Document:

exhibit_10-6.htm

Exhibit 10.6

 

NC – 62603

Updated: 31 October, 2013

Agreement of Lease – High-Tech Village

Made and executed in Jerusalem this 7th day of November 2013.

Between:

The Jerusalem Industrial Zone Management and Development Administration Ltd., (corporate number 51-254450-3) (hereinafter: “JIZMD”) and/or the Lessor) by the Hebrew University Property Company Ltd., of the High-Tech Village – Annex 2.9, Edmond J.Safra, Campus, Givat Ram, Jerusalem, of the one part;

AND

Company: Biocancell Therapeutics Israel Ltd., (corporate number: 513597856).

Of ______________

By its authorized representatives:

Mr. Aharon Schwartz I.D. 003651627, Position: Chairman; and

Mr. Jonathan Burgin, I.D. 012714515, Position: CEO.

(hereinafter – “the Lessor”) of the other part.

	
WHEREAS:

	
(1)

	
The Hebrew University of Jerusalem (hereinafter: “the University”) is the proprietor of the rights in annexe 1.3 having a total area of 255 square meters (hereinafter: “the Annexe”) situated in the Alef Student Dormitories Complex.

	
  

	
(hereinafter: “the Complex”) on the Edmond J. Safra Campus, Givat Ram, Jerusalem;

	
  

	
(2)

	
The University, in partnership with the JIZMD have promoted the construction of a dedicated section for high-tech companies in the area of the Project (hereinafter: “the Project”);

	
  

	
(3)

	
The Lessee is desirous of leasing an area of 180 square meters in the Annexe according to the plan attached hereto (hereinafter: “the Premises”);

	
  

	
(4)

	
The Lessee has received the University’s approval for its fitness to enter into an agreement of lease of the Premises for customizing by way of adaptation works, the Premises (hereinafter: “the Adaptation Works”);

 

  

  

  

 

	
  

	
(5)

	
The Lessee declares that it has no right in the Premises according to the Tenants Protection Law (Consolidated Version 5732-1972 or any other statute enabling and the Lessee has not paid to the University or to the JIZMD directly or indirectly, any keymoney;

	
  

	
(6)

	
The Lessee declares that it is aware that this agreement of lease neither confers now or hereafter any status of a protected tenant according to the Tenants Protection Law (Consolidated Version), 5732-1972, and that it will be required to quit the Premises on the expiration of the term of the lease or on the lapse or abrogation of this Agreement, for any reason whatsoever, whichever is the earlier;

	
  

	
(7)

	
Whereas the Lessee is desirous taking, and the JIZMD is desirous of granting a lease to the Lessee of the Premises pursuant and subject to the terms herein contained;

	
  

	 

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

	
1.

	
Preamble

	
  

	
1.1

	
The preamble to this Agreement, including the declarations therein contained, constitute an integral part hereof.

	
  

	
1.2

	
To this Agreement are attached the following Appendices which constitute an integral part hereof:

	
  

	
Appendix “A” – “Insurance Certificate”.

	
  

	
Appendix “B” – “Adaptation Works Appendix”.

	
  

	
Appendix “C” – “Form of Bank Guarantee”.

	
  

	
Appendix “D” – “Insurance Certificate – Contracting Works”.

	
  

	
Appendix “E” – “Security and Transport Appendix”.

	
  

	
Appendix “F” – “Safety Appendix”.

	
2.

	
The Lessor’s declarations

	
  

	
The Lessor declares that:

	
  

	
2.1

	
It has not paid nor undertaken to pay in any form and manner whatsoever and at the University and/or the JIZMD has not received nor undertaken to receive any form or manner whatsoever in respect of the Premises, keymoney and/or any other sum whatsoever other than the payments described in this Agreement.

	
  

	
2.2

	
The provisions of the Tenants Protection Law (Consolidated Version), 5732-1972 nor of any future tenants protection laws will apply with respect to the Premises or to this Agreement, and the Lessee is neither nor shall it be in any form whatsoever, a protected tenant.

 

  

  

  

 

	
  

	
2.3

	
It has been well explained to it that the JIZMD willingness to grant a lease to it of the Premises is predicated on the provisions of this clause and the provisions contained in the preamble to this Agreement regarding the fact that this is an unprotected tenancy.

	
  

	
2.4

	
It maintains books of account according to the provisions of the Income Tax Ordinance and the Value Added Tax and reports to those authorities pursuant to statute, that it holds a certificate to that effect pursuant to the provisions of the Public Bodies Transactions (Bookkeeping Enforcement) Law, 5747-1987, and that it will furnish such certificate to the JIZMD prior to the signature of this Agreement.

	
  

	
2.5

	
It has examined and found as suitable for its needs, the Premises and waives any claim of defect or non-conformity in connection with the Premises.

	
  

	
The Lessee further declares that it has visited and checked the Complex, including the access roads, and found the same to be suitable to its needs and that it is entering into this Agreement on the basis of its examinations and not on the basis of any representation whatsoever.

	
  

	
2.6

	
It is aware that the JIZMD is scheduled to grant a lease of the annexes in the Complex and/or varies in the Annexe (to the extent the Lessee is not taking a lease of the Annexe in its entirety) to other startup companies, and it shall have no claim against the University or the JIZMD with respect to the fields and/or manner or operation of the other companies provided that it will not affect the reasonable use of the Premises.

	
  

	
2.7

	
This clause is a principal term of this Agreement, the breach thereof will constitute a fundamental breach.

	
3.

	
Term of the Agreement

	
  

	
3.1

	
The JIZMD hereby grants to the Lessee a lease of the Premises for a term of 33 months commencing from 1 January, 2014 and expiring on 30 September, 2016 (hereinafter – “the Lease Term”).

	
  

	
It is clarified that the date of the commencement of the lease is conditional on the conclusion of renovations of the Annexe and the adaptation thereof to the Lessee’s needs pursuant to Appendix “B” and that changes may occur in that date and the Lessee will have no claim by reason thereof.

	
  

	
3.2

	
Either party may terminate this Agreement of Lease prior to the expiration of the Lease Term provided that notice to that effect will be given by it to the counterparty 90 days in writing in advance.

 

  

  

  

 

	
  

	
3.3

	
On the date of the termination of the Agreement, including the termination thereof prior to the expiration of the Lease Term, the Lessee will not be entitled to any reimbursement in respect of works that it will have carried out at the Premises nor will it have any claim in connection therewith.

	
4.

	
Purpose of the lease

	
  

	
4.1

	
The Lessee undertakes to use the Premises for office purposes of the Company only subject to law (hereinafter – “the Lease Purpose”).

	
  

	
The Lessee may not use the Premises for any other purpose.

	
  

	
This clause is a principal term of this Agreement, the breach thereof will constitute a fundamental breach.

	
  

	
4.2

	
The University or the JIZMD bear no responsibility whatsoever towards the Lessee including in all aspects relating to the adaptation of the Premises for its purpose and in all aspects relating to the Lessee’s ability to obtain a business licence and/or any other permit required (hereinafter: “Business Licence”) that is required for the Lease Purposes of the Premises.

	
  

	
4.3

	
The Lessee is solely responsible for obtaining a Business Licence from the competent authority, at its own expense. Failure to obtain a Business Licence will not entitle the Lessee to terminate or suspend the Agreement of Lease, and the Lessee declares that it will be, notwithstanding whether it will have examined or not examined at the competent authorities its ability to obtain such a Business Licence, solely and fully responsible for the issuance of the Business Licence and the same will not constitute any cause for the termination or suspension of the Agreement of Lease.

	
  

	
4.4

	
The Lessee undertakes to manage the business at the Premises, according to the Lease Purpose, lawfully and in accordance with any lawful permit and licence.

	
  

	
4.5

	
If the competent authority will subject the grant of the Business Licence and/or the extension thereof to the making of changes at the Premises, then the Lessee will be required to obtain the University’s and the JIZMD’s consent in advance and in writing. If the Lessee will be unable to obtain a licence following the University’s or JIZMD’s refusal to the making of the changes, this Agreement will be null and void without any right of action of the parties against one another.

	
  

	
Only if the Lessee obtains the University’s JIZMD’s prior consent in advance and in writing, will be it entitled to make the changes that will have been approved by the University and the JIZMD in accordance with a pre-approved plan in writing, by the University and the JIZMD.

	
  

	
The making of the changes will be at and on the Lessee’s expense and responsibility, and the University and/or the JIZMD will have the authority to effect the works independently or inspect the performance thereof. In all aspects relating to the changes that have been made in the Premises according to this clause, the provisions contained in Clause 6 hereof will similarly apply.

 

  

  

  

 

	
5.

	
Structure and equipment

	
  

	
5.1.1

	
The Premises will be adapted to the Lessee’s needs by the JIZMD and/or parties on its behalf (hereinafter: “the Contractor”) according to plans and specifications that have been prepared by the JIZMD and approved by the Lessee, and which are attached hereto as Appendix “B” (Adaptation Works Appendix).

