Document:

Exhibit 10.2

 

	 	Contract number (FI No): 92335
	 	Contract number (FI No): 91870
	 	Serapis No: 2019-0880

 

Innovative Cell Therapies (EGFF)

 

Guarantee Agreement

 

between the

 

European Investment Bank

 

and

 

Pluristem Ltd.

 

and

 

Pluristem GmbH

 

30 September, 2020

 

     

     

    

 

	Article
    1 INTERPRETATION AND DEFINITIONS	2
	 	 
	1.01	Interpretation	2
	 	 	 
	1.02	Definitions	3
	 	 	 
	Article
    2 FINANCE DOCUMENTS	5
	 	 
	Article
    3 GUARANTEE	5
	 	 
	3.01	Guarantee (Garantie)
    and Indemnity (Ausfallhaftung)	5
	 	 	 
	3.02	Demands and payments	5
	 	 	 
	3.03	Independent payment
    obligation	6
	 	 	 
	3.04	No defences	6
	 	 	 
	3.05	Immediate recourse	7
	 	 	 
	3.06	Appropriations	8
	 	 	 
	3.07	Deferral of Guarantor`s
    rights	8
	 	 	 
	3.08	Additional Security	8
	 	 	 
	Article
    4 TERM OF THE GUARANTEE	9
	 	 
	4.01	Term	9
	 	 	 
	4.02	Reinstatement	9
	 	 	 
	Article
    5 REPRESENTATIONS AND WARRANTIES	10
	 	 
	5.01	Representations and
    Warranties of the Guarantor	10
	 	 	 
	5.02	Undertakings of the
    Guarantor	13
	 	 	 
	Article
    6 INFORMATION TO THE BANK	14
	 	 
	6.01	Financial Information	14
	 	 	 
	6.02	Information duties	14
	 	 	 
	Article
    7 DEFAULT INTEREST AND TAXES	15
	 	 
	7.01	Taxes	15
	 	 	 
	7.02	Interest on overdue
    sums	15
	 	 	 
	7.03	Currency conversion	16
	 	 	 
	7.04	Set-off	16
	 	 	 
	Article
    8 CONTINUING OBLIGATIONS	16

 

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	Article
    9 NON WAIVER	16
	 	 
	Article
    10 LAW AND JURISDICTION, miscellaneous	17
	 	 
	10.01	Governing Law	17
	 	 	 
	10.02	Jurisdiction	17
	 	 	 
	10.03	Service of process	17
	 	 	 
	10.04	Place of performance	17
	 	 	 
	10.05	Evidence of sums
    due	18
	 	 	 
	10.06	Entire Agreement	18
	 	 	 
	10.07	Invalidity	18
	 	 	 
	10.08	Amendments	18
	 	 	 
	10.09	Counterparts	18
	 	 	 
	10.10	Assignment and transfer
    by the Bank	19
	 	 	 
	Article
    11 Final Articles	19
	 	 
	11.01	Form of notice	19
	 	 	 
	11.02	Addresses	20
	 	 	 
	11.03	Demand after notice
    to remedy	21
	 	 	 
	11.04	English language	21
	 	 	 
	11.05	Conclusion of this
    Guarantee Agreement (Vertragsschluss)	21

 

    ii

     

    

 

THIS GUARANTEE AGREEMENT IS MADE ON
30 SEPTEMBER, 2020 BETWEEN:

 

	The European Investment Bank having its seat at 100 blvd Konrad Adenauer, Luxembourg, L-2950 Luxembourg, represented by Donald Fitzpatrick, Head of Division, and Mariana Duarte Silva, Counsel;	 	(the “Bank”)
	 	 	 
	and	 	 
	 	 	 
	Pluristem Ltd., a limited liability company incorporated under the laws of the State of Israel, whose registered office is at MATAM Advanced Technology Park

Building 5, Haifa 3508409, Israel, registered with the Israeli Companies Registry under no. 51-337166-6, represented by Chen Franco-Yehuda and Yaacob Yanay;	 	(the “Guarantor”)
	 	 	 
	and	 	 
	 	 	 
	Pluristem GmbH, a limited liability company (Gesellschaft mit beschränkter Haftung) incorporated in Germany, having its office at Brentanoweg 9, 14469 Potsdam, Germany and registered with the commercial register (Handelsregister) of the local court (Amtsgericht) of Berlin (Charlottenburg) under HRB 213655, represented by Chen Franco-Yehuda, Yaacob Yanay and Zalman Aberman.	 	(the “Borrower”)

 

     

     

    

  

WHEREAS:

 

		(A)	Pursuant to a finance contract dated 29 April 2020 and entered into between the Bank as lender
and the Borrower as borrower, the Bank has agreed to grant in favour of the Borrower a credit in the amount of up to EUR 50,000,000
(fifty million euro) (the “Finance Contract”).

 

		(B)	As a condition precedent to any disbursement under the Finance Contract, the Borrower has undertaken
that the Guarantor shall, and the Guarantor has agreed to, grant a guarantee (Garantie) in favour of the Bank pursuant to
the terms of this guarantee agreement (the “Guarantee Agreement”).

 

		(C)	The parties to this Guarantee Agreement expressly agree that any reference in this Guarantee Agreement
to the Finance Contract shall under no circumstances be construed as affecting the independent, unconditional and irrevocable nature
of the guarantee (Garantie) granted pursuant to this Guarantee Agreement.

 

NOW THEREFORE
it is hereby agreed as follows:

 

Article
1

INTERPRETATION AND DEFINITIONS

 

		1.01	Interpretation

 

		(a)	In this Guarantee Agreement, unless a contrary indication appears:

 

		(i)	“Guarantor”, the “Bank” and the “Borrower” shall be construed as
to include its and any subsequent successors in title, permitted assigns and permitted transferees;

 

		(ii)	references to Articles, Recitals, Schedules and (Sub-)Paragraphs are, save if explicitly stipulated
otherwise, references respectively to articles of, and recitals, schedules and (sub-)paragraphs of schedules to, this Guarantee
Agreement. All Recitals and Schedules form part of this Guarantee Agreement;

 

		(iii)	references to “law” or “laws” mean (i) any applicable law and any applicable
treaty, constitution, statute, legislation, decree, normative act, rule, regulation, judgement, order, writ, injunction, determination,
award or other legislative or administrative measure or judicial or arbitral decision in any jurisdiction which is binding or applicable
case law, and (ii) EU Law;

 

		(iv)	references to applicable law, applicable laws or applicable jurisdiction means (i) respectively
a law or jurisdiction applicable to the Guarantor, its respective rights and/or obligations (in each case arising out of or in
connection with the Finance Documents), its capacity and/or assets, and/or, as applicable, (ii) a law or jurisdiction (including
in each case the Bank’s statute) applicable to the Bank, its rights, obligations, capacity and/or assets;

 

		(v)	references to a provision of law are references to that provision as amended or re-enacted;

 

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		(vi)	references to this Guarantee Agreement and any other Finance Document or other agreement or instrument
are references to this Guarantee Agreement or that Finance Document or other agreement or instrument as amended, novated, supplemented,
extended or restated;

 

		(vii)	words and expressions in plural shall include singular and vice versa;

 

		(viii)	a “person” includes any person, firm, company, corporation, government, state or agency
of a state or any association, trust or partnership (whether having separate legal personality or not); and

 

		(ix)	a Default (other than an Event of Default) is “continuing” if it has not been remedied
or waived and an Event of Default is “continuing” if it has not been waived.

 

		(b)	A term used in any notice given under or in connection with this Guarantee Agreement has the same
meaning as ascribed to it in this Guarantee Agreement.

 

		(c)	This Guarantee Agreement is made in the English language. For the avoidance of doubt, the English
language version of this Guarantee Agreement shall prevail over any translation of this Guarantee Agreement. However, where a German
translation of a word or phrase appears in the text of this Guarantee Agreement, the German translation of such word or phrase
shall prevail.

 

		1.02	Definitions

 

A reference to a term defined in the Finance
Contract has the same meaning in this Guarantee Agreement, unless otherwise defined herein. In this Guarantee Agreement:

 

“Bank’s Account”
has the meaning ascribed to such term in Article 3.02(a)(iii) (Demands and payments).

 

“BGB” means the German
Civil Code (Bürgerliches Gesetzbuch).

 

”Demand” has the meaning
ascribed to such term in Article 3.02(a)(Demands and payments).

 

“EUR” or “euro“
means the lawful currency of the Member States of the European Union which adopt or have adopted it as their currency in accordance
with the relevant provisions of the Treaty on European Union and the Treaty on the Functioning of the European Union or their succeeding
treaties.

