Exhibit 10.1

 

SUBSCRIPTION AGREEMENT

 

SUBSCRIPTION AGREEMENT (“ Agreement ”), dated as of July 2, 2007, by and between ACCBT Corp., a corporation duly incorporated under the laws of the British Virgin Islands (“ ACCBT ”), and Brainstorm Cell Therapeutics Inc., a corporation duly incorporated under the laws of the State of Delaware, USA (“ Company ”).

 

WHEREAS , the Investor (as defined below) wishes to subscribe for and purchase, and the Company wishes to issue and sell, upon the terms and conditions stated in this Agreement, (i) up to 27,500,000 shares of the Company’s common stock, par value 0.00005 per share (“ Common Shares ”), at an aggregate subscription price of up to $5.0 million (“ Maximum Subscription Price ”) for all possible subscription shares hereunder (“ Subscription Shares ”), and (ii) warrants in substantially the form attached hereto as Exhibit A (“ Warrants ”), to acquire up to such additional number of Common Shares as provided below (as exercised, collectively, the “ Warrant Shares ”).

 

WHEREAS , contemporaneously with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Registration Rights Agreement, substantially in the form attached hereto as Exhibit B (the “ Registration Rights Agreement ”) pursuant to which the Company will provide certain registration rights with respect to the Registrable Securities (as defined in the Registration Rights Agreement) under the 1933 Act (as defined below) and the rules and regulations, promulgated thereunder and applicable state securities laws.

 

NOW, THEREFORE, the Company and the Investor hereby agree as follows:

 

1.	DEFINITIONS

 

Other than certain capitalized terms defined in the body of this Agreement, the following terms will have the meaning ascribed to them below:

 

1.1	“ $ ” means United States Dollars.

 

1.2	“ 1933 Act ” means the United States Securities Act of 1933, as amended.

 

1.3	“ 1934 Act ” means the United States Securities Exchange Act of 1934, as amended.

 

1.4

“ Affiliate ” means with regard to an entity (“ X ”), any entity that directly or indirectly (i) is under Control of X, (ii) has Control over X, or (iii) is under common Control with X. For this purpose, “ Control ” shall mean ownership of more than fifty percent (50%) of the equity or voting power of an entity or the right to appoint at least fifty percent (50%) of the members of the Board of Directors of such entity.

 

1.5	“ Business Day ” means any day other than Saturday, Sunday or other day on which commercial banks in the state of Delaware generally remain closed.

 

1.6	“ Bylaws ” means the Company’s Bylaws as in effect on the date hereof.

 

1.7	“ Certificate of Incorporation ” means the Company’s Certificate of Incorporation as in effect on the date hereof.

 

 

1.8

“ Contingent Obligation ” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any Indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.

 

1.9	“ First Closing ” means the closing for the first purchase referred to in the table included in §2.2 below.

 

1.10	“ First Closing Date ” means the date of the First Closing.

 

 

1.13	“ Investor ” means ACCBT Corp. and any other Person designated thereby to hold any or all of the Securities.

 

1.14	“ Knowledge of the Company ” or the “ Company’s Knowledge ” means the actual knowledge of the executive officers of the Company, after due inquiry.

 

1.15	“ Last Closing ” means the closing for the last purchase referred to in the table included in §2.2 below.

 

 

 

 

1.19	“ Principal Market ” means the NASD’s OTC Bulletin Board.

 

1.20	“ Regulation D ” means Regulation D under the 1933 Act.

 

 

2.	BASIC TRANSACTION

 

2.1

Purchase of Common Shares and Warrants . Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, and the Investor’s right to not make any further payments on account of the Maximum Subscription Price in accordance with Section 2.2 below, the Company shall issue and sell to the Investor, and the Investor agrees to subscribe for and purchase from the Company on (or, at the election of the Investor, before) the dates and for the consideration set forth below up to 27,500,000 Subscription Shares as provided below. Further, at such dates, and for no additional consideration, if the Investor subscribes for and purchases the relevant Subscription Shares, then the Company shall issue to the Investor Warrants to acquire up to 30,250,0000 additional Common Shares as provided below. For such Warrants representing the first 10,083,333 Common Shares issuable upon exercise, the Exercise Price (as defined in the Warrant) shall be - $0.20 (twenty cents) per share; for such Warrants representing the next 10,083,333 Common Shares issuable upon exercise, the Exercise Price (as defined in the Warrant) shall be - $0.29 (twenty nine cents) per share; and for such Warrants representing the next 10,083,334 Common Shares issuable upon exercise, the Exercise Price (as defined in the Warrant) shall be - $0.36 (thirty six cents) per share.

 

 

 

2.2

Closings . Separate closings of the purchase and sale of the Subscription Shares and the Warrants (each, a “ Closing ” and together the “ Closings ”) shall occur on each of the purchase dates set forth above (each, a “ Closing Date ”) and shall take place at such time and place as the Company and the Investor shall agree. Notwithstanding the above, the Investor may elect to advance any Closing Date; provided , however , that such date will not be earlier than 7 days following such notice. At each Closing, the Company shall deliver to the Investor the number of Subscription Shares and Warrants set forth above upon the delivery to the Company by the Investor of a certified check or wire transfer of funds in the amount set forth opposite each purchase date above. The Subscription Shares deliverable to the Investor hereunder at each Closing will be evidenced by a single certificate registered in the Investor’s name (including, for the avoidance of doubt, a nominee as ACCBT may specify) and, when issued in accordance with the terms of this Agreement for the consideration expressed herein, will be duly authorized, validly issued, fully paid, nonassessable and free and clear of all preemptive or similar rights, taxes, liens and charges with respect to the issue thereof.

