([*] weeks of recruitment + [*]
  weeks treatment in the [*], with the possibility of enrolling in the [*] of
  the trial for an additional [*] weeks of treatment. All patients will be
  observed for [*] after completion of treatment).

  	
   

  	
  Phase of development:

  [*]

  
	
   

  	
   

  	
   

  
	
  Objectives: The primary
  objective will be to compare the [*] of HepeX-BÔ to [*] as measured by [*], in patients who have received
  [*] for treatment of [*].[*] is the primary measure of [*] and is defined as
  [*] measured on two consecutive assessments [*] days apart. Secondary
  objectives will be to compare the [*] concentrations and to describe the
  safety of the reference and test agents.

  
	
   

  	
   

  
	
  Methodology: This is a [*]
  study of the [*] of HepeX-BÔ as compared to standard [*] in patients who have received
  [*] for treatment of [*] and who are currently receiving [*] and concomitant
  treatment with an [*]. Up to [*] patients may be enrolled in order to achieve
  at least [*] evaluable patients ([*] patients per treatment group). Eligible
  patients will be [*]. Patients will receive an [*] of study medication every
  [*] for [*] in the [*], with the possibility of an additional [*] all
  patients enrolled in the [*] of the trial. All patients will be observed for
  [*] after completion of treatment. Periodic [*] will be collected for
  determination of [*] will be monitored by a Data and Safety Monitoring Board
  (DSMB). After successful completion of this study, patients may be eligible
  for participation in a 12-month follow-on study to examine [*].

  
	
   

  
	
  Number of subjects: Up to [*]
  patients may be enrolled in order to obtain [*] evaluable patients [*]. To be
  considered evaluable, patients must either receive [*] and complete the [*]
  follow-up visit, or must have met the criteria for treatment failure.
  Patients who terminate the study prematurely for reasons other than treatment
  failure will be replaced.

  
	
   

  
	
  Main Inclusion Criteria:
  Patients who are at least [*] post first [*] for treatment of [*], who have
  received [*] from the time of [*] through the time of entry into the study,
  who have received an [*] for at least the [*] immediately prior to entry into
  the study, and who have undetectable [*] on two consecutive tests within the
  [*] screening period, are eligible for the study.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Main Exclusion Criteria: Patients
  who are [*], or who have received other [*] are ineligible to participate.

  

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

3

 

	
  Test product, dose and mode of administration:
  HepeX-BÔ will be [*].

  

  •
  HepeX-BÔ [*] every
  [*] for [*] for all patients enrolled in the [*], with the possibility of an
  additional [*] for all patients enrolled in the [*] of the trial. All
  patients will be observed for [*] after completion of treatment. 

  

  •
  HepeX-BÔ [*] every
  [*] for [*] for all patients enrolled in the [*], with the possibility of an
  additional [*] for all patients enrolled in the [*] of the trial. All
  patients will be observed for [*] after completion of treatment.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Reference therapy, dose and mode of administration:
  [*].

  

  •
  [*] for all patients enrolled in the [*], with the possibility of an
  additional [*] for all patients enrolled in the [*] of the trial. All
  patients will be observed for [*] after completion of treatment.

  
	
   

  
	
  Duration of treatment and observation:
  [*] for all patients enrolled in the [*], with the possibility of an
  additional [*] for all patients enrolled in the [*] phase of the trial. All
  patients will be observed for [*] after completion of treatment.

  
	
   

  
	
  Anti-viral assessments: [*] will
  be determined prior to and [*] following each [*]. [*] results will be
  confirmed by repeat testing at least [*].

  

  [*] assessments: [*] will be determined
  immediately prior to each [*], at the end of each [*] after the completion of
  each [*], and at [*] after each [*]. The [*] determined immediately prior to
  each [*] will be considered the [*].

  

  Safety assessments: Safety will be
  evaluated by periodic [*] and reported and observed [*]. Emergence of [*] (as
  indicated by detectable [*]) will also be reviewed as a safety measure.
  Selected safety measures, including [*] status, will be reviewed periodically
  by an independent Data Safety Monitoring Board (DSMB). Criteria will be
  prospectively established to terminate one or both of the experimental arms
  in the event of unacceptable risk to study participants.

  
	
   

  
	
  Criteria for Evaluation: The
  primary endpoint will be the [*] in each treatment regimen without [*]. [*]
  is defined as the [*] of detectable [*] measured on two consecutive
  assessments [*] apart. Secondary endpoints will be a comparison of [*],
  including the proportion of subjects in each arm of the study with [*], and a
  description of safety (i.e., [*]) throughout the study.

  
	
   

  
	
  Statistical Methods: Hypothesis
  testing will be done for the primary endpoint using a [*] approach at an
  alpha of [*].

  [*]: HepeX-BÔ is not inferior to the active comparator, [*],
  using a maximum delta of [*] To test the null hypothesis, the lower bound of
  the two-sided 95% confidence interval (CI) of the difference between the proportions
  of response in HepeX-BÔ and the active
  comparator will be compared to the pre-set threshold ([*] difference). The
  difference will be calculated HepeX-BÔ
  minus active comparator.

  

  Categorical variables (nominal or ordinal) will be summarized by sample size,
  number (frequency), and percentage of subjects at each level of the variable.
  Continuous variables will be summarized by sample size, mean, median,
  standard deviation (SD), minimum, and maximum values.

