Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (this “Agreement”), dated as of February 28th, 2017
(the “Signature Date”), is entered into by and between BRAINSTORM CELL
THERAPEUTICS INC., a Delaware corporation with a mailing address of 3 University
Plaza Drive, Hackensack, NJ 07601 (the “Company”), and DR. RALPH KERN, an
individual, with a mailing address of 959 First Avenue, New York, NY 10022 (the
“Executive”).

 

WHEREAS, the Company desires to employ the Executive, and the Executive desires
to be employed by the Company as of March 6th, 2017 (the “Effective Date”), upon
the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the mutual premises contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

 

1.                  Employment. The Company hereby employs the Executive, and
the Executive agrees to accept such employment, upon the terms and conditions
herein set forth.

 

2.                   Employment Period. The term of employment hereunder shall
commence on the Effective Date and continue until terminated as provided herein
(the “Employment Period”). Executive’s employment with the Company is “at will”
and not for a fixed term and is subject to termination in accordance with this
Agreement.

 

3.                   Position and Duties. The Executive hereby agrees to serve
as Chief Operating Officer and Chief Medical Officer (“COO/CMO”) of the Company,
and shall have those duties, services, responsibilities and authority
customarily accorded a person holding such positions in a company such as the
Company, including but not limited to those duties, services and
responsibilities listed on Exhibit A attached hereto (collectively, the
“Executive Duties”). As COO/CMO, the Executive shall report to both the Chief
Executive Officer (the “CEO”) of the Company and the Board of Directors of the
Company (the “Board”). The Executive shall devote his reasonable best efforts
and his full business time and attention to the performance of the Executive
Duties to the Company in accordance with the terms hereof and as may reasonably
be requested by the Company. Executive shall not engage in any other business or
professional activities, either on a full-time or part-time basis, as an
employee, consultant or in any other capacity, whether or not he receives any
compensation therefor, without the prior written consent of the CEO which shall
not be unreasonably withheld; provided, however, that nothing herein shall
prevent the Executive from (a) making and managing personal investments
consistent with Section 9 of this Agreement and any applicable Company policies
as more fully detailed in the Company’s employee manual (the “Employee Manual”),
(b) engaging in community and/or charitable activities, including serving as a
trustee or board member of charitable organizations, (c) engaging in
industry-related activities such as serving on the board or committees of
industry organizations, for example but not limited to PhRMA or BIO, or (d)
serving as a board member of up to two (2) pharmaceutical or biotechnology
companies, so long as any of such activities, either singly or in the aggregate,
do not interfere with the proper performance of the Executive Duties or conflict
or compete with the Company’s activities as currently conducted or as proposed
to be conducted during Executive’s employment.

 

 

 

 

4.                   Compensation and Other Terms of Employment.

 

(a)                Base Salary. In consideration of the performance of the
Executive Duties, the Executive shall be entitled to receive an annual base
compensation during the Employment Period at the rate of Five Hundred Thousand
U.S. Dollars (USD$500,000) per year (the “Base Salary”). During the Employment
Period, the Board (or a committee thereof) may, at its sole discretion,
additionally increase (but not decrease) the Base Salary. No additional
compensation shall be payable to the Executive by reason of the number of hours
worked or any hours worked on Saturdays, Sundays or holidays, by reason of
special responsibilities assumed (whether on behalf of the Company or any of its
subsidiaries or affiliates), special projects completed, or otherwise. All Base
Salary payable hereunder shall be payable in accordance with the Company’s
regular payroll practices (e.g., timing of payments and standard employee
deductions, such as income and employment tax withholdings).

 

(b)               Bonus Compensation. The Executive shall be eligible to receive
an annual cash bonus equal to thirty percent (30%) of Executive’s Base Salary,
subject to his satisfaction of pre-established performance goals to be mutually
agreed upon by the Board (or a committee thereof) and the Executive each year
during the Employment Period. Performance shall be evaluated through a
performance management framework and a bonus range based on the target bonus.

 

(c)                Equity Grant. On the Effective Date and on each anniversary
thereafter, the Executive shall receive a grant of restricted stock under the
Company’s 2014 Stock Incentive Plan (or any successor or other equity plan then
maintained by the Company) comprised of a number of shares of common stock of
the Company with a fair market value determined based on the price of the
Company’s common stock immediately preceding normal trading hours on the date of
grant according to Nasdaq) equal to 30% of the Executive’s Base Salary (the
“Equity Grant”). Each Equity Grant shall be contingent upon Executive’s
execution of one or more restricted stock agreements in such form and substance
as may reasonably be determined by the Company. Each Equity Grant shall vest as
to twenty-five percent (25%) of the award on each of the first, second, third
and fourth anniversary of the date of grant, provided the Executive remains
continuously employed by the Company from the date of grant through each
applicable vesting date.  Each Equity Grant shall be subject to accelerated
vesting upon a Change of Control of the Company and such other accelerated
vesting as provided in this Agreement or the Plan (and any award agreement
evidencing such grant, to the extent such award agreement contains more
preferential terms).  In the event of the Executive’s termination of employment,
the Executive shall retain his right to any vested shares (after taking into
account any accelerated vesting) and any portion of the Equity Grant that is not
yet vested (after taking into account such accelerated vesting) shall
automatically be immediately forfeited to the Company, without the payment of
any consideration to the Executive.  In addition, the Executive shall be
entitled to receive additional equity or equity-based awards, including stock
options, as determined by the Board (or the Compensation Committee of the Board)
in its sole discretion.

 

(d)               Option Grant. As an inducement to enter into the Agreement and
commence employment with the Company, on the Effective Date, the Company shall
grant the Executive an option to purchase stock of the Company (the “Option”) on
shares with a fair market value (as determined based on the closing price of the
Company’s common stock at the end of normal trading hours on the date of grant
according to Nasdaq) of Two Hundred Thousand U.S. Dollars ($200,000) on the
Effective Date. The Option shall be fully vested and exercisable as of the date
of grant and shall remain exercisable until the 2nd anniversary of the date of
grant, regardless of whether the Executive remains employed by the Company. The
exercise price per share shall be equal to the fair market value on the date of
grant (as determined based on the price of the Company’s common stock
immediately preceding normal trading hours on the date of grant according to
Nasdaq). The grant of the Option is also contingent upon Executive’s execution
of one or more stock option agreements in such form and substance as may
reasonably be determined by the Company which the parties will endeavor to
execute within ten (10) days from their mutual execution of this Agreement.

