Exhibit 10.01





 


EMPLOYMENT AGREEMENT


 


This Employment Agreement
(this “Agreement”) is made and entered into as of this [*]th day of February 2016, by and between Neuralstem,
Inc., a Delaware corporation (the “Company”), and Richard Daly (the “Employee”).


 


WITNESSETH :


 


WHEREAS, the Company
desires to employ Employee as its Chief Executive Officer and Employee desires to accept such employment; and


 


WHEREAS, the Company
desires to enter into this Agreement regarding the terms of Employee’s employment, and Employee desires to enter into this
Agreement and to accept the terms and provisions of such employment, as embodied in this Agreement.


 


Section 1.       Definitions.


 


(a)       “Accelerated
Equity Benefit” shall have the meaning ascribed to it in Section 7(g)(iii) hereof.


 


(b)       “Accrued
Obligations” shall mean (i) all accrued but unpaid Base Salary through the Date of Termination, (ii) subject to
any conditions contain in this Agreement, all bonuses that have been awarded but remain unpaid as of the Date of Termination, (iii) any
unpaid or unreimbursed expenses incurred in accordance with Section 6 hereof, and (iii) any accrued but unused vacation
time through the Date of Termination.


 


(c)      “Base
Salary” shall mean the salary provided for in Section 4(a) hereof.


 


(d)      “Board”
shall mean the Board of Directors of the Company.


 


(e)      “Common
Stock” shall have the meaning ascribed to in in Section 4(d) hereof.


 


(f)       “Confidentiality
Agreement” shall mean the Company’s Confidentiality Information and Assignment Agreement attached hereto as Exhibit
B.


 


(h)      “Cause”
shall mean (i) Employee’s failure (except where due to a Disability), neglect, or refusal to perform in any material
respect Employee’s duties and responsibilities, (ii) any intentional or grossly negligent act of Employee that has,
or could reasonably be expected to have, the effect of injuring the business of the Company or its subsidiaries in any material
respect, (iii) Employee’s conviction of, or plea of guilty or no contest to: (x) a felony, (y) any material
violation of federal or state securities laws or (z) any other criminal charge that has, or could be reasonably expected to
have, a material adverse impact on the performance of Employee’s duties to the Company or otherwise result in material injury
to the business of the Company or its subsidiaries , (iv) the commission by Employee of an act of fraud or embezzlement against
the Company or its subsidiaries; (v) any material violation by Employee of the policies of the Company or its subsidiaries
, including but not limited to those relating to sexual harassment or business conduct, and those otherwise set forth in the manuals
or statements of policy of the Company or its subsidiaries, or (vi)  Employee’s breach of this Agreement or breach of
the Confidentiality Agreement.


 


(i)        “Code”
shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.


 




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(j)        “Date
of Termination” shall mean the date on which Employee’s employment as Chief Executive Officer of the Company terminates.


 


(k)       “Disability”
shall mean any physical or mental disability or infirmity of Employee that prevents the performance of Employee’s duties
for a period of (i) ninety (90) consecutive days or (ii) one hundred twenty (120) non-consecutive days during
any twelve (12) month period. Any question as to the existence, extent, or potentiality of Employee’s Disability upon
which Employee and the Company cannot agree shall be determined by a qualified, independent physician selected by the Company and
approved by Employee or, if applicable, his guardian (which approval shall not be unreasonably withheld). The determination of
any such physician shall be final and conclusive for all purposes of this Agreement.


 


(l)        “Effective Date”
shall mean February [*], 2016.


 


(m)      “Good
Reason” shall mean, without Employee’s consent, (i) (A) a material diminution in Employee’s duties,
or responsibilities, (B) adverse change in Employee’s title, position, or person or entity to whom Employee reports or (C)
assignment to Employee of duties not commensurate with his position, (ii) a reduction in Base Salary as set forth in Section 4(a)
hereof , (iii) provided that Employee has previously relocated to the Washington D.C. Metropolitan Area, any requirement by
or directive from the Company, which is not recommended by Employee, that Employee permanently relocate his principal residence
or change in the primary place of the Company’s business outside of the Washington D.C. Metropolitan Area, or (iv) any
other material breach of a provision of this Agreement by the Company (other than a provision that is covered by clause (i), (ii) or
(iii) above). Employee acknowledges and agrees that Employee’s exclusive remedy in the event of any breach of this Agreement
shall be to assert Good Reason pursuant to the terms and conditions of Section 7(e) hereof. Notwithstanding the foregoing,
during the Term, in the event that the Company reasonably believes that Employee may have engaged in conduct that could constitute
Cause hereunder, the Company may, in its sole and absolute discretion, suspend Employee from performing Employee’s duties
hereunder for a period not to exceed 90 days, and in no event shall any such suspension constitute an event pursuant to which Employee
may terminate employment with Good Reason or otherwise constitute a breach hereunder; provided , that no such suspension
shall alter the Company’s obligations under this Agreement during such period of suspension.


 


(n)       “Housing
Allowance” shall have the meaning ascribed to it in Section 4(e) hereof.


 


(o)       “Inducement
Plan” shall have the meaning ascribed to it in Section 4(d) hereof.