  

  For the efficacy analyses, the proportion of patients without [*]
  breakthrough will be presented by treatment regimen for each analysis
  population. Summaries of [*] will be presented for the evaluation of safety.
  Listings of [*] will be provided as well as summaries of the [*]. The primary
  analysis for the study will be conducted when the last patient enrolled has
  received [*] and completed [*] of follow-up. At this time, the [*] data for
  all patients will be analyzed. A secondary analysis will be performed when
  [*] has been completed by [*] patients and will include all of the data
  accumulated during the [*].

  

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

4

[*] Study  –
Synopsis

 

It is understood that Cubist will determine the
precise timing and scope of [*] prior to their start, and
that [*] will be responsible for study execution.

 

	
  1.1.1.1.1                                                 Name of Sponsor

  [*]

  	
   

  	
  Name of
  Active Ingredient

  [*]

  	
   

  	
  Study number:

   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title of
  study:  [*]

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Investigator:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Study
  center:  

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Study
  period:  [*]

  	
   

  	
  Phase of
  development:  [*]

  	
   

  	
   

  

 

Objectives:  The primary objectives of this study are to

 

•                  assess
the [*], as determined from [*] administered by [*] (prepared from [*])
administered by [*]

•                  assess
the relative [*], as determined from [*], of single doses of [*] (prepared from
[*]) administered by [*] (prepared from [*]) administered by [*]

 

The secondary objectives
of this study are to

 

•                  assess
the relative [*], as determined from [*], of single doses [*] (prepared from
[*]) administered by [*] (prepared from [*]) administered by [*]

•                  evaluate
the safety of the [*] of single doses of [*] (prepared from [*]) compared to
[*] (prepared from [*])

 

Methods:  This study will be conducted in [*]. Subjects
will be screened for eligibility. 
Subjects will be randomly assigned to receive a [*]:

 

Group 1: [*] subjects will receive a [*] prepared from
[*]

Group 2: [*] subjects will receive a [*] prepared from
[*] and administered over [*].

Group 3: [*] subjects will receive a [*] prepared from
[*] and administered over [*].

 

Subjects will remain at the study center for at least [*] after the [*]
for collection of [*] and safety monitoring. 
Subjects will return to the study center on Study Days [*] for
collection of [*] and safety monitoring. 
Subjects will return to the study center on Study Day [*] for collection
of [*] and completion of a Follow-up visit].

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

5

 

Population:  [*] volunteers, [*], who are [*], and who
have a body mass index (BMI) between [*]. 
Subjects who received [*] and those who use any concomitant medications
that may impact [*] within 30 days prior to study entry are not eligible to
participate.

 

Number of subjects:  [*] volunteers will be entered randomly into
one of three dose groups ([*]).  Subjects
who terminate prematurely before completing the sample collections through
Study Day [*] will be replaced.

 

Test product, dose and mode of administration:
[*] (prepared from [*]) administered as a [*]

 

•                  [*]

•                  [*]
(the route of administration, [*], will be based on the results of [*] efforts
currently ongoing).

 

Reference therapy, dose and mode of
administration:  [*]
(prepared from [*]) administered as a [*]

 

Duration of treatment and observation:  On Study Day [*] subjects will receive a
[*].  Subjects will remain at the study
center for at least [*] hours after commencement of the [*] will be collected
at intervals while the subjects remain at the study center, and the subjects
will be monitored regularly for safety. 
Subjects will return to the study center on Study Days [*] for collection
of [*] and safety monitoring.  Subjects
will return to the study center on Study Day [*] for collection of [*] and for
completion of a Termination Visit.

 

[*] assessments: 
[*] concentrations will be determined in [*] collected at the
following times:

 

•                  Study Day [*]:  immediately
prior to commencement of the [*], and at approximately Hours [*]

•                  Study Day [*]:  at
approximately [*]

•                  Study Day [*]:  at
approximately [*]

•                  Study Day [*]:  at
approximately [*]

•                  Study Days [*]

 

Safety assessments:  Safety will be evaluated by periodic [*].

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

6

 

Statistical Methods:

 

[*]:

 

The [*] analysis will be based on all subjects who have evaluable [*].  The individual concentration-time profiles of
[*] will be evaluated using [*].  Data
permitting, the following pharmacokinetic parameters will be determined:

 

[*]

 

Descriptive statistics (N, mean, standard deviation, CV, median,
minimum, and maximum) will be used to summarize [*] concentration data at each
planned sampling time point for each treatment. [*] parameters calculated from
the concentrations will also be summarized by treatment using descriptive
statistics.

 

Bioequivalence will be evaluated for [*] (prepared from [*])] compared
to [*] (prepared from [*] with an analysis of their log-transformed [*].  [*] with terms for subject and treatment will
be performed for the parameters [*]. 
From these analyses, 90% confidence intervals (CIs) for the geometric
test/reference mean ratios will be obtained. 
Group 1 will be compared with Group 2, with Treatment Group 2 as the
reference.  Bioequivalence will be
declared if the 90% confidence limits for the test to reference ratios fall
within [*].

 

Bioeavailability will be evaluated for [*] (prepared from [*])]
compared to both [*] (prepared from [*] (prepared from [*] using the same [*]
model described above. Group 3 will be compared with Group 1 as well as Group
2, with Treatment Group 1 and Treatment Group 2 as the reference,
respectively.  For these comparisons, the
bioavailability ratio and 95% C.I. will be calculated using the difference
between the [*].

