XTL BIOPHARMACEUTICALS LTD.

We have an employment agreement dated February 10, 2006, and effective as of January 1, 2006, with Bill Kessler, our Director of Finance.
Mr. Kessler is currently entitled to an annual base salary of $135,000. He is entitled to receive bonus payments at the discretion of the Chief Executive
Officer and as set by our Board of Directors. Mr. Kessler shall also be entitled to receive one or more grants of options to purchase our ordinary shares,
on terms and conditions set by our Board of Directors. Mr. Kessler is also entitled to receive benefits comprised of managers' insurance (pension and
disability insurance), a continuing education plan, and the use of a company car. There is a non-compete clause surviving one year after termination of
employment, preventing Mr. Kessler from competing directly with us. The employment agreement may be terminated by either party on three months
prior written notice. In January 2008, our Board of Directors granted options to Mr. Kessler to purchase a total of 500,000 ordinary shares at an
exercise price equal to $0.315 per share (equal to the closing price of our ADRs on the NASDAQ Stock Market on the date of grant divided by ten).
These options vest over a four-year period, with 25% having vested on grant date, and with the remainder vesting equally on each of the one-, two- and
three-year anniversaries of the issuance of the options. The options are exercisable for a period of ten years from the date of issuance, and were granted
under the Share Option Plan 2001. In June 2006, our Board of Directors granted options to Mr. Kessler to purchase a total of 500,000 ordinary shares
at an exercise price equal to $0.60 per share (the price of our ADRs in the private placement that we completed on March 22, 2006 and which closed
on May 25, 2006, divided by ten, which was above the market price of our ADRs on the NASDAQ Stock Market on such date divided by ten). These
options vest over a four-year period and are exercisable for a period of ten years from the date of issuance, and were granted under the Share Option
Plan 2001.
We have an agreement dated August 1, 2005, with Michael S. Weiss, our non-Executive Chairman of the Board of Directors. Mr. Weiss is
entitled to annual remuneration of $150,000. He was granted options to purchase a total of 9,250,000 ordinary shares at an exercise price equal to
$0.354 per share (which was below the market price of our ordinary shares on the date of grant) (the “Original Options”). These Original Options were
exercisable for a period of five years from the date of issuance, and were granted under the same terms and conditions as our 2001 Share Option Plan.
The Original Options vest upon achievement of certain market capitalization based milestones (1/3 upon the achievement of $150 million market
capitalization, as set out in the agreement, 1/3 upon the achievement of $250 million market capitalization, as set out in the agreement, and 1/3 upon
the achievement of $350 million market capitalization, as set out in the agreement). In December 2007, we canceled the Original Options, and granted
Mr. Weiss 9,250,000 options (the “New Options”) on the exact same terms and conditions as the Original Options (including the remainder of the
exercise period of the Original Options), with the exception of the exercise price, which is equal to $0.36 per option (a price greater than the closing
price on the date of grant of the New Options). As of December 31, 2007, 3,083,333 options that were granted to Mr. Weiss are vested. We may
terminate the agreement without cause (as defined in the agreement) on 30 days’ prior notice to Mr. Weiss, and immediately and without prior notice
for cause. Mr. Weiss may terminate the agreement with good reason (as defined in the agreement) on 30 days prior notice to us. In the event that the
agreement is terminated without cause (in our case) or with good reason (in the case of Mr. Weiss), any outstanding but unvested options granted to
Mr. Weiss under the agreement will immediately vest and the period during which he may exercise such options will be extended. If we choose to
terminate the agreement for cause, Mr. Weiss will not be owed any benefits, with the exception of any unpaid remuneration that would have accrued
through his date of termination.
We have three types of service agreements with our non-executive directors, other than our agreement with our non-Executive Chairman. The
first type, entered into with Ben Zion Weiner on August 1, 2005, provides for a grant of 2,000,000 options having an exercise price equal to $0.354 per
share (which was below the market price of our ordinary shares on the date of grant), exercisable for a period of five years and vesting upon
achievement of certain market capitalization based milestones. As of December 31, 2006, 666,667 options that were granted to Mr. Weiner are vested.
The second type of director service agreement, entered into with William Kennedy on August 1, 2005, provides for a grant of 60,000 options having an
exercise price equal $0.853 (equal to the average price per share, as derived from the Daily Official List of the London Stock Exchange, in the three
days preceding the date of such grant), vesting over the three years from the date of grant. In addition, the second type of director service agreement
provides for three annual grants of 20,000 options each, at an exercise price equivalent to the then current closing price of our ADRs on the NASDAQ
Stock Market (subject to the ordinary share-ADR ratio). The third type, entered into with Ido Seltenreich and Vered Shany, on August 1, 2005,
respectively, does not provide for option grants, and has a term of 36 months, unless terminated by the director upon two months’ written notice to us.
Each of the three types of director service agreements provides for an annual salary of $20,000, payments of $2,000 for attendance at each board
meeting, $500 for attendance at each committee meeting, $500 for attendance at a board meeting held by teleconference, reimbursement of reasonable
out-of-pocket expenses, and termination by the director on two months’ written notice to us.
Compensation
The aggregate compensation paid by us and by our wholly-owned subsidiary to all persons who served as directors or officers for the year
2007 (seven persons) was approximately $0.9 million. This amount includes payments made for social security, pension, disability insurance and
health insurance premiums of approximately $0.1 million, as well as bonus accruals, payments made in lieu of statutory severance, payments for
continuing education plans, payments made for the redemption of accrued vacation, and amounts expended by us for automobiles made available to
our officers.
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