 


(p)       “Option
Award” shall have the meaning ascribed to it in Section 4(d) hereof.


 


(q)       “Payment
Date” shall have the meaning ascribed to it in Section 7(h) hereof.


 


(r)        “Pro
Rata Bonus Payment” shall have the meaning ascribed to it in Section 7(g)(iv) hereof.


 


(s)       “Reimbursement
Period” shall have the meaning ascribed to it in Section 4(e) hereof.


 


(t)        “Release
of Claims” shall mean a release of claims made by the Employee in favor of the Company and its subsidiaries in the form
attached hereto as Exhibit A (with any updates reasonably determined by the Company to be necessary to comply with applicable
law) and the execution of which is a condition precedent to Employee’s eligibility for Severance Benefits, the Accelerated
Equity Benefit and the Pro-Rata Bonus Payment in the event his employment is terminated by the Company without Cause or by Employee
for Good Reason, as described in Sections 7(d) and 7(e), or following a Sale Event, as described in Section 7(g).


 




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(u)       “Severance
Benefits” shall mean continued payment of Base Salary during the Severance Term, payable in accordance with the Company’s
regular payroll practices.


 


(v)       “Severance
Term” shall mean (i) the eighteen (18) month period, which commences on the first day following the Date of
Termination following termination by the Company without Cause or by Employee for Good Reason if such termination occurs within
the twelve (12) month anniversary of the Effective Date, or (ii) the twelve (12) month period, which commences on the first day
following the Date of Termination following termination by the Company without Cause or by Employee for Good Reason if such termination
occurs after the twelve (12) month anniversary but before the twenty four (24) month anniversary of the Effective Date, or (iii)
the nine (9) month period, which commences on the first day following the Date of Termination following termination by the Company
without Cause or by the Employee for Good Reason if such termination occurs at any time after the twenty four (24) month anniversary
of the Effective Date, or (iv) if the Date of Termination occurs within eighteen (18) months after a Sale Event, the
eighteen (18) month period, which commences on the first day following the Date of Termination by the Company without Cause
or by Employee for Good Reason.


 


(w)      “Target
Cash Bonus” shall have the meaning ascribed to it in Section 4(b) hereof.


 


(x)       “Term”
shall have the meaning ascribed to it in Section 2 hereof.


 


(y)       “Travel
Allowance” shall have the meaning ascribed to it in Section 4(e) hereof.


 


Section 2.        Acceptance and Term. Commencing on the Effective Date, the Company agrees to employ Employee on an at-will basis (subject
to the terms of Sections 7(d) and 7(e) hereof), and Employee agrees to accept such employment and serve the Company, in accordance
with the terms and conditions set forth herein. The term of employment shall commence on the Effective Date and continue until
terminated by either party at any time, subject to the provisions herein (referred to herein as the “Term”).


 


Section 3.       Position,
Duties, and Responsibilities; Place of Performance.


 


(a)          Position,
Duties, and Responsibilities. During the Term, Employee shall be employed and serve as Chief Executive Officer of the Company
(together with such other position or positions consistent with Employee’s title or as the Company shall specify from time
to time) and shall have such duties and responsibilities commensurate therewith, and such other duties as may be assigned and/or
prescribed from time to time by the Board or a committee thereof. On the Effective Date, the Board will appoint Employee to serve
as a member of the Board in such class or classes of the Board as determined by the Board. During the Term, the Board will nominate
Employee for election to the Board by the Company’s stockholders; provided that Employee hereby will submit written notice
of resignation of his directorship to the Board, effective as of the date on which Employee ceases to serve as Chief Executive
Officer.


 




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(b)          Performance.
Employee shall devote his full business time, attention, skill, and best efforts to the performance of his duties under this Agreement
and shall not engage in any other business or occupation during the Term, including, without limitation, any activity that (x) conflicts
with the interests of the Company, (y) interferes with the proper and efficient performance of Employee’s duties for
the Company, or (z) interferes with Employee’s exercise of judgment in the Company’s best interests. Notwithstanding
the foregoing, nothing herein shall preclude Employee from: (i) continuing to serve on existing boards of directors as of
the Effective Date until Employee’s current term on those boards expires or (ii) serving, with the prior consent and
approval of the Board, (which shall not be unreasonably withheld or delayed) as a member of no more than two other board of directors
provided that service on any such board complies with the factors contained in (x), (y) and (z) above or advisory boards
(or their equivalents in the case of a non-corporate entity) of non-competing businesses and charitable organizations; (iii) engaging
in charitable activities and community affairs; and (iv) managing Employee’s personal investments and affairs; provided,
however, that the activities set out in clauses (i), (ii), (iii) and (iv) herein shall be limited by Employee so
as not to interfere in any material respect, individually or in the aggregate, with the performance of Employee’s duties
and responsibilities hereunder, or pose a conflict of interest or violate any provision of this Agreement such determinations to
be made at the reasonable good faith discretion of the Board. Employee represents that he has provided the Company with a comprehensive
list of all outside professional activities with which he is currently involved or reasonably expects to become involved at the
current time. In the event that, during his employment by the Company, the Employee desires to engage in other outside professional
activities, not included on such list, Employee will, prior to engaging in any such activities, first seek written approval from
the Chairman of the Board and such approval shall not be unreasonably withheld.