 

A sample size of [*] per group has been calculated to provide greater
than 90% power to demonstrate equivalence using a CV of [*].  The CV of [*] was the largest CV calculated
for the log transformed [*] parameters using data from the following study: [*]

 

Safety:  Descriptive summaries will be provided by
treatment group for demographics.  The
frequency of adverse events will be tabulated. 
Baseline, within study and end-of-study, and change from baseline
clinical laboratories, and vital signs will be summarized.  Descriptive statistics will be computed for
safety parameters as appropriate. 
Further statistical evaluations will be applied for select endpoints, if
warranted. All baseline data and safety data collected during the study will be
listed for each subject and dose group.

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

7

 

[*]
Study  – Synopsis

 

 

	
  1.1.1.1.2[Name
  of Sponsor 

  [*]

  	
   

  	
  Name of
  Active Ingredient

  [*]

  	
   

  	
  Study number:

   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title of
  study: [*]

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Investigator: [*]

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Study center: [*]

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Study period: [*]

  	
   

  	
  Phase of
  development: [*]

  	
   

  	
   

  

 

Objectives: The primary
objectives of this study are to 

 

•                  Compare the [*],
as determined by the relative changes in [*] in response to a [*] (prepared
from [*]) administered by [*] (prepared from [*]. 

•                  Compare the [*],
as determined by the relative changes in [*] in response to a [*] (prepared
from [*]) administered by [*] (prepared from [*]) administered by [*].

 

The secondary objectives
of this study are to 

 

•                  Compare the [*],
as determined by the relative changes in [*] in response to a [*] (prepared
from [*]) administered by [*] (prepared from [*]) administered by [*]. 

•                  Evaluate the
safety of the [*] (prepared from [*]) compared to [*] (prepared from [*]).

 

Methods: This study will be
conducted in an [*]. Subjects will be screened for eligibility and randomly
assigned to receive each of the following treatments on Study Day [*]. [*]
washout period between study doses will separate each treatment period.

 

Treatment A:[*] prepared from [*]

Treatment B:[*] prepared from [*] and administered
over [*].

Treatment C: [*] prepared from [*] and administered
over [*].

 

During each treatment period, subjects will remain at the study center
for at least [*] after the administration of study medication for collection of
[*] and safety monitoring. Following period [*], subjects will return to the
study center on Study Day [*] for completion of a Follow-up visit.

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

8

 

Population:
Eligible patients will be [*], with a minimum [*] at screening for subject inclusion to allow better cross-over
comparison.

 

Number of subjects:
[*] subjects will be entered into the study. Subjects who terminate prematurely
before completing the [*] will be replaced.

 

Test product, dose and mode of
administration: [*] (prepared from [*]) administered as [*] 

 

•                  [*] 

•     [*] (the route of administration, [*], will be based
on the results of [*] efforts currently ongoing).

 

Reference therapy, dose and mode
of administration: [*]

 

Duration of treatment and
observation: The study duration will be approximately [*] for
each subject. Subjects will be screened within [*] of administration of [*].
During each treatment period, subjects will receive [*]. Subjects will remain
at the study center for at least [*] after commencement of [*]. Subjects will
check out on Day [*] following the [*] and return on Day [*] for the [*]. Subjects
will be monitored regularly for safety. A washout of [*] between doses will
separate each treatment period. Following period [*], subjects will return to
the study center between [*] for completion of a Follow-up visit.

 

[*] and [*] assessments: [*] concentrations and [*] concentrations will
be determined in [*] collected at screening and at the following times during
each treatment period: 

•                  Study
Day [*]: immediately prior to commencement of [*], and at approximately [*]
commencement 

•                  Study
Day [*]: [*] commencement 

•                  Study
Day [*]: [*] commencement Safety assessments:
Safety will be evaluated by periodic [*].

 

Criteria for evaluation:

[*]:The primary variable for comparison of the
[*] is the change in [*] (in percent) following [*] administration compared to
the concentration immediately prior to administration on Day [*] of each
treatment period.

 

[*]: As secondary
variable for comparison, [*] concentration-time data will be compared for the
[*] in healthy normal volunteers has been previously evaluated. However, the
[*] has not been previously evaluated in patients with [*]. [*] are expected to
be highly variable between patients due to the complex relationship to [*]
concentration, changes in [*] over time will be evaluated for each treatment.

 

[*].

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

9

 

Statistical Methods:

 

Pharmacodynamics:

The pharmacodynamic analysis will be based on all subjects who have
evaluable change in [*]. For each concentration-time point, a change from
baseline value (in percent) will be calculated as follows: [*]. The individual
percent change from baseline values of [*] will be evaluated using
model-independent methods as implemented in [*]. Data permitting, the following
pharmacodynamic parameters will be determined:

[*]

 

The rational for deriving partial average changes from
baseline for select time intervals is the [*]:

[*]         concentrations appears to
be correlated to the baseline [*] concentration which could affect
interpretation of the changes in [*] in the later portion of the
concentration-time profile

[*]         Intersubject variability
due to the severity of the disease state is likely to affect the rate of [*]
which could affect interpretation of the changes in [*] in the later portion of
the concentration-time profile

[*]         The potential of differences
in [*] may affect the [*]

 

Descriptive statistics (N, mean, standard deviation, CV, median,
minimum, and maximum) will be used to summarize the percent change from
baseline concentration data at each planned sampling time point for each
treatment. Change from baseline pharmacodynamic parameters will also be
summarized by treatment using descriptive statistics.