 

2 

 

 

(Solely for clarification purposes, the fair market value of the Company’s
common stock on the Effective Date that will be used to calculate the first
Equity Grant pursuant to Section 3(c) hereof as well as the Option grant under
Section 3(d) shall be the price of the Company’s common stock immediately
preceding normal trading hours on March 6th, 2017).

 

(e)               Change of Control. “Change of Control” means the first to
occur of any of the following: (i) The sale, transfer, conveyance or other
disposition by the Company, in one or a series of related transactions, whereby
an independent third party(s) becomes the beneficial owner of a majority of the
voting securities of the Company; (ii) any merger, consolidation or similar
transaction involving the Company, other than a transaction in which the
stockholders of the Company immediately prior to the transaction hold
immediately thereafter in the same proportion as immediately prior to the
transaction not less than 50% of the combined voting power of the then voting
securities with respect to the election of the Board of Directors of the
resulting entity; or (iii) any sale of all or substantially all of the assets of
the Company. Notwithstanding the foregoing, no change in ACCBT Corp., ACC
International Holdings Ltd. or their affiliates’ ownership of the Company shall
be deemed a Change of Control under this Agreement, and none of the following
shall, either together or alone, constitute a Change of Control: (A) the
subscription for, or issuance of Company securities (whether or not constituting
more than 50% of the Company’s issued and outstanding securities (unless such
subscription or issuance would result in a Change of Control under clause (i)
above)); (B) the issuance or exercise of Board appointment or nomination rights
of any kind (whether or not relating to a majority of Board members); (C)
preemptive rights to purchase securities of the Company, or the exercise of such
rights; (D) the right to consent to Company corporate actions; or (E) the
exercise of warrants or options.

 

(f)                 Business Expenses. Upon presentation of vouchers and similar
receipts, the Executive shall be entitled to receive reimbursement in accordance
with the policies and procedures of the Company maintained from time to time for
all reasonable business expenses actually incurred in the performance of the
Executive Duties, and as more fully detailed in the Employee Manual.

 

(g)                Vacation. The Executive shall be entitled to vacation during
each year of the Employment Period in accordance with the Employee Manual;
provided, that, the Executive shall be entitled to no less than two (2) weeks of
vacation per fiscal year.

 

(h)               Benefits. The Executive shall be entitled to participate in
such employment benefits, including but not limited to a Section 401(k)
retirement plan, health, dental, life insurance, and long term disability plans
as are established by the Company and as in effect from time to time applicable
to executives of the Company. The Company shall provide health and dental
insurance plans or, if the Company is unable to provide such plans, the Company
will reimburse the Executive for his health and dental insurance costs. The
Company shall not be required to establish, continue or maintain any other
specific benefits or benefit plans other than health and dental insurance.

 

(i)                  No Additional Compensation. Except as provided in this
Section 4 or as determined in the discretion of the Compensation Committee of
the Board, the Executive shall not be entitled to any other compensation, salary
or bonuses for services as an employee of Company.

 

3 

 

 

5.                   Termination and Consequences.

 

(a)                The Executive’s Rights to Terminate. Notwithstanding any
other provision of this Agreement to the contrary, the Executive may terminate
this Agreement at any time, (i) for Good Reason (as defined in Section 5(g)
below), or (ii) without Good Reason on (A) thirty (30) days’ prior written
notice to the Company through the first anniversary of the Effective Date; (B)
sixty (60) days’ prior written notice following the first anniversary of the
Effective Date.

 

(b)               The Company’s Right to Terminate. Notwithstanding any other
provision of this Agreement to the contrary, the Company may terminate this
Agreement at any time during the term hereof, (i) immediately with Cause (as
defined in Section 5(h) below), or (ii) on (A) thirty (30) days’ prior written
notice to the Executive through the first anniversary of the Effective Date; or
(B) sixty (60) days’ prior written notice following the first anniversary of the
Effective Date, without Cause.

 

(c)                Consequences of Termination without Cause or for Good Reason.
If the Company terminates this Agreement or Executive’s employment hereunder
without Cause or if the Executive terminates this Agreement or his employment
hereunder with Good Reason as defined in Section 5(g) hereof, the Company shall:
(i) pay the Executive, as severance pay, an amount equal to six (6) months of
his Base Salary (which severance pay shall increase to an amount equal to nine
(9) months of his then current Base Salary if such termination occurs after the
two-year anniversary of the Effective Date and to an amount equal to twelve (12)
months of his then current Base Salary if such termination occurs after the
third anniversary of the Effective Date; provided Executive was actively
employed by the Company on such anniversary date) (assuming Executive is
actively employed by the Company on such anniversary date(the “Payment Period”)
payable in a lump sum payment within ninety (90) days following the termination
date; and (ii) pay the Executive within thirty (30) days of the termination of
his employment (or such revised payment period pursuant to Section 11(o) of this
Agreement) any portion of the Bonus Compensation that the Executive would
otherwise be entitled to receive during the Payment Period (giving Executive
credit for those milestones and performance goals that Executive successfully
completed through the effective termination date); (iii) immediately vest in the
number of equity or equity based awards that would have vested during the
following six (6) months following the effective date of termination of
employment; and (iv) shall continue to provide to or pay the cost of
continuation of Executive’s and his eligible dependents’ health insurance
benefits contemplated under Section 4(g) hereof during the Payment Period.
Should the Executive become eligible for health insurance benefits provided by a
new employer during the duration of Payment Period, then the Company’s
obligation to pay for or reimburse the Executive for health insurance costs will
terminate when the Executive’s new health insurance benefit begins.
Notwithstanding anything to the contrary, no compensation of any kind shall be
payable to the Executive pursuant to this Section 5(c) unless or until Executive
executes and delivers a full and general waiver and release to the Company (in
favor of the Company, its successors, assigns, Board members, officers,
employees, affiliates, subsidiaries, parent companies and representatives), in a
form reasonably acceptable to the Company and the Executive, such waiver and
release to be delivered by Executive within ten (10) days after the termination
of his employment (unless applicable law requires a longer time period, in which
case this date will be extended to the minimum time required by applicable law).

