EMPLOYMENT
      AGREEMENT

    


    THIS
      EMPLOYMENT AGREEMENT (the “Agreement”), dated as of 21 September, 2007, between
      Prana Biotechnology Limited, an Australian corporation (the “Company”) with its
      principal offices at Level 2, 369 Royal Parade, Parkville, Victoria, Australia
      and Geoffrey Kempler (the “Executive”) residing at 19 Crotonhurst Avenue, North
      Caulfield 3161 Victoria, Australia.

    


    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;

    


    
      	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, 21 September, 2007,
      and continue until termination as provided herein (the “Employment Period”). It
      is acknowledged that the Executive has previously provided services to the
      Company, this Agreement applies only to his employment as from (and including)
      21 September, 2007 and prior accrued entitlements of the Executive are not
      adversely affected by this Agreement.

    


    
      	3.	
              Position
                and Duties

            


    

    The
      Executive hereby agrees to serve as our Executive Chairman and Chief Executive
      Officer (CEO) of the Company and shall have the duties, responsibilities and
      authority in respect of his CEO function as more fully set forth on Attachment
      A
      attached hereto. In such capacity the Executive shall report to the Board of
      Directors of the Company and shall serve on the Board of Directors. As an
      existing Director of the Company, termination of the CEO role will not terminate
      the Executive’s directorship on the Board. The Executive shall devote his best
      efforts 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.

    


    
      	4.	
              Compensation
                and Other Terms of Employment

            


    

    


    
      	 	
              (a)

            	
              Base
                Compensation

            


    

    In
      consideration of the performance of his duties for the Company, for the period
      beginning 21 September, 2007 through and including the termination of this
      Agreement as provided herein, the Executive’s base salary compensation will be
      no less then $386,400 (including superannuation) per year (the “Base Salary”)
      payable in accordance with the Company’s regular payroll practices (eg, timing
      of payments and standard employee deductions, such as income and employment
      tax
      withholdings). Made up as $315,000 (including superannuation) for Executive
      Chairman and $71,400 (including superannuation) for additional CEO duties to
      be
      increased by CPI annually, commencing 1 February 2008. The foregoing salary
      may
      be increased, but not decreased, at the discretion of the Board of Directors.
      

    


    
      	 	
              (b)

            	
              Bonus
                Compensation

            


    

    The
      Company will pay the Executive the following bonuses:

    
      	 	
              ·

            	
              Bonus
                of $50,000 following a capital raising of at least A$7m (before costs)
                prior to 30 September 2007.

            


    

    
      	 	
              ·

            	
              Bonus
                of $25,000 following a further capital raising of at least A$12m
                (before
                costs) anytime in the 2008 financial year.


            


    

    
      	 	
              ·

            	
              Bonus
                of $25,000 for attaining a share price above $0.60 for at least four
                consecutive trading days by 30 June 2008


            


    

    
      	 	
              ·

            	
              Bonus
                of $50,000 for implementation of the following:


            


    

    
      	 	
              o

            	
              Completion
                of clinical trial recruitment by 30 September 2007 - $10K bonus
                

            


    

    
      	 	
              o

            	
              Completion
                of signed Statistical Analysis Report by 29 February 2008 - $10K
                bonus 

            


    

    
      	 	
              o

            	
              Regular
                meetings (minimum twice yearly) of the full Integrated Advisory Board
                -
                $6K bonus 

            


    

    
      	 	
              o

            	
              Review
                and provide written proposal to the board of Prana’s Intellectual Property
                Portfolio to determine other value add opportunities for license,
                merger
                and acquisition or divestment by 31 December 2007 - $14K bonus
                

            


    

    
      	 	
              o

            	
              Develop
                Prana staff retention strategy and action plan by 31 October 2007
                and
                implement by 31 December 2007 - $10K bonus


            


    

     

    
      
         

      

      
        Page
          1 of 7

        
          

        

      

      
         

      

       

    

    Upon
      termination of this Agreement pursuant to the Executive’s death or disability
      pursuant to Section 5(e) below, the company shall pay a pro-rata bonus pursuant
      to Section 5(e).