	 	
  

	
The Contractor will use its best ability to complete the Adaptation Works by the date of the commencement of the lease but no delay in the delivery of the Premises by reason of the continuation of the Adaptation Works will confer upon the Lessee any right against the University or the JIZMD or the Contractor, but in such event, the date of the commencement of the lease will be deferred until the date of the conclusion of the Adaptation works.

	
  

	
5.1.2

	
Any further change that will be requested by the Lessee beyond that contained in Appendix “B”, will be made at the Lessee’s expense, by the Contractor or in accordance with its approval (subject and provided in clause 6.1 hereof) only. It is hereby expressly clarified that the JIZMD and/or the Contractor will finance the renovation works up to a cost cap of NIS 200,000 (exclusive of VAT).

	 	
  

	
The Lessee will pay the full costs of the renovation in excess of the sum of NIS 200,000.

	 	
  

	
The Lessee will, at the time of the signature of this Agreement, deliver a check to the order of the JIZMD in a sum of NIS 100,000 as an advance on account of its share of the cost of the renovation.

	
  

	
5.1.3

	
The taking of possession of the Premises by the Lessee and its signature on a delivery memorandum, will constitute approval on the part of the Lessee to the effect that it has examined the Premises and found the same to have been adapted in accordance with the provisions of this Agreement, and that it neither has nor will have any claims in relation to the performance of the works other than those that are contained in the memorandum.

	
  

	
5.1.4

	
To the extent the Lessee will wish, during the currency of the Lease Term, to effect renovation works at the Premises, it will be required to submit detailed work plans to the JIZMD and to the University, in writing, in advance.

	 	
  

	
The Lessee will furnish to the JIZMD, prior to the commencement of the performance of the renovation works, with confirmation of the existence of insurances of the performing contractors of the renovation, in the form attached hereto as Appendix “D”, the same being signed by an insurance company.

	
  

	
5.1.5

	
On the conclusion of the performance of the renovation, all the improvements that will have been made in the Premises in the Annexe and in the fixtures to the Annexe, will become the property of the University and the Lessee will not be entitled to any reimbursement or compensation in respect of the works and the installations that it has made in the Premises, in any event whatsoever.

 

  

  

  

 

	
  

	
5.2

	
Maintenance and repairs

	 	
5.2.1

	
Definitions

	
”Systems”

 

	
All components of the electrical systems, water, plumbing, central airconditioning systems, fire disclosure and detection, that have been installed in the Premises and/or in the Annexe or in any other annexe, that are used by the Lessee at the Premises.

 

	
”Equipment”

	
Anything that is not fixed to the Premises and/or to the Annexe and which has been purchased by the Lessee for its use, such as: computers, furniture, electrical appliances.

 

	
“Fixtures”

	
Anything which from the standpoint of the nature and use thereof as is customary, is fixed to the building permanently (even if it can be dismantled), such as: airconditioners, fire extinguishing equipment (fire extinguishers, water hoses), electricity board etc.

 

	
”Infrastructures”

	
Central campus systems, outside the area of the Premises and the Annexe, such as electrical, water and central sewerage systems.

 

	 	
5.2.2

	
Equipment

	 	
  

	
The Lessee will purchase at its own expense all of the equipment required by itto operate the Premises.

	 	
  

	
It is clarified that the Equipment is the Lessee’s property, unless otherwise agreed in writing between it and the JIZMD, and upon disagreement coming to an end, at any time, the Lessee will remove the Equipment belonging to it, at its own expense.

	
  

	
5.2.3

	
Systems and fixtures

	 	
  

	
The Lessee undertakes to use the systems and fixtures that are installed or which will be installed in the Premises, fairly and cautiously, to retain the integrity and work ability thereof and fix any damage, malfunction or defect therein that will be caused as a result of its use at its own expense, save for fair wear and tear.

 

  

  

  

 

	 	
  

	
If the Lessee is the party that installed the systems and the fixtures, it will be exclusive and responsible also to repair breakdowns and damage that results from normal use and wear.

	
  

	
5.2.4

	
The Premises and Infrastructures

	 	
  

	
The Lessee undertakes to use the Premises and the Infrastructures fairly and cautiously and retain the integrity and work ability thereof.

	 	
  

	
The Lessee will bear the funding of any damage that will be caused to the Premises, the Annexe or to the Infrastructures, as a result of its incautious use.

	
  

	
5.3

	
The Lessee undertakes to notify the University’s Building and Maintenance Section (hereinafter: “BMS”)) of any harm to the Premises or the Infrastructures and/or the Systems and/or in the Fixtures, immediately.

	
  

	
Repair of the defects will be carried out in every case solely by means of the BMS, the payment for the repair to be paid pursuant to clause 5.2 above.

	
  

	
5.4

	
Should the Lessee not fulfil the terms of this clause, the University and/or the JIZMD may, without derogating from their right to any remedy or other relief, to sue the Lessee, both during the Lease Term, or subsequently, for the full amount of the repair price or the expenses of repair, even before the University and/or the JIZMD will have effectively executed the repairs or repair of the damages.

	
  

	
5.5

	
The Lessee undertakes to effect, at its own expense, preventive maintenance works according to the rules customary in the University and as required by law.

	
6.

	
Condition of the Premises

	
  

	
6.1

	
The Lessee hereby acknowledges that it has taken the Premises in its present condition upon “As Is” and that the Premises are suitable for its needs and for the Lease Purpose, subject as provided in clause 5.1 above and that on the date of the execution of this Agreement, the Adaptation Works which the Lessor is required to effect as will be agreed between the parties, have yet to be executed. The Lessee undertakes to keep the Premises and the condition thereof in good order and may not make therein any modifications, repairs or additions whatsoever whether internal or external (hereinafter – “Modifications and Additions”) unless it first receives the written consent of the University and the JIZMD, and after receiving all of the permits that are required to do so, by law.

	
  

	
6.2

	
Without derogating from the foregoing, if the Lessee will make in the Premises Modifications or Additions, the University and/or the JIZMD will have the right and the option, at their sole discretion, to demand the removal thereof and restoration of the Premises to their former condition, all at the Lessee’s expense, or take the Premises together with the Modifications and the Additions, and the latter will become the full property of the University. The University and/or the JIZMD will notify the Lessee of their choice in accordance with the foregoing, on the date on which they approve the Modifications and the Additions.

 

  

  

  

 

	
  

	
The Lessee will have no claim or demand against the University and/or the JIZMD in respect of the Modifications and the Additions and/or in respect of its investment therein, unless otherwise agreed in advance in writing.

	
  

	
This clause is a principal term and the breach thereof will constitute a fundamental breach.

	
7.

	
Employees

	
  

	
7.1

	
The Lessee declares that it operates as an independent corporate body whose actions are unrelated to the University, other than as detailed in the letter of the Yissum company of 27 June, 2013 (that is attached hereto) and/or unrelated to the JIZMD in any manner whatsoever and that the Complex constitutes a place of operation only for its business and independent activity.

	
  

	
7.2

	
The Lessee declares that nothing herein contained or in any of the terms thereof shall create in the labour relations [employer-employee relationship] between the Lessee or any person on its behalf (1) and the University and/or the JIZMD (2), on the other.

	
  

	
7.3

	
The Lessee shall solely bear the payments that are due to or relate to his employees, including wages, income tax, social security and any tax or levy or loan and any other social benefit.

	
  

	
7.4

	
The Lessee undertakes to pay its employees wages and provide social benefits in accordance with the provisions of the collective agreements applicable to it, and also to act towards them in accordance with the provisions of any law in force, and in particular, according to the work and safety legislation.

	
  

	
It is hereby expressly declared that the Lessee shall employ workers solely above the age permitted by statute.

	
  

	
7.5

	
If the University and/or the JIZMD be sued for payment of any payments that apply to the Lessee as stated above, the Lessee undertakes to pay any such sum forthwith upon the University’s or JIZMD’s demand.

	
  

	
7.6

	
Subordination to the University’s security infrastructure and defense procedures:

	
  

	
7.6.1

	
The University may demand from the Lessee to cease employing at the Premises any employee who, at the University’s discretion, is unsuitable, provided that it will not do so without reasonable cause that will be set out in writing.

 

  

  

  

 

	
  

	
The Lessee undertakes to forward a list of its employees having their place of residence in the Judea and Samaria and/or Gaza Strip regions, to the University’s Security Department, every 6 months.

	
  

	
The Lessee undertakes to notify the University’s Security Department immediately upon any addition or change being made in the above list of employees.

	
  

	
7.6.2

	
Entry passes to the Campus and the Complex will be in accordance with that stated in Appendix “E” (“Safety and Transport Appendix”).

	
8.

	
Cleaning, the environment, safety and statutory compliance

	
  

	
8.1

	
The Lessee undertakes to attend, at its own expense, on a daily basis, to the cleaning and sanitary conditions at the Premises and observe all and any provision or directive of the Ministry of Health or of the Environment and/or of any other competent authority or of the University and/or the JIZMD. The Lessee will disinfect the Premises against rodents and pests at its own expense, by prior arrangement with the University and the JIZMD.