 

4 

 

 

(d)               Consequences of Termination With Cause or Without Good Reason.
If the Company terminates this Agreement or Executive’s employment hereunder
with Cause or the Executive terminates this Agreement or his employment
hereunder without Good Reason, then (i) Employee’s Base Salary shall be
discontinued upon the termination of the Agreement or his employment hereunder,
(ii) no Bonus Compensation, accrued or otherwise, shall be payable for the year
in which the termination with Cause or without Good Reason occurs, (iii) to the
extent permitted by applicable law, the Executive shall cease to be entitled to
participate in any benefit plans or programs maintained by the Company, and (iv)
Executive shall forfeit all rights to any unvested Company stock options if
terminated by the Company for Cause and shall forfeit all rights with respect to
any Company unvested restricted stock if terminated by the Company for Cause or
if terminated by the Executive without Good Reason. The Executive shall be
entitled to receive payment for all accrued Base Salary and benefits earned
through and including the date of termination, including, but not limited to all
Bonus Compensation earned, but not yet paid, for the year preceding the year in
which such termination occurs, payment for all accrued, unused vacation,
reimbursement of all business expenses incurred through the date of termination,
and all vested benefits to which the employee is entitled. In addition, the
Executive and his eligible dependents shall be entitled to continue all group
health benefits at his or their expense, pursuant to applicable law.

 

(e)               Consequences of Termination for Death or Disability. If the
Executive dies or is unable to perform the Executive Duties and/or any other
obligations he may have hereunder because of a Disability (as defined herein)
during the term of this Agreement, then the Agreement shall terminate, except
that the Company shall pay within thirty (30) days of such event (or such
revised payment period pursuant to Section 11(o) of this Agreement) all accrued
Base Salary and any Bonus Compensation that the Executive would otherwise have
been entitled to receive through the date that the Executive’s employment with
the Company is terminated and for a period of three (3) months thereafter. In
the case of a Disability, the Executive shall also receive any applicable
payments and benefits pursuant to any disability plan or policy sponsored or
maintained by the Company. The unvested Equity Grant shall remain outstanding in
accordance with their existing terms and conditions.

 

(f)                 Fringe Benefits. In the case of termination under Sections
5(a), (b), (d) or (e) above, inclusive, subject to applicable law, the Company
shall discontinue any other benefits and perquisites provided under Section 4
above that are not otherwise provided for effective as of the date that the
Company’s obligation to pay Base Salary terminates.

 

(g)                Definition of Good Reason. “Good Reason” means (i) a material
reduction of the Executive’s Base Salary and benefits from the levels in effect
immediately prior to the reduction, (ii) a material reduction of the Executive
Duties and responsibilities from those in effect immediately prior to the
reduction, or (iii) material breach by the Company of any provision of this
Agreement after receipt of written notice thereof from the Executive and failure
by the Company to cure the breach within thirty (30) days thereafter. A
termination by the Executive under Sections 5(g)(i), 5(g)(ii) and/or 5(g)(iii)
will not be considered a termination for Good Reason unless within thirty (30)
days of the later of the last event relied upon by the Executive to establish
Good Reason or Executive’s knowledge thereof, the Executive furnishes the
Company with a written statement specifying the reason or reasons why he
believes he is entitled to terminate his employment for Good Reason and affords
the Company at least thirty (30) days during which to remedy the cause thereof.
Such thirty (30)-day notice period may run concurrently with the thirty (30)-day
notice specified in Section 5(a) above. Any such termination shall not be deemed
a breach of the Agreement.  If the Company timely cures the condition giving
rise to Good Reason for the Executive’s resignation, the notice of termination
shall become null and void. If the Company does not timely cure the condition
giving rise to Good Reason, the Executive’s termination of employment shall be
effective as of the end of such cure period.

 

5 

 

 

(h)               Definition of Cause. “Cause” means a good faith finding by the
Company of: (i) gross negligence or willful misconduct by Executive in
connection with the Executive Duties, (ii) Executive’s indictment for,
conviction of, or entry of a plea of guilty or no contest or similar plea with
respect to any felony, acts of fraud, misrepresentation, embezzlement, theft,
dishonesty or breach of fiduciary duty of loyalty to the Company or any of its
subsidiaries, or a material and intentional breach of Sections 7, 9 or 10 hereof
by Executive, (iii) willful or repeated failure to follow specific directives of
the CEO and/or the Board (or its committees or other designees), (iv) willful
failure by Executive (except where due to Disability or where performance of the
Executive's duties is prohibited by law) or refusal to perform the Executive
Duties, which failure or refusal is not corrected by the Executive within ten
(10) business days following receipt by the Executive of written notice from the
Company of such failure or refusal, and the actions required to correct the
same, to the satisfaction of the CEO, (v) misappropriation by Executive of the
assets or business opportunities of the Company or its affiliates, (vi) any
intentionally wrongful act or omission by the Executive that has a material
adverse effect on the reputation or business of the Company or any of its
subsidiaries or affiliates, (vii) a willful and/or knowing breach by Executive
of any representations or warranties included in this Agreement, or
(viii) Executive knowingly allowing any third party to commit any of the acts
described in any of the preceding clause (v) against the Company.

 

(i)                  Definition of Disability. “Disability” means the inability
of the Executive to perform the Executive Duties pursuant to the terms of this
Agreement, because of physical or mental disability where such disability shall
have existed for a period of more than ninety (90) consecutive days in any two
hundred and seventy (270) day period. The existence of a Disability means that
the Executive cannot perform the essential functions of his position with or
without reasonable accommodation. The fact of whether or not a Disability exists
hereunder shall be determined by a professionally qualified medical expert
reasonably chosen by the Company.