    


    
      	 	
              (c)

            	
              It
                is intended that the Executive should have no disincentive to his
                spending
                additional days each year in the USA. Accordingly, the Base Salary
                and
                bonus will be adjusted each year (by the agreement between the Executive
                and the Board of Directors) to compensate the Executive for differences
                in
                Australian and United States tax rates in the event that this difference
                has penalized the Executive for spending significant time in the
                USA.

            


    

    


    
      	 	
              (d)

            	
              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 or all reasonable business expenses
      actually incurred in the performance of his duties for the Company.

    


    
      	 	
              (e)

            	
              Vacation

            


    

    The
      Executive shall be entitled to twenty (20) days of vacation during each calendar
      year of the Employment Period. Any vacation days that the Executive does not
      use
      in a calendar year will automatically be carried over for the use in the
      following year to a maximum carry of two years. Any vacation days that the
      Executive has not used at the termination of the Employment Period will be
      paid
      to the Executive at his Base Salary rate in effect at the time of
      termination.

    


    
      	 	
              (f)

            	
              Benefits

            


    

    The
      Executive shall be entitled to participate in such employment benefits,
      including but not limited to a retirement plan, health, dental, life insurance,
      and short 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.

    


    
      	 	
              (g)

            	
              Review

            


    

    The
      Remuneration Committee of the Company (or if there is no Remuneration Committee
      for the time being, the Board or a committee of the Board) shall not less than
      once each year consider and if thought fit recommend to the Board (or, in the
      case of the Board, propose) changes to the salary to be received by the
      Executive pursuant to this Agreement or as applying after an earlier review
      or
      amendment of terms. The purpose of the review and recommended or proposed
      changes shall be to ensure that the salary of the Executive, when considered
      together with all other benefits to which the Executive is or may become
      entitled under this Agreement, is comparable with and maintains parity with
      salaries representatives payable to executives in like circumstances when
      benefits to which such executives may reasonably be expected to be or to become
      entitled are taken into account. Such review shall be carried out in accordance
      with the Corporate governance policies of the Company applicable at the time
      (if
      any). The Executive shall not be involved in any discussions or decision
      concerning recommendations or proposals.

    


    
      
        
          	5.	
                  Terminations
                    and Consequences

                


        

      

    

    


    
      	 	
              (a)

            	
              The
                Executive’s Right to Terminate

            


    

    Notwithstanding
      any other provision of this Agreement to the contrary, the Executive may
      terminate this Agreement; 

    
      	
            	(i)	
              at
                any time during the Employment Period for Good Reason (as defined
                in
                Section 5 (f) below), on at least thirty (30) days’ prior written notice;
                or 

            


    

    
      	
            	(ii)	
              without
                Good Reason on at least ninety (90) days’ prior written notice to the
                Company.

            


    

     

    
      
         

      

      
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          2 of 7

        
          

        

      

      
         

      

    

     

    
      	 	
              (b)

            	
              The
                Company’s Right to Terminate

            


    

    Notwithstanding
      any other provision of this Agreement to the contrary, the Company may terminate
      this Agreement; 

    
      	
            	(i)	
              at
                any time during the Employment Period for Good Reason (as defined
                in
                Section 5 (f) below), on at least thirty (30) days’ prior written notice;
                or 

            


    

    
      	
            	(ii)	
              without
                Good Reason on at least ninety (90) days’ prior written notice to the
                Executive.

            


    

    


    
      	 	
              (c)

            	
              Consequences
                of Termination Without Cause or for Good
                Reason

            


    

    If
      the
      Company terminates this Agreement without Cause, or if the Executive terminates
      this Agreement with Good Reason, the Company shall:

    
      	
            	(i)	
              pay
                the Executive within ninety (90) days of the termination date $1,000,000
                provided the Company has sufficient capital requirements to fulfil
                this
                clause, 

            


    

    
      	
            	(ii)	
              immediately
                pay the Executive all unreimbursed business expenses and accrued,
                unused
                vacation days; and 

            


    

    
      	
            	(iii)	
              accelerate
                the vesting of any unvested options to purchase ordinary shares and
                permit
                Executive to exercise such options during the remainder of the exercise
                period for such options.