	
  

	
The Lessee will attend to dispose of the waste in the adjacent waste container including removing waste or toxic effluents as required by law, all at its own expense.

	
  

	
8.2

	
The Lessee undertakes to use and operate the Premises in accordance with the statutory provisions, bye-laws, regulations, orders, zoning regulations and the license of any competent authority to which it is subject with respect to the Premises and/or the lease of the dedicated premises.

	
  

	
8.3

	
The Lessee undertakes to act in accordance with the safety rules, particularly in all aspects relating to gas installations (if any) observe the fire prevention and firefighting procedures and acquire or maintain at its expense, all preventive and safety equipment that is required in order to implement and keep the relevant provisions and procedures.

	
  

	
The Lessee will forward to the University, once a year, in January, confirmation from an authorized company of a check of the safety, detection and extinguishing equipment in the Premises, and the work ability thereof.

	
  

	
8.4

	
The Lessee undertakes to conform with the instructions of the University’s Safety and Hygiene Department in all matters relating to the handling and prevention of harmful occurrences.

	
  

	
8.5

	
The Lessee undertakes to use the Premises in a manner that will not cause any nuisance to the environment, work and the University studies or to the persons who are in or visiting the Complex or in its vicinity. The Lessee will prevent nuisances, smells and/or smoke or noise or toxins and administer the Premises in the proper manner, with maximum emphasis on cleaning the Premises and its surroundings.

 

  

  

  

 

	
  

	
8.6

	
The Lessee undertakes not to hang signs or any other item whatsoever on the external walls of the Premises other than of a size that will be pre-approved by the University and will receive the approval of the competent entities and/or authorities.

	
  

	
8.7

	
This clause is a principal term the breach of which constitutes a fundamental breach of this Agreement.

	
9.

	
Expenses and payment of consideration

	
  

	
9.1

	
The Lessee undertakes to pay the JIZMD during the Lease Term, in respect of the Premises, monthly rent in the sum of NIS 10,544 (ten thousand, five hundred and forty four shekels) per month, with the addition of lawful VAT.

	
  

	
9.1.1

	
The rent will be linked to the CPI as published from time to time by the Central Bureau of Statistics or such other competent body that will replace it, the base CPI being that for the month of September 2013, which stands at 102.3 points according to the 2012 base and the new CPI is that known at the time of the making of the actual payment.

	
  

	
If, however, it transpires that the new CPI has fallen or has not risen compared with the previous known CPI, the rent will be paid according to its nominal value, as of the last payment that was paid.

	
  

	
9.1.2

	
The Lessee will be exempt from paying rent only in respect of the first two months of the lease.

	
  

	
9.1.3

	
In addition to that provided in clause 9.1.2 above, the Lessee shall be exempt from paying rent only in respect of the last month of the lease (September 2016). Should the Lessee terminate the lease on an earlier date, it will not be entitled to an exemption for that month.

	
  

	
9.2

	
The rent will be paid once every three months in advance, commencing from the date of the commencement of the Lease Term.

	
  

	
The Lessee will deposit with the JIZMD, prior to the commencement of the Lease Term, postdated checks in respect of the entire Lease Term.

	
  

	
Indexation differentials will be paid on the date on which the duty to pay arises.

	
  

	
9.3

	
The rent is exclusive of VAT.

	
  

	
The Lessee will add to each payment the VAT amount that is due in respect of that payment.

 

  

  

  

 

	
  

	
9.4

	
City taxes

	
  

	
The Lessee undertakes to register itself as the occupier with the Jerusalem municipality, within fourteen days of the signature of this Agreement, and furnish to the University certification in writing thereof.

	
  

	
The Lessee will bear the payment of the city taxes in accordance with the amounts and on the dates prescribed by the local authority.

	
  

	
The Lessee will forward to the University confirmations of the payment of the city taxes each year, or upon the University’s demand.

	
  

	
9.5

	
House committee

	
  

	
9.5.1

	
The Lessee will bear payment of the house committee fees constituting participation in the overall maintenance costs of the Complex and the campus.

	
  

	
9.5.2

	
The house committee fees are NIS 4.67/per square meter a month, commencing from 1 January, 2013.

	
  

	
The house committee fees will be linked to the CPI on an annual basis, the base CPI being that known at the beginning of the calendar year (1 January) falling after the date of the signature of the Agreement, and the new CPI is that known at the end of each year, from the date of the base CPI.

	
  

	
9.5.3

	
On the signature of this Agreement, the Lessee will deposit with the University quarterly checks to the order of The Hebrew University of Jerusalem dated the first day of each calendar quarter, in the sum of NIS 2,522 for each check.

	
  

	
This amount constitutes payment of house committee fees in respect of three months.

	
  

	
Indexation differentials will be paid once a year as detailed in clause 9.5.2 above and within 15 days of the date of the issue of the demand.

	
  

	
9.6

	
The Lessee will bear the payment of electricity, water, fuel, steam, gas and waste removal and every payment in respect of the Premises maintenance applicable to tenants (all maintenance expenses of the Premises being hereinafter called: “current use”). The payment amount will be set according to a metre reading to the extent such exists, or according to an assessment or calculation according to the findings of the University using the method and on the conditions customary with respect to the remaining factors above and/or tenants of the University areas.

	
  

	
9.7

	
On the signature date of this Agreement, the Lessee will deposit with the University quarterly checks to the order of The Hebrew University of Jerusalem dated the first day of each calendar quarter, in the sum of NIS 5,000 each check.

 

  

  

  

 

	
  

	
This amount constitutes payment in advance for the current usage in respect of the use of the Premises for the period of three months.

	
  

	
Whereas the amount mentioned is being paid in accordance with an assessment only, then, to the extent the cost of the current usage will be higher, the Lessee undertakes to make up the balance in respect thereof, although to the extent the cost of the usage will be lower than the amount that has been paid, the difference will be credited to the Lessee in the books of account and to the extent any balance remains at the end of the Lease Term, the University will ensure that the balance will be repaid to the Lessee, subject and after the actual making of all payments.

	
  

	
9.8

	
Each payment applicable to the Lessee according to this Agreement which is past due will bear arrears interest at the rate then customary in Bank Leumi le-Israel for overdraft accounts, from the date of the payment according to this Agreement until the actual payment.

	
  

	
The interest will be calculated on a daily basis.

	
  

	
9.9

	
This clause is a principal term and the breach thereof shall constitute a fundamental breach of this Agreement.

	
  

	
9.10

	
The Lessee undertakes to supply the University and/or JIZMD, at its own expense, every quarter, or upon a special demand in writing, with the financial transactions in the University’s or the JIZMD’s accounts appearing in its bookkeeping system, by means of sending a ledger to the University’s financial comptroller accounts and reporting department and/or by means of sending the transactions in a computer file according to the University’s specifications, if and when it will be required to do so in writing. The Lessee will bear the cost of preparing the data file, as required.

	
  

	
This clause is a fundamental term in the Lessee’s engagement. The University and/or JIZMD may, without derogating from any other right whatsoever, offset against any payment that will be due from them to the Lessee, agreed and pre-determined compensation of NIS 5,000 in respect of the Lessee’s failure to comply with this undertaking.

	
10.

	
Damages

	
  

	
10.1

	
The Lessee undertakes to bear full and exclusive responsibility for all and any act of it or of any of the persons who are employed by it or who operate on its behalf for any harm or expense and/or damage of any kind whatsoever that will be caused to any person, including the University and/or JIZMD, as a result of or in consequence of the performance or breach of this Agreement, and undertakes to reimburse the University and/or the JIZMD for any such expense or damage or loss, upon first demand.

 

  

  

  

 

	
  

	
10.2

	
The Lessee undertakes to dispose of any claim that will be brought in respect of such harm or the cause of such damage against the University and/or the JIZMD, immediately upon demand. Any claim that will be brought against the University or the JIZMD in respect of the cause of such damage, will be referred to the Lessee, who will handle any such claim and will be solely responsible to bear all financial expense that will be involved in such claim, and will similarly pay any compensation that will be adjudicated by law.

	
11.

	
Insurance

	
  

	
11.1

	
The Lessee undertakes to effect and maintain at its own expense, the insurances described in Appendix “A” for the entire duration of the Agreement and furnish to the JIZMD upon the signature of this Agreement, a certification confirming the existence of insurances (Appendix “A”), as attached hereto as an integral part hereof, signed by the insurance company approved by the JIZMD. The presentation of the certification of the existence of the insurances constitutes a fundamental term of the Agreement.

	
  

	
11.1.1

	
The Lessee undertakes to co-operate with the University and/or the JIZMD in investigating damage and its precise circumstances, and do everything that will be required in order to bring about a settlement of claims to pay insurance compensation, as required under the policies.