 

6.                   Termination Obligations. The Executive hereby acknowledges
and agrees that all Personal Property and equipment furnished to or prepared by
the Executive in the course of or incident to his employment by the Company
belongs to the Company and shall be promptly returned to the Company upon
termination of his employment. As used in this Section 6, “Personal Property”
includes, without limitation, all books, manuals, records, reports, notes,
contracts, lists, blueprints, and other documents, or materials, or copies
thereof (including computer files), and all other proprietary information
relating to the business of the Company or any affiliate. Following termination,
the Executive will not retain any written or other tangible material containing
any proprietary information or Confidential Information (as defined below) of
the Company or any affiliate. Upon termination of employment, the Executive
shall be deemed to have resigned from all offices then held with the Company or
any affiliate.

 

7.                   Records and Confidential Data.

 

(a)                Acknowledgement. The Executive acknowledges that in
connection with the performance of the Executive Duties during the term of his
employment the Company will make available to the Executive, or the Executive
will have access to, certain Confidential Information (as defined below) of the
Company and its affiliates. The Executive acknowledges and agrees that any and
all Confidential Information learned or obtained by the Executive during the
course of his employment by the Company or otherwise (including, without
limitation, information that the Executive obtained through or in connection
with his relationship with the Company prior to the Effective Date) whether
developed by the Executive alone or in conjunction with others or otherwise,
shall be and is the property of the Company and its affiliates.

 

6 

 

 

(b)               Confidentiality Obligations. During the term of his employment
and thereafter Executive shall keep all Confidential Information confidential
and will not use such Confidential Information other than in connection with the
Executive’s discharge of the Executive Duties hereunder, and will be safeguarded
by the Executive from unauthorized disclosure. This covenant is not intended to,
and does not limit in any way Executive’s duties and obligations to the Company
under statutory and common law not to disclose or make personal use of the
Confidential Information or trade secrets.

 

(c)                Return of Confidential Information. Following the Executive’s
termination of employment, upon receipt of a written request from the Company,
the Executive will return to the Company or destroy all written Confidential
Information which has been provided to the Executive and the Executive will
destroy all copies of any analyses, compilations, studies or other documents
prepared by the Executive or for the Executive’s use containing or reflecting
any Confidential Information. Within ten (10) business days of the receipt of
such request by the Executive, the Executive shall, upon written request of the
Company, deliver to the Company a notarized document certifying that such
written Confidential Information has been returned or destroyed in accordance
with this Section 7(c).

 

(d)               Definition. For the purposes of this Agreement, “Confidential
Information” shall mean all confidential and proprietary information of the
Company, and its affiliates and any information obtained by the Company pursuant
to a confidentiality obligation to any third party, including, without
limitation, marketing strategies, pricing policies or characteristics, customers
and customer information, product or product specifications, designs, software
systems, leasing costs, cost of equipment, customer lists, business or business
prospects, plans, proposals, codes, marketing studies, research, reports,
investigations, or other information of similar character. For purposes of this
Agreement, the Confidential Information shall not include and the Executive’s
obligations under this Section 6 shall not extend to (i) information which is
generally available to the public, (ii) information obtained by the Executive
from third persons other than Executives of the Company, its subsidiaries, the
Company and the Company’s affiliates not under agreement to maintain the
confidentiality of the same and (iii) information which is required to be
disclosed by law or legal process. Further, the Executive shall be free to use
and employ his general skills, know-how and expertise, and to use, disclose and
employ any generalized ideas, concepts, know-how, methods, techniques or skills,
including those gained or learned during the course of the performance of any
services hereunder, so long as he applies such information without disclosure or
use of any Confidential Information.

 

(e)               Construction. Any reference to the Company in this Section 7
shall include the Company and/or its subsidiaries.

 

8.                   Assignment of Inventions.

 

(a)                Definition of Inventions. “Inventions” mean discoveries,
developments, concepts, ideas, methods, designs, improvements, inventions,
formulas, processes, techniques, programs, know-how and data, whether or not
patentable or registerable under copyright or similar statutes, except any of
the foregoing that (i) is not related to the business of the Company or its
affiliates, or the Company’s (and its affiliates’) actual or demonstrable
research or development, (ii) does not involve the use of any equipment,
supplies, facility or Confidential Information of the Company, (iii) was
developed entirely on the Executive’s own time, and (iv) does not result from
any work performed by the Executive for the Company.

 

7 

 

 

(b)               Assignment. The Executive agrees to and hereby does assign to
the Company, without further consideration, all of his right, title and interest
in any and all Inventions he may make during the term hereof.

 

(c)                Duty to Disclose and Assist. The Executive agrees to promptly
disclose in writing all Inventions to the Company, and to provide all assistance
reasonably requested by the Company in the preservation of the Company’s
interests in the Inventions including obtaining patents in any country
throughout the world. Such services will be without additional compensation if
the Executive is then employed by the Company and for reasonable compensation
and subject to his reasonable availability if he is not. If the Company cannot,
after reasonable effort, secure the Executive’s signature on any document or
documents needed to apply for or prosecute any patent, copyright, or other right
or protection relating to an Invention, whether because of his physical or
mental incapacity or for any other reason whatsoever, the Executive hereby
irrevocably designates and appoints the Company and its duly authorized officers
and agents as his agent and attorney-in-fact, to act for and on his behalf and
in his name and stead for the purpose of executing and filing any such
application or applications and taking all other lawfully permitted actions to
further the prosecution and issuance of patents, copyrights, or similar
protections thereon, with the same legal force and effect as if executed by him.

 

(d)               Ownership of Copyrights. The Executive agrees that any work
prepared for the Company which is eligible for United States copyright
protection or protection under the Universal Copyright Convention or other such
laws or protections including, but not limited to, the Berne Copyright
Convention and/or the Buenos Aires Copyright Convention shall be a work made for
hire and ownership of all copyrights (including all renewals and extensions)
therein shall vest in the Company. If any such work is deemed not to be a work
made for hire for any reason, the Executive hereby grants, transfers and assigns
all right, title and interest in such work and all copyrights in such work and
all renewals and extensions thereof to the Company, and agrees to provide all
assistance reasonably requested by the Company in the establishment,
preservation and enforcement of the Company’s copyright in such work, such
assistance to be provided at the Company’s expense but without any additional
compensation to the Executive. The Executive hereby agrees to and does hereby
waive the enforcement of all moral rights with respect to the work developed or
produced hereunder, including without limitation any and all rights of
identification of authorship and any and all rights of approval, restriction or
limitation on use or subsequent modifications.