 

Similarity in [*] will be evaluated for the percent change from
baseline pharmacodynamic parameters for [*] (prepared from [*]) relative to [*]
(prepared from [*]) with an analysis of their pharmacodynamic parameters. An
[*] with terms for subject, period, sequence, and treatment will be performed
for the parameters [*] above. One-sided 95% confidence intervals (CI) for the
test/reference mean ratios will be estimated from the [*] to assess [*] of the
test treatments using [*]. The test treatment will be compared with the
reference treatment and [*] will be declared] if the 95% confidence limit for
the test to reference ratios are greater than [*] for all of the identified
parameters.

 

Similarity in [*] be evaluated for the percent change from baseline
pharmacodynamic parameters for [*] (prepared from [*]) relative to both [*]
(prepared from [*])[*] (prepared from [*]) using the same [*] model described
above. One-sided 95% confidence intervals (CIs) for the test/reference mean
ratios will be estimated from the [*] to assess [*] of the test treatments
using [*]. Treatment A will be compared to Treatment C and to Treatment B, with
Treatments C and B treated as reference. Non-inferiority will be declared if
the 95% confidence limit for the test to reference ratios are greater than [*]
for all of the identified parameters.

 

A sample size of [*] yields just over 80% power to show [*] in the cross-over design using the following
assumptions. 

 

•                                          There is no difference between the [*]

•                                          [*] defined as the test treatment yielding responses
no less than [*] of the reference
treatment 

•                                          The intra-patient CV is at most [*]. 

•                                          [*] one-sided significance level].

 

Pharmacokinetics:

Descriptive statistics (N, mean, standard deviation, CV, median,
minimum, and maximum) will be used to summarize [*] concentration data at each
planned sampling time point for each treatment.An attempt will be made to
perform a pharmacokinetic analysis for those subjects who have [*] that follow
a traditional pattern of [*]. The individual concentration-time profiles of [*]
will be evaluated using model-independent methods as implemented in [*]. Data
permitting, the following pharmacokinetic parameters will be determined:

[*]

 

[*] pharmacokinetic parameters calculated from the concentrations will
also be summarized by treatment using descriptive statistics. Differences in
concentration-time data and/or pharmacokinetic parameters will be evaluated
graphically.

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

10

 

Safety: Descriptive summaries will
be provided by treatment group for demographics. The frequency of adverse
events will be tabulated. Baseline, within study and end-of-study, and change
from baseline clinical laboratories, and vital signs will be summarized.
Descriptive statistics will be computed for safety parameters as appropriate.
Further statistical evaluations will be applied for select safety endpoints, if
warranted. All baseline data and safety data collected during the study will be
listed for each subject and dose group.

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.

 

11

 

Exhibit E

(XTL Licensor Payments)

 

Note that confidential
treatment has been requested and one (1) page of material from this Exhibit E
has been omitted and filed separately with the Commission.

 

[*]

 

*Confidential Treatment Requested. Material has been omitted and filed
separately with the Commission.Exhibit 10.2(c)

 

THIRD AMENDMENT TO 

 

LOAN AND SECURITY AGREEMENT

 

THIS THIRD AMENDMENT TO
LOAN AND SECURITY AGREEMENT (this “Amendment”) is entered into as of and
effective as of November 9, 2004, (the “Effective Date”), by and
among BANK OF AMERICA, NATIONAL ASSOCIATION, as administrative agent (“Administrative
Agent”) for the other lenders identified on the signature pages hereof (“Lenders”),
and METALS USA, INC., a Delaware corporation, and each of its subsidiaries (“Subsidiaries”)
which are parties hereto (collectively, “Borrowers”).

 

RECITALS

 

A.                                   Borrowers
(meaning, in this case, all entities comprising Borrowers as of October 31,
2002), Administrative Agent and Lenders are parties to that certain Loan and
Security Agreement dated as of October 31, 2002 (as amended, the “Agreement”;
terms defined in the Agreement and not otherwise defined herein shall be used
herein as defined in the Agreement).

 

B.                                     Borrowers,
Administrative Agent, and Lenders desire to amend the Agreement to provide for
certain modifications as set forth herein, all subject to the terms and
conditions contained herein.

 

NOW, THEREFORE, in
consideration of the covenants, conditions and agreements hereafter set forth,
and for other good and valuable consideration, the receipt and adequacy of
which are all hereby acknowledged, the parties hereto covenant and agree as
follows:

 

1.                                       AMENDMENT
TO THE AGREEMENT.  Effective as of
the Effective Date, the Agreement is hereby amended as follows:

 

1.1                                 Amendment
to Section 1.1 of the Agreement. 
The existing definitions of the following defined terms in Section 1.1
of the Agreement are amended and restated in their entirety to read as follows:

 

“Anniversary
Date” means a yearly (twelve-month) anniversary of November 9, 2004.

 

“Annual
Agent Fee” means $125,000.

 

“Applicable
Margin” means (a) during the period commencing on November 9,
2004 and ending on but not including the first adjustment date set forth
hereinbelow, -0.250% with respect to Base Rate Revolving Loans and 1.25% with
respect to LIBOR Rate Revolving Loans, and (b) on the first adjustment
date set forth hereinbelow and thereafter, in each case subject to adjustment
from time to time thereafter to the applicable percentage specified
corresponding to the Fixed Charge Coverage Ratio, as set forth below,
respectively:

 

 

	
  Fixed Charge Coverage Ratio

  	
   

  	
  Base Rate Revolving

  Loans

  	
   

  	
  LIBOR Rate

  Revolving Loans

  
	
  Less than 0.80 to 1.00

  	
   

  	
  0.50%

  	
   

  	
  2.50%

  
	
  Greater than or equal
  to 0.80 to 1.00, but less than or equal to 1.00 to 1.00

  	
   

  	
  0.25%

  	
   