	
  

	
11.1.2

	
The Lessee undertakes to maintain and fulfil all of the terms of the insurance policies strictly to the letter, and without derogating from the generality of the foregoing, to conform with all of the safety and caution provisions that are comprised in the insurance policies.

	
  

	
11.1.3

	
The Lessee undertakes to strictly fulfil all of the requirements of the insurance policies and effect any act that will be required to do by JIZMD and/or the University in order to exercise the rights under the insurance policies where necessary, including joining in a claim of the University or the JIZMD under the insurance policies, if same is required by the University or JIZMD.

	
  

	
11.1.4

	
Should the Lessee have breached the provisions of the policies in a manner that abrogates its rights or the rights of the University or of the JIZMD under the policies, the Lessee will be fully and exclusively responsible for the damages, without being afforded any claim whatsoever against the University or the JIZMD for any damage or other loss that will be incurred by it in consequence thereof.

	
  

	
11.2

	
The Lessee will be exclusively responsible for all of the uninsured damages for which the responsibility falls on it by virtue of the clauses of this Agreement.

	
  

	
11.3

	
The Lessee shall bear the payments that are imposed upon it as an employer according to the National Insurance Law and/or any other law dealing with employee insurance by employers.

 

  

  

  

 

	
  

	
11.4

	
The Lessee hereby undertakes to punctually pay the insurance premiums. Should the Lessee fail to punctually pay any insurance premiums, the JIZMD may, at its discretion, pay the unpaid rate and deduct the amount of the premium out of the payments that are due to the Lessee under this Agreement. The foregoing will not derogate in any manner from the Lessee’s responsibility.

	
  

	
11.5

	
The JIZMD may offset against the payments to which the Lessee is entitled by virtue of this Agreement or for any other reason, sums that are claimed from the University or the JIZMD by any third party in respect of an act or omission falling within the Lessee’s responsibility, as stated above, and/or in respect of damages that have been caused to the University or the JIZMD by reason of any act or omission which fall within the Lessee’s responsibility as stated.

	
  

	
11.6

	
The Lessee shall furnish an insurance existence certificate –contracting works, as stated in clause 5.1.4 above.

	
12.

	
Inspection

	
  

	
12.1

	
The JIZMD, through its representatives, may enter upon the Premises, by arrangement with the Lessee a reasonable time in advance, and examine the Lessee’s fulfilment of his obligations according to this Agreement and demand and obtain any relevant information thereto from the Lessee.

	
  

	
12.2

	
The JIZMD may, from time to time, prevent and limit or impose conditions on such terms as it deems fit, on the lease and any service in the areas in relation to any person or class of persons.

	
13.

	
Guarantees and collateral

	
  

	
13.1

	
The Lessee undertakes to furnish to the JIZMD collateral for the performance of each of the terms of this Agreement including collateral for payment of all those payments which the Lessee is liable to pay according to this Agreement, including rent and all of its undertakings hereunder.

	
  

	
The furnishing of the following collateral is a condition for conveying possession:

	
  

	
The Lessee will deposit an autonomous and unconditional bank guarantee in the form attached hereto as Appendix “C”, linked to the CPI of the month of January 2013, that stands at 100.3 points according to the 2012 base, to the order of the Jerusalem Industrial Regional Management and Development Administration Ltd., and/or the Hebrew University of Jerusalem, in an amount equal to 3 months’ rent (plus VAT) i.e. the sum of NIS 37,326 (thirty seven thousand and three hundred and twenty six shekels), to be in force until the expiration of 60 days after the expiration of the Lease Term (hereinafter: “the Collateral”), to secure the full performance of the Lessee’s undertakings and the JIZMD and/or the University may exercise the same in such manner as it deems fit, in order to fulfil the Lessee’s obligations.

 

  

  

  

 

	
  

	
13.2

	
It is agreed that JIZMD and/or the University may realize the collateral at any time in order to cover any payment and any debt that will be passed due and outstanding by the Lessee within 30 days of the date it will have been required to do so, by the JIZMD, by written notice.

	
  

	
It is hereby declared that the realization of the Collateral by JIZMD and/or the University in order to cover payment of the rent on the dates specified in clause 9.2 above will be made immediately, and without prior notice.

	
  

	
The JIZMD and/or the University may realize the Collateral by way of deduction out of the guarantee monies.

	
  

	
13.3

	
If the JIZMD or the University will have realized the Collateral or any part thereof, the Lessee will then be bound to make up, immediately upon the JIZMD’s or the University’s demand, any shortfall amount of the Collateral, following the realization.

	
  

	
13.4

	
Without derogating from the generality of the foregoing, the Lessee undertakes that throughout the entire Lease Term, Collateral in the amount as set in this Agreement will be available for the benefit of the JIZMD or the University.

	
  

	
13.5

	
The realization of the Collateral or part thereof by JIZMD or the University will be at the discretion of the JIZMD or the University only, after giving 14 days’ written notice and the Lessee neither has nor shall have any right to impute the collateral to any sum that it is bound to pay or demand that the JIZMD or the University will realize the collateral or any part thereof.

	
  

	
13.6

	
Upon the expiration of the Lease Term, and not prior to it having become clear to the JIZMD that the Lessee has fulfilled all of its undertakings under this Agreement, the JIZMD will return to the JIZMD the Collateral, or any sum that will be remaining thereof.

	
  

	
13.7

	
The realization of the Collateral or part thereof shall not be deemed to be payment or fulfilment of the Lessee’s undertakings according to the Agreement, and such realization shall not be deemed to be any waiver on the part of JIZMD or the University of any breach whatsoever that has been committed by the Lessee, nor will it prejudice any right that will be available to the JIZMD or the University according to the Agreement and by law, including any claim for an additional payment if it transpires that the collateral will be insufficient to cover all of the Lessee’s debts, monies and cover any other obligation.

	
14.

	
Assignment of the Agreement

	
  

	
14.1

	
The Lessee undertakes not to transfer or convey or lease or assign to any person or other entity its rights under this Agreement, in whole or in part, nor suffer any others to use the same nor co-operate with others the use thereof.

 

  

  

  

 

	
  

	
14.2

	
This clause is a fundamental term of this Agreement and the breach thereof will constitute a fundamental breach.

	
15.

	
Breach, rescission of the Agreement and agreed compensation

	
  

	
15.1

	
Without derogating from the Lessee’s undertakings under this Agreement and the JIZMD’s right to obtain any relief or other remedy, the JIZMD may terminate this Agreement and demand the Lessee’s immediate eviction, in the following cases:

	
  

	
15.1.1

	
If the Lessee is in breach of or fails to perform any principal term of this Agreement, and has failed to rectify the breach within 15 days of the date of written notice to do so having been given to it.

	
  

	
15.1.2

	
The Lessee has been declared bankrupt or it is under receivership or a liquidator has been appointed or attachment imposed upon the Lessee’s assets, and such order will not have been vacated within 7 days of the date on which it is granted.

	
  

	
15.2

	
Without derogating from any other relief vested in the JIZMD by law or under this Agreement, if the Lessee commits a fundamental breach of this Agreement the Lessee will pay to the JIZMD as agreed and pre-determined compensation, an amount in shekels equal to the rent payable in respect of six months lease.

	
16.

	
Vacating the Premises

	
  

	
16.1

	
Upon the earlier of the expiration of this Agreement or the termination thereof according to clause 15 above, or upon the conclusion thereof for any other reason, the Lessee undertakes to vacate the Premises and reinstate the same to a good and proper condition, subject to fair wear and tear, to the JIZMD. Should the Lessee have failed to vacate the Premises, the JIZMD may remove any of its equipment and possessions from the Premises, at its expense. It is hereby clarified that the Lessee may not remove or dismantle from the Premises any permanent equipment or any installation that has been made according to clause 6 above, notwithstanding that it is capable of being removed, such as air conditioners, radiators, electricity boards etc.

	
  

	
16.2

	
Without derogating from the JIZMD’s remaining rights, in the event of the Lessee failing to vacate the Premises on the expiration of the Lease Term or upon the rescission or termination thereof for any reason whatsoever or immediately after a lawful demand of JIZMD, the Lessee undertakes to pay to the JIZMD for each day of delay in surrendering the Premises, an amount equal to 10% of the monthly rent for each day of delay, together with indexation differentials and interest, as described in clause 9.7 above.

	
  

	
16.3

	
Without derogating from the foregoing, the JIZMD may, in the event of the non-vacation on due date, cause the electricity supply, water, telephone and the like to be disconnected, at its discretion. The Lessee shall solely bear all damages ensuing in consequence thereof.

 

  

  

  

 

	
  

	
16.4

	
This clause is a fundamental term the breach of which will constitute a fundamental breach.

	
17.

	
Offset

	
  

	
The JIZMD may offset against the monies that will be due from it to the Lessee any sum that is due to it from the Lessee, for any reason whatsoever, including any unliquidated amount.

	
18.

	
General

	
  

	
18.1

	
The provisions of the Contracts (Remedies for Breach of Contract) Law, 5731-1970, shall apply to a breach of this Agreement.