 

8 

 

 

(e)               Litigation. The Executive agrees to render assistance and
cooperation to the Company at its request regarding any matter, dispute or
controversy with which the Company may become involved and of which the
Executive has or may have reason to have knowledge, information or expertise.
Such services will be without additional compensation if the Executive is then
employed by the Company and for reasonable compensation and subject to his
reasonable availability if he is not.

 

(f)                 Construction. Any reference to the Company in this Section 8
shall include the Company and/or its subsidiaries.

 

9.                   Additional Covenants.

 

(a)                Non-Interference with Customer Accounts. Executive covenants
and agrees that: (i) during his employment, except as may be required by
Executive’s employment by the Company, (ii) for a period of one (1) year
following the termination of his employment by the Company for Cause or by the
Executive without Good Reason and (iii) for a period of one (1) year following
the termination of his employment by the Company without Cause or by Executive
for Good Reason, Executive shall not directly or indirectly, personally or on
behalf of any other person, business, corporation, or entity, contact or do
business with any customer, licensee, licensor, consultant or other vendor of
the Company with respect to any product, business, activity or service which is
directly competitive with any product, business, activity or service of the
Company in which the Company is engaged during the term of Executive’s
employment, or with respect to Executive’s covenants regarding the periods
following termination, in which the Company is engaged at the time of
termination and/or was engaged during the one (1) year period prior thereto (a
“Company Activity”). By way of example, as of the execution of this agreement,
Company Activity can be defined as the development, marketing and sale of
autologous mesenchymal stem cell products expressing neurotrophic factors for
the treatment of neurodegenerative diseases.

 

(b)               Non-Competition. Subject to matters and activities approved by
the Board in writing, the Executive covenants and agrees that (i) during his
employment, and (ii) for a period of six (6) months following the termination of
his employment by the Company for Cause or by the Executive without Good Reason
or (iii) for a period equal to the Payment Period, but in no event less than
three (3) months following the termination of his employment by the Company
without Cause or by Executive for Good Reason, Executive shall not own a
majority interest in, operate, control, or serve as an executive of any
corporation, partnership, proprietorship, firm, association, or other entity
that primarily engages in any Company Activity in which the Company is engaged
at the time of termination, and/or was engaged during the one (1) year period
prior thereto. This Covenant (as defined below) applies to Company Activities in
any territory or jurisdiction in which the Company is doing business or is
making an active effort to do business at the time of termination, and/or was
engaged during the one (1) year period prior thereto. This Covenant does not
prohibit the ownership of less than one percent (1%) of the outstanding stock of
any public corporation, as long as the Executive is not otherwise in violation
of this Covenant.

 

(c)                No Diversion. Executive covenants and agrees that Executive
shall not divert or attempt to divert or take advantage of or attempt to take
advantage of any actual or potential business opportunities of the Company
(e.g., joint ventures, other business combinations, investment opportunities,
potential investors in the Company, and other similar opportunities) which the
Executive became aware of as the result of his employment with the Company.

 

9 

 

 

(d)       Non-Disparagement. Executive shall not at any time (whether during or
after the termination of his employment) make any statement or disclosure or
otherwise cause or permit to be stated or disclosed any information which is
designed or intended to have a negative impact or adverse effect on the Company
or its business. Notwithstanding the foregoing, nothing contained in this
Agreement or in this Section 9(d) in particular prohibits the Executive or is
intended to prohibit the Executive from providing truthful information about his
employment or the Company to any governmental entity, regulatory agency,
judicial or dispute resolution forum, or to interfere with or prevent the
Executive from commencing, defending or participating fully in a judicial
proceeding or dispute resolution process. This Section 9(d) may be raised by the
Executive as a complete bar to any claim of Cause hereunder or any proceeding
brought under Section 9(f) to the extent the claim of Cause or the proceeding
concerns a statement or disclosure permissible under this Section 9(d). The
Company shall not, directly or indirectly, at any time (whether during or after
the termination of Executive’s employment) make any statement or disclosure or
otherwise cause or permit to be stated or disclosed any information which is
designed or intended to have a negative impact or adverse effect on the
Executive.

 

(e)       Non-Recruitment. Executive agrees that the Company has invested
substantial time and effort in assembling its present workforce. Accordingly,
Executive covenants and agrees that during his employment and for a period of
two (2) years following the termination of the Employment Period, Executive
shall not hire away, nor directly or indirectly entice or solicit or seek to
induce or influence any of the Company’s executives to leave their employment.

 

(f)       Remedies. Executive acknowledges that should he violate any of the
covenants contained in Sections 7, 8 and 9(a), (b), (c), and (d) above
(collectively, the “Covenants”), it will be difficult to determine the resulting
damages to the Company and, in addition to any other remedies it may have, the
Company shall be entitled to seek temporary injunctive relief without being
required to post a bond and permanent injunctive relief. Executive shall be
liable to pay all costs including reasonable attorneys’ fees which the Company
may incur in enforcing or defending, to any extent, the Covenants, whether or
not litigation is actually commenced and including litigation of any appeal
taken or defended by the Company, where the Company succeeds in enforcing any
part of the Covenants, and the Company shall be liable to pay all costs
including reasonable attorneys’ fees which the Executive may incur in defending,
to any extent, any claim that he has violated or intends to violate any of the
Covenants, whether or not litigation is actually commenced and including
litigation of any appeal taken or defended by the Executive, where the Company
does not succeed in enforcing the Covenants. The Company may elect to seek one
or more of these remedies at its sole discretion on a case by case basis.
Failure to seek any or all remedies in one case does not restrict the Company
from seeking any remedies in another situation. Such action by the Company shall
not constitute a waiver of any of its rights.