            


    

    


    
      	
            	(d)	
              Consequences
                of Termination With Cause or Without Good
                Reason

            


    

    If
      the
      Company terminates this Agreement with Cause or the Executive terminates this
      Agreement Without Good Reason, then the 

    
      	
            	(i)	
              Executive’s
                Base Salary shall be discontinued upon the termination of the Employment
                Period; 

            


    

    
      	
            	(ii)	
              Bonus
                Compensation shall be pro-rated only if termination with Cause occurs
                in
                the first year; and 

            


    

    
      	
            	(iii)	
              Company
                shall pay the Executive all unreimbursed business expenses and accrued,
                unused vacation days; and 

            


    

    
      	
            	(iv)	
              Executive
                shall be permitted to exercise only unvested options to purchase
                shares
                that pre-existed this contract.

            


    

    


    
      	
            	(e)	
              Consequences
                of Termination for Death or Disability 

            


    

    If
      the
      Executive dies during the term of this Agreement, then the Agreement shall
      terminate except that the Company shall pay to Executive’s estate all accrued
      Base Salary, pro-rate Bonus Compensation and unremibursed business expenses
      and
      accrued, unused vacation days that the Executive would otherwise have been
      entitled to receive. Executive’s estate shall also be permitted to exercise
      Executive’s vested options for shares. If the Executive is unable to perform his
      functions because of Disability and the Agreement is terminated for that reason,
      the Executive shall be entitled to receive the same amount that the Company
      would be obligated to pay if the Executive had died during the term of this
      Agreement less the amounts of payment under any disability policy maintained
      by
      the Company.

    


    
      	
            	(f)	
              Definition
                of Good Reason 

            


    

    “Good
      Reason” means:

    
      	
            	(i)	
              a
                material reduction of the Executive’s duties and responsibilities from
                those in effect immediately prior to the reduction or change,
                

            


    

    
      	
            	(ii)	
              a
                requirement that the Executive relocate his primary office more then
                50
                kilometers from North Caulfield, Victoria, or


            


    

    
      	
            	(iii)	
              material
                breach by the Company of any provision of this Agreement after receipt
                of
                ten (10) days written notice thereof from the Executive and failure
                by the
                Company to cure the breach within thirty (30) days thereafter, or
                

            


    

    
      	
            	(iv)	
              the
                occurrence of an event described in sub-paragraphs i), ii), iii)
                or iv) of
                Section 5(i) where notice is given by the Executive in accordance
                with
                sub-paragraph (BB) of Section 5(i).

            


    

     

    
      
         

      

      
        Page
          3 of 7

        
          

        

      

      
         

      

    

     

    
      	
            	(g)	
              Definition
                of Cause 

            


    

    “Cause”
      means the Executive’s:

    
      	
            	(i)	
              conviction
                of a felony, 

            


    

    
      	
            	(ii)	
              commission
                of acts of fraud, misappropriation, embezzlement, or theft, or
                

            


    

    
      	
            	(iii)	
              willful
                or repeated failure to follow lawful specific directives of the Board
                of
                Directors to act or refrain from acting, which directives are consistent
                with the Executive’s position as Chief Executive Officer of the Company.
                Before the Company can terminate the Executive for Cause under clause
                (g)(iii) of this Section 5(g), the Company must give the Executive
                written
                notice setting forth the Company’s dissatisfaction with the Executive and
                the reasons therefore, and give the Executive thirty (30) days to
                cure the
                circumstances supporting the for Cause
                determination.

            


    

    


    
      	
            	(h)	
              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 sixty (60) consecutive days or an aggregate of ninety (90)
      days in any 365 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 selected by
      the
      Company and the Executive.

    


    
      	
            	(i)	
              Change
                of Control

            


    

    Despite
      anything to the contrary in this Agreement in the event that:

    
      	
            	(i)	
              there
                is an effective change of control of fifty percent (50%) of the issued
                capital of the Company:

            


    

    
      	
            	(ii)	
              the
                business, operations or capital of the Company is merged in or combined
                with that of another entity or entities; or


            


    

    
      	
            	(iii)	
              the
                membership of the Board changes to the extent that at least 50% of
                the
                Board did not hold office at the date of this Agreement;
                or

            


    

    
      	
            	(iv)	
              control
                of the composition of the Board changes to the extent that control
                of the
                composition of the Board is or can be exercised by the parties who
                did not
                control the Composition of the Board at the date of this
                Agreement,

            


    

    


    then,
      without limiting the other circumstances in which Section 5(c) may apply,
      Section 5 (c) shall apply:

    


    
      	 	
              (AA)

            	
              if
                the company subsequently terminates this Agreement without Cause
                (as
                herein defined); and

            


    

    
      	 	
              (BB)

            	
              if
                the Executive terminates this Agreement, which termination shall
                be deemed
                to have been termination with Good Reason (as herein defined) provided
                always that the Executive gives at least one (1) month’s written notice to
                the Company within a period of six (6) months immediately following
                the
                occurrence of an event described in sub-paragraphs i), ii), iii)
                or iv) of
                this Section 5(i)

            


    

    


    
      	
            	(j)	
              Non-disparagement

            


    

    In
      the
      event that Executive terminates this Agreement with or without Good Reason,
      or
      that the Company terminates this Agreement with or without Cause, the Company
      and the Executive agree that they will not disparage each other in any
      way.

    


    
      	
            	(k)	
              Resignation
                as a Director

            


    

    If
      the
      Executive resigns as a Director he shall immediately resign (or be deemed to
      have resigned) as Chief Executive Officer (CEO) and to have terminated this
      Agreement. The provisions of this Section 5 shall apply to such termination
      of
      this Agreement (that is, such termination or deemed termination of this
      Agreement by the Executive shall either have been with Good Reason or not with
      Good Reason, as the case may be, as provided for above).

     

    
      
         

      

      
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          4 of 7

        
          

        

      

      
         

      

    

     

    
      
        
          	6.	
                  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. 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
      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
      then 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 as soon as possible after the
      Company’s written request, the Executive will return to the Company all written
      Confidential Information which has been provided to the Executive and the
      Executive will destroy all copies of any analyses, complications, studies or
      other documents prepared by the Executive or for the Executives’ use containing
      or reflecting any Confidential Information.

    


    
      	
            	(d)	
              Definition

            


    

    For
      the
      purposes of this Agreement, “Confidential Information” shall mean all
      confidential and proprietary information of he Company, and its affiliates,
      including, without limitation the company’s scientific information, 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,
      investigation or other information or similar character. For Executives’
obligations under the 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, the Company and the Company’s affiliates, not under agreement to
                maintain the confidentially of the same and


            


    

    
      	 	
              (iii)
                

            	
              information
                which is required to be disclosed by law or legal process and
                

            


    

    
      	 	
              (iv)
                

            	
              information
                known to Executive prior to commencement of his employment with the
                Company, as evidenced by written
                documentation.

            


    

    


    
      
        
          	7.	
                  Arbitration

                


        

      

    

    


    
      	
            	(a)	
              Good
                Faith Discussions

            


    

    The
      parties shall meet and discuss in good faith any dispute between them arising
      out of this Agreement.