	
  

	
18.2

	
No modification in any of the terms of this Agreement shall be of any effect unless made in writing.

	
  

	
18.3

	
The territorial jurisdiction to dispose of any dispute related to the performance or breach of this Agreement or the tenancy relationship between the parties, shall be vested in the courts of Jerusalem and in those courts only.

	
19.

	
Notices

	
  

	
The parties’ addresses in this Agreement are as set forth in the preamble to this Agreement. Any notice sent by registered mail will be deemed to have reached its destination 72 hours after the time of its dispatch and if delivered personally – at the time of delivery.

In witness whereof the parties have set their hands on the date and place first above written

	
/s/ Israel Amichai

	 	
/s/ Aharon Schwartz

	 
	
/s/ Lior Oron

	 	
/s/ Jonathan Burgin

	 
	
The Jerusalem Industrial Zone Management

	 	
Lessee -

	 
	
and Development for Administration Ltd.

	 	
BioCancell Therapeutics

	 
	
By the Hebrew University Property Company Ltd.

	 	
Israel Ltd.

	 

 

I, Advocate Avi Nadler, the undersigned, the lawyer of BioCancell Therapeutics Israel Ltd. corporate number: 513597856, hereby certify that:

Mr. Aharon Schwartz, I.D. 003651627, Chairman, and

Mr. Jonathan Burgin, I.D. 012714515, CEO.

Signed this Agreement on behalf of the Company before me, and are empowered to sign on its behalf and their signature is binding on the company, according to its by-laws.

	
Name: Avi Nadler.

	
Lawyer’s signature: /s/ Avi Nadler

	
Stamp.

	
Date: 5 December, 2013

Lic. No.: 50750.exhibit_10-8.htm

Exhibit 10.8

 

	

	
8 Hartom St, POB 45389                     

Fax:. +972-2-548-6550

http://www.biocancell.com     

	
Jerusalem Israel 91451

Phone: +972-2-548-6555 

* info@biocancell.com

BioCancell Ltd.

 

Compensation Policy

December 1, 2013

(As revised on January 2, 2014 and April 15, 2015)

 

  

  

  

Contents

                                                                                                                            

	 	Page
	
Background

	
3

	
Definitions

	
5

	
Objectives of the Compensation Policy

	
6

	
Comparison of wages compared with the Company’s remaining employees

	
7

	
Compensation Package Structure

	
8

	
Compensation Policy

	
9

	
Skills required of Officers

	
19

	
Appendix A – Fringe Benefits Ancillary to the Salary

	
21

 

  

2

  

 

Background

On December 12, 2012, Amendment No. 20 of the Companies Law, 5759-1999 (hereinafter: “the Amendment” and “the Companies Law”, respectively) entered into effect. The Amendment deals with the regulation of the compensation structure for officers in public companies and bond companies, and also provides for a special procedure for the approval thereof. According to the Amendment, the compensation committee and board of directors (hereinafter: “BOD”) of BioCancell Ltd., (hereinafter: “the Company”) adopted this compensation policy.

The considerations guiding the Company’s compensation committee (hereinafter: “Compensation Committee”) and the BOD of the Company in adopting the policy being to promote the objects of the Company, its working program and policy in a long-term overview; the creation of proper incentives to the Company’s officers, taking account, inter alia, the Company’s risk management policy; the size of the Company and the nature of its activities; and with respect to the terms of office and employment that comprise variable components – the officers’ contribution to achieving the Company’s targets and generate profits, in the long-term overview and according to the officers’ duties.

The compensation policy was drawn having regard to the size and nature of the Company as an active corporation in the field of medical R&D.

The principles of the compensation policy were formulated after internal discussions that were held by the Compensation Committee and the Company’s BOD, in consultation with an external consultant, Fahn Kanne Management and Control Ltd., and with the Company’s outside counsel. The policy was designed to determine informed, appropriate and fair compensation principles for the Company’s officers, ensure their compensation would be consistent with the interests and strategy of the Company across the board, amid consideration of the Company’s risk management policy, align the Company’s officers’ interests with those of the Company’s shareholders while at the same time, bring about an increased sense of solidarity with the Company and its activity on the part of high-quality officers in the Company,  in the long term.

The compensation principles are a benchmark-based tool that derives, inter alia, from the Company’s annual working program and long-term plans as determined by the BOD, from time to time.

The components of the compensation policy will address each of the following:

	
a. 

	
Fixed components: Salary, fringe benefits ancillary to the salary, subscription reward and payments on retirement, as more particularly set forth in this document.

	
b.

	
Variable compensation components in the short and long term: bonuses of various classes that consist of, inter alia, an annual bonus, special bonus etc.

	
c.

	
Variable compensation components in the long term: equity-based compensation.

	
d.

	
Insurance, exemption and indemnity: directors and officers’ liability insurance (in the normal course of business as well as in respect of past events, exemption from liability for officers in advance and retroactively, and the provision of an indemnity obligation of the officers, in advance and retroactively.

  

3

  

 

The provisions of this compensation policy apply to the senior officers of the Company and the subsidiary, BioCancell Therapeutics Israel Ltd., (as defined in the Companies Law, 5759-1999 and in the Securities Law – 5728-1968).

The compensation policy was debated by the Compensation Committee meetings that were held on June 2, July 10, July 23, July 30, November 3 and December 1, 2013 and on January 2, 2014. The proposed compensation document was transmitted by the Committee to the Company’s BOD, which discussed the same on a number of occasions and approved it at its meeting of January 2, 2014. Pursuant to the statutory provisions, the compensation policy will be submitted to the Company’s general meeting for approval and will be implemented in future engagements with officers and on updating the terms of engagement of the incumbent officers. The compensation policy will serve the Company in the ensuing three years and reviewed from time to time to the extent the Compensation Committee and/or the Company’s BOD will take the view that it is relevant to do so.

The publication of this document is intended to increase transparency, enable the Company’s shareholders to express their opinion and enhance their ability to influence the Company’s officers’ compensation policy.

It is important to note also that prior to the approval of this policy document, the Company had pre-existing procedures in place, and the officers of the Company had employment agreements and option plans before the Amendment.

  

4

  

Definitions

Officer – means the CEO, chief business officer, deputy to the CEO, vice president, and any party holding such duties in the Company even if described otherwise, and includes also a director or manager who is directly subordinate to the CEO.

Company’s officers – includes senior officers of the Company (as defined in the Securities Law, 5728-1968).

Professional VP – a VP who is principally employed in the biomed field, including chief scientist, R&D VP, clinical development VP and the like.

Active chairman – as of the date of the approval of the plan, the chairman of the Company’s BOD is active, and is appropriately addressed in the compensation policy document. To the extent the chairman in the future will be non-active the caps for compensation in this document will be at the rate of up to 70% of that prescribed herein.

Application – this document is valid with effect from the date of the policy approval. To the extent there is any deviation between the existing employment agreements of the incumbent officers of the Company and this document, those existing employment agreements will prevail. The Company policy is that the officers’ employment agreements in the Company will be adjusted with time, to this document.

Terms of service and employment – the overall terms of service or employment of officers, including the grant of exemption, insurance, undertaking to indemnity or indemnity according to an indemnity authorization, retirement grant and any benefit, or other payment or obligation to make such payment, provided by reason of such service or employment.

Base salary – the officers’ fixed salary. For the avoidance of any doubt, the basic salary does not include the reimbursement of expenses.

National Insurance salary – the aggregate income from the sources detailed in section 2(2) of the Income Tax Ordinance, including payments that have been granted as a bonus or participation grant in the employer’s profits. For the purposes of the section on salary compared with the remaining employees of the Company – this accord with the requirements of Amendment 20.

Management fees / consulting fees – officer reward based on a VAT invoice, and otherwise than by means of a salary. An officer who receives the compensation in this way is not entitled to fringe benefits and the management fees reflect the total costs of his permanent employment. For the avoidance of any doubt an officer who receives his salary in this manner, is entitled to variable compensation – bonuses and equity–based compensation.

VP Finance / comptroller – although BioCancell found it appropriate to publish the compensation policy for a vice president - finance as of the date of the approval of the policy, there is presently no such officer in the Company. A comptroller will be deemed to be an officer as long as no vice president - finance of the Company has been appointed. The compensation policy in relation to the comptroller is a derivative of the compensation policy in relation to the VP finance, as will be detailed below in this document.

The amounts, rates and caps mentioned in this policy document are for a full-time position.

 

  

5

  

Objectives of the Compensation Policy

The compensation policy plan of the Company is designed to be an aid to comply with the Company’s objectives, targets and milestones. The plan is intended to serve as a platform for the retention and/or recruitment where necessary, of officers in key positions, with the emphasis on an attractive compensation plan, while being competitive in the market.