 


Section 4.       Compensation.


 


(a)          Base Salary.
In exchange for Employee’s performance of his duties and responsibilities, Employee initially shall be paid an annual base
salary of $440,000 (“Base Salary”), payable in accordance with the regular payroll practices of the Company.
All payments referenced in this Agreement are on a gross, pre-tax basis and shall be subject to all applicable federal, state and
local withholding, payroll and other taxes.


 


(b)          Target
Cash Bonus.        In addition to the Base Salary, Employee will be eligible to earn an annual target bonus of up to 50% of his
Base Salary (the “Target Cash Bonus”). The actual amount of such bonus, if any, will be determined by the Board
(or a committee thereof) based upon Company performance and any other factors that the Board (or a committee thereof), in its reasonable
good faith discretion following reasonable consultation with Employee, deems appropriate. Employee’s achievement of such
milestones, as well as the amount of any bonus, shall be determined by the Board in its reasonable good faith discretion. Bonuses,
if any, shall be paid out no later than March 15 of the year following the applicable bonus year. Except as otherwise provided
in Section 7 of this Agreement, Employee must be employed by the Company at the time the bonus is awarded and through the
end of the calendar year in which any bonus may be earned in order to be eligible for any such payment.


 


(c)          Annual
Stock Option Award. In addition to the Base Salary and Target Cash Bonus, Employee will be eligible to receive an annual market
based stock option grant (the “Annual Stock Option Grant”) issued pursuant to the terms of one of the Company’s
equity compensation plans. The actual amount of such grant, if any, will be determined by the Board (or a committee thereof) based
upon Company performance and any other factors that the Board (or a committee thereof), in its reasonable good faith discretion,
deems appropriate. Employee’s achievement of such milestones, as well as the amount of any Annual Stock Option Grant, if
any, shall be determined by the Board (or a committee thereof) in its reasonable good faith discretion. In connection with such
grants, the Employee shall enter into the Company’s standard stock option agreement which will incorporate the vesting schedule
and other terms as determined by the Board (or a committee thereof).


 




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(d)          Inducement
Stock Options/Equity Grants. On the day following the Effective Date, the Company will grant Employee an option to purchase
2,750,000 shares of the Company’s common stock, $0.01 par value per share (the “Common Stock”), issued
pursuant to the terms of the Company’s Inducement Award Stock Option Plan (or a successor plan, if any) (the “Inducement
Plan”) and subject to the terms of a stock option agreement thereunder (the “Option Award”). The options
subject to the Option Award shall have a term of 10 years from the date of grant, and an exercise price equal to the closing trading
price of the Common Stock on the date of grant. The Option Award will be subject to vesting in accordance with the terms of the
Inducement Plan, Section 7(g) of this Agreement and the stock option agreement(s); specifically the Option Award will vest
over four years, with twenty-five percent (25%) vesting on the six month anniversary of the grant date, twenty-five percent
(25%) vesting on the one-year anniversary of the grant date and the remaining options vesting in equal quarterly installments over
the following three (3) years; provided, however, Employee must remain continuously employed through the applicable
vesting date. The Option Award shall be subject to the terms set forth in the Option Award, the terms of the Inducement Plan, any
applicable shareholder and/or option holder agreements and other restrictions and limitations generally applicable to Common Stock
of the Company or equity awards held by Company executives and/or employees or otherwise imposed by law.


 


(e)          Housing
Allowance/Commuting Costs. Employee will continue to maintain his permanent residence in the Chicago, Illinois area. Until
the earlier of twelve (12) months from the Effective Date, or such time as Employee relocates to where the Company is headquartered
(“Reimbursement Period”), Employee will receive a monthly housing allowance of up to $5,000.00 per month for
the rental of an apartment in the area of the Company’s headquarters (“Housing Allowance”). The amount
of the monthly housing allowance will be grossed up by the Company in order to fully offset the tax liability of the Employee for
such allowance. During the Reimbursement Period, Employee will also be reimbursed for airfare and related travel expenses for commuting-related
travel to and from the Chicago, Illinois area and the area in which the Company is located (“Travel Allowance”).
The Company agrees to purchase an American Airlines Airpass (or a comparable pass on another airline selected by the Employee)
for Employee for use during the term of this Agreement. If, prior to the 12-month anniversary of the Effective Date, Employee resigns
without Good Reason or the Company terminates Employee’s employment for Cause, then Employee agrees to repay to the Company
the net amount of the housing allowance provided through the Date of Termination and all airfare and travel related expenses reimbursed
under this Subsection provided through the Date of Termination within 30 days of such Date of Termination. For avoidance of doubt,
no additional Housing Allowance or Travel Allowance payments will be made subsequent to the Reimbursement Period.


 


(f)          Annual
Tax and Financial Planning Stipend. During the Term, the Company will, subject to the receipt of appropriate documentation,
reimburse Employee up to $5,000 on an annual basis for Employee’s out of pocket costs spent on tax and financial planning,
prorated for any partial year of employment.