  	
  2.25%

  
	
  Greater than 1.00 to
  1.00, but less than or equal to 1.25 to 1.00

  	
   

  	
  0.00%

  	
   

  	
  2.00%

  
	
  Greater than 1.25 to
  1.00, but less than or equal to 1.50 to 1.00

  	
   

  	
  -0.125%

  	
   

  	
  1.75%

  
	
  Greater than 1.50 to
  1.00

  	
   

  	
  -0.250%

  	
   

  	
  1.50%

  
	
  Greater than 2.00 to
  1.00 and Minimum EBITDA Compliance

  	
   

  	
  -0.250%

  	
   

  	
  1.25%

  

 

For the purpose of
determining any such adjustments to the Applicable Margin, the Fixed Charge
Coverage Ratio shall be determined as of the last day of each Fiscal Period of
the Parent based upon the Parent’s Financial Statements for the three immediately
preceding Fiscal Periods (provided, however, if a Fiscal Period in
which the Applicable Margin is being determined ends on a Fiscal Quarter end or
a Fiscal Year end, the Borrowers will have the option, pursuant to Section 7.2(b),
of providing an Applicable Margin Calculation in lieu of Financial Statements for
Fiscal Periods ending after a Fiscal Quarter or Fiscal Year, whichever is
applicable, within thirty (30) days after the end of such Fiscal Period for
purposes of this calculation), beginning with the Fiscal Period ending November 30,
2004, delivered to the Agent as described by Section 7.2(b), and
any such adjustment, if any, shall become effective (A) with respect to
the Base Rate Revolving Loans and all other Obligations on and after the first
day of the Fiscal Period following the Fiscal Period in which such Financial
Statements are (or, such optional Applicable Margin Calculation is) delivered
to the Agent and (B) with respect to LIBOR Rate Revolving Loans as of the
date on or after the first day of the Fiscal Period following the Fiscal Period
in which such Financial Statements are (or, such optional Applicable Margin
Calculation is) delivered to the Agent when any LIBOR Rate Revolving Loan is
made, continued, or converted, as the case may be; provided, however,
in the event that, with respect to any Fiscal Quarter or Fiscal Year, the
Financial Statements of the Borrowers required by Section 7.2(a) or
Section 7.2(b) shall indicate the Fixed Charge Coverage Ratio or
Minimum EBITDA Compliance (i) is less than that reflected in the Financial
Statements or Applicable Margin Calculations provided at the end of any Fiscal
Period pursuant to Section 7.2(b), the Applicable Margin shall be
adjusted retroactively (to the effective date of the Applicable Margin which
was determined based upon the delivery of such Financial Statements or
Applicable Margin Calculations delivered pursuant to Section 7.2(b))
to reflect an Applicable Margin based upon the Fixed Charge Coverage Ratio or
Minimum EBITDA Compliance determined by such Financial Statements delivered
with respect to such Fiscal Quarter or Fiscal Year pursuant to Section

 

2

 

7.2(a)
or Section 7.2(b) and each of the Borrowers shall make payments to the
Agent on behalf of the Lenders, or (ii) more than that reflected in the
Financial Statements or Applicable Margin Calculations provided at the end of
any Fiscal Period pursuant to Section 7.2(b), the Applicable Margin
shall be adjusted retroactively (to the first day of the month in which such
updated Financial Statements are delivered) to reflect an Applicable Margin
based upon the Fixed Charge Coverage Ratio or Minimum EBITDA Compliance
determined by such Financial Statements delivered with respect to such Fiscal
Quarter or Fiscal Year pursuant to Section 7.2(a) or Section 7.2(b).

 

“Interest
Period” means, with respect to any LIBOR Rate Revolving Loan, the period
commencing on the Funding Date of such Revolving Loan or on the
Conversion/Continuation Date on which such Revolving Loan is converted into or
continued as a LIBOR Rate Revolving Loan, and ending on the date one, two,
three or six months thereafter as selected by a Borrower in a Notice of
Borrowing or a Notice of Conversion/Continuation; provided that:

 

(a)                                  if
any Interest Period would otherwise end on a day that is not a Business Day,
that Interest Period shall be extended to the following Business Day unless the
result of such extension would be to carry such Interest Period into another
calendar month, in which event such Interest Period shall end on the preceding
Business Day;

 

(b)                                 any
Interest Period pertaining to a LIBOR Rate Revolving Loan that begins on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at the end of
such Interest Period; and

 

(c)                                  no
Interest Period shall extend beyond the Stated Termination Date.

 

“Maximum
Revolver Amount” means $350,000,000.

 

“Stated
Termination Date” means November 9, 2009.

 

1.2                                 Amendment
to Definition of “Restricted Investment” in Section 1.1 of the Agreement.  The reference to “$10,000,000” in subsection (j)
of the definition of Restricted Investment is deleted and replaced with “$25,000,000”.

 

1.3                                 Addition
to Section 1.1 of the Agreement. 
The following definitions are added to Section 1.1 of the
Agreement in alphabetical order and read in their entirety as follows:

 

“Applicable Margin Calculation” means Fixed
Charge Coverage Ratio and EBITDA calculations to determine the Applicable
Margin and Minimum EBITDA Compliance in accordance with the terms of this
Agreement and in form and substance reasonably satisfactory to the Agent.

 

“Minimum EBITDA Compliance” means the Borrower
shall have maintained as of the last day of each Fiscal Period, as computed for
the twelve month

 

3

 

period
preceding any date of determination and based on the information provided
pursuant to Section 7.2(a), (b) and (c), EBITDA in an amount
in excess of $100,000,000 for such period of determination.  For the avoidance of doubt, Minimum EBITDA
Compliance is applicable only with respect to the calculation of the Applicable
Margin.