1.           Motivation generation to achieve targets while balancing risk-taking

The officers’ compensation plan is intended to encourage managers to meet the Company’s targets as determined by its institutions. The plan is designed to encourage target compliance in various timeframes (whether in the short-, medium – and long-term) while assuming risks according to the level of the risk, as decided by the organs of the Company. In addition, the compensation policy will encourage the interests of the officers in the Company to be closely allied with and match those of the Company’s shareholders and bondholders. The higher the officer’s management grade, responsibility and expertise, the greater will be his contribution in determining the achievement of the business results and will accord with the varying compensation to which the officer may expect to be entitled.

2.           Manager retention

The compensation plan will encourage managers to stay with the Company and reduce staff turnover amongst this population. One of the important objectives considered by the Compensation Committee was the creation of value in senior manager retention having the ability to lead to the corporate success of the Company. In order to achieve that goal, the compensation plan creates a balance between the fixed compensation, the compensation in respect of the short-term achievement attainment and the long term. This objective is a key point in the creation of added value for the shareholders.

3.           Consistency

The compensation policy is designed to create an infrastructure for the ongoing management of the senior officers of the Company, and is aimed at establishing principles which will guide the Company’s management in the future. For that purpose, this plan charts a policy, principles and wage ranges. In order to keep these principles current, the Company will review the plan periodically.

  

6

  

Comparison of wages compared with the Company’s remaining employees

Background

The Compensation Committee examined the wage agreements and compensation terms of the officers in force in the Company prior to adopting the compensation policy, including experience, education, fields of responsibility and skills, while drawing a comparison thereof. The Compensation Committee and the BOD examined the comparison between the cost of the terms of service and employment of the Company’s officers and the cost of salary1 of the remaining Company employees (including the remaining officers) in particular, the ratio to the average salary and the external salary of such employees and the effects of the caps on labor relations in the Company, as of the date of the approval of this compensation policy, and determined that the ratio is reasonable taking into account the Company’s characteristics, size, field of business and staff mix employed, and is not expected to have any impact on the working relations in the Company. As of the present, these ratios are as follows (based on a 100% position, as required):

 

	
Position

	
Ratio to the average overall cost of employment of all the remaining Company employees (including the remaining officers)

	
Ratio to the upper median of the average overall cost of employment of all the remaining Company employees (including the remaining officers)

	
Chairman

	
2.7

	
3.5

	
CEO

	
2.1

	
2.7

	
VP’s

	
No more than 2.2*

	
No more than 2.9*

* This ratio represents those highest paid from amongst the VP’s of the Company. For the VP’s having salary is lower, the ratios are lower.

 

 

1  “Cost of salary” -  bears the meaning contained in the First Schedule (A) of the Companies Law. In calculating this ratio, the employees of the Company will be included as well as the senior officers of the Company.

 

  

7

  

 

Compensation Package Structure

Pursuant to the objectives of the compensation policy and according to the market in which the Company operates, including the competition for manpower, the Company compensates the officers on three levels:

	
1. 

	
Fixed component – monthly salary or consulting fees/management fees.

	
2.

	
Cash bonus – this varies for the short–medium-term in order to generate incentives in respect of special achievements that have been attained by the officers.

	
3.

	
Equity–based compensation – a long-term variable component in order to generate a connection between the officers and the Company’s performance, over time.

	
Position

	
Chairman

	
Chief Scientist

	
VP (including VP - Finance)

	
Fixed salary

	
35-100%

	
39-100%

	
43-100%

	
Short-term variable

	
Up to 25%

	
Up to 29%

	
Up to 14%

	
Variable in respect of a material transaction

	
Up to 33%

	
Up to 33%

	
Up to 33%

	
Long-term variable

	
Up to 50%

	
Up to 40%

	
Up to 40%

	
  

	 

It should be made clear that the Company may grant a compensation package in volumes lower than those set forth in the above table, and also, this policy of itself does not commit the Company to provide a variable compensation (whether in the short– or the long-term) in practice.

The Compensation Committee and the BOD used, amongst other things, the following documents: the existing employment agreements of the Company’s officers (for details concerning these agreements vide Regulation 21 of Chapter D of the Periodic Report; Appendix B – Comparative Data Review, which itemizes the compensation of peer officers in biomed companies comparable to the Company. The comparison was made for 15 Israeli biomed public companies found in a similar development phase compared with that of the Company, as well as biomed companies having a similar market worth.

The Compensation Committee and the BOD took note that the purpose of this comparison is to make a parallel between index-based information regarding the compensation volumes customary in the Israeli market, but due to its limitations, is not an exact science and thus indicative only of the overall considerations that were considered by them in weighing the interests of the Company and the fair and reasonable compensation.

 

  

8

  

Compensation Policy

1.           Fixed compensation (base salary and ancillary/fringe benefits)

	
1.1

	
An office’s base salary in the Company will be set, having regard to previous employment agreements signed with him and will not exceed the relevant cap as stated in section 1.4 below.

	
1.2

	
In determining a new officer’s base salary, the following considerations will, inter alia, be taken into account:

	
1.2.1

	
Experience, past performance and achievements.

	
1.2.2

	
Position and spheres of responsibility.

	
1.2.3

	
Education, expertise and skills.

	
1.2.4

	
The ratio to the salary of the remaining Company employees and in  relation to the remaining officers, separately.

	
1.2.5

	
Previous salary agreements of the officer.

	
1.3

	
When updating an incumbent officer’s wage terms, the following will be additionally considered:

	
1.3.1

	
Performance and contribution in the Company.

	
1.3.2

	
An adjustment in the current fields of the officer’s responsibility.

	
1.4

	
The following are the base salary ceilings of the officers in the Company (in NIS’000) for a full-time position:

	
Position

	
Chairman

	
CEO

	
VP (including VP - Finance)

	
VP - Finance

	
Fixed salary.

	
80

	
80

	
50

	
50

	
·

	
In addition, each officer of the Company will be entitled to the ancillary/fringe benefits described in Appendix A.

2.           Variable compensation medium-term bonus in salary

	
  

	
For the purpose of this compensation is to encourage the compliance with corporate goals in the short- and medium-term. This compensation creates an automatic balancing mechanism which combines economically, the officers, when complying with short – medium-term targets that have been set for them while reduces the cost of the employment, when target-compliance is absent. The bonus creates the officer’s motivation to improve the Company’s performance, over time.

 

  

9

  

 

	
  

	
Manager retention – the retention of high caliber managers is not the principal objective of bonus plans although the ability to compensate for their performance over and above the regular salary constitutes an added dimension in the Company’s ability to retain its quality managers.

	
  

	
Over and above the above, the Compensation Committee and the BOD found it appropriate to grant this component on the ground that the officers’ salary in the Company is below the average of companies for whom a comparative data review was made (Appendix B).

	
  

	
The following are the principles of the Company’s bonus plan.

	
2.1

	
The Company may grant the officers an annual bonus not to exceed the maximum cap set out below, based on a plan that will be submitted to the Compensation Committee and the BOD in advance, in respect of each year, on its inception.

	
2.2

	
A bonus will be paid to officers in the first year of their office, after they comply with the preset benchmark targets which are set for them (vide below) and have worked at least half a year at the time of the period for which the bonus is calculated.

	
2.3

	
For an officer who has worked at least half a year but less than a full year, the bonus will be computed according to the number of months of his incumbency, but the Compensation Committee and the BOD may grant the officer a bonus at a higher rate which will not exceed the maximum cap.

	
2.4

	
A bonus may be paid to officers who have completed their service during the year, to the extent they have complied with the targets detailed before the conclusion of their service. The Compensation Committee and the BOD of the Company will review the circumstances of the retirement, the officer’s contribution to the Company’s success and the Company’s financial position.

	
2.5

	
The following are the parameters relating generally to the officers of the Company:

  Chairman

	
Chairman

	
Cap

	
4 salaries

	
Conditions

	
Chairman’s benchmarks for 2014:

 

a.    Obtaining FDA approval in the US for the Phase 3 Clinical Trial of the drug BC-A19 as treatment of cancer of the bladder – 40%;

 

b.    Raising funds in an aggregate amount in excess of US $3 million otherwise than from the controlling stakeholder of the Company – 40%;

 

c.    Qualitative evaluation pursuant to the discretion of the Compensation Committee and the BOD – 20% of the aggregate bonus volume.

 

Chairman’s benchmarks for the coming years:

 

1.    The Chairman’s benchmarks for the coming years will cover at least two performance or financial benchmarks, having a weighting of not less than 25% for each benchmark and an aggregate weighting of 80% as determined by the Compensation Committee and the BOD. The benchmarks are:

 

a.    Milestones in clinical trials ahead of/during/conclusion of trials according to the annual working program. The milestones will be published during Q1 of the measured year;

 

b.    Raising funds, including capital otherwise than from the controlling stakeholder, in a volume that will be approved by the Compensation Committee and the BOD, as significant;

 

c.    Compliance with the annual working program of those subordinate to the CEO in a volume that will not be less than 80%.

 

2.    Qualitative evaluation at the discretion of the Compensation Committee – up to a 20% weighting of the aggregate bonus volume.

 

The Company will submit the Chairman’s benchmarks for the coming years to the general meeting of shareholders of the Company for approval, to the extent their approval will be required.