 

“Fee Letters” means the
Luxembourg law governed letters from the Bank to the Borrower dated 6 January 2020 and dated 29 April 2020.

 

“Finance Documents” means
this Guarantee Agreement, the Finance Contract, the Fee Letters, any other guarantee agreements in relation to the Finance Contract,
any side letters in relation to the Finance Contract and any other document designated a “Finance Document” by the Borrower
and the Bank.

 

“GAAP”
means generally accepted accounting principles in the jurisdiction of incorporation of the respective Obligor, including IFRS.

 

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“Guarantee” means the
guarantee and indemnity granted pursuant to Article 3.01 (Guarantee (Garantie) and Indemnity (Ausfallhaftung)).

 

“InsO” means the German
Insolvency Code (Insolvenzordnung).

 

“Notification” has the
meaning ascribed to such term in Article 3.02(a) (Demands and payments).

 

“Obligor”
means the Borrower and each “Guarantor” stated in the Finance Contract.

 

“Payment Period” has the
meaning ascribed to such term in Article 3.02(b) (Demands and payments).

 

“Security”
means any mortgage, land charge (Grundschuld), pledge, lien, charge, assignment, security transfer (Sicherungsübereignung),
retention of title arrangements, hypothecation, or other security interest securing any obligation of any person or any other agreement
or arrangement having a similar effect.

 

“Tax” means any tax, levy,
impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any
failure to pay or any delay in paying any of the same).

 

“ZPO” means the German
Code of Civil Procedure (Zivilprozessordnung).

 

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Article
2

FINANCE DOCUMENTS

 

The Guarantor hereby confirms
that it has received a copy of the Finance Documents and that it is aware of the contents of the Finance Documents and the transactions
contemplated thereby. The Guarantor further confirms that, to the extent the Finance Documents are in the English language, it
is in command of the English language or has obtained a translation thereof, and to the extent necessary, has made itself familiar
with the contents of the Finance Documents and the transactions contemplated thereby.

 

Article
3

GUARANTEE

 

		3.01	Guarantee (Garantie) and Indemnity (Ausfallhaftung)

 

The Guarantor irrevocably
and unconditionally:

 

		(a)	guarantees (garantiert) by way of an independent payment obligation (selbständiges
Zahlungsversprechen) to the Bank to pay to the Bank any amount of principal, interest, costs, expenses or other amount under
or in connection with the Finance Documents, including, without limitation, any amounts due under the Finance Contract including,
for the avoidance of doubt, any Profit Participation Payments as more specifically defined therein, in each case that has not been
fully and irrevocably paid by the Borrower or any other Obligor when due in accordance with the terms of any other Finance Document,
in each case including, for the avoidance of doubt, any obligation arising out of damages (Schadenersatz), unjust enrichment
(ungerechtfertigte Bereicherung), tort (unerlaubte Handlung) or any claims arising from the insolvency administrator’s
discretion to perform obligations in agreements according to Section 103 InsO; and

 

		(b)	undertakes vis-à-vis the Bank to indemnify (schadlos halten) the Bank against any
cost, loss or liability suffered by the Bank if any obligation of the Borrower under or in connection with any Finance Document
or any obligation guaranteed by it is or becomes unenforceable, invalid or illegal. The amount of the cost, loss or liability shall
be equal to the amount which the Bank would otherwise have been entitled to recover (Ersatz des positiven Interesses).

 

For the avoidance of doubt this
Guarantee does not constitute a surety (Bürgschaft) or a guarantee upon first demand (Garantie auf erstes Anfordern)
and, in particular, receipt of such written demand shall not preclude any rights and/or defences the Guarantor may have with respect
to any payment requested by the Bank under this Guarantee.

 

		3.02	Demands and payments

 

		(a)	Any demand made by the Bank to the Guarantor under this Guarantee Agreement (each, a “Demand”)
shall be made by way of a written notification addressed by the Bank to the Guarantor, sent in accordance with the provisions set
forth in Article 11.01 (Form of notice) below and having the following content (each a “Notification”):

 

		(i)	specifying that the Bank is making a Demand under this Guarantee Agreement;

 

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		(ii)	specifying the amount due and payable by the Guarantor and that such amount is an amount of principal,
interest, costs, expenses or other amount under or in connection with the Finance Documents that has not been fully and irrevocably
paid by the Borrower or any other Obligor when due in accordance with the terms of any other Finance Document as well as the currency
of payment of such sums; and

 

		(iii)	providing details of the relevant bank account into which payment should be made (the “Bank’s
Account”) together with relevant instructions as to how payment should be made (if any),

 

it being understood
that:

 

		(iv)	the Bank shall be under no obligation to provide the Guarantor with any additional document nor
to support its claim with any other justification or evidence, but shall reasonably consider a request reasonably made by the Guarantor
to provide documentary support in order for the Guarantor to assess the relevant claim made; and

 

		(v)	the payment obligation of the Guarantor under this Guarantee Agreement is not subject to the accuracy
or the merit of any statement, declaration or information contained in any Notification.

 

		(b)	The Guarantor shall make the payment requested in the Notification within five (5) Business Days
as from the date of receipt (included) of the relevant Notification (the “Payment Period”) and in the currency
as requested within the Notification.

 

		(c)	The Bank is entitled to request the payment of any amount in one or several instalments.

 

		3.03	Independent payment obligation

 

This Guarantee:

 

		(a)	is independent and separate from the other obligations of the Borrower and is a continuing guarantee
and indemnity which will extend to the ultimate balance of sums payable by the Borrower under the Finance Documents, regardless
of any intermediate payment or discharge in whole or in part; and

 

		(b)	shall extend to any additional obligations of the Borrower resulting from any amendment, novation,
supplement, extension, restatement or replacement of any Finance Document, including without limitation any extension of or increase
in any Loan or the addition of a new loan or tranche under the Finance Contract.

 

		3.04	No defences

 

		(a)	The obligations of the Guarantor under this Guarantee Agreement will not be affected by an act,
omission, matter or thing which relates to the principal obligation (or purported obligation) of the Borrower or any other guarantor
under any other Finance Document and which would reduce, release or prejudice any of its obligations under this Guarantee Agreement,
including any personal defences of the Borrower (Einreden des Hauptschuldners) or any right of revocation (Anfechtung)
or set-off (Aufrechnung) of the Borrower. In particular, the Guarantor by its execution of this Guarantee Agreement:

 

		(i)	consents (willigt ein), as required pursuant or analogue to Section 418 sub-section
1 sentence 3 BGB, to any assumption of debt (Schuldübernahme) or assignment and transfer by assumption of contract
(Vertragsübernahme) which relates to any such principal obligation (or purported obligation); and

 

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		(ii)	waives (verzichtet auf) any defences (Einreden) to which the Borrower in its respective
capacity as principal debtor (Hauptschuldner) of any such principal obligation (or purported obligation) may be entitled.

 

		(b)	The obligations of the Guarantor under this Guarantee Agreement are independent from any other
security or guarantee which may have been or will be given to the Bank. In particular, the obligations of the Guarantor under this
Guarantee Agreement will not be affected by any of the following:

 

		(i)	the release of, or any time (Stundung), waiver or consent granted to, the Borrower or any
other guarantor under any other Finance Document from or in respect of its obligations under or in connection with any Finance
Document,

 

		(ii)	the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect,
take up or enforce, any rights against, or Security over assets of, the Borrower or any other guarantor under any other Finance
Document or any other person or any failure to realise the full value of any Security,

 

		(iii)	any incapacity or lack of power, authority or legal personality of or dissolution or a deterioration
of the financial condition of the Borrower or any other guarantor under any other Finance Document, or

 

		(iv)	any unenforceability, illegality or invalidity of any obligation of the Borrower or any other guarantor
under any other Finance Document.

 

		(c)	For the avoidance of doubt nothing in this Article 3.04 (No defences) shall preclude
any defences that the Guarantor (in its capacity as Guarantor only) may have against the Bank that the Guarantee does not constitute
its legal, valid, binding or enforceable obligations.

 

		(d)	Without derogating from any other provisions of this Guarantee Agreement, the Guarantor hereby
expressly waives all rights and defences under sections 4(b), 4(c), 5, 6, 7(b), 8, 9, 11, 12, 15 and 17 of the Israeli Guarantee
Law, 1967, and all rights and defences under sections 7(b) and 13(b) of the Israeli Pledge Law, 1967, and confirms that the provisions
of the Israeli Guarantee Law and the Israeli Pledge Law shall not affect the rights granted to the Bank under this Guarantee Agreement.

 

		3.05	Immediate recourse

 

The Bank will not be required
to proceed against or enforce any other rights or Security or claim payment from any person before claiming from the Guarantor
under this Guarantee. This applies irrespective of any law or provision of a Finance Document to the contrary.