 

1.4           Amendment
to Section 2.1 of the Agreement.  The
Reference to “$200,000,000” in Section 2.1 of the Agreement is deleted and
replaced with “$350,000,000”.

 

1.5                                 Amendment
to Section 3.1(c) of the Agreement. 
Section 3.1(c) of the Agreement is amended and restated in
its entirety to read as follows:

 

(c)                                  Interest
Periods.  After giving effect to any
Borrowing, conversion, or continuation of any LIBOR Rate Revolving Loan, there
may not be more than twelve (12) different Interest Periods in effect
hereunder; provided that in its discretion the Agent may agree to permit
the Borrowers to maintain more than twelve (12) different Interest Periods
in effect hereunder.

 

1.6                                 Amendment
to Section 3.6 of the Agreement. 
Section 3.6 of the Agreement is amended and restated in its
entirety to read as follows: “[reserved].”

 

1.7                                 Amendment
to Section 4.2(b) of the Agreement. 
Section 4.2(b) of the Agreement is amended and restated in
its entirety to read as follows:

 

(b)                                 The
Borrowers may terminate this Agreement upon at least thirty (30) days
prior written notice thereof to the Agent and the Lenders, upon (i) the
payment in full of all outstanding Revolving Loans, together with accrued and
unpaid interest thereon, and the cancellation and return of all outstanding
Letters of Credit and Credit Support (or, alternatively, with respect to each
such Letter of Credit or Credit Support, the furnishing to the Agent, for the
benefit of the Lenders, of a Supporting Letter of Credit or cash deposit, in
each case in amounts and in the manner required by Section 2.3(i)),
(ii) the payment of the early termination fee set forth in the following
sentence, (iii) with respect to any LIBOR Rate Revolving Loans prepaid in
connection with such termination prior to the expiration date of the Interest
Period applicable thereto, the payment of the amounts described in Section 5.4,
and (iv) the payment in full in cash of all other Obligations together
with accrued and unpaid interest thereon. Subject to Section 3.3, if
this Agreement is terminated at any time on or prior to the first Anniversary
Date the Borrowers shall pay to the Agent, for the account of the Lenders, an
early termination fee in an amount equal to one percent (1.00%) of the then
existing Maximum Revolver Amount. 
Notwithstanding the foregoing, no such early termination fee shall be
payable in the event this Agreement is terminated in connection with
refinancing of the Obligations in a transaction in which the Bank, or any of
its Affiliates, provides or arranges replacement financing or acts as
underwriter or arranger of any public offering of debt or equity securities of
the Parent.

 

1.8                                 Amendment
to Section 7.2(b) of the Agreement. 
Section 7.2(b) of the Agreement is amended and restated in
its entirety as follows:

 

(b)                                 The
Borrowers will furnish, or cause to be furnished, as soon as available, but in
any event not later than thirty (30) days after the end of each Fiscal Period,
other than any Fiscal Period which is a Fiscal Quarter end and with respect to
any such Fiscal Quarter

 

4

 

end within forty-five (45) days after the end of such Fiscal Quarter, a
Compliance Certificate, consolidated and consolidating (with respect to each
business product group of the Parent) unaudited balance sheets of the Parent
and its Subsidiaries as at the end of such Fiscal Period or Fiscal Quarter, as
applicable, and consolidated and consolidating (with respect to each business
product group of the Parent) unaudited statements of income and cash flow for
the Parent and its Subsidiaries for such Fiscal Period or Fiscal Quarter, as
applicable, and for the period from the beginning of the Fiscal Year to the end
of such Fiscal Period or Fiscal Quarter, as applicable, all in reasonable
detail, fairly presenting the financial position and results of operations of
the Parent and its Subsidiaries as at the date thereof and for such periods,
and prepared in accordance with GAAP (other than presentation of footnotes and
subject to normal year-end audit adjustments) applied consistently with the
audited Financial Statements required to be delivered pursuant to Section 7.2(a)
or, in the case of consolidating Financial Statements, the Borrowers’ standard
internal practices, provided, however, in the event that the
Borrowers cannot provide such Financial Statements within thirty (30) days
after any Fiscal Period ending on a Fiscal Quarter end or Fiscal Year end, the
Borrowers shall provide the Agent with an Applicable Margin Calculation in the form
of Exhibit G attached hereto within thirty (30) days after the end of
such Fiscal Quarter or Fiscal Year. 
Notwithstanding anything to the contrary contained herein, should the
Borrowers elect to provide the Applicable Margin Calculation in lieu of
Financial Statements within thirty (30) days after such Fiscal Quarter end or
Fiscal Year end, the Borrowers shall also furnish Financial Statements in
accordance with the terms hereof.  The
Parent shall certify by a certificate signed by its chief financial officer or
chief accounting officer that all such Financial Statements have been prepared
in accordance with GAAP or, in the case of consolidating financial statements,
the Borrowers’ standard internal practices and present fairly, subject to
normal year-end adjustments, the financial position of the Parent and its
Subsidiaries as at the dates thereof and its results of operations for the
periods then ended.

 

1.9                                 Amendment
to Section 9.10(a)(ii) of the Agreement.  The reference to “$1,100,000” in Section 9.10(a)(ii)
of the Agreement is deleted and is replaced with “$2,200,000”.