 

  

10

  

 

 CEO

	
CEO

	
Cap

	
4     salaries

	
Conditions

	
3.    The CEO’s benchmarks will include two performance or financial benchmarks at the least, that will have weighting of not less than 25% for each benchmark and an aggregate weighting of 80% as determined by the Compensation Committee and the BOD, the benchmarks are:

 

a.    Milestones in clinical trials ahead of /during / on the conclusion of trials according to the annual working plan. The milestones will be published during Q1 of the measured year;

 

b.    To the extent any of the positions of VP of the Company will not be filled and the CEO will take a decisive part in the relevant activity of that VP – compliance with one milestone or more as determined by the Compensation Committee and the BOD in connection with matters that fall under the management of the absent VP, out of the following;

 

c.    Raising funds otherwise than from a controlling stakeholder, as approved by the Compensation Committee and the BOD as significant;

 

d.    Compliance with the annual working program of those subordinate to the CEO with a volume of not less than 80%;

 

4.    Qualitative evaluation at the discretion of the Compensation Committee and the BOD – up to a weighting of 20% of the aggregate bonus volume.

  

11

  

 

Chief Scientist

	
Cap

	
2 salaries

	
Conditions

	
1.    One or more milestones as set by the Compensation Committee and the BOD, in connection with subjects that fall under the management of the Chief Scientist, out of the following – 50%.

 

2.    Compliance with milestones set by Compensation Committee and the BOD in connection with subjects that do not fall under the management of the Chief Scientist, out of the following – 30%.

 

3.    Qualitative evaluation by the CEO of the Company, with the approval of the Compensation Committee and the BOD – 20%.

Special bonus – Chief Scientist:

The Compensation Committee and the BOD of the Company, following a review, decided it appropriate that the Chief Scientist should be additionally entitled to a special bonus at the rate of 7.5% of bonuses that will be received in the Company, upon all of the following conditions being fulfilled:

	
a.

	
The funds stem from research grant monies that have actually been received by the Company or the laboratory that it finances;

	
b.

	
The Company’s BOD has approved the receipt thereof;

	
c.

	
The Chief Scientist has actively participated in obtaining them and is noted therein as the chief researcher;

	
d.

	
The monies are other than those that have been received under the auspices of the Chief Scientist’s Bureau of the Ministry of Economics;

 

  

12

  

The cap on the special bonus to the Chief Scientist will be up to three monthly salaries per calendar year.

 

Professional VP

	
Cap

	
2 salaries

	
Conditions

	
1.    Compliance with one or more milestones as set by the Compensation Committee and the BOD in connection with subjects falling under the direct management of the VP, out of those appearing below – 50%.

 

2.    Compliance with milestones as set by the Compensation Committee and the BOD in connection with subjects that do not fall under the direct management of the VP, out of the following – 30%.

 

3.    Qualitative evaluation by the CEO of the Company, with the approval of the Compensation Committee and the BOD – 20%.

  VP - Finance

	
Cap

	
2 salaries

	
Conditions

	
1.    Compliance with one or more milestones as set by the Compensation Committee and the BOD in connection with subjects falling under the direct management of the VP, out of the list below – 50%.

 

2.    Compliance with milestones as set by the Compensation Committee and the BOD in connection with subjects that do not fall under the direct management of the VP, out of the following list – 30%.

 

3.    Qualitative evaluation by the CEO of the Company, with the approval of the Compensation Committee and the BOD – 20%.

The overall targets and milestones out of which the Compensation Committee and the BOD may determine criteria for bonuses, according to the compensation policy.

	
a.

	
Success of clinical trials

	
b.

	
Obtaining regulatory approvals

	
c.

	
The signing of material agreements

	
d.

	
Completion of milestones in development

  

13

  

 

	
e.

	
Completion of milestones in production

	
f.

	
Agreements with the regulatory authorities

	
g.

	
Completion of a milestone in recruiting patients for trials

	
h.

	
Teaming and licensing agreements

	
i.

	
Compliance with reporting procedures and internal procedures

	
j.

	
Compliance with budget targets

	
k.

	
Raising funds.

	
3.

	
Variable compensation - Special bonus in respect of material business engagements.

 

The Company may grant in addition to the officers, a special bonus in respect of material business engagements relating to licensing and trading (out licensing). This special bonus will be submitted to the Compensation Committee and the other organs of the Company for approval, as required by law. The volume of this bonus will not exceed 6 monthly salaries for each officer.

	
4.

	
Variable compensation – long-term equity based.

 

The purpose of the option grant to acquire shares of the Company for the officers of the Company is to create identity of interests between the Company’s business results in the long term, and the officers’ compensation. In addition, the grant of options in the eyes of the Committee is a tool for high-caliber manager retention. The following are the principles of such compensation:

 

	
4.1

	
The Company may grant equity-based compensation from time to time to the officers under than directors, and notwithstanding that stated in sub-section 4.2 below, including to an active chairman (according to dilution caps and the cost for the grant).

 

The vesting period will be sixteen portions over four years, to those officers (including to an active chairman).

 

	
4.2

	
The Company may grant equity-based compensation to directors once every three years (according to a dilution cap and in the case of a chairman, cost cap). The vesting period for the directors, will be three years.

	
4.3

	
No automatic mechanism will be created to enable the immediate vesting of equity-based conditions other than in the cases of a change of control, as well as in a case where such immediate vesting will not be for controlling stakeholders.

	
4.4

	
The exercise price will be the average of the last 30 trading days prior to the BOD decision regarding the grant, but not less than the share price in the market, concurrently with the grant date.

	
4.5

	
Lapse date – not less than six years from the allotment date.

 

  

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4.6

	
Subject to the provisions of the Income Tax (New Version) Ordinance, and to the extent possible, the grant of options in the Company to employees and officers will be granted according to section 102 of the Income Tax Ordinance, other than in relation to those not being an “employee” according to section 102 of the Income Tax Ordinance, for whom the relevant tax track will apply.

	
4.7

	
Value cap as of the grant date (First Schedule A – Part B1 (b)) – the value cap will be calculated on the basis of accepted evaluation methods (e.g.: Black and Scholes/binomial). The cap is for a year, based on a linear computation.

	
4.8

	
The remaining terms for the grant of the options will accord with the Company’s option plan, in force on the grant date.

	
4.9

	
The following are the caps at the time of the grant (according to the lower of the conditions listed below – non-cumulative):

 

Chairman

 

	
Cap value

	
12 monthly salaries

	
Cap dilution*

	
 Up to 1%

  Other directors

 

	
Cap value

	

NIS 150,000

	
Cap dilution*

	

 0.2%

 

CEO

 

	
Cap value

	

12 monthly salaries

	
Cap dilution*

	

 Up to 1%

  Professional VP

 

	
Cap value

	

8 monthly salaries

	
Cap dilution*

	

 Up to 0.35%

 

VP - Finance

	
Cap value

	

8 monthly salaries

	
Cap dilution*

	

 Up to 0.35%

*The dilution percentages are out of the Company’s equity capital – fully diluted.

 

  

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5.

	
Directors’ compensation (other than the BOD Chairman)

	
5.1

	
The directors of the Company will be entitled to annual compensation and participation reward according to the Company’s (Rules regarding Reward and Expenses for Non-executive Directors), 5760-2000, according to the Company’s rating, as existing from time to time.

	
5.2

	
The Company may grant an equity-based compensation to directors from time to time, pursuant to the equity-based compensation plan in the Company. The cap for the equity-based compensation value will be computed on the basis of accepted evaluation methods (e.g.: Black and Scholes / binomial) and be limited to the sum of NIS 50,000 per annum, on the basis of a linear calculation.

	
6.

	
Liability, insurance, exemption and indemnity

 

The Company may grant the officers an exemption from liability, liability insurance (including a run-off insurance policy) as well as an undertaking for indemnity, subject to the provisions of the Companies Law and the Company’s by-laws.

Without derogating from the generality of the above, the Company may, at any time during the currency of this compensation policy, acquire directors’ and officers’ insurance (including directors and officers who are or are deemed to be, or who represent, the controlling stakeholders of the Company) serving in the Company from time to time, extend or renew the existing insurance policy and/or enter into a new policy on the renewal date, or during the currency of the insurance term, with the same or a different insurer, in Israel or abroad, on the conditions listed below, for insuring the directors’ and/or officers’ liability, provided those engagements will be principally based on the conditions set forth below, and the Compensation Committee and the BOD of the Company has approved the same:

 

	
a.

	
The cover amount under every policy that will be acquired will not exceed 5 million dollars, per event and for the insurance term.

	
b.

	
The premium for the insurance term in respect of an annual insurance policy will not exceed 21 thousand dollars.

	
c.

	
The policy will also cover the liability of directors and officers who are deemed to be the controlling stakeholders of the Company or their relations, from time to time, provided the cover terms in respect of them will not exceed those of the remaining directors and/or officers of the Company.