 

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		3.06	Appropriations

 

Until all amounts which may be
or become payable by the Borrower and the Guarantor under or in connection with the Finance Documents have been unconditionally
and irrevocably paid in full, the Bank may:

 

		(a)	refrain from applying or enforcing any other moneys, Security or rights held or received by the
Bank in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those
amounts or otherwise) and the Guarantor shall not be entitled to the benefit of the same; and

 

		(b)	hold in an account any moneys received from the Guarantor or on account of the Guarantor’s liability
under this Guarantee.

 

		3.07	Deferral of Guarantor’s rights

 

		(a)	Until all amounts which may be or become payable by the Borrower and the Guarantor under or in
connection with the Finance Documents have been irrevocably paid in full and unless the Bank otherwise directs, the Guarantor will
not exercise any rights which it may have by reason of performance by it of its obligations under the Finance Documents or by reason
of any amount being payable, or liability arising, under this Guarantee:

 

		(i)	to be indemnified by the Borrower or any other guarantor under any other Finance Document;

 

		(ii)	to claim any contribution from any other guarantor of the Borrower’s or the Guarantors obligations
under the Finance Documents;

 

		(iii)	to exercise any right of set-off against the Borrower or any other guarantor under any other Finance
Document; and/or

 

		(iv)	to take the benefit (in whole or in part and whether by way of legal subrogation or otherwise)
of any rights of the Bank under the Finance Documents or of any other guarantee or Security taken pursuant to, or in connection
with, the Finance Documents by the Bank.

 

		(b)	If the Guarantor receives any benefit, payment or distribution in relation to such rights it shall
hold that benefit, payment or distribution to the extent necessary to enable all amounts which may be or become payable to the
Bank by the Borrower and any other guarantor under or in connection with the Finance Documents to be repaid in full on trust for
the Bank and shall promptly pay or transfer the same to the Bank or as the Bank may direct.

 

		3.08	Additional Security

 

This Guarantee
is in addition to and is not in any way prejudiced by any other guarantee or Security now or subsequently held by the Bank.

 

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Article
4

TERM OF THE GUARANTEE

 

		4.01	Term

 

This Guarantee shall take effect
on the date of execution of this Guarantee Agreement and expires on the date on which all sums which the Bank may claim under or
in connection with any Finance Document have unconditionally and irrevocably been paid to the satisfaction of the Bank. This also
includes, for the avoidance of doubt, any Profit Participation Payments pursuant to the Finance Contract.

 

		4.02	Reinstatement

 

		(a)	If any full or partial payment by the Borrower, the Guarantor, or any other guarantor under any
other Finance Document is rescinded, invalidated, declared fraudulent, set aside, determined void or voidable as a preference,
fraudulent conveyance, impermissible setoff, diversion of trust funds, avoided, reduced, or otherwise required to be returned by
the Bank as a result of insolvency, bankruptcy, dissolution, liquidation, reorganization or any similar event involving the Borrower,
the Guarantor, or any other guarantor under any other Finance Document, or upon or as a result of the appointment of a receiver,
intervenor, custodian or conservator of a trustee or similar officer for Borrower, Guarantor, or any other guarantor under any
other Finance Document, or any substantial part of its property, or otherwise:

 

		(i)	this Guarantee Agreement and the liability of the Guarantor or any other guarantor under any other
Finance Document shall continue to be effective or shall be reinstated (as the case may be) as if the payment, discharge, avoidance
or reduction had not occurred; and

 

		(ii)	the Bank shall be entitled to recover the value or amount of that security or payment from the
Guarantor or any other guarantor under any other Finance Document, as if the payment, discharge, avoidance or reduction had not
occurred.

 

		(b)	The Guarantor shall pay or reimburse the Bank for all expenses incurred by the Bank in the defence
of any claim that a payment received by the Bank in respect of all or any part of the obligations under the Finance Documents must
be refunded.

 

		(c)	The provisions of this Article 4.02 shall survive the termination of this Guarantee Agreement
and any satisfaction and discharge of Borrower by virtue of any payment, court order, or law.

 

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Article
5

REPRESENTATIONS AND WARRANTIES

 

		5.01	Representations and Warranties of the Guarantor

 

The Guarantor hereby represent
and warrant to the Bank that:

 

		(a)	Authorisations and Binding Obligations

 

		(i)	It is not a “company in violation” (“hevrah meferah”) as defined
in Section 362A of the Israeli Companies Law, 1999 and it has not received any warning that it will be registered as such.

 

		(ii)	Its place of incorporation or
                                         establishment is not (a) a jurisdiction classified by any Lead Organisation as being
                                         weakly regulated and/or weakly supervised and/or non-transparent and/or uncooperative
                                         or any equivalent classification used by any Lead Organisation, in connection with activities
                                         such as money laundering, financing of terrorism, tax fraud and tax evasion or harmful
                                         tax practices, and/or (b) a jurisdiction that is blacklisted by any Lead Organisation
                                         in connection with such activities.1

 

		(iii)	The execution and delivery of the Guarantee Agreement and the performance and compliance with its
respective duties under this Guarantee Agreement do not and will not cause any representations made pursuant to this Article 5.01
to be untrue.

 

		(b)	No Insolvency

 

		(i)	It is not now insolvent, nor will the entering into of this Guarantee Agreement and the performance
of its respective obligations hereunder render it insolvent and, particularly, it is not ‘insolvent’ as defined under the Israeli
Insolvency and Economic Rehabilitation Law, 2018 ((the “Insolvency Law”).

 

		(ii)	The execution and delivery of the Guarantee Agreement and the performance and compliance with its
respective duties under this Guarantee Agreement will not leave it with unreasonably small capital or assets in order to conduct
its business as currently conducted.

 

		(iii)	The obligations incurred under this Guarantee Agreement have not been incurred with the intent
to hinder, delay, or defraud present or future creditors.

 

		(iv)	It is able to pay its debts as they fall due and the entering into of this Guarantee Agreement
and the performance of its respective obligations hereunder do not and will not cause it to be or to be deemed to be unable to
pay its debts as they fall due.

  

 

	1	Relevant jurisdictions may be identified on the basis of lists of Lead Organisations, as such
                                                             lists are updated, amended or supplemented from time to time, including: jurisdictions with strategic deficiencies in the
                                                             area of AML-CFT as identified by FATF (http://www.fatf-gafi.org/countries/#high-risk); jurisdictions listed “partially
                                                             compliant”, “provisionally partially compliant” or “non-compliant” in the OECD Global Forum
                                                             progress reports/ Global Forum rating (http://www.oecd.org/tax/transparency/GFratings.pdf;
                                                             http://www.oecd.org/tax/transparency/exchange-of-information-on-request/ratings/); jurisdictions identified in EU delegated
                                                             regulation 2016/1675 of 14.7.2016 supplementing Directive (EU) 2015/849 as high-risk third countries with strategic
                                                             deficiencies (http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32016R1675); and jurisdictions included in the EU
                                                             list of non-cooperative jurisdictions for tax purposes (https://ec.europa.eu/taxation_customs/tax-common-eu-list_en).

 

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		(v)	It has not taken any corporate action nor have any other steps been taken in relation to the suspension
of payments, a moratorium of any indebtedness, dissolution, administration or reorganisation (by way of voluntary arrangement,
scheme of arrangement or otherwise) or legal proceedings been started or ,so far as the Guarantor is aware, threatened against
it for its winding-up, dissolution, administration, reorganisation, or any analogous procedure or step or for the appointment of
a liquidator, receiver, administrator, administrative receiver, trustee, compulsory manager or similar officer of it or of any
or all of its assets or revenues.

 

		(vi)	It has not taken any corporate action nor have any other steps been taken by it or against it in
relation to an application for a commencement of proceedings order (tzav l’ptichat halichim) under or in connection with
the Insolvency Law

 

		(c)	No Proceedings

 

		(i)	No litigation, arbitration, administrative proceedings or investigation is current or to its knowledge
is threatened or pending before any court, arbitral body or agency which has resulted or if adversely determined is reasonably
likely to result in a Material Adverse Change, nor is there subsisting against it any unsatisfied judgement or award.

 

		(ii)	To the best of its respective knowledge and belief (having made due and careful enquiry) no material
Environmental Claim has been commenced or is threatened against it.

 

		(iii)	As at the date of this Guarantee Agreement, it has not taken any action to commence proceedings
for, nor have any other steps been taken or legal proceedings commenced or, so far as it is aware, threatened against it for its
insolvency, winding up or dissolution, or for it to enter into any arrangement or compositions for the benefit of creditors, or
for the appointment of an administrator, receiver, administrative receiver, examiner, trustee or similar officer (including relating
to an application for a commencement of proceedings order (tzav l’ptichat halichim) under or in connection with the Insolvency
Law).