 

2.3

Investor’s Right to Cease Payments . Notwithstanding the foregoing, with respect to any payment other than the payment payable by the Investor on the First Closing Date and without derogating from the provisions of Section 7 below, the Investor shall have the right, upon 45 days notice to the Company prior to the next scheduled Closing Date, to not make the next scheduled or any further payments on account of the Maximum Subscription Price (and, accordingly, the Company will not be required to issue any further Subscription Shares and Warrants), without incurring any liability. Upon such notice, this Agreement as it pertains to the transactions contemplated in connection with a subsequent Closing (and, at the election of the Investor, also in connection with other or all subsequent Closings) shall terminate, whereupon the Company shall have no claim against or recourse to the Investor and may not alter or cancel any of the Investor’s rights (other than the Investor’s rights to make further investments in the Company) or obtain any compensation from the Investor.

 

3.	INVESTOR’ S REPRESENTATIONS AND WARRANTIES

 

The Investor represents and warrants to the Company that the statements contained in this Section 3 ‎ are, on the date of this Agreement, and, as of each Closing Date, correct and complete (as though made then and as though each Closing Date were substituted for the date of this Agreement throughout this Section 3), except as set forth in Annex I attached hereto.

 

 

3.1	Organization of the Investor . The Investor is a corporation duly organized, validly existing and, if applicable, in good standing under the laws of the British Virgin Islands.

 

3.2

Authorization; Enforcement; Validity . The Investor has the requisite power and authority to enter into and perform its obligations under this Agreement. The execution and delivery of this Agreement by the Investor and the consummation by the Investor of the transactions contemplated hereby have been duly authorized by the Investor’s Board of Directors and no further filing, consent, or authorization is required by the Investor, its Board of Directors or its shareholders. This Agreement has been duly executed and delivered by the Investor, and shall constitute the legal, valid and binding obligations of the Investor, enforceable against the Investor in accordance with its terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.

 

3.3	Brokers’ Fees . The Investor has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which the Company could become liable or obligated.

 

3.4

No Public Sale or Distribution . The Investor is (i) acquiring the Subscription Shares and the Warrants and (ii) upon the exercise of the Warrants (other than pursuant to a Cashless Exercise (as defined in the Warrants)) will acquire the Warrant Shares issuable upon exercise of the Warrants, for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted under the 1933 Act; provided , however , that by making the representations herein, the Investor does not agree to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with, or pursuant to, or a registration statement or an exemption under the 1933 Act.

 

4.	REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company (which for purposes of the representations and warranties under this Section 4 is deemed to include any subsidiary of the Company, unless the context otherwise requires) represents and warrants to the Investor that the statements contained in this Section 4 are correct and complete as of the date of this Agreement and will be correct and complete as of each Closing Date (as though made then and as though each Closing Date were substituted for the date of this Agreement throughout this Section 4), except as set forth in the disclosure schedule delivered by the Company to the Investor on the date hereof, attached hereto (“ Disclosure Schedule ”). Nothing in the Disclosure Schedule shall be deemed adequate to disclose an exception to a representation or warranty made herein, however, unless the Disclosure Schedule identifies the exception with reasonable particularity. The Disclosure Schedule will be arranged in paragraphs corresponding to the lettered and numbered paragraphs contained in this Section 4.

 

4.1

Organization and Qualification . The Company is duly organized, validly existing and, if applicable under the laws of its place of incorporation, in good standing under such jurisdiction, and has the requisite power and authority to own its properties and to carry on its business as now being conducted. The Company has one subsidiary, which subsidiary is identified in Section 4.1 of the Disclosure Schedule.

 

 

4.2

Authorization; Enforcement; Validity . The Company has the requisite power and authority to enter into and perform its obligations under this Agreement, the Warrants, the Registration Rights Agreement, and each of the other agreements entered into by the parties hereto in connection with the transactions contemplated by this Agreement (collectively, the “ Transaction Documents ”) and to issue the Securities in accordance with the terms hereof and thereof. The execution and delivery of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Warrants, the issuance of the Warrant Shares upon exercise of the Warrants, have been duly authorized by the Company’s Board of Directors and no further filing, consent, or authorization is required by the Company, its Board of Directors or its shareholders. This Agreement and the other Transaction Documents of even date herewith have been duly executed and delivered by the Company, and shall constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.

 

4.3

Issuance of Securities . The issuance of the Subscription Shares and the Warrants is duly authorized and is free from all taxes, liens and charges with respect to the issue thereof. As of each Closing, a number of Common Shares shall have been duly authorized and reserved for issuance which equals at least 110% of the maximum number of Common Shares issuable upon exercise of the Warrants. Upon issuance or exercise in accordance with the Warrants, and payment of the consideration set forth in this Agreement, the Warrants and the Warrant Shares, respectively, will be validly issued, fully paid and nonassessable and free from all preemptive or similar rights, taxes, liens and charges with respect to the issue thereof, with the holder being entitled to all rights accorded to a holder of Common Shares.

 

4.4

No Conflicts . The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Warrants, and the issuance of the Warrant Shares) will not (i) result in a violation of the Certificate of Incorporation or the Bylaws or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or result in termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree applicable to the Company or by which any property or asset of the Company is bound or affected.

 

4.5

Consents . The Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its obligations under or contemplated by the Transaction Documents, in each case in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence shall have been obtained or effected on or prior to the First Closing Date.

 

 

4.6

Dilutive Effect . The Company understands and acknowledges that the number of Warrant Shares issuable upon exercise of the Warrants may increase beyond the initially anticipated amounts in certain circumstances. The Company further acknowledges that its obligation to issue the Warrant Shares upon exercise of the Warrants in accordance with this Agreement and the Warrants, in each case, is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.

 

4.7

Application of Takeover Protections; Rights Agreement . The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Certificate of Incorporation or the laws of the jurisdiction of its formation which is or could become applicable to the Investor as a result of the transactions contemplated by this Agreement, including, without limitation, the Company’s issuance of the Securities and the Investor’s ownership of the Securities. The Company has not adopted a shareholder rights plan or similar arrangement relating to accumulations of beneficial ownership of Common Shares or a change in control of the Company.