 

1.10                           Amendment
to Section 9.22 of the Agreement. 
Section 9.22 of the Agreement is amended and restated in its
entirety to read as follows:

 

Section 9.22                                Capital Expenditures.  No Borrower shall make or incur any Capital
Expenditure if, after giving effect thereto, the aggregate amount of all
Capital Expenditures by the Borrowers on a consolidated basis during any Fiscal
Year would exceed $35,000,000.

 

1.11                           Amendment
to Section 9.24 of the Agreement. 
The references to “20,000,000” in Section 9.24 of the
Agreement are deleted and are replaced with “35,000,000”.

 

5

 

1.12                           Amendment
to Section 12.1 of the Agreement. 
Section 12.1 of the Agreement is amended and restated in its
entirety to read as follows:

 

The Borrowers may terminate this Agreement at any time
if they: (a) give the Agent and the Lenders thirty (30) days prior written
notice of termination by registered or certified mail; and (b) pay and perform
all Obligations, including, without limitation, all fees (if any) required by Section 4.2
and any other fees payable under the Loan Documents on or prior to the
effective date of termination.  The Agent
upon direction from the Majority Lenders may terminate this Agreement without
notice to the Borrowers during the existence of an Event of Default.  Upon the effective date of termination of
this Agreement for any reason whatsoever, all Obligations (including all unpaid
principal, accrued and unpaid interest, and any early termination or prepayment
fees but excluding indemnification obligations to the extent no claim with
respect thereto has been asserted and remains unsatisfied) shall become
immediately due and payable and the Borrowers shall immediately arrange for the
cancellation and return of all Letters of Credit and Credit Support then
outstanding.  Notwithstanding the
termination of this Agreement, until all Obligations (other than such
indemnification obligations relating to unasserted claims) are indefeasibly
paid and performed in full in cash, the Borrowers shall remain bound by the
terms of this Agreement and shall not be relieved of any of their Obligations
hereunder or under any other Loan Document, and the Agent and the Lenders shall
retain all their rights and remedies hereunder (including, without limitation,
the Agent’s Liens in and all rights and remedies with respect to all then
existing and after-arising Collateral).

 

1.13                           Addition
of Exhibit G to the Agreement.  Exhibit
G is added to the Agreement and all references in the Loan Documents to Exhibit
G are hereby deemed references to the attached Exhibit G.

 

2.                                       ACKNOWLEDGMENT
OF THE BORROWERS.  Borrowers
acknowledge and agree that Lenders executing this Amendment have done so in
their sole discretion and without any obligation to consent to any other or
future amendments to the Agreement. 
Borrowers further acknowledge and agree that any action taken or not
taken by Lenders or Administrative Agent prior to, on or after the date hereof
shall not constitute a waiver or modification of any term, covenant or
provision of any Loan Document.

 

3.                                       REPRESENTATIONS
AND WARRANTIES.  By its execution and
delivery hereof, Borrowers represent and warrant to Lenders that, as of the
date hereof the representations and warranties contained in the Agreement and
the other Loan Documents are true and correct in all material respects on and
as of the date hereof as if made on and as of such date, and no event has
occurred and is continuing which constitutes a Default or an Event of Default.

 

4.                                       CONDITIONS
OF EFFECTIVENESS.  This Amendment
shall be effective as of the Effective Date upon execution by all of Lenders
and the other parties hereto, so long as (i) all corporate actions of
Borrowers taken in connection herewith and the transactions contemplated hereby
shall be satisfactory in form and substance to Administrative Agent and
Lenders, (ii) Administrative Agent shall have received from Borrowers, a
Revolving Note payable to the

 

6

 

order of each Lender in the amount of its Commitment
(as revised by this Amendment and listed on each Lender’s signature page hereto),
duly executed by Borrowers, (iii) there shall not have occurred or exist
any event or condition which constitutes a Material Adverse Effect, (iv) Administrative
Agent shall have received from Borrowers, for the ratable benefit of all
Lenders (based upon the dollar amount set forth beside each respective Lender’s
name under the heading “Commitment” on the signature pages of this Amendment),
an amendment closing fee in the amount of $525,000, (v) giving effect to
any Notice of Borrowing pending on the Effective Date, minimum Availability of
$50,000,000 must exist on the Effective Date, (vi) Administrative Agent shall
have received such other documents, certificates, and instruments as
Administrative Agent shall reasonably require prior to Administrative Agent’s
receipt of this Amendment executed by the Majority Lenders and the other
parties hereto and (vii) Administrative Agent shall have received all agreed
upon fees and costs associated with this Amendment and the other Loan Documents.

 

5.                                       OTHER
AGREEMENTS. Borrowers shall (i)  within thirty (30) days of the
Effective Date, provide Administrative Agent and Lenders the opportunity to
examine the books of account and other records and files of Borrowers and to
conduct a post-closing audit which shall include, without limitation,
verification of Inventory, Accounts and the Borrowing Base, and the results of
such examination and audit shall be satisfactory to Administrative Agent and
Lenders in all respects and (ii) within ten (10) Business Days of the Effective
Date, provide a good standing
certificate for Metals USA Plates and Shapes Southeast, Inc. in substance satisfactory
to the Administrative Agent.  Failure to
comply with any provision of this Section shall constitute an Event of
Default under the Agreement.

 

6.                                       REFERENCE
TO AGREEMENT.  Upon the effectiveness
of this Amendment, each reference in the Agreement to “this Agreement,” “hereunder,”
or words of like import shall mean and be a reference to the Agreement, as
affected and amended by this Amendment.