 

		(d)	Ranking

 

		(i)	Its payment obligations under this Guarantee Agreement rank not less than pari passu in
right of payment with all other present and future unsecured and unsubordinated obligations under any of its respective debt instruments
except for obligations mandatorily preferred by law applying to companies generally.

 

		(ii)	No financial covenants have been concluded with any other of its creditors.

 

		(iii)	No Voluntary Non-EIB Prepayment has occurred.

 

		(e)	Accounting and Tax

 

		(i)	The latest of its available consolidated and unconsolidated audited accounts have been prepared
on a basis consistent with previous years and have been approved by its auditors as representing a true and fair view of the results
of its operations for that year and accurately disclose or reserve against all of its liabilities (actual or contingent).

 

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		(ii)	The Accounting Reference Date of the Guarantor is 30 June.

 

		(iii)	It is not required to make any deduction for or on account of any Tax from any payment it may make
under this Guarantee Agreement. (Non-repeating)

 

		(iv)	All Tax returns required to have been filed by it or on its behalf under any applicable law have
been filed when due and contain the information required by applicable law to be contained in them.

 

		(v)	It has paid when due all Taxes payable by it under applicable law except to the extent that it
is contesting payment in good faith and by appropriate means.

 

		(vi)	With respect to Taxes which have not fallen due or which it is contesting, each Obligor is maintaining
reserves adequate for their payment and in accordance, where applicable, with GAAP.

 

		(vii)	Under the laws of the jurisdiction of incorporation of the Guarantor, it is not necessary that
this Guarantee Agreement be filed, recorded or enrolled with any court or other authority, other than with the Securities and Exchange
Commission, or that any stamp, registration or similar tax be paid on or in relation to this Guarantee Agreement, or the transactions
contemplated by this Guarantee Agreement. (Non-repeating)

 

		(f)	Information provided

 

Any factual
information provided by it for the purposes of entering into this Guarantee Agreement and any related documentation was true and
accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated and continues
to be true and accurate in all material respect as at the date of this Guarantee Agreement.

 

		(g)	Environment

 

It is in compliance
with Paragraph 5. (Environment) of Schedule H (General Undertakings) of the Finance Contract, as if all references
to the Borrower were to the Guarantor.

 

		(h)	Borrower Information

 

The Guarantor
has and will continue to have full and complete access to any and all information concerning the transactions contemplated by the
Finance Documents or referred to therein, the value of the assets owned or to be acquired by Borrower, Borrower’s financial
status, and Borrower’s ability to pay and perform any obligation under or in connection with any Finance Document. So long
as any obligation of the Borrower under or in connection with any Finance Document remains unsatisfied or owing to the Bank, the
Guarantor shall keep itself fully informed as to all aspects of the Borrower’s financial condition and ability to pay and
perform such obligations.

 

    12

     

    

 

		(i)	Other

 

In respect
of this Guarantee Agreement and the transaction contemplated by, referred to in, provided for or effected by this Guarantee Agreement,
it has entered into this Guarantee Agreement (i) in good faith and for the purpose of carrying out its business, (ii) on arms’
length commercial terms and (iii) without any intention to defraud or deprive of any legal benefit of any other parties (such as
third parties and in particular creditors other than the Bank) or to circumvent any applicable mandatory laws or regulations of
any jurisdiction. The granting of this Guarantee Agreement is not disproportionate to its financial means.

 

The representations
and warranties set out in this Article 5.01 – other than those paragraphs which are identified with the words “(Non-repeating)”
at the end of the Paragraphs - shall survive the execution of this Guarantee Agreement and shall be repeated on each Disbursement
Date Acceptance and each Disbursement Date, by reference to the facts and circumstances then prevailing.

 

		5.02	Undertakings of the Guarantor

 

The Guarantor acknowledges and
agrees that during the subsistence of this Guarantee Agreement:

 

		(a)	Authorisations

 

It shall obtain,
comply with the terms of and do all that is necessary to maintain in full force and effect all authorisations, approvals, licences
and consents required in or by the laws and regulations of its jurisdiction of incorporation to enable it lawfully to enter into,
exercise its rights and perform the obligations expressed to be assumed by it under this Guarantee Agreement and to ensure the
legality, validity, enforceability and admissibility in evidence of this Guarantee Agreement in its jurisdiction of incorporation
and in Germany.

 

		(b)	No Security

 

It shall not create or permit
to subsist any Security over any of its assets other than:

 

		(i)	any Permitted Security; and

 

		(ii)	any Security created with the prior approval of the Bank.

 

		(c)	Pari passu with other creditors

 

The Guarantor shall ensure that
its payment obligations under this Guarantee Agreement rank, and will rank not less than pari passu in right and priority
of payment with all other present and future unsecured and unsubordinated obligations under any of its debt instruments except
for obligations mandatorily preferred by law applying to companies generally.

 

		(d)	No action

 

It shall not
take any action which would cause any of the representations made in Article 5.01 above to be untrue at any time during the
continuation of this Guarantee Agreement.

 

    13

     

    

 

		(e)	Know your Customer

 

The Guarantor shall deliver to
the Bank any such information or further document concerning customer due diligence matters of or for the Guarantor as the Bank
may reasonably require within a reasonable timeframe.

 

		(f)	Notification duty

 

It shall notify
the Bank of the occurrence of any event of which it becomes aware which results in or may reasonably be expected to result in any
of the representations made in Article 5.01 above being untrue.

 

		(g)	Subordination of Debt

 

Any debt of the Borrower now
or hereafter held by the Guarantor is hereby subordinated to any obligation of the Borrower under or in connection with any Finance
Document. The Guarantor shall not seek, accept, or retain for its own account any payment from the Borrower on account of any subordinated
debt until all amounts which may be or become payable by the Borrower and the Guarantor under or in connection with the Finance
Documents have been unconditionally and irrevocably paid in full. Any payment of such subordinated indebtedness by the Borrower
to the Guarantor before payment in full of all amounts which may be or become payable by the Borrower and the Guarantor under or
in connection with the Finance Documents shall be collected, enforced and received by the Guarantor as trustee for the Bank and
promptly paid to the Bank in payment of the obligations of the Borrower under or in connection with any Finance Document.

 

Article
6

INFORMATION TO THE BANK

 

		6.01	Financial Information

 

The Guarantor shall
deliver to the Bank:

 

		(a)	as soon as they become available but in any event within 120 (one hundred and twenty) days after
the end of each of its financial years, a copy of its annual reports, balance sheets, cash flow statements, profit and loss accounts
and auditors reports for that financial year together with all other such information as the Bank may reasonably require as to
the Guarantor’s financial situation; and

 

		(b)	from time to time, such further information on its general financial position, business and operation
as the Bank may reasonably request.

 

		6.02	Information duties

 

During the subsistence of this
Guarantee Agreement, the Guarantor shall immediately inform the Bank of:

 

		(a)	any material alteration to its constitutional documents and of any proposal or decision known to
it which contemplates the introduction of such alteration as well as of any material change in its corporate status or powers,
in each case in so far as such event could reasonably be expected to affect the validity and enforceability of this Guarantee Agreement
or the ability of the Guarantor to perform the obligations expressed to be assumed by it under this Guarantee Agreement;

 

    14

     

    

 

		(b)	a Change-of-Law Event with respect to the Guarantor; and

 

		(c)	deliver any other information on its financial position likely to have a detrimental effect on
its ability to perform the obligations expressed to be assumed by it under this Guarantee Agreement, subject in each case to Paragraph
5. (Confidential Information) of Schedule I (Information and Visits) of the Finance Contract.

 

For the purposes of this Article
6.02, “Change-of-Law Event” means the enactment, promulgation, execution or ratification of or any change in or
amendment to any law, rule or regulation (or in the application or official interpretation of any law, rule or regulation) that
occurs after the date of this Guarantee Agreement and which, in the opinion of the Bank, would materially impair the Guarantor’s
ability to perform its obligations under this Guarantee Agreement.

 

Article
7

DEFAULT INTEREST AND TAXES

 

		7.01	Taxes

 

		(a)	All Taxes, charges, duties, fees as well as any other expenses or impositions of whatsoever nature,
arising out or in connection with this Guarantee Agreement shall be borne by the Guarantor. The Guarantor shall make all payments
under this Guarantee Agreement gross without withholding or deduction of any Tax, charges, duties, fees, expenses or impositions
of whatsoever nature

 

		(b)	If any amount in respect of any applicable Taxes, charges, duties, fees as well as any other expenses
or impositions must be deducted, withheld or retained from any amount due under this Guarantee Agreement, the Guarantor undertakes
to pay such additional amount as may be necessary to ensure that the Bank receives a net amount equal to the full amount to which
it is entitled under this Guarantee Agreement.