 


Section 5.       Employee
Benefits. During the Term, Employee shall be eligible to participate in health insurance and other benefits provided generally
to similarly situated employees of the Company, subject to the terms and conditions of the applicable benefit plans (which shall
govern). In addition to holidays recognized by the Company, Employee also shall receive four (4) weeks of paid vacation per
year, prorated for any partial year of employment, of which up to two (2) weeks may roll-over year to year for a maximum of six
(6) weeks at any given time. Nothing contained herein shall be construed to limit the Company’s ability to amend, suspend,
or terminate any employee benefit plan or policy at any time without providing Employee notice, and the right to do so is expressly
reserved.


 


Section 6.       Reimbursement
of Business Expenses. During the Term, the Company shall pay (or promptly reimburse Employee) for documented, out-of-pocket
expenses reasonably incurred by Employee in the course of performing his duties and responsibilities hereunder, which are consistent
with the Company’s policies in effect and as amended from time to time, with respect to business expenses, subject to the
Company’s requirements with respect to documentation and reporting of such expenses.


 




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Section 7.       Termination
of Employment.


 


(a)          General.
Employee’s employment with the Company shall terminate upon the earliest to occur of: (i) Employee’s death, (ii) a
termination by reason of Employee’s Disability, (iii) a termination by the Company with or without Cause, or (iv) a
termination by Employee with or without Good Reason.


 


(b)          Termination
Due to Death or Disability. Employee’s employment under this Agreement shall terminate automatically upon Employee’s
death. The Company also may terminate Employee’s employment immediately upon the occurrence of a Disability, such termination
to be effective upon Employee’s receipt of written notice of such termination. In the event of Employee’s termination
as a result of Employee’s death or Disability, except as otherwise provided in Section 7(g), Employee’s or Employee’s
estates or beneficiaries, as the case may be, sole and exclusive remedy shall be receipt of the Accrued Obligations, and Employee
shall have no further rights to any compensation or any other benefits under this Agreement.


 


(c)          Termination by the Company with
Cause.


 


(i)          The Company may
terminate Employee’s employment at any time with Cause, effective upon Employee’s receipt of written notice of such
termination; provided, however, that with respect to any Cause termination relying on clause (i), (ii), (v), or (vi) of
the definition of Cause set forth in Section 1(h) hereof, to the extent that such act or acts or failure or failures to act
are curable, as determined by the Board in its reasonable good faith discretion, Employee shall be given thirty (30) days’
written notice by the Company of its intention to terminate his employment with Cause, such notice to state the act or acts or
failure or failures to act that constitute the grounds on which the proposed termination with Cause is based, and such termination
shall be effective at the expiration of such thirty (30) day notice period unless Employee has fully cured such act or acts
or failure or failures to act, to the Company’s complete satisfaction, that give rise to Cause during such period.


 


(ii)          In the event
that the Company terminates Employee’s employment with Cause, Employee shall be entitled only to the Accrued Obligations.
Following such termination of Employee’s employment with Cause, except as set forth in this Section 7(c)(ii) or as otherwise
provided in Section 7(g), Employee shall have no further rights to any compensation or any other benefits under this Agreement.
For the avoidance of doubt, Employee’s sole and exclusive remedy upon a termination of employment by the Company with Cause
shall be receipt of the Accrued Obligations.


 


(d)          Termination
by the Company without Cause. The Company may terminate Employee’s employment at any time without Cause, effective upon
Employee’s receipt of written notice of such termination. In the event that Employee’s employment is terminated by
the Company without Cause (other than due to death or Disability) and provided that he fully executes and does not revoke an effective
Release of Claims as described in Section 7(h), Employee shall be eligible for:


 


(i)          The
Accrued Obligations; and


 


(ii)         The
Severance Benefits.


 


Notwithstanding the foregoing, the Severance
Benefits shall immediately terminate, and the Company shall have no further obligations to Employee with respect thereto, in the
event that Employee is found by a court of competent jurisdiction to have breached this Agreement, any provision of the Confidentiality
Agreement or the Release of Claims. Any such termination of payment or benefits shall have no effect on the Release of Claims or
any of Employee’s post-employment obligations to the Company. Following such termination of Employee’s employment by
the Company without Cause, except as set forth in this Section 7(d) or 7(g), Employee shall have no further rights to any
compensation or any other benefits under this Agreement. For the avoidance of doubt, except as otherwise provided in Section 7(g),
Employee’s sole and exclusive remedy upon a termination of employment by the Company without Cause shall be receipt of (i) the
Severance Benefits, subject to his execution of the Release of Claims, and (ii) the Accrued Obligations. If the Company makes
overpayments of Severance Benefits, Employee promptly shall return any such overpayments to the Company and/or hereby authorizes
deductions from future Severance Benefit amounts so long as such deduction does not violate Section 409A of the Code.