 

7.                                       COUNTERPARTS;
EXECUTION VIA FACSIMILE.  This
Amendment may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.  This Amendment may be
validly executed and delivered by facsimile or other electronic transmission.

 

8.                                       GOVERNING
LAW; BINDING EFFECT.  This Amendment
shall be governed by and construed in accordance with the laws of the State of
Texas and shall be binding upon Borrower, Administrative Agent, each Lender and
their respective successors and assigns.

 

9.                                       HEADINGS.  Section headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose.

 

10.                                 LOAN
DOCUMENT.  This Amendment is a Loan
Document and is subject to all provisions of the Agreement applicable to Loan
Documents, all of which are incorporated in this Amendment by reference the
same as if set forth in this Amendment verbatim.

 

7

 

11.                                 ACKNOWLEDGEMENT
OF LENDERS.  Each Lender acknowledges
that as of the date of this Amendment, and giving effect to this Amendment, it’s
respective Commitment is as set forth opposite its respective signature to this
Amendment.

 

12.                                 ACKNOWLEDGMENT
OF NEW LENDER.  Borrowers, Lenders,
Administrative Agent and UPS Capital Corporation (the “New Lender”)
acknowledge and agree that the New Lender shall be a party under the Loan
Documents and have the rights and obligations of a Lender, including but not
limited to the obligation to participate in Letters of Credit and Credit
Support, under the Loan Documents.

 

13.                                 FEES
AND EXPENSES.  Borrowers agree to pay
all reasonable out-of-pocket fees and expenses of Administrative Agent in
connection with the Loan Documents, including this Amendment, including without
limitation, appraisal fees, filing and recording fees, legal and other
professional fees and expenses, if any, incurred on or prior to the date of
this Amendment by Administrative Agent, including, without limitation, (a) the
fees and expenses of Winstead Sechrest & Minick P.C., and (b) $775 per
day charge for each agent or employee with respect to each field examination or
audit conducted pursuant to this Amendment or any other Loan Document.

 

14.                                 NO
ORAL AGREEMENTS.  THIS WRITTEN
AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. 
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.

SIGNATURE PAGES TO FOLLOW.]

 

8

 

IN
WITNESS WHEREOF, the parties hereto have executed this Amendment as the date
first above written.

 

	
   

  	
  BORROWERS:

  
	
   

  	
   

  
	
   

  	
  METALS USA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /S/  TERRY
  FREEMAN

  	
   

  
	
   

  	
  Name:

  	
  Terry L. Freeman

  
	
   

  	
  Title:

  	
  Senior Vice President and

  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  METALS USA BUILDING PRODUCTS, L.P.

  
	
   

  	
  (f/k/a “ALLMET BUILDING PRODUCTS, L.P.”)

  
	
   

  	
  By: Allmet GP, Inc., its General Partner

  
	
   

  	
  ALLMET GP, INC.

  
	
   

  	
  ALLMET LP, INC.

  
	
   

  	
  INTERSTATE STEEL SUPPLY CO. OF MARYLAND, INC.

  
	
   

  	
  INTSEL GP, INC.

  
	
   

  	
  INTSEL LP, INC.

  
	
   

  	
  i-SOLUTIONS DIRECT, INC.

  
	
   

  	
  JEFFREYS REAL ESTATE CORPORATION

  
	
   

  	
  LEVINSON STEEL GP, INC.

  
	
   

  	
  LEVINSON STEEL LP, INC.

  
	
   

  	
  METALS RECEIVABLES CORPORATION

  
	
   

  	
  METALS USA CARBON FLAT ROLLED, INC.

  
	
   

  	
  METALS USA FINANCE CORP.

  
	
   

  	
  METALS USA FLAT ROLLED CENTRAL, INC.

  
	
   

  	
  METALS USA MANAGEMENT CO., L.P.

  
	
   

  	
  By: MUSA GP, Inc., its General Partner

  
	
   

  	
  METALS USA PLATES AND SHAPES, NORTHEAST, L.P.

  
	
   

  	
  By: Levinson Steel GP, Inc., its General Partner

  
	
   

  	
  METALS USA PLATES AND SHAPES SOUTHCENTRAL, INC.

  
	
   

  	
  METALS USA PLATES AND SHAPES SOUTHEAST, INC.

  
	
   

  	
  METALS USA PLATES AND SHAPES SOUTHWEST,

  
	
   

  	
  LIMITED PARTNERSHIP

  
	
   

  	
  By: Intsel GP, Inc., its General Partner

  
	
   

  	
  METALS USA REALTY COMPANY

  
	
   

  	
  METALS USA SPECIALTY METALS NORTHCENTRAL, INC.

  
	
   

  	
  MUSA GP, INC.

  
	
   

  	
  MUSA LP, INC.

  
	
   

  	
  QUEENSBORO, L.L.C.

  
	
   

  	
  By: Metals USA Plates and Shapes Southeast, Inc.,

  its sole Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /S/  TERRY
  FREEMAN

  	
   

  
	
   

  	
  Name:

  	
  Terry L. Freeman

  
	
   

  	
  Title:

  	
  Vice President of each of the above-listed entities

  

 

 

	
   

  	
  AGENT:

  
	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, NATIONAL

  ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /S/ ROBERT SCALZITTI

  	
   

  
	
   

  	
  Name:

  	
  Robert Scalzitti

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LENDERS:

  
	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /S/ ROBERT SCALZITTI

  	
   

  
	
   

  	
  Name:

  	
  Robert Scalzitti

  	
   

  
	
   

  	
  Title:

  	
  Vice President

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