 

		(c)	The Guarantor undertakes to pay and indemnify the Bank against any amount, cost or loss incurred
by the Bank in relation to any stamp duty, registration or similar Tax or notarial fee payable in respect of the Guarantor.

 

		7.02	Interest on overdue sums

 

If the Guarantor
fails to pay any amount payable by it under this Guarantee Agreement within the relevant Payment Period in accordance with Article
3.02 (Demands and payments), interest shall accrue on any overdue amount (other than any interest amount) payable under
the terms of this Guarantee Agreement, as from the expiration of the relevant Payment Period up to the date of payment by the Guarantor,
at the rate and on the terms specified in Article 4.4 (a) (Interest on overdue sums) of the Finance Contract shall
apply mutatis mutandis, provided that such amount is not already accruing interest pursuant to Article 4.4 (a) (Interest on
overdue sums) of the Finance Contract as an overdue obligation of the Borrower.

  

    15

     

    

 

		7.03	Currency conversion

 

		(a)	Any payment to be made by the Guarantor under this Guarantee Agreement shall be made in the currency
as set out in the relevant Notification. The Bank shall apply the exchange rate published by the European Central Bank in Frankfurt
am Main for the purpose of any currency conversion.

 

		(b)	If the Bank has received a payment under this Guarantee Agreement in a currency other than the
currency requested in the relevant Notification and must convert this payment, the Guarantor shall indemnify the Bank, upon first
demand, for any loss resulting from the difference in exchange rates between the date of conversion and the date on which the payment
is received in the other currency, as well as for any fees (including legal fees, Taxes and any other charges) connected with this
conversion.

 

		7.04	Set-off

 

All payments to be made by the
Guarantor under this Guarantee Agreement shall be made without (and free and clear of any deduction for) set-off or counterclaim
unless the counterclaim is undisputed or has been confirmed in a final non-appealable judgement.

 

Article
8

CONTINUING OBLIGATIONS

 

It is hereby
expressly agreed that any change, whatsoever, in the legal situation of the Guarantor shall not affect its obligations under this
Guarantee Agreement and that in particular, in case of merger, demerger or absorption, the absorbing new or beneficiary company
shall take over, under the merger treaty or agreement, the commitments of the Guarantor under this Guarantee Agreement and in case
of demerger, the demerger companies benefiting from the partial assignment of assets resulting from the split will be bound to:

 

		(a)	take over with joint liability the commitments of the Guarantor under this Guarantee Agreement;
and

 

		(b)	if requested by the Bank, grant additional security or guarantees.

 

Article
9

NON WAIVER

 

No failure or delay or single
or partial exercise by the Bank in exercising any of its rights or remedies under this Guarantee Agreement shall be construed as
a waiver of such right or remedy and the Bank shall not be liable for any such failure, delay or single or partial exercise of
any such right and remedy.

 

    16

     

    

 

Article
10

LAW AND JURISDICTION, miscellaneous

 

		10.01	Governing Law

 

This Guarantee
Agreement and any non-contractual obligations arising out of or in connection with it shall be governed by the laws of Germany.

 

		10.02	Jurisdiction

 

		(a)	The courts of Frankfurt am Main, Germany, have exclusive jurisdiction to settle any matter or dispute
(a “Dispute”) arising out of or in connection with this Guarantee Agreement (including a dispute regarding the
existence, validity or termination of this Guarantee Agreement or the consequences of its nullity) or any non-contractual obligation
arising out of or in connection with this Guarantee Agreement.

 

		(b)	The parties agree that the courts of Frankfurt am Main, Germany, are the most appropriate and convenient
courts to settle Disputes between them and, accordingly, that they will not argue to the contrary.

 

		(c)	This Article 10.02 is for the benefit of the Bank only. As a result and notwithstanding Sub-Paragraph
(a) above, it does not prevent the Bank from taking proceedings relating to a Dispute in any other courts with jurisdiction. To
the extent allowed by law, the Bank may take concurrent proceedings in any number of jurisdictions.

 

		10.03	Service of process

 

		(a)	Without prejudice to any other mode of service allowed under any relevant law, the Guarantor:

 

		(i)	irrevocably appoints the Borrower (the “Process Agent”) as its agent for service
of process in relation to any proceedings before the German courts in connection with any Finance Document;

 

		(ii)	agrees that failure by the Process Agent to notify the Guarantor of the process will not invalidate
the proceedings concerned; and

 

		(iii)	undertakes to deliver to the Process Agent within five Business Days upon request of the Bank a
process agent appointment letter and to send a copy of such executed letter to the Bank.

 

		(b)	The Process Agent hereby accepts its appointment pursuant to Article 10.03(a) above. The Process
Agent shall ensure that documents to be served to the Guarantor may validly be served by delivery to the Process Agent. The Process
Agent shall notify the Bank of any change of address, accept any documents delivered to it on behalf of the Guarantor, fulfil any
requirements of Section 171 ZPO and present the original process agent appointment letter to any person effecting the service of
process as required pursuant to Section 171 sentence 2 ZPO.

 

		10.04	Place of performance

 

Unless otherwise
specifically agreed by the Bank in writing, the place of performance under this Guarantee Agreement, shall be the seat of the Bank.

 

    17

     

    

 

		10.05	Evidence of sums due

 

In any legal
action arising out of this Guarantee Agreement the certificate of the Bank as to any amount or rate due to the Bank under this
Guarantee Agreement shall, in the absence of manifest error, be prima facie evidence of such amount or rate.

 

		10.06	Entire Agreement

 

This Guarantee
Agreement constitutes the entire agreement between the Bank and the Guarantor in relation to the provision of this Guarantee Agreement
hereunder, and supersedes any previous agreement, whether express or implied, on the same matter.

 

		10.07	Invalidity

 

		(a)	If at any time any term of this Guarantee Agreement is or becomes illegal (nichtig), invalid
or unenforceable in any respect, or this Guarantee Agreement is or becomes ineffective (unwirksam) in any respect, under
the laws of any jurisdiction, such illegality (Nichtigkeit), invalidity, unenforceability or ineffectiveness (Unwirksamkeit)
shall indisputably (unwiderlegbar) not affect:

 

		(i)	the legality, validity or enforceability in that jurisdiction of any other term of this Guarantee
Agreement or the effectiveness in any other respect of this Guarantee Agreement in that jurisdiction; or

 

		(ii)	the legality, validity or enforceability in other jurisdictions of that or any other term of this
Guarantee Agreement or the effectiveness of this Guarantee Agreement under the laws of such other jurisdictions,

 

without any
party to this Guarantee Agreement having to argue (darlegen) and prove (beweisen) such parties’ intent to uphold
this Guarantee Agreement even without the void, invalid or ineffective provisions.

 

		(b)	The illegal, invalid, unenforceable or ineffective provision shall be deemed replaced by such legal,
valid, enforceable and effective provision that in legal and economic terms comes closest to what the parties to this Guarantee
Agreement intended or would have intended in accordance with the purpose of this Guarantee Agreement if they had considered the
point at the time of conclusion of this Guarantee Agreement. The same applies in the event that this Guarantee Agreement does not
contain a provision which it needs to contain in order to achieve the economic purpose as expressed herein (Regelungslücke).

 

		10.08	Amendments

 

Any amendment
to this Guarantee Agreement (including this Article 10.08) shall be made in writing (or in notarial form, if required) and
shall be signed by the parties hereto.

 

		10.09	Counterparts

 

This Guarantee
Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument.
Each counterpart is an original, but all counterparts shall together constitute one and the same instrument.

 

    18

     

    

 

		10.10	Assignment and transfer by the Bank

 

		(a)	Subject to sub-paragraph (b) of this Article 10.10 (Assignment and transfer by the Bank),
the consent of the Guarantor is required for an assignment or transfer (by way of assumption of contract (Vertragsübernahme),
assignment, sub-participation or otherwise) by the Bank of all or part of its rights, benefits or obligations under this Guarantee
Agreement, unless the assignment or transfer:

 

		(i)	is to a Bank Affiliate; or

 

		(ii)	is made at a time when an Event of Default has occurred and is continuing; or

 

		(iii)	is made in respect of a sub-participation or securitisation (or similar transaction of broadly
equivalent economic effect) where the Bank remains the lender of record of the Loan.

 

		(b)	The consent of the Guarantor to an assignment or transfer must not be unreasonably withheld or
delayed. The Guarantor will be deemed to have given its consent five (5) Business Days after the Bank has requested such consent
in written form unless consent is expressly refused by the Guarantor within that time.