 

(g)       Severability and Modification of Any Unenforceable Covenant. It is the
parties’ intent that each of the Covenants be read and interpreted with every
reasonable inference given to its enforceability. However, it is also the
parties’ intent that if any term, provision or condition of the Covenants is
held to be invalid, void or unenforceable, the remainder of the provisions
thereof shall remain in full force and effect and shall in no way be affected,
impaired or invalidated. Finally, it is also the parties’ intent that if it is
determined that any of the Covenants are unenforceable for any reason, then such
Covenant shall be modified so as to make it reasonable and enforceable under the
prevailing circumstances.

 

10 

 

 

(h)       Tolling. In the event of the breach by Executive of any Covenant the
running of the period of restriction shall be automatically tolled and suspended
for the amount of time that the breach continues, and shall automatically
recommence when the breach is remedied so that the Company shall receive the
benefit of Executive’s compliance with the Covenants. This Section shall not
apply to any period for which the Company is awarded and receives actual
monetary damages for breach by the Executive of a Covenant with respect to which
this Section applies.

 

(i)       Construction. Any reference to the Company in this Section 9 shall
include the Company and/or its subsidiaries.

 

10.               No Assignment.

 

This Agreement and the rights and duties hereunder are personal to the Executive
and shall not be assigned, delegated, transferred, pledged or sold by the
Executive without the prior written consent of the Company. The Executive hereby
acknowledges and agrees that the Company may assign, delegate, transfer, pledge
or sell this Agreement and the rights and duties hereunder (a) to an affiliate
of the Company or (b) to any third party in connection with (i) the sale of all
or substantially all of the assets of the Company or (ii) an equity purchase,
merger, or consolidation involving the Company. This Agreement shall inure to
the benefit of and be enforceable by the parties hereto, and their respective
heirs, personal representatives, successors and assigns.

 

11.               Miscellaneous Provisions.

 

(a)                Intentionally Omitted.

 

(b)               Payment of Taxes. Any payments otherwise due under this
Agreement to the Executive, including, but not limited to, the Base Salary and
any bonus compensation shall be reduced by any required withholding for federal,
state and/or local taxes and other appropriate payroll deductions.

 

(c)                Notices. All notices, offers or other communications required
or permitted to be given pursuant to this Agreement shall be in writing and
shall be considered as properly given or made (i) if delivered personally or
(ii) after the expiration of five days from the date upon which such notice was
mailed from within the United States by certified mail, return receipt
requested, postage prepaid, (iii) upon receipt by prepaid telegram or facsimile
transmission (with written confirmation of receipt) or (iv) after the expiration
of the second business day following deposit with documented overnight delivery
service. All notices given or made pursuant hereto shall be so given or made to
the addresses set forth above, or any other address which shall be provided by
due notice.

 

(d)               Severability. If any provision of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal or unenforceable, such
provision shall be severed and enforced to the extent possible or modified in
such a way as to make it enforceable, and the invalidity, illegality or
unenforceability thereof shall not affect the validity, legality or
enforceability of the remaining provisions of this Agreement.

 

(e)               Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey applicable to
contracts executed in and to be performed entirely within that state, except
with respect to matters of law concerning the internal corporate affairs of any
corporate entity which is a party to or the subject of this Agreement, and as to
those matters, the law of the jurisdiction under which the respective entity
derives its powers shall govern. The parties irrevocably agree that all actions
to enforce an arbitrator’s decision pursuant to Section 11(m) of this Agreement
shall be instituted and litigated only in federal, state or local courts sitting
in Newark, New Jersey and each of such parties hereby consents to the exclusive
jurisdiction and venue of such court and waives any objection based on forum non
conveniens.

 

11 

 

 

(f)                 WAIVER OF JURY TRIAL. THE PARTIES HEREBY WAIVE, RELEASE AND
RELINQUISH ANY AND ALL RIGHTS THEY MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO
ANY ACTIONS TO ENFORCE AN ARBITRATOR’S DECISION PURSUANT TO SECTION 11(l) OF
THIS AGREEMENT.

 

(g)                Counterparts. This Agreement may be executed in counterparts,
each of which shall be an original, but all of which shall constitute one and
the same instrument. A signed copy of this Agreement delivered by facsimile,
e-mail or other means of electronic transmission will be deemed to have the same
legal effect as delivery of an original signed copy of this Agreement.

 

(h)               Entire Understanding. This Agreement including the Plan, all
Exhibits and Recitals hereto which are incorporated herein by this reference,
together with the other agreements and documents being executed and delivered
concurrently herewith by the Executive, the Company and certain of its
affiliates, constitute the entire understanding among all of the parties hereto
and supersedes any prior understandings and agreements, written or oral, among
them respecting the subject matter within.

 

(i)                  Pronouns and Headings. As used herein, all pronouns shall
include the masculine, feminine, neuter, singular and plural thereof wherever
the context and facts require such construction. The headings, titles and
subtitles herein are inserted for convenience of reference only and are to be
ignored in any construction of the provisions hereof.

 

(j)                 Amendments. Except as set forth in Sections 9(g) and 11(d)
above, this Agreement shall not be changed or amended unless in writing and
signed by both the Executive and the Company.

 

(k)                Executive’s Representations. Executive hereby represents and
warrants to the Company that (i) the execution, delivery and performance of this
Agreement by Executive does not and shall not conflict with, breach, violate or
cause default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which he is bound, (ii) Executive is
not a party to or bound by any employment agreement, non-compete agreement or
confidentiality agreement with any other person or entity that restricts
Executive from serving in the position and/or performing the Executive Duties
set forth herein and (iii) upon the execution and delivery of this Agreement by
the Company, this Agreement shall be the valid and binding obligation of
Executive, enforceable in accordance with its terms. Executive further
represents and warrants to the Company that Executive has never (i) filed for
personal bankruptcy; (ii) been the subject of an SEC disciplinary matter or been
sanctioned by the SEC; (iii) been convicted or plead no contest to any crime
(other than minor traffic violations); or (iv) been held liable in a court of
law for acts of dishonesty in a business context.

 

(l)                  The Executive’s Acknowledgement. The Executive acknowledges
(i) that he has consulted with or has had the opportunity to consult with
independent counsel of his own choice concerning this Agreement and has been
advised to do so by the Company, and (ii) that he has read and understands this
Agreement, is fully aware of its legal effect, and has entered into it freely
based on his own judgment. The Executive shall be reimbursed by the Company for
the reasonable expense of review of this Agreement by such counsel.