 

4.8	SEC Documents; Financial Statements

 

 

4.9

Absence of Certain Changes . Since March 31, 2007, there has been no event which has had, or could reasonably be expected to result, in a Material Adverse Effect on the Company. Without derogating from the generality of the above, since March 31, 2007, except in connection with the transactions contemplated herein, there has not been:

 

 

4.9.3

any material damage, destruction or loss, whether or not covered by insurance to any assets or properties of the Company;

 

4.9.4

any waiver, not in the ordinary course of business, by the Company of a material right or of a material debt owed to it;

 

 

4.9.7

Any change in the number of directors of the Company or a change in the minimum or maximum possible seats which may constitute the board.

 

4.9.8

any material labor difficulties or labor union organizing activities with respect to employees of the Company;

 

 

4.9.9

the loss of the services of any key employee, or material change in the composition or duties of the senior management of the Company; or

 

 

 

 

4.16

Contracts

 

 

 

 

4.16.10

any agreement under which it has advanced or loaned any amount to any of its directors, officers, and employees;

 

 

4.16.12

any other agreement (or group of related agreements) the performance of which involves consideration in excess of $40,000.

 

4.17	The Company has delivered to the Investor a correct and complete copy of each written agreement listed in Section 4.16 of the Disclosure Schedule (as amended to date). With respect to each such agreement:

 

4.17.1

the agreement is legal, valid, binding, enforceable, and in full force and effect;

 

 

 

 

 

 

 

 

5.

COVENANTS

 

5.1	Pre-Closing Covenants . The following shall apply between the date of execution of this Agreement and the First Closing:

 

 

5.2

Adjustment of the Number of Shares and Price Per Share . In the event that at any time prior to the First Closing Date, the Company issues more Common Shares or other securities convertible into, exercisable or exchangeable for Common Shares, then the number of Subscription Shares and the price per share (but not the payment amounts or Maximum Subscription Price) will be adjusted to ensure that the Investor shall have the right to acquire up to 52.35% of the equity of the Company on a fully diluted as converted basis (assuming the Investor purchases all of the Subscription Shares and exercises in full all of the Warrants) and 50.02% of the issued and outstanding shares of the Company assuming the Investor invests the Maximum Subscription Price. In case the Investor invests less then the Maximum Subscription Price, the calculation will be “pro-rata” to the actual investment made by the Investor.

 

 

5.3	Pre-emptive Right

 

 

 

 

5.4	Board Composition . The Company shall cause the following to take place timely:

 

 

 

5.5

Cancellation of Certain Issued Warrant and Debenture . Upon the First Closing, the Investor will surrender to the Company the form of promissory note and warrants issued to the Investor on May 6, 2007, whereupon such promissory note and warrants will be deemed null and void. The parties hereto agree that the amount of $250,000 paid by the Investor in connection with the aforementioned issuance will be considered a payment made on the First Closing Date towards the payment due on such date (i.e., $1.25 million).

 

5.6

Security Holders Agreement . (i) The Investor, and (ii) certain security holders of the Company holding at least 31% of the issued and outstanding shares of the Company as at the date hereof shall have entered into a security holders agreement with the Investor in the form attached hereto as Exhibit C.

 

5.7

Protective Provisions . For so long as the Investor holds (taking into account, for the avoidance of doubt, a designee of ACCBT) at least 5% of the issued and outstanding share capital of the Company, no obligation of the Company (which, for purposes of this Section is deemed to include any subsidiary of the Company) will be entered into, no decision will be made, and no action will be taken by or with respect to the Company, either directly or indirectly (including by merger, consolidation or reclassification, or through the making of any shareholder proposal by any of its shareholder), with respect to the following matters without the written consent of the Investor:

 

 

 

 

5.7.4

the declaration or payment of any dividend or the making of any distributions to any holders of any shares in the capital of the Company;

 

 

5.7.7

the taking of any steps to voluntarily liquidate, dissolve, wind-up or otherwise terminate the corporate existence of the Company;

 

 

5.7.9

any material change to the direction of the business of the Company or the related business plan as described in the SEC Documents;

 

 

5.7.11

any acquisition of at least the majority of shares or all, or substantially all, of the assets of any other Person;

 

 

5.7.13

any commitment or agreement to do any of the foregoing.

 

5.8	Best Efforts . Each party hereto shall use its best efforts timely to satisfy each of the applicable conditions to be satisfied by it as provided in Sections 6 and 7 of this Agreement.

 

 

5.9

Form D and Blue Sky . The Company agrees to file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof to the Investor promptly after such filing. The Company shall, on or before the First Closing Date, take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for or to qualify the Securities for sale to the Investor at the First Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Investor on or prior to the First Closing Date. The Company shall make all filings and reports relating to the offer and sale of the Securities required under applicable securities or “Blue Sky” laws of the states of the United States following the First Closing Date.

 

 

 

 

5.17	Exclusivity . Between the date of execution of this Agreement and the First Closing, the Company shall not:

 

 

6.	CONDITIONS TO THE COMPANY ’S OBLIGATION TO ISSUE

 

The obligation of the Company hereunder to issue and sell the applicable Subscription Shares to the Investor at each Closing is subject to the satisfaction, at or before the relevant Closing Date, of each of the following conditions (if such remain relevant in a subsequent Closing), provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing the Investor with prior written notice thereof:

 

6.1

The representations and warranties of the Investor shall be true and correct in all material respects as of the date when made and as of the relevant Closing Date as though made at that time (except for representations and warranties that speak as of a specific date), and the Investor shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Investor at or prior to the relevant Closing Date;

 

6.2	The Investor shall have executed and delivered to the Company each of the Transaction Documents to be delivered by the Investor hereunder together with the applicable proceeds of the investment; and

 

6.3	All of the terms, covenants and conditions of this Agreement to be performed and/or complied with by the Investor at or prior to the relevant Closing Date shall have been performed or complied with.

