EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”), dated as of June 9, 2014 between
BRAINSTORM CELL THERAPEUTICS, INC, a Delaware limited company (the “Company”),
and ANTHONY FIORINO, MD, Ph.D (the “Executive”).

 

WHEREAS, the Company desires to employ the Executive, and the Executive desires
to be employed by the Company, 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 date hereof 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
Executive Officer of the Company (and its subsidiaries, but for no additional
compensation), and shall have those duties, responsibilities and authority
customarily accorded a person holding such positions in a company such as the
Company. In such capacity, the Executive shall report to the Board of Directors
of the Company (the “Board”). The Executive shall devote his best efforts and
his full business time and attention to the performance of services 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 Company; 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, (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’s
duties and responsibilities to the Company or conflict or compete with the
Company's activities as currently conducted or as proposed to be conducted at
any time.

 

 

 

 

4.          Compensation and Other Terms of Employment.

 

(a)          Compensation. In consideration of the performance of his duties for
the Company, the Executive shall be entitled to receive base compensation during
the first year of the Employment Period at the rate of $275,000 per year (the
“Base Salary”). At the conclusion of each year of employment, the Executive’s
Base Salary shall be increased over the prior year’s Base Salary by an amount no
less than $7,500. During the Employment Period, the Board (or a committee
thereof) may, at its sole discretion, additionally increase the Base Salary, but
shall not decrease the Base Salary below the foregoing specified first year Base
Salary and any accrued annual increments without Executive’s prior written
consent. 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 performance bonus subject to satisfaction of pre-established performance
goals to be mutually agreed upon by the Board (or a committee thereof) and the
Executive (the “Bonus Compensation”). In addition, at the Board’s (or a
committee thereof’s) discretion, it may award additional or other Bonus
Compensation to the Executive. Bonus Compensation may include cash, equity, or
equity derivatives (e.g., warrants or options), and non-cash Bonus Compensation
may be subject to vesting. Any amounts due to Executive pursuant to this Section
4(b) shall payable, if in cash, or issued, if in equity or equity derivatives,
no later than sixty (60) days following the adoption of the annual financial
statements of the previous fiscal year of the Company.

 

(c)          Initial Option Grant. The Company shall issue to the Executive on
the Executive’s start date, an option (the “Initial Options”) to purchase
5,700,000 shares of Company common stock under the Company’s Amended and
Restated 2005 U.S. Stock Option and Incentive Plan, or successor plan thereto
(the “Plan”). This option’s exercise price will be equal the closing price of
the Company’s common stock (during normal trading hours) on the date of grant.
Provided the Executive remains employed by the Company on each vesting date, the
vesting schedule of the option shall be as follows: 25% of the shares underlying
the option shall vest and become exercisable on the first anniversary of the
date of grant and 2.0833% of the shares underlying the option shall vest and
become exercisable on each monthly anniversary date of the date of grant
starting on the 13th monthly anniversary date of the date of grant through the
fourth anniversary of grant, so that the option becomes fully vested and
exercisable on the fourth anniversary of the date of grant. The option shall
have a ten (10) year term. Any unvested shares underlying the option as of the
date of the employment termination shall automatically terminate. The Executive
shall have 90 days after termination of Executive’s employment with the Company
to exercise the option to the extent then vested.

 

 

 

 

(d)          Equity Incentive Plan. During the Term, Executive shall be entitled
to participate in the Plan and receive such stock options or other equity awards
relating to the equity of the Company as determined by the Board (or the
Compensation Committee of the Board) in its sole and absolute discretion.

 

(e)          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 his
duties for the Company.

 

(f)          Vacation. The Executive shall be entitled to vacation during each
year of the Employment Period in accordance with the Company’s policies (which
have not yet been adopted by the Company) in effect from time to time applicable
to other members of the Company’ senior management; provided that the Executive
shall be entitled to no less than four weeks of vacation per fiscal year.

 

(g)          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.

 

(h)          [RESERVED]

 

(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.

 

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(h) below),
or (ii) without Good Reason on (i) 30 days' prior written notice to the Company
through the first anniversary of the date of this agreement; (ii) 60 days' prior
written notice following the first anniversary and through the second
anniversary of the date of this agreement; and (iii) 90 days' prior written
notice following the second anniversary of the date of this agreement.

