Document:

Exhibit
      10.1 Employment
      Agreement of Charles Leibold

     

     

    EMPLOYMENT
      AGREEMENT

    BETWEEN
      BLUEGATE CORPORATION AND

    CHARLES
      E. LEIBOLD

     

    This
      Employment agreement (the "Agreement") is made effective as of the 1st day
      of
      June 2006, by and between Bluegate Corporation, a Nevada corporation
      ("Bluegate"), and Charles E. Leibold (the "Executive").

     

    WHEREAS,
      The Executive is willing to be employed by Bluegate from and after the effective
      date on the basis and terms and conditions set forth in this
      Agreement.

     

    THEREFORE,
      upon the mutual promises and covenants of the parties, and other good and
      valuable consideration, the receipt and sufficiency of which is hereby
      acknowledged, and intending to be legally bound, the parties agree as
      follows:

     

    
      	
              1.

            	
              Employment.

            

    

     

    Bluegate
      hereby employs the Executive, and the Executive hereby accepts such employment,
      for the period stated in section (3) below and upon the other terms and
      conditions herein provided.

     

    
      	
              2.

            	
              Position
                and Duties.

            

    

     

    During
      the Employment Period the Executive agrees to serve as Chief Financial Officer
      ("CFO") of Bluegate. In his capacity of CFO, the Executive will perform such
      duties and responsibilities for Bluegate as may from time to time be assigned
      to
      him by the Board of Directors of Bluegate. 

     

    
      	
              3.

            	
              Term.

            

    

     

    By
      this
      Agreement, Bluegate employs the Executive, and the Executive accepts employment
      with Bluegate, for a period consisting of two (2) years, commencing on the
      date
      of this Agreement and will cover the period from June 1, 2006 through May 31,
      2008.

     

    
      	
              4.

            	
              Compensation.

            

    

     

    In
      consideration of such service, Bluegate agrees to pay the Executive as
      compensation an annual salary of $140,000.00, in accordance with Bluegate's
      regular payroll practices in effect from time to time. Effective on January
      1,
      2007, the annual salary will increase by 5.0%, to $147,000.00.

     

    Stock
      Options.
      In
      addition to the compensation set forth above, the Executive shall be entitled
      to
      receive options to purchase 600,000 shares of Bluegate shares of common stock,
      par value $.001 per share, ("Option Shares"), at the per-share option price
      of
      $0.75 pursuant to a Stock Option Agreement being entered into in connection
      herewith. This option shall become vested and exercisable with respect to 50,000
      Option Shares on June 1, 2006 (upon the execution and delivery of the related
      Stock Option Agreement), and this option shall become vested and exercisable
      with respect to 25,000 Option Shares every 30 days thereafter until this option
      becomes fully vested. 

     

    The
      Option Shares to be issued pursuant to this Agreement shall be restricted
      securities with piggy back registration rights, and shall terminate and become
      null and void after the expiration of five (5) years from the date of
      grant.

     

    Bonus.
      In
      addition to the compensation set forth above, Executive
      and Bluegate agree to enter into good faith negotiations with a view to reaching
      an agreement on the payment of one or more bonuses (the "Bonuses") in such
      amounts as are mutually agreed upon by Executive and Bluegate, if major
      transactions (such as acquisitions and financings) agreed mutually upon by
      them
      shall be achieved.  The Bonuses shall be payable at such time as is
      mutually agreed upon by Executive and Bluegate. The Executive and Bluegate
      agree
      that they intend for these good faith negotiations (i.e., to mutually define
      the
      bonus-triggering transactions, milestones, and/or achievements, as well as
      the
      associated pay-out metrics) to be completed by no later than 30 days from start
      date.

     

    Deferred
      Signing Bonus.
      In
      addition to the compensation set forth above, a deferred signing bonus of
      $20,000.00 will be paid to Executive and included in his bi-monthly payroll
      as
      follows: $5,000.00 on the last day of September, October, November and December
      2006. This bonus can be converted to Bluegate shares at the rate of $0.75 per
      share at the sole option of Executive.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              5.