 

7.	CONDITIONS TO THE INVESTOR’S OBLIGATION TO SUBCSCRIBE

 

Without derogating from the provisions of Section 2.3 above, the obligation of the Investor to purchase the relevant Subscription Shares at each Closing is subject to the satisfaction, at or before the relevant Closing Date, of each and all of the following conditions (if such remain relevant in a subsequent Closing), provided that these conditions are for the Investor’s sole benefit and may be waived by the Investor at any time in its sole discretion by providing the Company with prior written notice thereof:

 

7.1	The Company shall have executed and delivered to the Investor: (A) each of the Transaction Documents, and (B) the Warrants;

 

 

7.2	(i) The Investor and (ii) certain security holders of the Company, representing at least 31% of the issued and outstanding shares of the Company as at the date hereof, shall have entered into the security holders agreement set forth in Exhibit C.

 

7.3

The Company shall have taken such actions under the Company's Certificate of Incorporation and Bylaws and rights plan as may be necessary in the reasonable opinion of the Investor’s counsel to permit the purchase of the Subscription Shares and the Warrant Shares and to establish the rights of the Investor as contemplated under the Transaction Documents.

 

7.4

The representations and warranties of the Company shall be true and correct as of the date when made and as of each Closing Date as though made at that time (except for representations and warranties that speak as of a specific date), the Company shall have performed, satisfied and complied in all respects with the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Company at or prior to each Closing Date , and no event has occurred which has had, or could reasonably be expected to result, in a Material Adverse Effect on the Company;

 

7.5	The Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale and issuance of the Securities ;

 

7.6	No action, suit, or proceeding shall be pending or threatened before any court or quasi-judicial or administrative agency or before any arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling, or charge would:

 

7.6.1

prevent consummation of any of the transactions contemplated hereby and by the other Transaction Documents,

 

7.6.2

cause any of the transactions contemplated hereby and by the other Transaction Documents to be rescinded following consummation, or

 

7.6.3

affect adversely the right of the Investor to own the Subscription Shares and/or the Warrant Shares.

7.7

The Investor shall have received a certificate, executed by the Chief Executive Officer (or principal executive officer) of the Company, dated as of each Closing Date, to the effect that each of the applicable conditions specified in Sections 7.2 through 7.6 above is satisfied in all material respects;

 

7.8

The Company shall have delivered to the Investor a certificate, executed by the Chief Executive Officer (or principal executive officer) of the Company and dated as of the First Closing Date, attaching and confirm the due passage and in-effect status of (i) resolutions adopted by the Company’s Board of Directors to approve the transactions contemplated by this Agreement and the other Transaction Documents, (ii) the Certificate of Incorporation and (iii) the Bylaws, each as in effect at the First Closing;

 

7.9	By the First Closing the relevant parties shall have entered into the Registration Right Agreement;

 

 

 

7.12	The Company shall have obtained Directors and Officers liability insurance to the Investor's satisfaction.

 

 

8.	INDEMNIFICATION

 

8.1

Company’s Obligation to Indemnify . The Company shall defend, protect, indemnify and hold harmless the Investor (including, for the avoidance of doubt, each other holder of the Securities) (collectively, the “ Indemnitees ”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses (“ Claim ”) in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements and the reasonable cost of enforcement of this indemnity (“ Indemnified Liabilities ”), incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty made by the Company in the Transaction Documents, or any other certificate, instrument or document contemplated hereby or thereby, or (b) any breach of any covenant, agreement or obligation of the Company contained in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby.

 

8.2

Indemnification Procedure . Promptly after receipt by an Indemnitee under this Section 8 of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving a Claim, such Indemnitee shall, if a Claim in respect thereof is to be made against the Company under this Section 8, deliver to the Company a written notice of the commencement thereof including the factual basis for the Claim (if known) and the amount, and the Company shall have the right to participate in, and, to the extent the Company so desires, to assume control of the defense thereof with counsel mutually satisfactory to the Company and the Indemnitee. The Indemnitee shall cooperate fully with the Company in connection with any negotiation or defense of any such action or proceeding by the Company and shall furnish to the Company all information reasonably available to the Indemnitee which relates to such action or proceeding. The Company shall keep the Indemnitee reasonably apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. The Company shall not be liable for any settlement of any action, claim or proceeding effected without its prior written consent (excluding where the Company has not elected to assume control of the defense), provided , however , that the Company shall not unreasonably withhold, delay or condition its consent. The Company shall not, without the prior written consent of the Indemnitee, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnitee of a release from all liability in respect to such action, proceeding or litigation, and such settlement shall not include any admission as to fault on the part of the Indemnitee. Following indemnification as provided for hereunder, the Company shall be subrogated to all rights of the Indemnitee with respect to all insurance proceeds, third parties, firms or corporations relating to the matter for which indemnification has been made. The failure by an Indemnitee to deliver written notice to the Company within a reasonable time of the commencement of any such action shall not relieve the Company of any liability to the Indemnitee under this Section 8 except to the extent that the Company is prejudiced in its ability to defend such action, in which event the liability of the Company to such Indemnitee shall be reduced by the amount of any losses incurred by the Company resulting from the Indemnitee’s failure to give such notice on a timely basis.

 

 

9.	TERMINATION

 

In the event that any of the Closings shall not have occurred on or before the Closing Date designated for such Closing as set forth in Section 2.1 above due to the Company’s or the Investor’s failure to satisfy the conditions set forth in Sections 6 and 7 above (and the non-breaching party’s failure to waive such unsatisfied condition(s)), the non-breaching party shall have the option to terminate this Agreement at the close of business on such date as it pertains to the transactions contemplated in connection with the relevant Closing (and, at the non-breaching party’s election also in connection with all subsequent Closings) without liability of a party to the other party. Nothing in this Section 9 shall be deemed to release a party from any liability for any breach by such party of the applicable terms and provisions of this Agreement or the other Transaction Documents or to impair the right of a party to compel specific performance by the other party of its obligations under this Agreement or the other Transaction Documents.