 

12 

 

 

(m)             Arbitration. Except as provided in Section 11(e) hereof, in the
event that there shall be a dispute among the parties arising out of or relating
to this Agreement, or the breach thereof, the parties agree that such dispute
shall be resolved by final and binding arbitration in Newark, New Jersey,
administered by the American Arbitration Association (the “AAA”), in accordance
with AAA’s Commercial Arbitration Rules, to which shall be added the provisions
of the Federal Rules of Civil Procedure relating to the Production of Evidence,
and the parties agree that the arbitrators may impose sanctions in their
discretion to enforce compliance with discovery and other obligations. Such
arbitration shall be presided over by a single arbitrator. If the Executive, on
the one hand, and the Company, on the other hand, do not agree on the arbitrator
within fifteen (15) days after a party requests arbitration, the arbitrator
shall be selected by the Company and the Executive from a list of five (5)
potential arbitrators provided by AAA. Such list shall be provided within ten
(10) days of the request of any party for arbitration. The party requesting
arbitration shall delete one name from the list. The other party shall delete
one name from the list. This process shall then be repeated in the same order,
and the last remaining person on the list shall be the arbitrator. This
selection process shall take place within the two (2) business days following
both parties’ receipt of the list of five (5) potential arbitrators. Hearings in
the arbitration proceedings shall commence within twenty (20) days of the
selection of the arbitrator or as soon thereafter as the arbitrator is
available. The arbitrator shall deliver his or his opinion within twenty (20)
days after the completion of the arbitration hearings. The arbitrator’s decision
shall be final and binding upon the parties, and may be entered and enforced in
any court of competent jurisdiction by either of the parties. The arbitrator
shall have the power to grant temporary, preliminary and permanent relief,
including without limitation, injunctive relief and specific performance. Unless
otherwise ordered by the arbitrator pursuant to this Agreement, the arbitrator’s
fees and expenses shall be shared equally by the parties.

 

(n)               Attorney’s Fees. If any arbitration is brought under Section
11(m), the arbitrator may award the successful or prevailing party reasonable
attorneys’ fees and other costs incurred in that action or proceeding, in
addition to any other relief to which it may be entitled. If any other
proceeding is brought by one party against the other in connection with or
relating in any manner to this Agreement, or to enforce an arbitration award,
the successful or prevailing party (as determined by an independent third party,
e.g. a judge) shall be entitled to recover its reasonable attorneys’ fees and
other costs incurred in that action or proceeding, in addition to any other
relief to which it may be entitled.

 

(o)               Special Payment Provision. Notwithstanding any provision in
the Agreement to the contrary:

 

(i)       This Agreement is intended to comply with the requirements of Section
409A of the Code (“Section 409A”) and regulations promulgated thereunder such
that no payment provided hereunder shall be subject to an “additional tax”
within the meaning of Section 409A. To the extent that any provision in this
Agreement is ambiguous as to its compliance with Section 409A, the provision
shall be read in such a manner so that all payments due under this Agreement
shall not be subject to any additional tax. For purposes of Section 409A, each
payment made under this Agreement shall be treated as a separate payment. In no
event may the Executive, directly or indirectly, designate the calendar year of
payment. All reimbursements provided under this Agreement shall be made or
provided in accordance with the requirements of section 409A, including, where
applicable, the requirement that (i) any reimbursement is for expenses incurred
during the Executive’s lifetime (or during a shorter period of time specified in
this Agreement), (ii) the amount of expenses eligible for reimbursement during a
calendar year may not affect the expenses eligible for reimbursement in any
other calendar year, (iii) the reimbursement of an eligible expense will be made
on or before the last day of the calendar year following the year in which the
expense is incurred, and (iv) the right to reimbursement is not subject to
liquidation or exchange for another benefit.

 

13 

 

 

(ii)       If payment or provision of any amount or other benefit that is a
“deferral of compensation” subject to section 409A of the Code at the time
otherwise specified in this Agreement or elsewhere would subject such amount of
benefit to additional tax pursuant to section 409A(a)(1)(B) of the Code, and if
payment or provision thereof at a later date would avoid any such additional
tax, then the payment or provision thereof shall be postponed to the earliest
date on which such amount or benefit can be paid or provided without incurring
such additional tax. In the event this Section 11(o)(ii) requires a deferral of
any payment, such payment shall be accumulated and paid in a single lump sum on
such earliest date together with interest for the period of delay, compounded
annually, equal to the prime rate (as published in The Wall Street Journal), and
in effect as of the date of the payment should otherwise have been provided.

 

(iii)       If any payment or benefit permitted or required under this Agreement
is reasonably determined by either party to be subject for any reason to a
material risk of additional tax pursuant to section 409A(a)(1)(B) of the Code,
then the parties shall promptly agree in good faith on appropriate provisions to
avoid such risk without materially changing the economic value of this Agreement
to either party.

 

(p)               Survival. Sections 6, 7, 8 and 9 (as well as any provisions of
this Agreement necessary to give effect thereto) shall survive the termination
of this Agreement.

 

IN WITNESS WHEREOF, this Agreement has been executed as of the Effective Date.

 

  THE COMPANY:         BRAINSTORM CELL THERAPEUTICS INC.         By: /s/ Chaim
Lebovits   Name: Chaim Lebovits   Title: President and Chief Executive Officer  
            THE EXECUTIVE:         By: /s/ Ralph Kern, M.D.   Name: Ralph Kern,
M.D.   Title: In his individual capacity

  

14 

 

 

EXHIBIT A

 

Executive Duties

 

The Executive shall provide operational support and overview of the Company and
reports to the CEO.  The Executive’s core duties and responsibilities shall
include:

 

1. Work in close coordination with the CEO on major operational activities of
the Company, including without limitation, clinical operations and scientific
research, external collaborations and stakeholder engagements, commercial and
marketing activities, regulatory affairs, and compliance.