 

(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(i) below) or (ii) on (i) 30 days' prior written notice to
the Executive through the first anniversary of the date of this agreement; (ii)
60 days' prior written notice following the first anniversary and through the
second anniversary of the date of this agreement; and (iii) 90 days' prior
written notice following the second anniversary of the date of this agreement,
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 (and the Company would not otherwise have
substantially the right to terminate Employee for Cause), the Company shall (i)
continue to pay the Executive, as severance pay, his Base Salary pursuant to the
Company's regular payroll schedule for a period equal to four (4) months (which
shall increase to six (6) months after the first anniversary of the date of this
Agreement and nine (9) months after the second anniversary of the date of this
Agreement) (assuming Executive is actively employed by the Company on such
dates) from the date that the Executive’s receives notice of termination of his
employment with the Company (the “Payment Period”) or issue within 15 days of
his termination a lump sum payment equivalent to such number of months of base
salary; and (ii) pay the Executive within 30 days of his termination of
employment (or such revised payment period pursuant to Section 11(o) of this
Agreement) any Bonus Compensation that the Executive would be entitled to
receive during the Payment Period in the absence of his termination without
Cause or for Good Reason; (iii) immediately vest such number of options that
would have vested during the following 6 months following the date of notice of
termination and (iv) shall continue to provide to Executive health insurance
benefits contemplated under Section 4(g) during the Payment Period. In the event
that the Executive is no longer eligible for health insurance benefits as
provided by the Company benefit plan, then the Company shall pay for Executive’s
health insurance premiums under COBRA for such period. The Company shall pay for
Executive’s health insurance premiums under COBRA for the duration of Payment
Period from the date of termination under this clause (c). In the event that the
Company’s health insurance plan is discontinued or otherwise not eligible for
COBRA, or if the Executive is not eligible to receive benefits under COBRA, then
the Company will reimburse the Executive for his health insurance costs for the
duration of Payment Period from the date of termination under this clause (c).
Should the Executive becomes eligible for health insurance benefits provided by
a new employer during the duration of Payment Period, then the Company’s
obligation to reimburse the Executive for health insurance costs will terminate
when the Executive’s new health insurance benefit begins. In the event that the
Executive is entitled to severance benefits under Section 5(f) below, this
Section 5(c) shall not apply and shall have no further force or effect.

 

(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 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 unexercised Company stock options if terminated by the Company for Cause
and with 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.

 

 

 

 

(e)          Consequences of Termination for Death or Disability. If the
Executive dies or is unable to perform his duties 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 Initial
Options shall remain outstanding in accordance with their existing terms and
conditions.

 

(f)          Consequences Upon Termination Following Change of Control. If at
any time within twelve (12) months after a Change of Control of the Company (as
defined herein) has occurred, the Executive's employment is terminated (x) by
the Company or any successor company for any reason other than for Cause or the
Executive's Disability or death (y) or by Executive due to a Change of Control
Termination (as hereinafter defined) (any such termination under Section 5(f)(x)
or 5(f)(y), a “5(f) Termination”), the Company shall pay or provide Executive
with the following within thirty (30) days of such 5(f) Termination of
employment (or such revised payment period pursuant to Section 11(o) of this
Agreement):

 

(i)          All Base Salary up through the date of such 5(f) Termination, which
shall be paid in accordance with the Company's normal payroll practices as
currently in effect;

 

(ii)         Payment equal to one (1) times Executive's target Bonus
Compensation for the year in which the Change of Control immediately preceding
the 5(f) Termination occurs;

 

(iii)        Base Salary for twelve (12) months following the date of such 5(f)
Termination; and

 

(iv)         Acceleration in full of the vesting and exercisability of all
Company stock options granted to the Executive which are outstanding and
otherwise unvested immediately prior to such 5(f) Termination. Such accelerated
options shall remain exercisable for no less than a period of 60 days following
such 5(f) Termination (but not to exceed the original term of such awards).

 

Notwithstanding anything to the contrary, no compensation of any kind shall be
payable to the Executive pursuant to this Section 5(f) or pursuant to 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 reasonable acceptable to the Company, such waiver
and release to be delivered by Executive within 10 days after 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).

 

 

 

 

(g)          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.

 

(h)          Definition of Good Reason. “Good Reason” means (i) a material
reduction of the Executive's Base Salary and benefits from the levels provided
herein, (ii) a material reduction of Executive’s 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(h)(i), 5(h)(ii) and/or 5(h)(iii) will not be considered a termination
for Good Reason unless within thirty (30) days of the last event relied upon by
the Executive to establish Good Reason 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 refute that statement or remedy the cause
thereof. Such 30-day notice period may run concurrently with the 30-day notice
specified in Section 5(a) above.

 

(i)          Definition of Cause. “Cause” means a good faith finding by the
Company of: (i) gross negligence or willful misconduct by Executive in
connection with Executive’s employment duties, (ii) commission of acts of fraud,
misrepresentation, embezzlement, theft, dishonesty or breach of the duty of
loyalty in performance of the Executive’s duties on behalf of the Company, or
any embezzlement or other financial fraud committed by Executive, (iii) willful
or repeated failure to follow specific directives of the Board (or its
committees or other designees), (iv) failure by Executive to perform Executive’s
duties or responsibilities required pursuant to Executive’s employment, after
written notice and an opportunity to cure, (v) misappropriation by Executive of
the assets or business opportunities of the Company or its affiliates, (vi) a
willful and knowing breach by Executive of any representations or warranties
included in this Agreement, (vii) Executive knowingly allowing and not taking
all available actions against, any third party to commit any of the acts
described in any of the preceding clauses (ii), (v), or (vi) against the
Company, or (viii) Executive’s indictment for, conviction of, or entry of a plea
of no contest with respect to, any felony.