 




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(e)          Termination
by Employee with Good Reason. Employee may terminate his employment with Good Reason by providing the Company thirty (30) days’
written notice setting forth in reasonable specificity the event that constitutes Good Reason, which written notice, to be effective,
must be provided to the Company on the later of: (i) within thirty (30) days of the occurrence of such event, (ii) or promptly
upon Employee’s actual knowledge of such event. During such notice period, the Company shall have a cure right (if curable),
and if not cured within such period, Employee’s termination will be effective upon the expiration of such cure period, and
Employee shall be entitled to the same payments and benefits as provided in Section 7(d) hereof, subject to the same conditions
on payment and benefits as described in Section 7(d) hereof. Following such termination of Employee’s employment by
Employee with Good Reason, except as set forth in this Section 7(e) or as otherwise provided in Section 7(g) or under
any Company benefit plan (other than severance plans that are broad based), Employee shall have no further rights to any compensation
or any other benefits under this Agreement. For the avoidance of doubt, except as otherwise provided in Section 7(g) or under
any Company benefit plan (other than severance plans that are broad based), Employee’s sole and exclusive remedy upon a termination
of employment with Good Reason shall be receipt of the Severance Benefits, subject to his execution of the Release of Claims, and
(ii) the Accrued Obligations.


 


(f)          Termination
by Employee without Good Reason. Employee may terminate his employment without Good Reason by providing the Company sixty (60) days’
written notice of such termination. In the event of a termination of employment by Employee under this Section 7(f), Employee
shall be entitled only to the Accrued Obligations. In the event of termination of Employee’s employment under this Section 7(f),
the Company may, in its sole and absolute discretion, by written notice accelerate such date of termination without changing the
characterization of such termination as a termination by Employee without Good Reason. Following such termination of Employee’s
employment by Employee without Good Reason, except as set forth in this Section 7(f) or as otherwise provided in Section 7(g)
or under any Company benefit plan (other than severance plans that are broad based), Employee shall have no further rights to any
compensation or any other benefits under this Agreement. For the avoidance of doubt, except as otherwise provided in Section 7(g)
or under any Company benefit plan (other than severance plans that are broad based), Employee’s sole and exclusive remedy
upon a termination of employment by Employee without Good Reason shall be receipt of the Accrued Obligations.


 


(g)          Termination
following a Sale Event. In the event Employee’s employment is terminated within eighteen (18) months following
a Sale Event (using the most expansive meaning given to such term in the Inducement Plan and/or the Company’s incentive equity
plans, that have been approved by the Company’s shareholders and pursuant to which any applicable equity grants have been
made to Employee, as the case may be): (a) by the Company for any reason other than as a result of Employee’s
death or Disability pursuant to Section 7(b) or a with Cause termination as definition in Section 1(h) hereof or (b) by
Employee with Good Reason pursuant to Section 7(e), Employee shall be eligible for (in lieu of, and  not in addition
to, any payments described in Section 7(c), (d), or (e) of this Agreement):


 


(i)          The
Accrued Obligations;


 


(ii)         The
Severance Benefits, provided that he fully executes and does not revoke an effective Release of Claims as described in Section 7(h)
and continues to comply with the Confidentiality Agreement;


 




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(iii)        To
the extent not otherwise accelerated and vested in connection with a Sale Event in accordance with the Inducement Plan, acceleration
of the vesting of 100% of Employee’s then outstanding unvested equity awards, such that all unvested equity awards vest and
become fully exercisable or non-forfeitable as of the Date of Termination (the “Accelerated Equity Benefit”),
in which case Employee shall have ninety (90) days from the Date of Termination to exercise the vested equity awards; and


 


(iv)        payment of a
pro rata portion of Employee’s Target Cash Bonus for the year in which the Date of Termination occurs, the amount of which
is calculated based on the number of days he is employed by the Company in the year of the Date of Termination and based upon the
determination by the Board of achievement of the Company against the Company’s corporate goals for such year pursuant to
Section 4(b) of this Agreement (the “Pro Rata Bonus Payment”).


 


Notwithstanding the foregoing, the Severance
Benefits shall immediately terminate, and the Company shall have no further obligations to Employee with respect thereto, in the
event that Employee is found by a court of competent jurisdiction to have breached this Agreement, any provision of the Confidentiality
Agreement or the Release of Claims. Any such termination of payment or benefits shall have no effect on the Release of Claims or
any of Employee’s post-employment obligations to the Company. If the Company makes overpayments of Severance Benefits, Employee
promptly shall return any such overpayments to the Company and/or hereby authorizes deductions from future Severance Benefit amounts.


 


(h)       Release.
Notwithstanding any provision herein to the contrary, the payment of the Severance Benefits and the Pro Rata Bonus Payment, and
the provision of the Accelerated Equity Benefit, pursuant to subsection (d), (e) or (g) of this Section 7, shall
be conditioned upon Employee’s execution, delivery to the Company, and non-revocation of the Release of Claims (and the expiration
of any revocation period contained in such Release of Claims) in accordance with the time limits set forth therein (and, in all
events, within sixty (60) days following the Date of termination). If Employee fails to execute the Release of Claims in such
a timely manner, or timely revokes Employee’s acceptance of such release following its execution, Employee shall not be entitled
to any of the Severance Benefits, the Pro Rata Bonus Payment, or the Accelerated Equity Benefit. Payment of the Severance Benefits
will commence on the first regular Company payday that is at least five (5) business days following the date the Company receives
a timely, effective and non-revocable Release of Claims (the “Payment Date”); provided, however, that the first
payment will be retroactive to the day immediately following the Date of Termination. Payment of the Pro Rata Bonus Payment will
also be made on the Payment Date. Notwithstanding the foregoing, to the extent that any portion of the Severance Benefits or Pro
Rata Bonus Payment constitutes “non-qualified deferred compensation” subject to Section 409A of the Code, any
payment of such portion scheduled to occur prior to the sixtieth (60th) day following the date of Employee’s termination
of employment hereunder, but for the condition on executing the Release of Claims as set forth herein, shall not be made until
the first regularly scheduled payroll date following such sixtieth (60th) day unless otherwise permitted by Section 409A of
the Code, after which any remaining such benefits shall thereafter be provided to Employee according to the applicable schedule
set forth herein.