 

2. Work in close coordination with the Company’s management team to ensure
adequate quality and compliance policies, procedures, monitoring and managerial
controls are in place throughout the organization and are effectively supporting
all company operations.

 

3. Coordinate and fully execute the Company's Therapeutic Biologic Applications
(BLA) with the FDA.

 

4. Attend major external congresses at which Executive will fully support and
represent the Company's presence and commercial activities (and in particular,
present those developments within the Company which the Executive is requested
to highlight by the CEO and/or the Board). Similarly, the Executive shall, in
coordination with the CEO and the Board, actively and continually present the
Company to both institutional and retail investors during roadshows and non-deal
roadshows alike.

 

5. Work in close coordination with the CEO and the Company’s executive
management team to develop commercial strategies, including without limitation,
the development of target product profiles, forecasts, competitive intelligence
and market research activities, go-to-market models, and approval of all
agreements and contracts supporting commercial activities.

 

6. Various other matters, including but not limited to direct reports,
administration, preparation for and participation in board meetings, and any
other duties, services, responsibilities, and authority which may need to be
assigned to COO/CMO, from time to time, by the CEO or the Board.

 

7. Except while the Executive is travelling, the Executive will work out of the
Company’s Hackensack, NJ office, and will make commercially reasonable efforts
to be present in the Company’s office during normal business hours, Monday thru
Friday.

 

15 

 

 

AMENDMENT No. 1 TO EMPLOYMENT AGREEMENT

 

This AMENDMENT NO.1 TO EMPLOYMENT AGREEMENT (the “Amendment”) is effective as of
March 3, 2017 (“Amendment Effective Date”), by and between BRAINSTORM CELL
THERAPEUTICS INC., a Delaware corporation with a mailing address of 3 University
Plaza Drive, Hackensack, NJ 07601 (the “Company”), and DR. RALPH KERN, an
individual, with a mailing address of 959 First Avenue, New York, NY 10022 (the
“Executive”).

 

WITNESSETH:

 

WHEREAS, Company and Executive entered into that certain Employment Agreement,
dated February 28, 2017 (the “Agreement"); and

 

WHEREAS, Company and Executive desire to amend and clarify the terms of their

Agreement as provided in this Amendment.

 

NOW, THEREFORE, it is hereby agreed as follows:

 

1. The terms of the Agreement are hereby amended as follows:

 

a. Paragraph 4(c) of the Agreement is hereby deleted in its entirety and
replaced with the following:

 

(c) Equity Grant. On the Effective Date and on each anniversary thereafter, the
Executive shall receive a grant of restricted stock under the Company’s 2014
Stock Incentive Plan (or any successor or other equity plan then maintained by
the Company) comprised of a number of shares of common stock of the Company with
a fair market value determined based on the closing price of the Company’s
common stock at the end of normal trading hours on the business day immediately
preceding the Effective Date according to Nasdaq equal to 30% of the Executive’s
Base Salary (the “Equity Grant”). Each Equity Grant shall be contingent upon
Executive’s execution of one or more restricted stock agreements in such form
and substance as may reasonably be determined by the Company. Each Equity Grant
shall vest as to twenty-five percent (25%) of the award on each of the first,
second, third and fourth anniversary of the date of grant, provided the
Executive remains continuously employed by the Company from the date of grant
through each applicable vesting date. Each Equity Grant shall be subject to
accelerated vesting upon a Change of Control of the Company and such other
accelerated vesting as provided in this Agreement or the Plan (and any award
agreement evidencing such grant, to the extent such award agreement contains
more preferential terms). In the event of the Executive’s termination of
employment, the Executive shall retain his right to any vested shares (after
taking into account any accelerated vesting) and any portion of the Equity Grant
that is not yet vested (after taking into account such accelerated vesting)
shall automatically be immediately forfeited to the Company, without the payment
of any consideration to the Executive. In addition, the Executive shall be
entitled to receive additional equity or equity-based awards, including stock
options, as determined by the Board (or the Compensation Committee of the Board)
in its sole discretion.

 

16 

 

 

b. Paragraph 4(d) of the Agreement is hereby deleted in its entirety and
replaced with the following:

 

(d) Option Grant. As an inducement to enter into the Agreement and commence
employment with the Company, on the Effective Date, the Company shall grant the
Executive an option to purchase common stock of the Company (the “Option”) on
shares with a fair market value (as determined based on the closing price of the
Company’s common stock at the end of normal trading hours on the business day
immediately preceding the Effective Date according to Nasdaq) of Two Hundred
Thousand U.S. Dollars ($200,000) on the Effective Date. The Option shall be
fully vested and exercisable as of the date of grant and shall remain
exercisable until the 2nd anniversary of the date of grant, regardless of
whether the Executive remains employed by the Company. The exercise price per
share shall be equal to the fair market value on the date of grant (as
determined based on the price of the Company’s common stock immediately
preceding normal trading hours on the date of grant according to Nasdaq). The
grant of the Option is also contingent upon Executive’s execution of one or more
stock option agreements in such form and substance as may reasonably be
determined by the Company which the parties will endeavor to execute within ten
(10) days from their mutual execution of this Agreement.

 

c. The Paragraph following Section 4(d) of the Agreement (which isn’t numbered)

is hereby deleted in its entirety.

 

2. Except as above amended, the Agreement is and shall remain in full force and
effect and binding upon the parties.

 

3. This Amendment may be executed in counterparts, each of which shall be an
original, but all of which shall constitute one and the same instrument. A
signed copy of this Amendment delivered by facsimile, e-mail or other means of
electronic transmission will be deemed to have the same legal effect as delivery
of an original signed copy hereof.

 

4. This Amendment shall be governed under the laws of the State of New Jersey.

 

IN WITNESS WHEREOF, this Amendment has been executed as of the Amendment
Effective

Date.

 

 

  THE COMPANY:         BRAINSTORM CELL THERAPEUTICS INC.   By: /s/ Chaim
Lebovits   Name: Chaim Lebovits   Title: President and Chief Executive Officer  
            THE EXECUTIVE:   By: /s/ Ralph Kern, M.D.   Name: Ralph Kern, M.D.  
Title: In his individual capacity

 

17