 

(j)          Definition of Disability. “Disability” means the inability of the
Executive to perform the Executive’s duties of employment to the Company
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 60
days in any 270 day period. The existence of a Disability means that the
Executive’s mental and /or physical condition substantially interferes with the
Executive’s performance of his substantive duties for the Company as specified
in this Agreement. The fact of whether or not a Disability exists hereunder
shall be determined by a professionally qualified medical expert reasonably
chosen by the Company.

 

 

 

 

(k)          Definition of Change of Control. “Change of Control” means the
first to occur of any of the following: (a) any “person” or “group” (as defined
in the Securities Exchange Act of 1934) becomes the beneficial owner of a
majority of the combined voting power of the then outstanding voting securities
with respect to the election of the Board of Directors of the Company; (b) 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 (c) 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.

 

(l)          Definition of Change of Control Termination. “Change of Control
Termination” means a termination of the Executive’s employment by the Executive
within twelve (12) months after a Change of Control (as defined above),
following the occurrence of any of the following events by the Company or any
successor company after such Change of Control:

 

(i)          a reduction in the Executive's then-current annual base salary or
bonus opportunity or benefits (other than in connection with a salary adjustment
generally applicable to similarly situated employees); or

 

(ii)         any failure to offer the Executive the same level of benefits
offered to similarly situated employees; or

 

(iii)        a significant diminution in the Executive’s duties, title, office,
or responsibilities (provided that being the head of this business unit within a
larger company will not result in a significant diminution in Executive’s
duties, title, office or responsibilities); or

 

(iv)         the relocation of the Executive’s primary business location to a
location that increases the Executive's commute by more than fifty (50) miles
compared to the commute of the Executive to the Executive's then-current primary
business location; or

 

(v)          the failure to pay the Employee any portion of his or her current
Base Salary, Bonus or benefits within twenty (20) days of the date such
compensation is due, based upon the payment terms currently in effect; or

 

(vi)         the failure of the Company to obtain a reasonably satisfactory
agreement from any successor to assume and agree to perform this Agreement (if
such separate agreement is required by law).

 

 

 

 

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. “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 his 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 date hereof) 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.

 

(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 his 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.

 

 

 

 

(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.

 

(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.

 

(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 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 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 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 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 one (1) year 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 (or engaged) 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.

 

(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, intended or might reasonably be perceived to be 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 th 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).

 

(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 “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 temporary injunctive relief without being required
to post a bond and permanent injunctive relief without the necessity of proving
actual damage. Executive shall be liable to pay all costs including reasonable
attorneys’ fees which the Company may incur in enforcing or defending, to any
extent, these 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 these 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 these 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 succeeds in enforcing these 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
determine any of the Covenants are unenforceable because of overbreadth, then
the covenants shall be modified so as to make it reasonable and enforceable
under the prevailing circumstances.

 

(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)          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.

 

(b)          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 following addresses:

 

if to Executive:To the Executive’s home address provided

separately to the Company from time to time.

 

if to the Company:Chairman of the Board of Directors

Brainstorm Cell Therapeutics Inc.

12 Bazel Street

Petach Tikva 49001, Israel

 

with copy to:Thomas B. Rosedale

BRL Law Group LLC

425 Boylston Street, Floor 3

Boston, MA 02116

Email: trosedale@brllawgroup.com

 

(c)          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.

 

(d)          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(l) 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.

 

 

 

 

(e)          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.

 

(f)          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.

 

(g)          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.

 

(h)          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.

 

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

 

(j)          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, noncompete agreement or
confidentiality agreement with any other person or entity that restricts
Executive from serving in the position and/or performing the 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.

 

(k)          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.

 

 

 

 

(l)          Arbitration. Except as provided in Section 11(d) 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 her 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.

 

(m)          Attorney's Fees. If any arbitration is brought under Section 11(l),
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.

 

(n)          Indemnification of Executive. The Company shall to the fullest
extent permitted by law, indemnify, defend and hold harmless the Executive from
any liability, loss or damages incurred by Executive by reason of any act
performed by the Executive in connection with the business of the Company and
from liabilities or obligations of the Company imposed on the Executive by
virtue of his position with the Company, including reasonable attorney fees and
costs and any amounts expended by the settlement of any such claims of
liability, loss or damages except that no indemnification shall be provided
regarding any matter as to which it is finally determined that Executive did not
act in good faith and in the reasonable belief that his action was in the best
interests of the Company or with respect to a criminal matter, that he had
reasonable cause to believe that his conduct was unlawful.

 

 

 

 

(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.

 

(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)(i) 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.

 

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IN WITNESS WHEREOF, this Agreement has been executed as of the date and year
first above written.

 

  THE COMPANY:       BRAINSTORM CELL THERAPEUTICS INC.         By: /s/ Chaim
Lebovits     Name: Chaim Lebovits     Title: CEO         THE EXECUTIVE:        
/s/ Anthony Fiorino   Anthony Fiorino, MD, Ph.D

 

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