 

 

10.	Miscellaneous

 

 

 

 

10.3	Construction

 

 

10.3.3

The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

 

 

If to Company:

Brainstorm Cell Therapeutic Inc.

12 Basel St. Petach Tikva

Tel: +972-3-9236384

Fax: +972-3-9236385

Atten.: Yoram Drucker

 

With a Copy to:

BRL Law Group LLC

31 St. James Avenue, Suite 850

Boston, MA 02116

Attention: Thomas B. Rosedale

If to Investor:

ACCBT Corp.

Morgan & Morgan Building

Pasea Estate, Road Town, Tortola

BVI

Tel:

Fax:

Atten.: Mr. Chaim Lebovitch

With a Copy to:

Caspi & Co.

33 Yavetz St

65258 Tel Aviv, Israel

Tel: +972-3-7961000

Fax: +972-3-7961001

Atten.: Norman Menachem Feder

 

or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to the other party five (5) Business Days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.

 

 

 

 

IN WITNESS WHEREOF , the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first written above.

 

ACCBT Corp.		Brainstorm Cell Therapeutic Inc.
By: /s/ Chaim Lebovits Title:   Director		By: /s/ Yoram Drucker Title: Chief Operating Officer

 

Exhibit 10.2

 

Warrant No.: [__]  

 

Number of Shares of Common Stock: [_____]

 

Date of Issuance: [] (“ Issuance Date ”)

 

BRAINSTORM CELL THERAPEUTICS, INC.

 

Common Stock Purchase Warrant

 

BRAINSTORM CELL THERAPEUTICS, INC. , a Delaware corporation (“ Company ”), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, ACCBT CORP. , the registered holder hereof or its permitted assigns ( “ Holder ”), is entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise Price (as defined below) then in effect, upon surrender of this Warrant Common Stock (including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement hereof, “ Warrant ”), at any time or times on or after the date hereof, but not after 11:59 p.m., Eastern Standard Time, on the Expiration Date (as defined below), [________] fully paid nonassessable shares of Common Stock (as defined below) (“ Warrant Shares ”). Except as otherwise defined herein, capitalized terms in this Warrant shall have the meanings set forth in Section 1 . This Warrant is one of a series of warrants to purchase Common Stock (“ Warrants ”) issued pursuant to that certain Subscription Agreement, dated as of July 2, 2007 (“ Subscription Date ”), by and between the Company and ACCBT Corp. (“ Investor ”) referred to therein (the “ Subscription Agreement ”).

 

1.   DEFINITIONS

 

1.1         “ $ ” means United States Dollars.

 

1.2         “ Board ” means the board of directors of the Company.

 

1.3         “ Bloomberg ” means Bloomberg Financial Markets.

 

1.4         “ Business Day ” means any day other than Saturday, Sunday or other day on which commercial banks in the City of New York are authorized or required by law to remain closed.

 

1.5         “ Closing Bid Price ” and “ Closing Sale Price ” means, for any security as of any date, the last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price, as the case may be, then the last bid price or last trade price, respectively, of such security prior to 4:00 p.m., New York Time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bid price or last trade price, respectively, of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price, as the case may be, of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.

 

 

1.6         “ Common Stock ” means (i) shares of common stock in the capital of the Company par value $0.00005, and (ii) any share capital into which such Common Stock shall have been changed or any share capital resulting from a reclassification of such Common Stock.

 

1.7          “ Convertible Securities ” means any shares or securities or instruments (other than Options) directly or indirectly convertible into or exercisable or exchangeable for Common Shares.

 

1.8          “ Excluded Securities ” means (i) shares of Common Stock issued pursuant to a transaction described in Section 3.3 below ; (ii) shares of Common Stock issued or deemed issued to employees, consultants, officers or directors (if in transactions with primarily non-financing purposes) of this Company pursuant to a board approved stock option plan and in an aggregate amount of up to [10%] of the shares of common Stock from time to time calculated on a fully-diluted as converted basis; (iii) shares of Common Stock issued pursuant to other Warrants ; and (iv) shares of Common Stock issued pursuant to other conversion of principal (but not interest) of any Convertible Securities outstanding as of the Issuance Date

 

1.9         “ Expiration Date ” means November 5, 2011.

 

1.10       “ Options ” means any rights, warrants or options to subscribe for or purchase Common Shares or Convertible Securities.

 

1.11       “ Principal Market ” means the NASD’s OTC Bulletin Board.

 

2.   EXERCISE OF WARRANT  

 

2.1         Mechanics of Exercise . Subject to the terms and conditions hereof, this Warrant may be exercised by the Holder on any day on or after the date hereof, in whole or in part, by (i) delivery of a written notice, in the form attached hereto as Exhibit A (“ Exercise Notice ”), of the Holder’s election to exercise this Warrant and (ii) (A) payment to the Company of an amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to which this Warrant is being exercised (“ Aggregate Exercise Price ”) in cash or wire transfer of immediately available funds or (B) by notifying the Company that this Warrant is being exercised in a Cashless Exercise pursuant to and subject to the conditions set forth in Section 2.3 below . The Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder. Execution and delivery of the Exercise Notice with respect to less than all of the Warrant Shares shall have the same effect as cancellation of the original Warrant and issuance of a new Warrant evidencing the right to purchase the remaining number of Warrant Shares. On or before the first Business Day following the date on which the Company has received each of the Exercise Notice and the Aggregate Exercise Price (or notice of a Cashless Exercise) (“ Exercise Delivery Documents ”), the Company shall transmit by facsimile an acknowledgment of confirmation of receipt of the Exercise Delivery Documents to the Holder and the Company’s transfer agent (“ Transfer Agent ”). On or before the third Business Day following the date on which the Company has received all of the Exercise Delivery Documents (“ Share Delivery Date ”), the Company shall issue and dispatch by overnight courier to the address as specified in the Exercise Notice, a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder is entitled pursuant to such exercise. Upon delivery of the Exercise Notice and Aggregate Exercise Price referred to in clause (ii)(A) above or notification to the Company of a Cashless Exercise referred to in Section 2.3 below , the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the certificates evidencing such Warrant Shares. If this Warrant is submitted in connection with any exercise pursuant to this Section 2.1 and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired upon an exercise, then the Company shall as soon as practicable and in no event later than three Business Days after any exercise and at its own expense, issue a new Warrant (in accordance with Section 5.4 below ) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised. No fractional shares of Common Stock are to be issued upon the exercise of this Warrant, but rather the number of shares of Common Stock to be issued shall be rounded up to the nearest whole number. The Company shall pay any and all taxes which may be payable with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant. Notwithstanding anything to the contrary, a Cashless Exercise may only be utilized with respect to up to and including 50% of the Warrant Shares, with the payment of the exercise price for all other Warrant Shares being in the form of cash or wire transfer of immediately available funds. Subject to the foregoing, the Holder shall be entitled to determine which of the Warrant Shares shall be considered to qualify for Cashless Exercise.