 

The insurer, cover amount and annual insurance premium will be set by the Compensation Committee and the BOD, who will determine that the amounts are appropriate in the circumstances having regard to the market conditions and pursuant to the terms set in the framework decision mentioned above.

From time to time these sums will be reviewed as appropriate (e.g. on listing for trading in the US).

To the extent any modification is made in the indemnity letters either according to regulatory directives and/or statute and/or any other reason, the Company shall be bound to submit the new terms to the general meeting, for approval.

 

  

16

  

 

	
7.

	
Termination of engagement

	
7.1

	
Prior notice

	
  

	
As a rule, prior notice of an intention to terminate an employment agreement will be given by the Company or by the officer in writing to the counterparty, by up to 90 days’ notice. The officer will, after the delivery of such prior notice by either party notwithstanding, continue to fulfil his duties until the actual determination of the agreement, unless otherwise decided by the Company.

	
7.2

	
Special retirement grants

	
Seniority

	
Entitlement effective as from the date of employment

	
More than 5 years

	
Up to 2 months acclimatization

	
More than 10 years

	
Up to 4 months acclimatization

 

	
  

	
The Compensation Committee and the BOD may approve the grant of a special retirement grant that is a derivative of the office’s monthly salary, and the cap set out in the above table. The Compensation Committee and the BOD will test the grant of the retirement grants recorded above and, inter alia, will review the office’s contribution to the achievement of the Company’s goals, its financial position and the circumstances of his retirement.

	
7.3

	
In the event of an office being an employee of the Company having resigned for any reason, the Compensation Committee and the BOD of the Company may decide to release the sums that have accrued in respect of severance pay, to that employee, subject to law.

	
7.4

	
Over and above the conditions specified above, no additional grants will be given upon the termination of the service and employment.

	
8.

	
Clawback – recovery of monies already paid

 

On the payment date of the grant, the officers will sign an undertaking to return to the Company the amount of the grant or part thereof in the event of it becoming apparent in the future that the calculation of the grant was made on the basis of data that subsequently became clear, were wrong, and have been restated in the financial statements. There will be no clawback in the event of a change occurring in accounting standard rules and reporting. The clawback will be available up to three years from the date of the payment of the grant.

 

	
9.

	
Reduction at the BOD’s discretion

 

The BOD may reduce the extent of the varying compensation and further determine, at its discretion, that no variable compensation will be given at all.

 

  

17

  

 

	
10.

	
Management, control and review of adjustments to the extent necessary

 

The Compensation Committee will, from time to time, or once a year, whichever is the earlier, examine the compensation policy and the need to adjust it if any material change occurs in the circumstances that existed at the time it was determined, or for other reasons, adjustments in the compensation policy according to the provisions of law, to the extent necessary. The party responsible for internalizing corporate governance in the Company is committed to convene the Compensation Committee in accordance with that stated above.

 

	
11.

	
Miscellaneous

	
11.1

	
The discretion for determining the identity of the officers in the Company is vested in the CEO of the Company. Changes may occur in the identity of the officers from year to year, and persons who served as such in a particular year and whose terms of service and employment were subject to this compensation policy will not necessarily continue to serve as officers in the ensuing years, and the terms of this office and employment will not be subject to this policy, and the converse also obtains. In addition, the Company may vary the terms of service and employment of any office at any time and there will be no obligation to apply to the office the same terms of service and employment that were applicable to him in previous years.

	
11.2

	
Nothing contained herein shall give rise to any right to officers to whom this compensation policy applies, nor will any other third party have the benefit of any right to obtain compensation of any kind whatsoever.

	
11.3

	
It is clarified that nothing contained in this policy shall derogate from the provisions of the Companies Law, 5759-1999 and/or the Company’s bye-laws in relation to the manner of approving the Company’s engagement with any officer in the context of the terms of their service and employment, and nothing contained in the provisions of this policy shall derogate from any reporting obligation of officers’ compensation, pursuant to the Securities Law, 5728-1968, and the Regulations thereunder.

	
11.4

	
The Compensation Committee and the BOD will debate the implementation of a compensation plan for each financial year pursuant to the compensation principles set out in this compensation policy, and either affirm or disaffirm the intrinsic implementation to each year of the plans, if at all.

	
11.5

	
The Compensation Committee and the BOD of the Company will set the benchmarks comprising the varying compensation targets in each of the plans.

	
11.6

	
In the approval process of any annual plan, (including the various components thereof) by the Compensation Committee and the BOD, changes will be reviewed each year in the Company’s goals, the market conditions, the Company’s position and like factors. In accord with this, the targets of each plan, its benchmarks and compensation targets will be reconsidered each year and their effective implementation - subject to changes, in accordance with decisions of the Compensation Committee and the BOD, from time to time.

	
11.7

	
The BOD may, after approving a specific annual compensation plan, decide that no compensation will be paid pursuant to the plan and may further direct the cancellation or suspension of all or any of the plan, on such grounds as will be deemed fit by the BOD.

	 

 

 

  

18

  

Skills Required of Officers

	
Position

	
Required characteristics and skills

	
BOD Chairman

	
1.    Qualified to be appointed for service as a director by law.

2.    Academic degree relevant in one of the following fields: science, engineering, economics / law, business administration.

3.    Five years’ experience in the fields of the Company’s business.

4.    Spheres of responsibility – BOD chairman of the Company and member of the BOD. Guiding the CEO in the management of the Company’s business, according to BOD policy.

	
CEO

	
1.    Relevant academic degree.

2.    Five years’ experience in the fields of the Company’s business.

3.    Spheres of responsibility – managing all of the Company’s business.

	
Directors

	
1.    Qualified to be appointed for service as a director by law.

2.    Spheres of responsibility – BOD member of the Company. The BOD will chart the Company’s policy and oversee the performance of the CEO’s duties and operations. The BOD of the Company is, moreover, granted all of the powers that are prescribed by law.

	
Professional VP

	
1.    Relevant academic degree, such as: science, engineering or any other field that is relevant.

2.    Five years experience in one of the fields of the Company’s business.

3.    Spheres of responsibility – pursuant to the position, e.g. –managing clinical trials, managing the production setup, research and development of new products.

	
VP - Finance

 

	
1.    Academic degree in one of the following fields, economics and/or accounting, from a recognized academic institution in Israel or abroad.

2.    2 years’ experience in the position of VP – Finance in another company, or comptroller having at least 4 years’ seniority in the position of a company comptroller. Licensed accountant – an advantage.

3.    Spheres of responsibility – managing the financial setup in the Company, including financial reporting.

  

19

  

 

The Compensation Committee and the BOD may, in exceptional cases, waive the requirement of education and/or experience set out above, if they believe that the office in question has special business experience which, in their opinion, could significantly contribute to his position.

Comptroller – pending the appointment of a VP - Finance in the Company, the compensation policy for the comptroller will derive from the compensation policy of a VP - Finance up to a cap of 80% of the latter’s salary. To the extent a VP - Finance will be appointed in the Company, the compensation policy will not apply to the comptroller.

 

  

20

  

Appendix A – Fringe Benefits Ancillary to the Salary

This Appendix is not valid for an office who receives management fees/professional fees.

The Company considers it appropriate to grant its officers fringe benefits over and above those prescribed by statute, and the Extension Orders [that apply in the Israeli economy] as customary.

The conditions below are for a full-time position.

The following are the ancillary conditions for the Company’s officers that exceed those required by statute:

	
1.

	
Contributions for social benefits – a salaried officer will receive contributions for full social benefits in a pension fund and/or managers’ insurance out of the basic salary, as elected by the particular officer.

	
2.

	
Loss of working capacity - a salaried officer who contributes towards managers’ insurance, will receive a contribution towards loss of working capacity, up to 2.5% of the basic salary.

	
3.

	
Study fund – the Company will contribute 7.5% monthly of the officer’s basic salary to a study fund as selected by the officer. 2.5% of the officer’s salary will be deducted and remitted to the fund.

	
4.

	
Annual vacation – an officer will be entitled to up to 26 vacation days annually.

 

The accumulation of vacation days will not exceed twice the quota of the officer’s annual vacation days.

 

	
5.

	
Vehicle – an officer may be entitled to a vehicle at his disposal and his personal use on an operating lease, as follows:

	
  

	
·

	
Chairman, CEO and Chief Scientist – up to Group 5 or the equivalent.

	
  

	
·

	
Other VP’s – up to Group 4 or the equivalent.

	
  

	
The vehicle component may be partially grossed up in the salary slip as customary for officers in similar companies.

	
6.

	
Reimbursement of mobile telephone expenses – an officer will be entitled to the full reimbursement of the mobile telephone expenses.

 

	
7.

	
Expense reimbursement – an officer will be entitled to the reimbursement of expenses in accordance with the Company policy, as adjusted from time to time.

The officer will bear the payment of any tax that may apply to him by reason of the conditions described above.

To the extent the labor laws will change, it is clarified that the fringe benefits will not fall below that prescribed by statute.

 

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