 


Section 8.       Confidentiality Agreement;
Cooperation.


 


(a)       Confidentiality
Agreement. As a condition of Employee’s employment with the Company under the terms of this Agreement, Employee has executed
and delivered to the Company a Confidentiality Agreement. The parties hereto acknowledge and agree that this Agreement and the
Confidentiality Agreement shall be considered separate contracts. In addition, Employee represents and warrants that he shall be
able to and will perform the duties of this position without utilizing any confidential and/or proprietary information that Employee
may have obtained in connection with employment with any prior employer, and that he shall not (i) disclose any such information
to the Company, or (ii) induce any Company employee to use any such information, in either case in violation of any confidentiality
obligation, whether by agreement or otherwise.


 




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(b)       Litigation
and Regulatory Cooperation. During and after Employee’s employment, Employee shall cooperate fully with the Company in
the defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf
of the Company which relate to events or occurrences that transpired while the Company employed Employee, provided, that the Employee
will not have an obligation under this paragraph with respect to any claim in which the Employee has filed directly against the
Company or related persons or entities or if such cooperation would be materially adverse to his own legal interests. The Employee’s
full cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with counsel
to prepare for discovery or trial and to act as a witness on behalf of the Company at mutually convenient times. During and after
Employee’s employment, Employee also shall cooperate fully with the Company in connection with any investigation or review
of any federal, state or local regulatory authority as any such investigation or review relates to events or occurrences that transpired
while Employee was employed by the Company, provided Employee will not have any obligation under this paragraph with respect to
any claim in which Employee has filed directly against the Company or related persons or entities. The Company shall reimburse
Employee for any reasonable out-of-pocket expenses incurred in connection with Employee’s performance of obligations pursuant
to this Section 8(b).


 


Section 9.       Taxes. The Company may withhold from any payments made under this Agreement all applicable taxes, including but not limited
to income, employment, and social insurance taxes, as shall be required by law. Employee acknowledges and represents that the Company
has not provided any tax advice to him in connection with this Agreement and that Employee has been advised by the Company to seek
tax advice from Employee’s own tax advisors regarding this Agreement and payments that may be made to him pursuant to this
Agreement, including specifically, the application of the provisions of Section 409A of the Code to such payments. The Company
shall have no liability to Employee or to any other person if any of the provisions of this Agreement are determined to constitute
deferred compensation subject to Section 409A but that do not satisfy an exemption from, or the conditions of, that section,
except in the event of the Company’s or its subsidiaries’ gross negligence or bad faith.


 


Section 10.      Additional Section 409A Provisions. Notwithstanding any provision in this Agreement to the contrary:


 


(a)       If at the
time of the Employee’s separation from service within the meaning of Section 409A of the Code, the Company determines
that the Employee is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, then to
the extent any payment or benefit that the Employee becomes entitled to under this Agreement on account of the Employee’s
separation from service is “non-qualified deferred compensation” subject to Section 409A of the Code and not otherwise
exempt, such payment shall not be payable and such benefit shall not be provided until the date that is the earlier of (i) six
months and one day after the Employee’s separation from service, or (ii) the Employee’s death. If any such delayed
cash payment is otherwise payable on an installment basis, the first payment shall include a catch-up payment covering amounts
that would otherwise have been paid during the six-month period but for the application of this provision, and the balance of the
installments shall be payable in accordance with their original schedule.


 


(b)       Each payment
in a series of payments hereunder shall be deemed to be a separate payment for purposes of Section 409A of the Code. Neither
the Company nor Employee shall have the right to accelerate or defer the delivery of any such payments except to the extent specifically
permitted or required by Section 409A.


 




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(c)       To the extent
that any right to reimbursement of expenses or payment of any benefit in-kind under this Agreement constitutes nonqualified deferred
compensation (within the meaning of Section 409A of the Code), (i) any such expense reimbursement or payment shall be
made by the Company no later than the last day of the taxable year following the taxable year in which such expense was incurred
by Employee, (ii) the right to reimbursement, payment or in-kind benefits shall not be subject to liquidation or exchange
for another benefit, and (iii) the amount of expenses eligible for reimbursement, payment or in-kind benefits provided during
any taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits to be provided in any other taxable
year; provided , that the foregoing clause shall not be violated with regard to expenses reimbursed under any arrangement
covered by Section 105(b) of the Code solely because such expenses are subject to a limit related to the period the arrangement
is in effect.