 

 

2.2         Exercise Price . For purposes of this Warrant, “ Exercise Price ” means [$0.20, $0.29, $0.36] subject to adjustment as provided herein.

 

2.3         Cashless Exercise . The Holder may, in its sole discretion, exercise this Warrant with respect to up to 50% of the number of shares of Common Stock issuable hereunder and, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the Aggregate Exercise Price, elect instead to receive upon such exercise the “Net Number” of shares of Common Stock determined according to the following formula (“ Cashless Exercise ”):

 

Net Number = (A x B) - (A x C)

B

 

For purposes of the foregoing formula:

 

A= the total number of shares with respect to which this Warrant is then being exercised.

 

B= the Closing Sale Price of the shares of Common Stock (as reported by Bloomberg) on the date immediately preceding the date of the Exercise Notice.

 

C= the Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.

 

2.4         Disputes . In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed.

 

2.5        Insufficient Authorized Shares . If at any time while any of the Warrants remain outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon exercise of the Warrants at least a number of shares of Common Stock equal to 110% (“ Required Reserve Amount ”) of the number of shares of Common Stock as shall from time to time be necessary to effect the exercise of all of the Warrants then outstanding (“ Authorized Share Failure ”), then the Company shall immediately take all action necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the Warrants then outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than sixty (60) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting, the Company shall provide each stockholder with a proxy statement and shall use its best efforts to solicit its stockholders’ approval of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders that they approve such proposal.

 

3.   ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES  

 

The Exercise Price and the number of Warrant Shares shall be adjusted from time to time as follows:

 

3.1         Full Ratchet Adjustment of Exercise Price upon Issuance of Common Stock . After the Closing Date, if the Company issues any shares of Common Stock in a bona fide offering of its securities (including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company, but excluding shares of Common Stock deemed to have been issued or sold by the Company in connection with any Excluded Securities) for a consideration per share (“ New Issuance Price ”) less than the Exercise Price in effect immediately prior to such issue or sale (the foregoing a “ Dilutive Issuance ”), then immediately after such Dilutive Issuance, the Exercise Price then in effect shall be reduced to an amount equal to the New Issuance Price.  

 

 

3.2         Provisions Applicable to Exercise Price Adjustments . For purposes of determining the adjusted Exercise Price under Section 3.1 above , the following provisions shall apply:

 

3.2.1           Issuance of Options . If the Company in any manner grants or sells any Options (other than any Excluded Securities) and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion or exchange or exercise of any Convertible Securities issuable upon exercise of such Option is less than the Exercise Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section 3.2.1 , the “lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion or exchange or exercise of any Convertible Securities issuable upon exercise of such Option” shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon granting or sale of the Option, upon exercise of the Option and upon conversion or exchange or exercise of any Convertible Security issuable upon exercise of such Option.

 

3.2.2           Issuance of Convertible Securities . If the Company in any manner issues or sells any Convertible Securities (other than Excluded Securities) and the lowest price per share for which one share of Common Stock is issuable upon such conversion or exchange or exercise thereof is less than the Exercise Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance of sale of such Convertible Securities for such price per share. For the purposes of this Section 3.2.2 , the “price per share for which one share of Common Stock is issuable upon such conversion or exchange or exercise” shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the issuance or sale of the Convertible Security and upon the conversion or exchange or exercise of such Convertible Security.

 

3.2.3           Change in Option Price or Rate of Conversion . If the purchase price provided for in any Options (other than Excluded Securities), the additional consideration, if any, payable upon the issue, conversion, exchange or exercise of any Convertible Securities, or the rate at which any Convertible Securities (other than Excluded Securities) are convertible into or exchangeable or exercisable for Common Stock is changed, the Exercise Price in effect at the time of such change shall be adjusted to the Exercise Price which would have been in effect at such time had such Options or Convertible Securities provided for such changed purchase price, additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section 3.2.3 , if the terms of any Option or Convertible Security that was outstanding as of the Closing Date are changed in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such change. No adjustment shall be made if such adjustment would result in an increase of the Exercise Price then in effect.

 

 

3.2.4           Record Date . If the Company takes a record of the holders of Common Stock for the purpose of entitling them (i) to receive a dividend or other distribution payable in Common Stock, Options or in Convertible Securities or (ii) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.

 

3.2.5           Dividends . In case the Company shall declare a dividend or make any other distribution upon any stock of the Company (other than the Common Stock) payable in Common Stock, Options or Convertible Securities, then any Common Stock, Options or Convertible Securities, as the case may be, issuable in payment of such dividend or distribution shall be deemed to have been issued or sold without consideration.