 

		(c)	Provided such disclosure is subject to confidentiality provisions at least as restrictive as set
forth in the MAR Side Letter, the Bank shall have the right to confidentially disclose all information relating to or concerning
the Guarantor, the Group, the Finance Documents and the Loan in connection with or in contemplation of any such assignment or transfer.

 

For the purpose
of this Article 10.10 (Assignment and transfer by the Bank):

 

“Affiliate” means any entity directly
or indirectly Controlling, Controlled by or under common Control with the Bank.

 

“Bank Affiliate” means an Affiliate
of the Bank and any other entity or platform initiated, managed or advised by the Bank.

 

Article
11

Final Articles

 

		11.01	Form of notice

 

		(a)	Any notice or other communication given under this Guarantee Agreement must be in writing and,
unless otherwise stated, may be made by letter and electronic mail.

 

		(b)	Notices and other communications for which fixed periods are laid down in this Guarantee Agreement
or which themselves fix periods binding on the addressee, may be made by hand delivery, registered letter or by electronic mail.
Such notices and communications shall be deemed to have been received by the other party:

 

		(i)	on the date of delivery in relation to a hand-delivered or registered letter; or

 

		(ii)	in the case of any electronic mail, when the electronic mail is received in readable form.

 

    19

     

    

 

		(c)	Any notice provided by the Guarantor to the Bank by electronic mail shall:

 

		(i)	mention the Contract Number in the subject line; and

 

		(ii)	be in the form of a non-editable electronic image (pdf, tif or other common non-editable file format
agreed between the parties) of the notice signed by one or more Authorised Signatories of the Guarantor as appropriate, attached
to the electronic mail.

 

		(d)	Notices issued by the Guarantor pursuant to any provision of this Guarantee Agreement shall, where
required by the Bank, be delivered to the Bank together with satisfactory evidence of the authority of the person or persons authorised
to sign such notice on behalf of the Guarantor and the authenticated specimen signature of such person or persons, unless such
person is listed in the then current List of Authorised Signatories.

 

		(e)	Without affecting the validity of electronic mail or communication made in accordance with this
Article 11 (Final Articles), the following notices, communications and documents shall also be sent by registered letter
to the relevant party at the latest on the immediately following Business Day:

 

		(i)	Disbursement Acceptance;

 

		(ii)	any notices and communication in respect of the cancellation of a disbursement of any Tranche,
Prepayment Request, Prepayment Notice, Event of Default, any demand for prepayment, and

 

		(iii)	any other notice, communication or document required by the Bank.

 

		(f)	The parties agree that any above communication (including via electronic mail) is an accepted form
of communication, shall constitute admissible evidence in court and shall have the same evidential value as an agreement under
hand.

 

		(g)	Any communication or document made or delivered to the Guarantor in accordance with this Article
11 (Final Articles) will be deemed to have been made or delivered to each of the Obligors or any other member of the Group
party to a Finance Document. Each Obligor incorporated in Germany, for this purpose, appoints the Borrower as its receipt agent
(Empfangsboten).

 

		11.02	Addresses

 

The address
and electronic mail address (and the department or officer, if any, for whose attention the communication is to be made) of each
party for any communication to be made or document to be delivered under or in connection with this Guarantee Agreement is:

 

	
        For the Bank

         

         

         

         
	
        Attention: OPS/ENPST/3-GC&IF

         

        98 - 100 boulevard Konrad
        Adenauer, L-2950 Luxembourg

         

        Email address: [_________]

 

    20

     

    

 

	For the Guarantor	
        Attention: Finance Department

         

        MATAM Advanced Technology
        Park, Building 5, Haifa 3508409, Israel

         

        Email address:
[_________]

 

		11.03	Demand after notice to remedy

 

The Bank and
the Guarantor shall promptly notify the other party in writing of any change in their respective communication details.

 

		11.04	English language

 

		(a)	Any notice or communication given under or in connection with this Guarantee Agreement must be
in English.

 

		(b)	All other documents provided under or in connection with this Guarantee Agreement must be:

 

		(i)	in English; or

 

		(ii)	if not in English, and if so required by the Bank, accompanied by a certified English translation
and, in this case, the English translation will prevail.

 

		11.05	Conclusion of this Guarantee Agreement (Vertragsschluss)

 

		(a)	The parties to this Guarantee Agreement may choose to conclude this Guarantee Agreement by an exchange
of signed signature page(s), transmitted by any means of telecommunication (telekommunikative Übermittlung) such as
by way of electronic photocopy or by way of qualified electronic signatures (qualifizierte elektronische Signatur) within
the meaning of Section 126a BGB.

 

		(b)	If the parties to this Guarantee Agreement choose to conclude this Guarantee Agreement pursuant
to this Article 11.05 (Conclusion of this Guarantee Agreement (Vertragsschluss)), they will transmit the signed signature
page(s) of this Guarantee Agreement to the following attorneys of Noerr LLP (Börsenstr. 1, 60313 Frankfurt am Main, Germany)
via email: Andreas Naujoks, Michael Schuhmacher and Dorian Legel (each a “Recipient”). The Guarantee Agreement will be considered concluded once a Recipient has actually received
the signed signature page(s) (Zugang der Unterschriftsseite(n)) from all parties (whether electronic photocopy or other
means of telecommunication and at the time of the receipt of the last outstanding signature page(s) by such one Recipient).

 

		(c)	For the purposes of this Article 11.05 (Conclusion of this Guarantee Agreement (Vertragsschluss))
only, the parties to this Guarantee Agreement appoint each Recipient as their attorney (Empfangsvertreter) and expressly
allow (gestatten) each Recipient to collect the signed signature page(s) from all and for all parties to this Guarantee
Agreement. For the avoidance of doubt, each Recipient will have no further duties connected with its position as Recipient. For
the purposes of proof and confirmation, each Obligor has to provide the Bank with original signature pages(s) or signature page(s)
signed by way of qualified electronic signatures (qualifizierte elektronische Signatur) within the meaning of Section 126a
BGB after signing this Guarantee Agreement.

 

This Guarantee Agreement has been entered into on the date stated
at the beginning of this Guarantee Agreement.

 

    21

     

    

 

Signed for and on behalf of   

 

EUROPEAN
INVESTMENT BANK   

 

	By:	/s/ Donald Fitzpatrick	 	By:	/s/ Mariana Duarte Silva
	Name:	Donald Fitzpatrick	 	Name:	Mariana Duarte Silva
	Title:	Head of Division	 	Title:	Counsel

 

    22

     

    

 

Signed for and on behalf of

 

Pluristem Ltd.

 

	By:	/s/ Yaacob Yanay	 	By:	/s/ Chen Franco-Yehuda
	Name:	Yaacob Yanay	 	Name:	Chen Franco-Yehuda
	Title:	CEO	 	Title:	CFO

 

Signed for and on behalf of

 

Pluristem GmbH

 

	By:	/s/ Yaacob Yanay	 	By:	/s/ Chen Franco-Yehuda
	Name:	Yaacob Yanay	 	Name:	Chen Franco-Yehuda
	Title:	Managing Director	 	Title:	Managing Director

 

 

23Document

Mercedes Romero
Via E-mail

July 27, 2020

Dear Mercedes:
I am very pleased to outline in this letter (the “Offer Letter”) the terms and conditions on which we are offering you the position of Chief Procurement Officer of Primo Water Holdings Inc.
(the “Company”), a subsidiary of Primo Water Corporation. This Offer Letter will not constitute an agreement until it has been fully executed by both parties. Please note that this Offer Letter does not contemplate a contract or promise of employment for any specific term; you will be an at-will employee at all times.

1.Position and Duties.
a..Position. Subject to the terms and conditions hereof, you will be employed by the Company as its Chief Procurement Officer, effective as of August 31, 2020 (the “Employment Date”) and continuing until terminated by you or the Company.  Effective as of the Employment Date, your principal place of employment will be Tampa, Florida.

b..Responsibilities.

(i)As the Company’s Chief Procurement Officer, you will report to the Company’s Chief Executive Officer (“CEO”) and have such duties and responsibilities as may be assigned to you from time to time by the CEO.

(ii)You agree to devote substantially all of your business time and attention to the business and affairs of the Company and to discharging the responsibilities assigned to you. This shall not preclude you from (i) serving on the boards of directors of a reasonable number of charitable organizations, (ii) engaging in charitable activities and community affairs, and
(iii) managing your personal affairs, so long as these activities do not interfere with the performance of your duties and responsibilities as the Company’s Chief Procurement Officer.

c..No Employment Restriction. You hereby represent and covenant that, except as disclosed to the Company, your employment by the Company does not violate any agreement or covenant to which you are subject or by which you are bound and that there is no such agreement or covenant that could restrict or impair your ability to perform your duties or discharge your responsibilities to the Company. You further agree to produce to the Company copies of any restrictive covenants (including, but not limited to, any noncompetition or non-solicitation 
Page 1 of 9

agreements) you have signed or to which you have otherwise agreed, and to produce such copies to the Company no later than one week prior to your Employment Date. You agree and understand that this Offer Letter is conditioned on your production of any such restrictive covenants to the extent any exist and/or apply and that if any do exist/apply, the Company retains the sole discretion to rescind this Offer Letter at any time before your Employment Date.  You further agree and understand that if you do not produce any such copies of any restrictive covenants by the deadline stated above, it shall be deemed an affirmative representation by you to the Company that no such restrictive covenants exist or apply.  Finally, you agree and understand that if you do not produce any copies of any restrictive covenants and/or represent to the Company that none exist or apply, and the Company discovers at any subsequent time that a restrictive covenant does or did in fact exist or apply (regardless of the eventual enforceability or lack of enforceability of the restrictive covenant), the Company may opt to terminate your employment for “Cause” (for purposes of the Severance and Non-Competition Plan, in addition to how Cause is defined in the Severance and Non-Competition Plan) without triggering any severance or further payment obligations to you under this Offer Letter, any document referenced hereunder, or any legal theory.

d..Offer Contingent on Successful Drug and Background Screen.  This Offer Letter and your potential employment with the Company is contingent on you submitting to and successfully passing a drug and background screen.  The Company reserves the right to revoke this Offer Letter and/or terminate your employment in its sole discretion after reviewing the results of these screens without triggering any severance obligations hereunder.

2.Remuneration.
a..Base Salary. Your annual base salary will initially be at the rate of US $275,000.00 per year (“Annual Base Salary”), paid on a bi-weekly basis, prorated for any partial periods based on the actual number of days in the applicable period. Your performance will be evaluated at least annually, and any increase to the level of your Annual Base Salary will be determined as part of the regular annual review process.

b..Bonus. You will be eligible to participate in the Company’s annual bonus plan and may earn a bonus based upon the achievement of specified performance goals. The amount of your target bonus is 50% of your Annual Base Salary. The bonus year is the Company’s fiscal year and any payments made to you for the bonus year 2020 will be pro-rated based on your Employment Date. Currently the maximum potential payout permitted under the bonus plan is two (2) times the applicable target bonus for achievement of performance goals significantly in excess of the target goals, as established by the Human Resources and Compensation Committee of the Company’s Board of Directors (the “HRCC”). Please note that the bonus plan is entirely discretionary, and the Company reserves in its absolute discretion the right to terminate or amend it or any other bonus plan that may be established. You must be actively employed on the actual pay date of the bonus to be eligible to receive it or any portion of it.

c..One-Time LTI Grant. You will be entitled to receive a one-time long-term incentive (“LTI”) award equivalent to US $150,000 comprised of stock options (37.5%), performance-based restricted share units (37.5%) and time-based restricted share units (25%), 
Page 2 of 9

granted to you on your Employment Date. The stock options and time-based restricted share units will vest ratably in three equal annual installments from the grant date, and the performance-based restricted units will vest based upon the achievement of a specific level of cumulative performance metrics to be determined over the three-year period ending at the end of fiscal 2023. The LTI award, including the vesting terms, will be governed by the terms of the Primo Water Corporation equity incentive plan under which the award is made (the “Equity Plan”) and your award agreement. You will be eligible for future LTI awards that will be based on your performance. Annual grants are issued following approval by the HRCC at its regularly scheduled meetings in December and your first annual grant will be in December 2021.

3.Benefits.
a..Benefit Programs. You will be eligible to participate in the Company’s benefit programs generally available to other senior executives of the Company. Our benefit programs include our 401(k) plan and health, disability and life insurance benefits. Employee contributions are required for our benefit programs.

b..ESPP. In addition, you will be eligible to participate in the Company’s Employee
Stock Purchase Plan (the “ESPP”), through which you can purchase Company common shares at a discount through payroll deductions.

c..Vacation. You will be entitled to four (4) weeks’ vacation per calendar year. You are encouraged to take vacation in the calendar year it is earned. All earned vacation must be taken in the year in which it is earned; otherwise it may be forfeited. If you should leave the Company, the value of any unearned vacation taken by you will be considered a debt to the Company and you expressly authorize the Company to deduct from your final paycheck to the maximum extent permitted by law the value of taken but unearned vacation. All vacation periods require the approval of the CEO.

d..Reimbursement. You will be reimbursed for expenses reasonably incurred in connection with the performance of your duties in accordance with the Company’s policies as established from time to time.  It is your obligation to submit to the Company expense reimbursement requests and evidence of such expenses in order to receive reimbursements for such expenses.

e..Sign-On Bonus. You will be provided with a sign-on bonus of US $75,000.00 (gross, less taxes and withholdings), which will be paid to you on the date that is thirty (30) days following your Employment Date.  You agree that in the event you resign your employment for any reason or are terminated by the Company for Cause (as defined in the Severance and Non-Competition Plan) prior to the first anniversary of the Employment Date, you will repay the Company 100% of the sign-on bonus in full on or before the 90th day after the date of your resignation or termination.

f..Relocation.   As a condition of your employment, you are required to relocate to the Tampa, Florida area on a permanent basis by no later than August 1, 2021 (“Relocation Date”).  Failure to relocate by this deadline shall constitute “Cause” for your termination including for purposes of the Severance and Non-Competition Plan (in addition to how Cause is 
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defined in the Severance and Non-Competition Plan).  This deadline may only be extended by a writing signed by the Company’s CFO or CEO.  To assist you in your relocation, the Company will pay you a relocation bonus in the amount of US $75,000.00 and will be paid at least 3 months prior to the Relocation Date.  You agree to promptly reimburse the Company 100% of the relocation bonus in the event you: (a) fail to relocate to the Tampa area on a permanent basis by the deadline provided (or extended deadline, as may be applicable); or (b) resign your employment for any reason or are terminated by the Company for Cause (as defined herein or in the Severance and Non-Competition Plan) prior to the first anniversary of the Relocation Date (or actual relocation date if extended, whichever is later).  You further agree to repay the Company the relocation bonus in full by the following deadlines: (a) if repayment is owed due to your failure to timely relocate, full repayment shall be due on or before the 90th day after the deadline to relocate; or (b) if repayment is owed due to your resignation for any reason or termination for Cause prior to the anniversary of the Relocation Date (or actual relocation date if extended, whichever is later), full repayment shall be due on or before the 90th day after the date of your resignation or termination. 

g..Allowances. You will receive an annual vehicle allowance in the amount of US
$13,500.00 and an annual cellphone allowance in the amount of $2,025.00, which amount shall be prorated during any partial year of employment.

h..No Other Benefits. Other than benefits generally available to all full-time employees, you will not be entitled to any benefit or perquisite other than as specifically set out in this Offer Letter or separately agreed to in writing by the Company.

4.Termination; Payments and Entitlements Upon a Termination.
a..Termination. The Company may terminate your employment: (a) for Cause (as defined herein or in the Severance and Non-Competition Plan); or (b) for any reason or no reason, in all cases, upon reasonable notice to you. Your employment with the Company will terminate upon your death. You are able to resign your employment, as provided in the Severance and Non-Competition Plan.

b..Involuntary Termination. Upon the Employment Date, you shall be entitled to the benefits of and be bound by the obligations under the Severance and Non-Competition Plan (the “Severance and Non-Competition Plan”) (a copy of which is attached hereto) as a “Level 2 Employee” in the event your employment terminates as result of an Involuntary Termination (as defined in the Severance and Non-Competition Plan).

c..Change in Control. If (1) your LTI awards are continued, assumed, or replaced by the surviving or successor entity, and, within two years after the Change of Control (as defined in the Equity Plan), you experience an involuntary termination of employment for reasons other than Cause (as defined in the Equity Plan), or you terminate your employment for Good Reason (as defined in the Equity Plan), or (2) such awards are not continued, assumed or replaced by the surviving or successor entity, then (i) your unvested options will immediately become vested and exercisable, (ii) all of your unvested time-based and performance-based restricted share units will immediately vest, and (iii) any performance objectives applicable to awards will be deemed to have been satisfied at your “target” level of performance.
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a.Resignation. If you are an officer of the Company or a director or an officer of a company affiliated or related to the Company at the time of your termination, you will be deemed to have resigned all such positions, and you agree that upon termination you will execute such tenders of resignation as may be requested by the Company to evidence such resignations.

b.Return of Company Property. Upon resignation/termination of your employment for any reason, you agree to immediately return all Company property in your possession, custody, or control (e.g., Company-issued computer, telephone, badge, keys, equipment, vehicle, etc.). You expressly authorize the Company to deduct the value or replacement cost (whichever is less) of any unreturned Company property from your severance payment (if receiving one) or final paycheck to the maximum extent permitted by law.

1.Restrictive Covenants.
a.Severance and Non-Competition Plan. You shall be bound by the restrictive covenants contained in the Severance and Non-Competition Plan, except that “Business” as used therein shall be modified to the definition provided below:
“Business” shall mean the business of manufacturing, selling or distributing water (including but not limited to exchange and refill), coffee, tea, powdered beverages, concentrates, extracts, water filtration units and other beverages or products manufactured, sold or distributed by Primo Water Corporation or its subsidiaries and affiliates at the time of termination of your employment, as well as such other beverages or products that are contemplated or projected to contribute materially to the profits of Primo Water Corporation or its subsidiaries and affiliates at the time of termination of your employment.

b.DTSA Acknowledgement. You acknowledge that, by this Section, you have been notified in accordance with the Defend Trade Secrets Act of 2016 that, notwithstanding the foregoing:
i.You will not be held criminally or civilly liable under any federal or state trade secret law or this Offer Letter for the disclosure of confidential information that: (1) You make (A) in confidence to a federal, state, or local government official, either directly or indirectly, or to your attorney; and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (2) you make in a complaint or other document that is filed under seal in a lawsuit or other proceeding.
ii.If you file a lawsuit for retaliation by the Company for reporting a suspected violation of law, you may disclose confidential information to your attorney and use the confidential information in the court proceeding if you: (i) file any document containing confidential information under seal and (ii) do not disclose confidential information, except pursuant to court order.

2.Code Section 409A.

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a.In General. This Section shall apply to you if you are subject to Section 409A of the United States Internal Revenue Code of 1986 (the “Code”), but only with respect to any payment due hereunder that is subject to Section 409A of the Code.

b.Release. Any requirement that you execute and not revoke a release to receive a payment hereunder shall apply to a payment described in Section 6.1 only if the Company provides the release to you on or before the date of your Involuntary Termination.

c.Payment Following Involuntary Termination. Notwithstanding any other provision herein to the contrary, any payment described in the Severance and Non-Competition Plan that is due to be paid within a stated period following your Involuntary Termination shall be paid:
i.If, at the time of your Involuntary Termination, you are a “specified employee” as defined in Section 409A of the Code and such payment is subject to (and not exempt from) Section 409A of the Code, such payment shall be made as of the later of (i) the date payment is due hereunder, or (ii) the earlier of the date which is six months after your “separation from service” (as defined under Section 409A of the Code), or the date of your death; or
ii.In any other case, on the later of (i) last day of the stated period, or if such stated period is not more than 90 days, at any time during such stated period as determined by the Company without any input from you, or (ii) the date of your “separation from service” (as defined under Section 409A of the Code).

d.Reimbursements. The following shall apply to any reimbursement that is a payment described in Section 6.1: (a) with respect to any such reimbursement under Section 7.8, reimbursement shall not be made unless the expense is incurred during the period beginning on your effective hire date and ending on the sixth anniversary of your death; (b) the amount of expenses eligible for reimbursement during your taxable year shall not affect the expenses eligible for reimbursement in any other year; and (c) the timing of all such reimbursements shall be as provided herein, but not later than the last day of your taxable year following the taxable year in which the expense was incurred.

e.Offset. If payments to you under this Agreement are subject to Section 409A of the Code, any offset under Section 7.11 shall apply to a payment described in Section 6.1 only if the debt or obligation was incurred in the ordinary course of your employment with the Company, the entire amount of the set-off in any taxable year of the Company does not exceed $5,000, and the set-off is made at the same time and in the same amount as the debt or obligation otherwise would have been due and collected from you.

f.Interpretation. This Offer Letter shall be interpreted and construed so as to avoid the additional tax under Section 409A(a)(l)(B) of the Code to the maximum extent practicable.

1.General Provisions.
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a.Entire Agreement. This Offer Letter, together with the plans and documents referred to herein, constitutes and expresses the whole agreement of the parties hereto with reference to any of the matters or things herein provided for or herein before discussed or mentioned with

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reference to your employment and supersedes any prior offer letters or severance arrangements offered by the Company or any of its affiliates. All promises, representation, collateral agreements and undertakings not expressly incorporated in this Offer Letter are hereby superseded by this Offer Letter.

a.Amendment. This Offer Letter may be amended or modified only by a writing signed by both of the parties hereto.

b.Assignment. This Offer Letter may be assigned by the Company to any successor to its business or operations. Your rights hereunder may not be transferred by you except by will or by the laws of descent and distribution and except insofar as applicable law may otherwise require. Any purported assignment in violation of the preceding sentence shall be void.

c.Governing Law; Consent to Personal Jurisdiction and Venue. This Offer Letter takes effect upon its acceptance and execution by the Company. The validity, interpretation, and performance of this Offer Letter shall be governed, interpreted, and construed in accordance with the laws of the State of Florida without giving effect to the principles of comity or conflicts of laws thereof. You hereby consent to personal jurisdiction and venue, for any action brought by the Company arising out of a breach or threatened breach of this Offer Letter or out of the relationship established by this Offer Letter, exclusively in the United States District Court for the Middle District of Florida, Tampa Division, or in the Circuit Court in and for Hillsborough County, Florida; and, if applicable, the federal and state courts in any jurisdiction where you are employed or reside; you hereby agree that any action brought by you, alone or in combination with others, against the Company, whether arising out of this Offer Letter or otherwise, shall be brought exclusively in the United States District Court for the Middle District of Florida, Tampa Division, or in the Circuit Court in and for Hillsborough County, Florida.

d.Severability. The invalidity of any one or more of the words, phrases, sentences, clauses or sections contained in this Offer Letter shall not affect the enforceability of the remaining portions of the Offer Letter or any part thereof, all of which are inserted conditionally on their being valid in law, and, in the event that any one or more of the words, phrases, sentences, clauses or sections contained in the Offer Letter shall be declared invalid, the Offer Letter shall be construed as if such invalid word or words, phrase or phrases, sentence or sentences, clause or clauses, or section or sections had not been inserted.

e.Section Headings and Gender. The section headings contained herein are for reference purposes only and shall not affect in any way the meaning or interpretation of this agreement. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine or neuter, as the identity of the person or persons may require.

f.No Term of Employment. Nothing herein obligates the Company to continue to employ you. Where lawfully permitted in any jurisdiction in which you perform employment responsibilities on behalf of the Company, your employment shall be at will.

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g.Indemnification. The Company will indemnify and hold you harmless to the maximum extent permitted by applicable law against judgments, fines, amounts paid in settlement and reasonable expenses, including reasonable attorneys’ fees, in connection with the

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defense of, or as a result of any action or proceeding (or any appeal from any action or proceeding) in which you are made or are threatened to be made a party by reason of the fact that you are or were an officer of the Company or any Affiliate (as defined in the Severance and Non- Competition Plan). In addition, the Company agrees that you shall be covered and insured up to the maximum limits provided by any insurance which the Company maintains to indemnify its directors and officers (as well as any insurance that it maintains to indemnify the Company for any obligations which it incurs as a result of its undertaking to indemnify its officers and directors).

a.Survivorship. Upon the termination your employment, the respective rights and obligations of the parties shall survive such termination to the extent necessary to carry out the intended preservation of such rights and obligations.

b.Taxes. All payments under this Offer Letter shall be subject to withholding of such amounts, if any, relating to tax or other payroll deductions as the Company may reasonably determine and should withhold pursuant to any applicable law or regulation.

c.Set-Off. Except as limited by Section 6.5, the Company may set off any amount or obligation that may be owing by you to the Company against any amount or obligation owing by the Company to you.

d.Records. All books, records, and accounts relating in any manner to the Company or to any suppliers, customers, or clients of the Company, whether prepared by you or otherwise coming into your possession, shall be the exclusive property of the Company and immediately returned to the Company upon termination of employment or upon request at any time.

e.Counterparts. This Offer Letter may be executed in counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.
f.Consultation with Counsel. You acknowledge that you have been advised, and have had a sufficient opportunity to, confer with your own counsel with respect to this Offer Letter, and that you understand the restrictions and limitations that it imposes upon your conduct.

Please indicate your acceptance of this offer by returning one signed original of this Offer Letter. Yours truly,

Thomas Harrington

I accept this offer of employment and agree to be bound by the terms and conditions listed herein.

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Mercedes Romero    Date
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