 


(d)       To the extent
that any payment or benefit described in this Agreement constitutes “non-qualified deferred compensation” under Section 409A
of the Code, and to the extent that such payment or benefit is payable upon the Employee’s termination of employment, then
such payments or benefits shall be payable only upon the Employee’s “separation from service.” The determination
of whether and when a separation from service has occurred shall be made in accordance with the presumptions set forth in Treasury
Regulation Section 1.409A-1(h).


 


(e)       The parties
intend that this Agreement will be administered in accordance with Section 409A of the Code. To the extent that any provision
of this Agreement is ambiguous as to its compliance with Section 409A of the Code, the provision shall be read in such a manner
so that all payments hereunder comply with Section 409A of the Code. The parties agree that this Agreement may be amended,
as reasonably requested by either party, and as may be necessary to fully comply with Section 409A of the Code and all related
rules and regulations in order to preserve the payments and benefits provided hereunder without additional cost to either party.
While the payments and benefits provided hereunder are intended to be structured in a manner to avoid the implication of any penalty
taxes under Section 409A of the Code, in no event whatsoever shall the Company or any of its subsidiaries be liable for any
additional tax, interest, or penalties that may be imposed on Employee as a result of Section 409A of the Code or any damages
for failing to comply with Section 409A of the Code (other than for withholding obligations or other obligations applicable
to employers, if any, under Section 409A of the Code) , except in the event of the Company’s or its subsidiaries’
gross negligence or bad faith.


 


Section 11.       Successors and Assigns.


 


(a)       The Company.
This Agreement shall inure to the benefit of the Company and its respective successors and assigns. This Agreement may not be assigned
by the Company without Employee’s prior consent.


 


(b)       Employee.
Employee’s rights and obligations under this Agreement shall not be transferable by Employee by assignment or otherwise,
without the prior written consent of the Company; provided, however, that if Employee shall die, all cash amounts
then payable to Employee hereunder shall be paid in accordance with the terms of this Agreement to Employee’s devisee, legatee,
or other designee, or if there be no such designee, to Employee’s estate.


 


Section 12.       Waiver
and Amendments. Any waiver, alteration, amendment, or modification of any of the terms of this Agreement shall be valid only
if made in writing and signed by each of the parties hereto; provided, however, that any such waiver, alteration,
amendment, or modification must be consented to on the Company’s behalf by the Board. No waiver by either of the parties
hereto of their rights hereunder shall be deemed to constitute a waiver with respect to any subsequent occurrences or transactions
hereunder unless such waiver specifically states that it is to be construed as a continuing waiver.


 




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Section 13.       Severability.
If any covenants or such other provisions of this Agreement are found to be invalid or unenforceable by a final determination
of a court of competent jurisdiction, (a) the remaining terms and provisions hereof shall be unimpaired, and (b) the
invalid or unenforceable term or provision hereof shall be deemed replaced by a term or provision that is valid and enforceable
and that comes closest to expressing the intention of the invalid or unenforceable term or provision hereof.


 


Section 14.       Governing
Law and Jurisdiction. This is a Maryland contract and shall be construed under and be governed in all respects by the laws
of Maryland without giving effect to the conflict of laws principles of such state. With respect to any disputes concerning federal
law, such disputes shall be determined in accordance with the law as it would be interpreted and applied by the United States
Court of Appeals for the Fourth Circuit. To the extent that any court action is initiated to enforce this Agreement, the parties
hereby consent to the non-exclusive jurisdiction of the state and federal courts of Maryland. Accordingly, with respect to any
such court action, Employee (a) submits to the personal jurisdiction of such courts; (b) consents to service of process;
and (c) waives any other requirement (whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction
or service of process.


 


Section 15.       Notices.



 


(a)       Place of
Delivery. Every notice or other communication relating to this Agreement shall be in writing, and shall be mailed to or delivered
to the party for whom or which it is intended at such address as may from time to time be designated by it in a notice mailed or
delivered to the other party as herein provided; provided, that unless and until some other address be so designated, all
notices and communications by Employee to the Company shall be mailed or delivered to the Company at its principal executive office,
and all notices and communications by the Company to Employee may be given to Employee personally or may be mailed to Employee
at Employee’s last known address, as reflected in the Company’s records.


 


(b)       Date of
Delivery. Any notice so addressed shall be deemed to be given or received (i) if delivered by hand, on the date of such
delivery, (ii) if mailed by courier or by overnight mail, on the first business day following the date of such mailing, and
(iii) if mailed by registered or certified mail, on the third business day after the date of such mailing.


 


Section 16.      Section Headings. The headings of the sections and subsections of this Agreement are inserted for convenience only and shall
not be deemed to constitute a part thereof or affect the meaning or interpretation of this Agreement or of any term or provision
hereof.


 


Section 17.       Entire Agreement. This Agreement, together with Confidentiality Agreement, the Inducement Plan, and any stock option agreement
entered into between the Company and Employee thereunder, constitute the entire understanding and agreement of the parties hereto
regarding the employment of Employee. This Agreement supersedes all prior negotiations, discussions, correspondence, communications,
understandings, and agreements between the parties (including without limitation that certain Term Sheet offer letter given to
Employee) relating to the subject matter of this Agreement.


 


Section 18.       Survival of Operative Sections. Upon any termination of Employee’s employment, the provisions of Section 7 through
Section 19 of this Agreement (together with any related definitions set forth in Section 1 hereof) shall survive to the
extent necessary to give effect to the provisions thereof.


 


Section 19.       Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original but
all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual or facsimile
signature.


 




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Section 20.       Gender Neutral. Wherever used herein, a pronoun in the masculine gender shall be considered as including the feminine gender
unless the context clearly indicates otherwise.


 


Section 21.       Expenses.
The Company agrees to pay (i) Employee’s reasonable legal, accounting and other expenses incurred in connection with the
negotiation and execution of this Agreement and the consummation of the transactions contemplated by and related to this Agreement
and (ii) any reasonable legal fees incurred in connection with any amendment, modification or waiver of any of the provisions
of this Agreement or any other agreement between Employee and the Company; provided, that the aggregate amount of the expenses
to be reimbursed pursuant to clause (i) and (ii) shall not exceed $15,000 in the aggregate.


 


 


IN WITNESS WHEREOF, the undersigned have
executed this Agreement as of the date first above written.


 


	NEURALSTEM, INC.
	 	 
	 	 	
        /s/

	By: Dr. Karl Johe	 	 
	Title: Chairman of the Board	 	 


 


	EMPLOYEE
	 	 
	 	 	
        /s/

	By: Richard Daly	 	 


 




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EXHIBIT A


 


General Release and Waiver of Claims


 


In exchange for the
severance benefits to be provided to me under the Employment Agreement between me and Neuralstem, Inc. (the “Company”),
dated as of February [*], 2016 (the “Employment Agreement”), to which I would not otherwise be entitled, on my own
behalf and that of my heirs, executors, administrators, beneficiaries, personal representatives and assigns, I agree that this
General Release and Waiver of Claims (the “Release of Claims”) shall be in complete and final settlement of any and
all causes of action, rights and claims, whether known or unknown, accrued or unaccrued, contingent or otherwise, that I have had
in the past, now have, or might now have, in any way related to, connected with or arising out of my employment or its termination,
under the Employment Agreement, or pursuant to Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act,
the Age Discrimination in Employment Act, as amended by the Older Workers Benefit Protection Act, the Worker Adjustment and Retraining
Notification Act, the Employee Retirement Income Security Act, the wage and hour, wage payment and fair employment practices laws
and statutes of the State of Maryland (each as amended from time to time), and/or any other federal, state or local law, regulation
or other requirement (collectively, the “ Claims ”), and I hereby release and forever discharge the Company,
its subsidiaries and all of their respective past, present and future directors, shareholders, officers, members, managers, general
and limited partners, employees, employee benefit plans, administrators, trustees, agents, representatives, successors and assigns,
and all others connected with any of them, both individually and in their official capacities, from, and I hereby waive, any and
all such Claims. This release shall not apply to (a) any claims that arise after I sign this Release of Claims, including
my right to enforce the terms of this Release of Claims; (b) any claims that may not be waived pursuant to applicable law;
(c) any right to indemnification that I may have under the certificate of incorporation or by-laws of the Company, and any
Indemnification Agreement between me and the Company or any insurance policies maintained by the Company; or (d) any right
to receive any vested benefits under the terms of any employee benefit plans and my award agreements thereunder.


 


Nothing contained in this Release of Claims
shall be construed to prohibit me from filing a charge with or participating in any investigation or proceeding conducted by the
federal Equal Employment Opportunity Commission or a comparable state or local agency, provided, however, that I hereby agree to
waive my right to recover monetary damages or other individual relief in any charge, complaint or lawsuit filed by me or by anyone
else on my behalf.


 


In signing this Release of Claims, I acknowledge
my understanding that I may consider the terms of this Release of Claims for up to [twenty-one (21)/forty-five (45)]1
days from the date I receive it and that I may not sign this Release of Claims until after the date my employment with the Company
terminates. I also acknowledge that I am hereby advised by the Company to seek the advice of an attorney prior to signing this
Release of Claims; that I have had sufficient time to consider this Release of Claims and to consult with an attorney, if I wished
to do so, or to consult with any other person of my choosing before signing; and that I am signing this Release of Claims voluntarily
and with a full understanding of its terms.


 


I further acknowledge that, in signing
this Release of Claims, I have not relied on any promises or representations, express or implied, that are not set forth expressly
in the Release of Claims. I understand that I may revoke this Release of Claims at any time within seven (7) days of the date
of my signing by written notice to the Chairman of the Company’s Board of Directors and that this Release of Claims will
take effect only upon the expiration of such seven-day revocation period and only if I have not timely revoked it.


 


 






1To be determined by the Company
at the time of termination.


 




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Intending to be legally bound, I have signed this Release of
Claims under seal as of the date written below.


 


	Signature 	 	 
	 	 	 
	Name 	 	 
	 	 	 
	Date Signed 	 	 


 




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EXHIBIT B


Confidentiality Information and Assignment
Agreement