 

3.2.6           Calculation of Consideration . In case any shares of Common Stock, Options or Convertible Securities shall be issued or sold for cash, the consideration received therefor shall be deemed to be the net amount received by the Company therefor, after deduction therefrom of any expenses incurred or any underwriting commissions or concessions paid or allowed by the Company in connection therewith. In case any shares of Common Stock, Options or Convertible Securities shall be issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Company shall be deemed to be the fair value of such consideration as determined in good faith by the Board, after deduction of any expenses incurred or any underwriting commissions or concessions paid or allowed by the Company in connection therewith. In case any Options shall be issued in connection with the issuance and sale of other securities of the Company, together comprising one integral transaction in which no specific consideration is allocated to such Options by the parties thereto, such Options shall be deemed to have been issued for such consideration as determined in good faith by the Board. If Common Stock, Options or Convertible Securities shall be issued or sold by the Company and, in connection therewith, other Options or Convertible Securities (“ Additional Rights ”) are issued, then the consideration received or deemed to be received by the Company shall be reduced by the fair market value of the Additional Rights (as determined using the Black-Scholes option pricing model or another method mutually agreed to by the Company and the Holder). The Board shall respond promptly, in writing, to an inquiry by the Holder as to the fair market value of the Additional Rights.

 

 

3.3        Adjustment upon Subdivision or Combination of Common Stock . If the Company at any time on or after the date hereof subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision will be proportionately reduced and the number of Warrant Shares will be proportionately increased. If the Company at any time on or after the Closing Date combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect immediately prior to such combination will be proportionately increased and the number of Warrant Shares will be proportionately decreased. Any adjustment under this Section 3.3 shall become effective at the close of business on the date the subdivision or combination becomes effective.

 

4.   NONCIRCUMVENTION

 

The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation, Bylaws (as such terms are defined in the Subscription Agreement) or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will at all times in good faith carry out all the provisions of this Warrant and take all action as may be required to protect the rights of the Holder. Without limiting the generality of the foregoing, the Company (i) shall not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, (ii) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant, and (iii) shall, so long as any of the Warrants are outstanding, take all action necessary to reserve and keep available out of its authorized and unissued shares of Common Stock, solely for the purpose of effecting the exercise of the Warrants, 110% of the number of shares of Common Stock as shall from time to time be necessary to effect the exercise of the Warrants then outstanding.

 

5.   REISSUANCE OF WARRANTS

 

5.1         Transfer of Warrant . If this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Warrant (in accordance with Section 5.4 below ), registered as the Holder may request, representing the right to purchase the number of Warrant Shares being transferred by the Holder and, if less then the total number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant (in accordance with Section 5.4 below ) to the Holder representing the right to purchase the number of Warrant Shares not being transferred.

 

5.2        Lost, Stolen or Mutilated Warrant . Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Warrant, the Company shall execute and deliver to the Holder a new Warrant (in accordance with Section 5.4 below ) representing the right to purchase the Warrant Shares then underlying this Warrant.

 

 

5.3         Exchangeable for Multiple Warrants . This Warrant is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Warrant or Warrants (in accordance with Section 5.4 below ) representing in the aggregate the right to purchase the number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase such portion of such Warrant Shares as is designated by the Holder at the time of such surrender; provided, however, that no Warrants for fractional shares of Common Stock shall be given.

 

5.4         Issuance of New Warrants . Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to Section 5.1 or Section 5.3 , the Warrant Shares designated by the Holder which, when added to the number of shares of Common Stock underlying the other new Warrants issued in connection with such issuance, does not exceed the number of Warrant Shares then underlying this Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date, and (iv) shall have the same rights and conditions as this Warrant.

 

6.   NOTICES

 

Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given in accordance with Section 10.6 of the Subscription Agreement. The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Warrant, including in reasonable detail a description of such action and the reason therefore. Without limiting the generality of the foregoing, the Company will give written notice to the Holder (i) immediately upon any adjustment of the Exercise Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment and (ii) at least fifteen days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B) with respect to any grants, issuances or sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property to holders of shares of Common Stock.

 

7.   AMENDMENT AND WAIVER

 

Except as otherwise provided herein, the provisions of this Warrant may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Holder.

 

8.   GOVERNING LAW

 

This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Israel without regard to the choice of law principles thereof.

 

9.   CONSTRUCTION; HEADINGS

 

This Warrant shall be deemed to be jointly drafted by the Company and all the Holder and shall not be construed against any person as the drafter hereof. The headings of this Warrant are for convenience of reference and shall not form part of, or affect the interpretation of, this Warrant.

 

 

10.   TRANSFER  

 

This Warrant may be offered for sale, sold, transferred or assigned without the consent of the Company.

 

IN WITNESS WHEREOF , the Company has caused this Warrant to Purchase Common Stock to be duly executed as of the Issuance Date set out above.

 

	BRAINSTORM CELL THERAPEUTICS, INC.
	By:
		Name:
		Title:

 

EXHIBIT A

 

EXERCISE NOTICE

 

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

 

WARRANT TO PURCHASE COMMON STOCK

 

BRAINSTORM CELL THERAPEUTICS, INC.

 

The undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock (“ Warrant Shares ”) of BRAINSTORM CELL THERAPEUTICS, INC., a Delaware corporation (“ Company ”), evidenced by the attached Warrant to Purchase Common Stock (“ Warrant ”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

 

1.	Form of Exercise Price . The Holder intends that payment of the Exercise Price shall be made as:

 

__________   a “Cash Exercise” with respect to _________________ Warrant Shares; and/or

 

__________   a “Cashless Exercise” with respect to _______________ Warrant Shares.

 

2.

Payment of Exercise Price . In the event that the holder has elected a Cash Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the holder shall pay the Aggregate Exercise Price in the sum of $___________________ to the Company in accordance with the terms of the Warrant.

 

3.	Delivery of Warrant Shares . The Company shall deliver to the holder __________ Warrant Shares in accordance with the terms of the Warrant.

 

Date: _______________ __, ______

 

Name of Registered Holder

 

By:
	Name:
	Title:

   

 

ACKNOWLEDGMENT

 

The Company hereby acknowledges this Exercise Notice and hereby directs [Insert Name of Transfer Agent] to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions dated _______________ from the Company and acknowledged and agreed to by [Insert Name of Transfer Agent].