    


    
      	
            	(b)	
              Mediation

            


    

    If
      the
      discussions referred to in the preceding Section 7(a) fail to resolve the
      relevant dispute, either party may (by written notice to the other party)
      require that the dispute be submitted for mediation by a single mediator
      nominated by the President for the time being of the Victorian Law Institute.
      In
      the event of any such submission to mediation:

    
      	
            	i)	
              The
                mediator shall be deemed to be not acting as an expert or as an
                arbitrator;

            


    

    
      	
            	ii)	
              The
                mediator shall determine the procedure and timetable for the mediation;
                and

            


    

    
      	
            	iii)	
              The
                cost of the mediation shall be shared equally between the
                parties

            


    

     

    
      
         

      

      
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          5 of 7

        
          

        

      

      
         

      

    

     

    
      	
            	(c)	
              Legal
                Proceedings

            


    

    Neither
      party may issue any legal proceedings in respect of any such dispute unless
      that
      party has first taken all reasonable steps to comply with Sections 7(a) and
      (b).

    


    
      	8.	
              Miscellaneous
                Provisions 

            


    

     

    
      	
            	(a)	
              Notices

            


    

    All
      notices, offers or other communications required or permitted to be given or
      made 

    
      	
            	(i)	
              if
                delivered personally; 

            


    

    
      	
            	(ii)	
              after
                the expiration of thirty (30) days from the date upon which such
                notice
                was mailed from within the United States or Australia by certified
                mail,
                return receipt requested, postage prepaid; or


            


    

    
      	
            	(iii)	
              upon
                receipt by prepaid telegram, facsimile transmission or electronic
                mail
                transmission (with written confirmation of receipt for each kind
                of
                transmission). 

            


    

    


    All
      notices given or made pursuant hereto shall be so given or made to the Executive
      at the address contained in the Company’s personnel records and to the Company
      at its headquarters, addressed to the attention of the Chair of the Board of
      Directors.

    


    
      	
            	(b)	
              The
                Executive’s Representations and
                Warranties

            


    

    The
      Executive hereby represents and warrants that he is not a party to any
      agreement, contract or understanding that would in any way restrict or prohibit
      him from undertaking or performing any of his obligations under this
      Agreement.

    


    
      	
            	(c)	
              Amendments

            


    

    Except
      as
      set forth Section 4 above, this Agreement shall not be changed or amended unless
      in writing and signed by both the Executive and the Company.

    


    
      	
            	(d)	
              Governing
                Law

            


    

    This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of Victoria applicable to contracts executed in and to be performed
      entirely within that jurisdiction. Each party irrevocably submits to the
      non-exclusive jurisdiction of courts of that state and the courts of appeal
      therefrom and waives any right to object to such jurisdiction on the basis
      of
      domicile or of being an inconvenient forum.

    


    
      	
            	(e)	
              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.

    


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

    


    


    PRANA
      BIOTECHNOLOGY LIMITED

    


    


    
      
        
          

        

      

    

    George
      Mihaly 

    Remuneration
      Committee 

    


    THE
      EXECUTIVE:

    


    


    
      

    

    Geoffrey
      Kempler

     

    
      
         

      

      
        Page
          6 of 7

        
          

        

      

      
         

      

       

    

    ATTACHMENT
      A

    


    DESCRIPTION
      OF DUTIES

    


    


    The
      Executive shall have the responsibilities and functions generally associated
      with the position of Chief Executive Officer (CEO), including but not limited
      to:

    


    
      	 	
              ·

            	
              Develop
                and implement a business plan approved by the Board of Directors
                to
                provide a clear and rational basis for the ongoing prioritization
                of the
                Company’s activities and resource allocation, updated as
                required.

            


    

    


    
      	 	
              ·

            	
              Develop
                and expand the management team of the
                Company.

            


    

    


    
      	 	
              ·

            	
              Demonstrate
                strong commerciality in dealing with Company’s
                assets.

            


    

    


    
      	 	
              ·

            	
              Direct
                and oversee relationships with major pharmaceutical companies, government
                regulatory agencies, investors and
                others.

            


    

    


    
      	 	
              ·

            	
              Work
                to continually improve the capitalization and ensure the ongoing
                funding
                of the Company.

            


    

    


    
      	 	
              ·

            	
              Comply
                with the current or future Company
                policies.

            


    

    


    
      
         

      

      
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          7 of 7