            	
              (Intentionally
                Left Blank)

            

    

     
      

    
      	
              6.

            	
              Confidentiality. 
                

            

    

    In the course of
      the performance of Executive's duties hereunder, Executive recognizes and
      acknowledges that Executive may have access to certain confidential and
      proprietary information of Company or any of its affiliates. 
Without  the prior written consent of Company, Executive shall not 
disclose  any such confidential or proprietary information to any person or
      firm,  corporation,  association,  or  other 
entity  for  any reason or purpose whatsoever,  and 
shall  not  use  such information, directly or indirectly, for
      Executive's  own  behalf  or on behalf of any other party. 
Executive agrees and affirms that  all  such information is the sole
      property of Company and that at the  termination  and/or 
expiration  of  this  Agreement,  at Company's written
      request, Executive shall promptly return to Company any and all such information
      so  requested  by  Company.

    

    The
      provisions of this Section shall not, however, prohibit Executive from
      disclosing to others or using in any manner information that: 

    (a)       
      has been  published  or  has become part of the public
      domain other than by acts, omissions or fault of  Executive;

    (b)       
      has been furnished or made known to Executive by third parties (other than
      those
      acting directly or indirectly for or on behalf of Executive) as a matter of
      legal right without restriction on its use or disclosure; 

    (c)       
      was in the possession of Executive prior to obtaining such information from
      Company in connection with the performance of this Agreement; or

    (d)       
      is required to be disclosed by law.

     

    
      	
              7.

            	
              Indemnification. 
                

            

    

    

    The
      Company shall to the full extent permitted by  law  or  as set
      forth in the Articles of Incorporation and the Bylaws of the Company, 
indemnify, defend and hold harmless Executive from and against any and all 
claims,  demands,  liabilities,  damages,  loses 
and  expenses  (including reasonable  attorney's 
fees,  court costs and disbursements) arising out of the performance 
by  him  of  his duties hereunder except in the case of his
      willful misconduct.

    

    
      	
              8.

            	
              Termination. 
                

            

    

    This
      Agreement and the employment relationship created hereby will terminate (i)
      with
      cause under Section 8(a); or (ii) upon the voluntary termination of employment
      by Executive under Section8 (b).

     

    (a)       
      With
      Cause. 
      The Company may terminate this Agreement at any time because of (i) the
      determination by the Board of Directors in the exercise of its reasonable
      judgment that Executive has committed an act or acts constituting a felony
      or
      other crime involving moral turpitude, dishonesty or theft or fraud; or (ii)
      Executive's willful misconduct  in the performance of his duties hereunder,
      provided, in each case, however, that the Company shall not terminate this
      Agreement pursuant to this Section unless the Company shall first have
      delivered  to  the Executive, a notice which specifically identifies
      such breach or misconduct and the executive shall not have cured the same within
      fifteen (15) days after receipt of such notice.

    (b)       
      Voluntary Termination. 
      The Executive may terminate his employment voluntarily.

    

    Obligations
      of Company Upon Termination. 
In
      the event of the termination of Executive's employment pursuant to Section
      8 (a)
      or (b), Executive will be entitled only to the compensation earned by him
      hereunder as of the date of such termination (plus any life insurance benefits).
       In the event of the termination of Executive's employment for any reason
      other than Section 8 (a) or (b) as described immediately above, all compensation
      of every nature described in this Agreement shall immediately vest and become
      due and owing to Executive.

    

    In
      the
      event of the Death of the Executive prior to the end of the Term of this
      Agreement, Executive’s spouse shall be entitled to receive Compensation pursuant
      to this Agreement through the end of its Term as it accrues.

     

              
      

    
      	
              9.

            	
              Waiver
                of Breach. 

            

    

    The
      waiver by any party hereto of a breach of any provision of this Agreement
      will not operate or be construed as a waiver of any subsequent breach by any
      party.

              
      

    

    
      	
              10.

            	
              Arbitration. 
                

            

    

    If
      a
      dispute should arise regarding this Agreement the parties agree that all claims,
      disputes, controversies, differences or other matters in question arising out
      of
      this relationship shall be settled finally, completely and conclusively by
      arbitration in Houston, Texas in accordance with the Commercial Arbitration
      Rules of the American Arbitration Association (the "Rules").  The governing
      law of this Agreement shall be the substantive law of the State of Texas,
      without giving effect to conflict of laws.  A decision of the arbitrator
      shall be final, conclusive and binding on the Company and Executive.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              11.

            	
              Covenant
                Not to Compete. 

            

    

     

    So
      long
      as the Executive is employed by the Company and for a period of eighteen (18)
      months after either (i) the voluntary termination of employment by Executive
      or
      (ii) the termination of the Executive by the Company for cause, as set forth
      in
      Section 8(b) hereof, the Executive specifically agrees that he will not, for
      himself, on behalf of, or in conjunction with any person, firm, corporation
      or
      entity, other than the Company (either as principal, employee, shareholder,
      member, director, partner, consultant, owner or part-owner of any corporation,
      partnership or any type of business entity) anywhere in any county in which
      the
      Company is doing business at the time of termination, directly or indirectly,
      own, manage, operate, control, be employed by, participate in, or be connected
      in any manner with the ownership, management, operation, or control of any
      business similar to the type of business conducted by the Company at the time
      of
      termination of the Executive's employment.

     

    Executive's
      Acknowledgments and Agreements. 
      The Executive acknowledges and agrees that:

    (1)       
      Due to the nature of the Company's business, the foregoing covenants place
      no
      greater restraint upon the Executive than is reasonably necessary to protect
      the
      business and goodwill of the Company;  

    (2)       
      These covenants protect a legitimate interest of the Company and do not serve
      solely to limit the Company's future competition;

    (3)       
      This Agreement is not an invalid or unreasonable restraint of
      trade;

    (4)       
      A breach of these covenants by the Executive would cause irreparable damage
      to
      the Company;

    (5)       
      These covenants will not preclude the Executive from becoming gainfully
      employed following termination of employment with the Company; 

    (6)       
      These covenants are reasonable in scope and are reasonably necessary to protect
      the Company's business and goodwill and valuable and extensive trade which
      the
      Company has established through its own expense and effort;

    (7)       
      The signing of this Agreement is necessary for the Executive's employment;
      and  

    (8)       
      He has carefully read and considered all provisions of this Agreement and that
      all of the restrictions set forth are fair and reasonable and are reasonably
      required for the protection of the interests of the Company.

    

    Remedies,
      Injunction. 
      In the event of the Executive's actual or threatened breach of any provisions
      of
      this Agreement, the Executive agrees that the Company shall be entitled to
      a
      temporary restraining order, preliminary injunction and/or permanent injunction
      restraining and enjoining the Executive from violating the provisions
      herein.  Nothing in this Agreement shall be construed to prohibit the
      Company from pursuing any other available remedies for such breach or threatened
      breach, including the recovery of damages from the Executive.  The
      Executive further agrees that for the purpose of any such injunction proceeding,
      it shall be presumed that the Company's legal remedies would be inadequate
      and
      that the Company would suffer irreparable harm as a result of the Executive's
      violation of the provisions of this Agreement.  In any proceeding brought
      by the Company to enforce the provisions of this Agreement, no other matter
      relating to the terms of any claim or cause of action of the Executive against
      the Company will be defense thereto.  The foregoing remedy provisions are
      subject to the provisions of §15.51 of the Texas Business and Commerce Code, as
      amended (the "Code"), which Code provisions shall control in the event of any
      conflict between the provisions hereof and the Code or any other law in effect
      relevant and applicable hereto.

     

    
      	
              12.

            	
              Benefits
                Insurance.

            

    

     

    (i)Medical,
      Dental and Vision Benefits. 
      During this Agreement, Executive and his dependents will be entitled to
      receive such group medical, dental and vision benefits as Company may provide
      to
      its other executives, provided such coverage is reasonably available, or be
      reimbursed if Executive is carrying his own similar insurance.

    

    (ii)Benefit 
      Plans. 
      The Executive will be entitled to participate in any benefit plan or
      program of the Company which may currently be in place or implemented in
      the future.

    

    (iii)Other
      Benefits. 
      During the Term, Executive will be entitled to receive, in addition to and
      not
      in lieu of base salary, bonus or other compensation, such other benefits
      and normal perquisites as Company currently provides or such additional benefits
      as Company may provide for its executive officers in the
      future.

     

    
      	
              13.

            	
              Vacation
                and Sick Leave.

            

    

     

    Vacation
      Pay.
      The
      Executive shall be entitled to an annual vacation leave of four (4) weeks at
      full pay.  Executive is specifically permitted to work from home or other
      remote location in his discretion, which time shall not be considered as
      vacation leave. 

     

    Sick
      Pay.
      The
      Executive shall be entitled to sick leave as needed. 

     

    
      	
              14.

            	
              Reimbursement
                of Expenses.

            

    

     

    Upon
      submission of a detailed statement and reasonable documentation, Company will
      reimburse Executive in the same manner as other executive officers for all
      reasonable and necessary or appropriate out-of-pocket travel and other expenses
      incurred by Executive in rendering services required under this Agreement. 
Executive shall be entitled to a $750.00 per month car
      allowance.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              15.

            	
              Withholding
                of Taxes.

            

    

     

    Bluegate
      may withhold from any payments under this Agreement all applicable taxes, as
      shall be required pursuant to any law or governmental regulation or
      ruling.

     

    
      	
              16.

            	
              Entire
                Understanding.

            

    

    This
      Agreement sets forth the entire understanding between the parties with respect
      to the subject matter hereof and cancels and supersedes all prior oral and
      written agreements between the parties with respect to the subject matter
      hereof. 

     

    
      	
              17.

            	
              Severability.

            

    

     

    If
      for
      any reason any provision of this Agreement shall be held invalid, such
      invalidity shall not affect any other provision of this Agreement not held
      so
      invalid.

     

    
      	
              18.

            	
              Governing
                Law.

            

    

     

    This
      Agreement has been executed and delivered in the State of Texas and its
      validity, interpretation, performance and enforcement shall be governed by
      and
      construed in accordance with the laws thereof applicable to contracts executed
      and to be wholly performed in Texas.

     

    
      	
              19.

            	
              Notices.
                

            

    

     

    All
      notices shall be in writing and shall have been duly given if delivered by
      hand
      or mailed, certified or registered mail, return receipt requested to the
      following address or to such other address as either party may designate by
      like
      notice:

     

    If
      to Executive:

    Charles
      E. Leibold

    22526
      Vobe Court

    Katy,
      Texas 77449

     

    If
      to Bluegate:

    Bluegate
      Corp.

    Attn:
      Chairman of the Board of Directors

    701
      N.
      Post Oak Road, Suite 630

    Houston,
      Texas 77024

     

    Bluegate
      has caused this Agreement to be executed by its officer and the Executive has
      signed this Agreement.

     

    
      	20.	
              Successors,
                Binding Agreement. 

            

    

     

    This
      Agreement is binding upon Bluegate’s successors.  Bluegate will require any
      successor (whether direct or indirect, by purchase, merger, consolidation,
      or
      otherwise) to all or substantially all of the business and/or assets of Bluegate
      to expressly assume and agree to perform this Agreement in the same manner
      and
      to the same extent that Bluegate would be required to perform it as if no such
      succession had taken place.  Failure of Bluegate to obtain such assumption
      and agreement prior to the effectiveness of any such succession shall constitute
      a breach of this Agreement.

     

    This
      Agreement shall inure to the benefit of both Bluegate and its successors and
      assigns and the Executive and his personal or legal representatives, executors,
      administrators, heirs, distributes, successors and assigns.

     

    
      	Bluegate:	Executive:
	 	 
	
              /s/
                William
                E. Koehler 

            	
              /s/
                CHARLES
                E. LEIBOLD 

            
	
              William
                E. Koehler

            	
              CHARLES
                E. LEIBOLD

            
	
              President
                and COOExhibit 10.1

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT
BE SOLD, TRANSFERRED OR ASSIGNED UNLESS SO REGISTERED OR AN EXEMPTION FROM
REGISTRATION UNDER SAID ACT IS AVAILABLE.

                                                                           No. 1

                        BRAINSTORM CELL THERAPEUTICS INC.

                10% Convertible Promissory Note Due June 5, 2007

U.S.$500,000                                                  New York, New York
                                                                    June 5, 2006

      BrainStorm Cell Therapeutics Inc., a Washington corporation (the
"Company"), for value received, hereby promises to pay to Vivian Shaltiel , or
registered assigns, the principal sum of U.S. Five Hundred Thousand Dollars
($500,000) plus all accrued but unpaid interest on June 5, 2007 (the "Maturity
Date"). Interest shall be computed on the basis of a 365-day year from the date
hereof on the unpaid balance of such principal amount from time to time
outstanding at the rate of ten percent (10%) per annum, such interest to be due
and payable in full on the Maturity Date.

      This Note shall become immediately due and payable without notice or
demand upon the occurrence at any time of any of the following events of default
(individually, "an Event of Default" and collectively, "Events of Default"):

      1.    default in the payment or performance of this or any other liability
            or obligation of the Maker to the holder, including the payment when
            due of any principal, premium or interest under this Note;

      2.    the liquidation, termination of existence, dissolution, insolvency
            or business failure of the Maker, or the appointment of a receiver
            or custodian for the Maker or any part of its property if such
            appointment is not terminated or dismissed within sixty (60) days;
            or

      3.    the institution by or against the Maker or any indorser or guarantor
            of this Note of any proceedings under the United States Bankruptcy
            Code or any other federal or state bankruptcy, reorganization,
            receivership, insolvency or other similar law affecting the rights
            of creditors generally or the making by the Maker or any indorser or
            guarantor of this Note of a composition or an assignment or trust
            mortgage for the benefit of creditors; or

Upon the occurrence of an Event of Default, the holder shall have then, or at
any time thereafter, all of the rights and remedies afforded by the Uniform
Commercial Code as from time to time in effect in the State of New York or
afforded by other applicable law.
<PAGE>

Every amount overdue under this Note shall bear interest from and after the date
on which such amount first became overdue at an annual rate which is five (5)
percentage points above the rate per year specified in the first paragraph of
this Note. Such interest on overdue amounts under this Note shall be payable on
demand and shall accrue and be compounded monthly until the obligation of the
Maker with respect to the payment of such interest has been discharged (whether
before or after judgment).

In no event shall any interest charged, collected or reserved under this Note
exceed the maximum rate then permitted by applicable law and if any such payment
is paid by the Maker, then such excess sum shall be credited by the holder as a
payment of principal.

All payments by the Maker under this Note shall be made without set-off or
counterclaim and be free and clear and without any deduction or withholding for
any taxes or fees of any nature whatever, unless the obligation to make such
deduction or withholding is imposed by law. The Maker shall pay and save the
holder harmless from all liabilities with respect to or resulting from any delay
or omission to make any such deduction or withholding required by law.

Whenever any amount is paid under this Note, all or part of the amount paid may
be applied to principal, premium or interest in such order and manner as shall
be determined by the holder in its discretion.

No reference in this Note to any guaranty or other document shall impair the
obligation of the Maker, which is absolute and unconditional, to pay all amounts
under this Note strictly in accordance with the terms of this Note.

The Maker agrees to pay on demand all costs of collection, including reasonable
attorneys' fees, incurred by the holder in enforcing the obligations of the
Maker under this Note.

No delay or omission on the part of the holder in exercising any right under
this Note shall operate as a waiver of such right or of any other right of such
holder, nor shall any delay, omission or waiver on any one occasion be deemed a
bar to or waiver of the same or any other right on any future occasion. The
Maker and every indorser or guarantor of this Note regardless of the time, order
or place of signing waives presentment, demand, protest and notices of every
kind and assents to any extension or postponement of the time of payment or any
other indulgence, to any substitution, exchange or release of collateral, and to
the addition or release of any other party or person primarily or secondarily
liable.

      1. Conversion. The holder of this Note has the right, at its option, at
any time and from time to time prior to the close of business on the Maturity
Date to convert all or part of the outstanding principal and interest amount of
this Note into fully-paid and non-assessable shares of Common Stock, $0.00005
par value per share, of the Company ("Common Stock"). The number of shares of
Common Stock that shall be issued upon conversion of this Note shall be
calculated by dividing the amount of outstanding principal and interest that the
holder elects to convert by the average of the Conversion Price. The Conversion
Price shall mean 75% of the average of the last bid and ask price of the Common

                                      -2-
<PAGE>

Stock as quoted on the Over-the-Counter Bulletin Board or such other exchange
where the Common Stock is quoted or listed for the five trading days ending the
day prior to the Maker's receipt of the holder's written notice of election to
convert. In order to exercise this optional conversion privilege, the holder of
this Note shall surrender this Note to the Company during usual business hours
at the Company's principal executive office, accompanied by written notice in
form satisfactory to the Company that the holder elects to convert the principal
amount of this Note or a portion hereof specified in such notice. Such notice
shall also state the name or names (with address and Social Security number or
federal tax identification number) in which the certificate or certificates for
shares of Common Stock which shall be issuable on such conversion shall be
issued. Notwithstanding the foregoing or anything to the contrary, upon the
occurrence of an Event of Default (unless waived by the holder), the Conversion
Price shall mean 50% of the average of the last bid and ask price of the Common
Stock as quoted on the Over-the-Counter Bulletin Board or such other exchange
where the Common Stock is quoted or listed for the five trading days ending the
day prior to the Maker's receipt of the holder's written notice of election to
convert.

      2. Surrender of Note and Delivery of Certificates. When surrendered for
optional or mandatory conversion this Note shall, unless the shares issuable on
conversion are to be issued in the same name as the name in which this Note is
then registered, be duly endorsed by, or accompanied by instruments of transfer
in form satisfactory to the Company duly executed by, the holder or his or its
duly authorized attorney. As promptly as practicable after the surrender of this
Note for conversion and the receipt of the notice specified above (in the case
of optional conversion), the Company shall deliver or cause to be delivered at
its principal executive office to the holder, or on the holder's written order,
a certificate or certificates for the number of full shares issuable upon the
conversion of this Note, or portion hereof, in accordance with the provisions
hereof. Such conversion shall be deemed to have been made at the time this Note
shall have been surrendered for conversion and the notice specified above (in
the case of optional conversion) shall have been received by the Company at its
principal executive office (the "Conversion Date"), and the holder in whose name
any certificate or certificates for shares of Common Stock shall be issuable
upon such conversion shall be deemed to have become on the Conversion Date the
holder of record of the shares represented thereby. If less than the entire
outstanding principal amount of this Note is being converted (in the case of
optional conversion), a new Note shall promptly be delivered to the holder for
the unconverted principal balance and shall be of like tenor as to all terms as
the Note surrendered.

      3. Adjustment of Conversion Price.

            (i) In case the Company shall:

                  (A) declare a dividend of Common Stock on its Common Stock,

                  (B) subdivide outstanding Common Stock into a larger number of
            shares of Common Stock by reclassification, stock split or
            otherwise, or

                  (C) combine outstanding Common Stock into a smaller number of
            shares of Common Stock by reclassification or otherwise,

            then the number of shares of Common Stock issuable upon conversion
            of this Note immediately prior to any such event shall be adjusted
            proportionately so that thereafter the holder of this Note shall be
            entitled to receive upon conversion of this Note the number of

                                      -3-
<PAGE>

            shares of Common Stock which such holder would have owned after the
            happening of any of the events described above had this Note been
            converted immediately prior to the happening of such event, provided
            that the Conversion Price shall in no event be reduced to less than
            the par value of the shares issuable upon conversion. Such
            adjustment shall become effective immediately after the record date
            in the case of a dividend and shall become effective immediately
            after the effective date in the case of a subdivision or
            combination.

            (ii) If, prior to the Maturity Date, the Company shall at any time
consolidate or merge with another corporation (other than a merger or
consolidation in which the Company is the surviving corporation), the registered
holder hereof will thereafter be entitled to receive, upon the conversion
hereof, the securities or property to which a holder of the number of shares of
Common Stock then deliverable upon the conversion hereof would have been
entitled upon such consolidation or merger, and the Company shall take such
steps in connection with such consolidation or merger as may be necessary to
ensure that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to any securities or property thereafter
deliverable upon the conversion of this Note.

                                      -4-
<PAGE>

      4. Statement of Adjustment. Whenever the Conversion Price shall be
adjusted as provided in herein, the Company shall provide the holder with a
statement, signed by the Chairman of the Board, the President, any Vice
President, the Treasurer or Secretary of the Company, showing in reasonable
detail the facts requiring such adjustment and the Conversion Price that will be
effective after such adjustment. The Company shall also cause a notice setting
forth any such adjustment to be sent by mail, first class, postage prepaid, to
the record holder of the Note at his or its last known address appearing on the
records of the Maker.

      5. Fractional Shares. No fractional shares of Common Stock shall be
issuable upon conversion of this Note, but a payment in cash will be made in
respect of any fraction of a share which would otherwise be issuable upon the
surrender of this Note, or portion hereof, for conversion. Such payment shall be
based on the Conversion Price.

      6. Accrued Interest. Upon the conversion of this Note, the Company shall
not be required to pay any accrued but unpaid interest on the amount so
converted up to the Conversion Date.

      7. Securities Act of 1933. Upon conversion of this Note, the registered
holder may be required to execute and deliver to the Company an instrument, in
form satisfactory to the Company, representing that the shares issuable upon
conversion hereof are being acquired for investment and not with a view to
distribution within the meaning of the Securities Act of 1933, as amended.

      8. Prepayment of Principal. The principal indebtedness represented by this
Note may be prepaid in whole or in part, with ten (10 days) prior written notice
to the holder of this Note.

      9. Successors and Assigns. This Note, and the obligations and rights of
the Company hereunder, shall be binding upon and inure to the benefit of the
Company, the holder of this Note, and their respective heirs, successors and
assigns.

      10. Recourse. Recourse under this Note shall be to the general unsecured
assets of the Company only and in no event to the officers, directors or
stockholders of the Company.

      11. Changes. Changes in or additions to this Note may be made or
compliance with any term, covenant, agreement, condition or provision set forth
herein may be omitted or waived (either generally or in a particular instance
and either retroactively or prospectively), upon written consent of the Company
and the holder.

      12. Currency. All payments shall be made in such coin or currency of the
United States of America as at the time of payment shall be legal tender therein
for the payment of public and private debts.

      13. Notices. All notices, requests, consents and demands shall be made in
writing and shall be mailed postage prepaid, or delivered by hand, to the
Company or to the holder hereof at their respective addresses set forth below or
to such other address as may be furnished in writing to the other party hereto:

                                      -5-
<PAGE>

            If to the holder:

            If to the Company:

            BrainStorm Cell Therapeutics Inc.
            1350 Avenue of the Americas
            New York, New York 10019
            Attention: Chief Financial Officer

            with a copy to:

            BRL Law Group LLC
            31 St. James Avenue, Suite 850
            Boston, MA 02116
            Attention: Thomas B. Rosedale
            Facsimile: 617-399-6930

      14. Saturdays, Sundays, Holidays. If any date that may at any time be
specified in this Note as a date for the making of any payment of principal or
interest under this Note shall fall on Saturday, Sunday or on a day which in the
New York, New York shall be a legal holiday, then the date for the making of
that payment shall be the next subsequent day which is not a Saturday, Sunday or
legal holiday.

      15. Governing Law. This Note shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the laws of the State
of New York.

      IN WITNESS WHEREOF, this Note has been executed and delivered as a sealed
instrument on the date first above written by the duly authorized representative
of the Company.

                                       BRAINSTORM CELL THERAPEUTICS INC.

                                       /s/ Yoram Drucker
                                       ------------------------------
                                       By:    Yoram Drucker
                                       Title: Chief Operating Officer

                                      -6-

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