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 10.4

 

SECURITY HOLDERS AGREEMENT

 

THIS SECURITY HOLDERS AGREEMENT (“ Agreement ”), dated as of ____ ____, and among ACCBT Corp., a corporation duly incorporated under the laws of the British Virgin Islands (“ ACCBT ”), and the persons listed in Exhibit A (“ Holders ”). Each of ACCBT and the Holders is referred to herein as a “Party” and collectively as the “Parties”.

 

WHEREAS , pursuant to that certain subscription agreement by and between ACCBT and Brainstorm Cell Therapeutics Inc. (“ Company ”) dated as of July 2 ,2007 (“ Subscription Agreement ”), ACCBT will purchase and subscribe from the Company up to 27,500,000 of the Company’s common shares for an aggregate subscription price of up to $5.0 million (“ Subscription Price ”);

 

WHEREAS , pursuant to Section 7.2 of the Subscription Agreement, ACCBT’s obligation to purchase the relevant shares is subject to the satisfaction of, inter alia , the Company's shareholders duly approving certain rights of ACCBT granted to ACCBT under the Agreement;

 

WHEREAS , in order to satisfy the foregoing condition, the Parties wish to enter into this Agreement.

 

NOW, THEREFORE , the Holders and ACCBT hereby agree as follows:

 

1.   BOARD COMPOSITION

 

1.1         Each of the Holders who is a shareholder of the Company or who shall be a shareholder of the Company at any time following the date hereof, hereby undertakes that immediately following a payment by ACCBT of its first USD $1 million towards the Subscription Price, then at any shareholders’ meeting in which directors of the Company or its subsidiaries are being elected, such Holder will vote all of its shares such that ACCBT’s nominees to the relevant Board of Directors (and any of their respective committees) will constitute a minimum of 40% (fractions to be rounded up to the nearest whole number) of the relevant board or committee. Such Holder additionally undertakes that it shall not vote any of its shares of the Company to replace an ACCBT nominee from the Board of Directors if said replacement will be inconsistent with the composition indicated above. At the request of ACCBT, a Holder will promptly provide ACCBT with an irrevocable and unconditional proxy to vote the Holder's shares at any shareholders' meeting of the Company to effect the foregoing in this paragraph.

 

1.2         Each of the Holders who is a shareholder of the Company or who shall be a shareholder of the Company at any time following the date hereof, hereby undertakes that immediately following a payment by ACCBT of its second USD $1 million towards the Subscription Price, then at any shareholders’ meeting in which directors of the Company or its subsidiaries are being elected, such Holder will vote all of its shares such that ACCBT’s nominees to the relevant Board of Directors (and any of their respective committees) will constitute a minimum of 50.1% (fractions to be rounded up to the nearest whole number) of the relevant board or committee. Such Holder additionally undertakes that it shall not vote any of its shares of the Company to replace an ACCBT nominee from the board if said replacement will be inconsistent with the composition indicated above. At the request of ACCBT, a Holder will promptly provide ACCBT with an irrevocable and unconditional proxy to vote the Holder's shares at any shareholders' meeting of the Company to effect the foregoing in this paragraph.

 

 

2.   PROTECTIVE PROVISIONS

 

Each Holder hereby acknowledges and accepts that for so long as ACCBT holds (taking into account, for the avoidance of doubt, an affiliate of ACCBT) at least 5% of the issued and outstanding share capital of the Company, it shall not vote any of its shares to approve the following matters, without the written consent of ACCBT:

 

2.1         For any change in the certificate of incorporation of the Company or its bylaws, or alteration of the capital structure of the Company through any reclassification or consolidation;

 

2.2          For the declaration or payment of any dividend or the making of any distributions to any holders of any shares in the capital of the Company;

 

2.3          For the taking of any steps to voluntarily liquidate, dissolve, wind-up or otherwise terminate the corporate existence of the Company;

 

2.4          For the share sale or exchange, merger, consolidation, amalgamation, arrangement, asset acquisition or any other similar transaction the effect of which is to place control of the business of the Company in the hands of an arm’s length third party;

 

2.5          For any commitment or agreement to do any of the foregoing..

 

3.   INTENTIONALLY LEFT BLANK.

 

4.   NO PREEMPTION OR OTHER SHAREHOLDERS’ AGREEMENTS

 

Each of the Holders represents and warrants that as of the date of this Agreement, it does not have or waive any preemptive rights in the issuances of securities of the Company and, except this Agreement, is not a party to any agreement which could influence any of its decisions or actions taken in its capacity as a security holder of the Company.

 

5.   HOLDERS’ TRANSFEREES

 

To the extend a Holder elects to sell to a third party the securities of the company held by it, it shall obtain from such third party as a pre-condition for such transfer an obligation to vote its shares and otherwise act in compliance with the terms of this Agreement.

 

6.   INTENTIONALLY LEFT BLANK.

 

7.   MISCELLANEOUS

 

7.1         Integration . This Agreement constitutes the entire agreement among the Parties and supersedes any prior understandings, agreements, or representations by or among the Parties, written or oral, to the extent they relate in any way to the subject matter hereof.

 

7.2         Amendments and Waivers . No amendment of any provision of this Agreement shall be valid unless made in writing and signed by ACCBT and the majority in interest of the Holders (calculated as of the date of such amendment). No waiver by a Party of any default, misrepresentation, or breach of warranty or covenant hereunder, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.

 

 

7.3         Governing Law . This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Israel without regard to the choice of law principles thereof.

 

7.4          This Agreement expires on December 31, 2008.

 

IN WITNESS WHEREOF , the Parties have caused this Agreement to be duly executed and delivered as of the day and year first written above.

 

Brainstorm Cell Therapeutic Inc. Security Holders   By:   Signature:		ACCBT Corp.   By:   Title:
By:   Signature:
By:   Signature:
By:   Signature:
By:   Signature: