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THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS
WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE
SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO BRAINSTORM CELL THERAPEUTICS INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.
Right to Purchase 47,500 shares of Common Stock of Brainstorm Cell
Therapeutics Inc.
(subject to adjustment as provided herein)
COMMON STOCK PURCHASE WARRANT AT $1.62 PER SHARE
Issue Date: May 16, 2005
BRAINSTORM CELL THERAPEUTICS INC., a corporation organized under the laws
of the State of Washington (the "Company"), hereby certifies that, for value
received, Trout Capital LLC a limited liability company, with its address at 740
Broadway, New York, New York 10003, or its assigns (the "Holder"), is entitled,
subject to the terms set forth below, to purchase from the Company at any time
after the Issue Date up to 5:00 p.m., E.S.T. on the FIFTH anniversary of the
Issue Date (the "Expiration Date") 47,500 fully paid and nonassessable shares of
the common stock of the Company (the "Common Stock"), $.00005 par value per
share at a per share purchase price of $1.62. The aforedescribed purchase price
per share, as adjusted from time to time as herein provided, is referred to
herein as the "Purchase Price." The number and character of such shares of
Common Stock and the Purchase Price are subject to adjustment as provided
herein. The Company may reduce the Purchase Price without the consent of the
Holder. This Warrant is that certain Warrant referred to in Section 4(e) of the
Engagement Letter dated May __, 2005 between the Company and Trout Capital LLC
(the "Engagement Letter"). All capitalized terms used but not defined in this
Warrant which are defined in the Engagement Letter shall have the same meaning
in this Warrant as in the Engagement Letter.
As used herein the following terms, unless the context otherwise requires,
have the following respective meanings:
(a) The term "Company" shall include Brainstorm Cell Therapeutics Inc. and
any corporation which shall succeed or assume the obligations of Brainstorm Cell
Therapeutics Inc.
(b) The term "Common Stock" includes (i) the Company's Common Stock,
$.00005 par value per share, and (ii) any other securities into which or for
which any of the securities described in (i) may be converted or exchanged
pursuant to a plan of recapitalization, reorganization, merger, sale of assets
or otherwise.
(c) The term "Other Securities" refers to any stock (other than Common
Stock) and other securities of the Company or any other person (corporate or
otherwise) which the holder of the Warrant at any time shall be entitled to
receive, or shall have received, on the exercise of the Warrant, in lieu of or
in addition to Common Stock, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to Section 4 or otherwise.
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(d) The term "person" or "Person" means any individual, corporation,
partnership, limited liability company, trust, association, governmental agency
or body or any other entity of any type.
1. Exercise of Warrant.
1.1 Number of Shares Issuable upon Exercise. From and after the
Issue Date through and including the Expiration Date, the Holder hereof shall be
entitled to receive, upon exercise of this Warrant in whole in accordance with
the terms of subsection 1.2 or upon exercise of this Warrant in part in
accordance with subsection 1.3, shares of Common Stock of the Company, subject
to adjustment pursuant to Section 4.
1.2 Full Exercise. This Warrant may be exercised in full by the
Holder hereof by delivery of an original or facsimile copy of the form of
subscription attached as Exhibit A hereto (the "Subscription Form") duly
executed by such Holder and surrender of the original Warrant (or such other
instrument as may be required pursuant to Section 8) within seven (7) days of
exercise, to the Company at its principal office or at the office of its Warrant
Agent (as provided hereinafter), accompanied by payment, in cash, wire transfer
or by certified or official bank check payable to the order of the Company, in
the amount obtained by multiplying the number of shares of Common Stock for
which this Warrant is then exercisable by the Purchase Price then in effect.
1.3 Partial Exercise. This Warrant may be exercised in part (but not
for a fractional share) by surrender of this Warrant in the manner and at the
place provided in subsection 1.2 except that the amount payable by the Holder on
such partial exercise shall be the amount obtained by multiplying (a) the number
of whole shares of Common Stock designated by the Holder in the Subscription
Form by (b) the Purchase Price then in effect. On any such partial exercise, the
Company, at its expense, will forthwith issue and deliver to or upon the order
of the Holder hereof a new Warrant of like tenor, in the name of the Holder
hereof or as such Holder (upon payment by such Holder of any applicable transfer
taxes) may request, the whole number of shares of Common Stock for which such
Warrant may still be exercised.
1.4 Fair Market Value. Fair Market Value of a share of Common Stock
as of a particular date (the "Determination Date") shall mean:
(a) If the Company's Common Stock is traded on an exchange or
is quoted on the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") National Market System, NASDAQ SmallCap Market or the
American Stock Exchange, LLC, then the closing or last sale price, respectively,
reported for the last trading day immediately preceding the Determination Date;
(b) If the Company's Common Stock is not traded on an exchange
or on the NASDAQ National Market System, the NASDAQ SmallCap Market or the
American Stock Exchange, Inc., but is quoted on the OTC Bulletin Board or, if
such is not available, the Pink Sheets LLC (formerly the National Quotation
Bureau), then the average of the closing bid and ask prices for the Common Stock
quoted by two market makers of the Common Stock reported for the last trading
day immediately preceding the Determination Date;
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(c) Except as provided in clause (d) below, if the Company's Common
Stock is not publicly traded, then as the Holder and the Company agree, or in
the absence of such an agreement, by arbitration in accordance with the rules
then standing of the American Arbitration Association, before a single
arbitrator to be chosen from a panel of persons qualified by education and
training to pass on the matter to be decided; or
(d) If the Determination Date is the date of a liquidation,
dissolution or winding up, or any event deemed to be a liquidation, dissolution
or winding up pursuant to the Company's charter, then all amounts to be payable
per share to holders of the Common Stock pursuant to the charter in the event of
such liquidation, dissolution or winding up, plus all other amounts to be
payable per share in respect of the Common Stock in liquidation under the
charter, assuming for the purposes of this clause (d) that all of the shares of
Common Stock then issuable upon exercise of all of the Warrants are outstanding
at the Determination Date.
1.5 Company Acknowledgment. The Company will, at the time of the exercise
of the Warrant, acknowledge in writing its continuing obligation to afford to
such Holder any rights to which such Holder shall continue to be entitled after
such exercise in accordance with the provisions of this Warrant.
1.6 Trustee for Warrant Holders. In the event that a bank or trust company
shall have been appointed as trustee for the Holder of the Warrants pursuant to
Subsection 3.2, such bank or trust company shall have all the powers and duties
of a warrant agent (as hereinafter described) and shall accept, in its own name
for the account of the Company or such successor person as may be entitled
thereto, all amounts otherwise payable to the Company or such successor, as the
case may be, on exercise of this Warrant pursuant to this Section 1.
1.7 Delivery of Stock Certificates, etc. on Exercise. The Company agrees
that the shares of Common Stock purchased upon exercise of this Warrant shall be
deemed to be issued to the Holder hereof as the record owner of such shares as
of the close of business on the date on which this Warrant shall have been
surrendered and payment made for such shares as aforesaid. As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within ten (10) business days thereafter, the Company at its expense
(including the payment by it of any applicable issue taxes) will cause to be
issued in the name of and delivered to the Holder hereof, or as such Holder
(upon payment by such Holder of any applicable transfer taxes) may direct in
compliance with applicable securities laws, a certificate or certificates for
the number of duly and validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) to which such Holder shall be entitled on
such exercise, plus, in lieu of any fractional share to which such Holder would
otherwise be entitled, cash equal to such fraction multiplied by the then Fair
Market Value of one full share of Common Stock, together with any other stock or
other securities and property (including cash, where applicable) to which such
Holder is entitled upon such exercise pursuant to Section 1 or otherwise.
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2. Exercise or Conversion.
(a) This Warrant may be exercised in whole or in part for cash, wire
transfer or by certified or official bank check payable to the order of the
Company equal to the applicable aggregate Purchase Price for the number of
shares of Common Stock and/or Other Securities being purchased upon exercise of
this Warrant.
(b) (i) In lieu of the exercise of this Warrant as provided in
Section 2(a), the Holder shall have the option to convert this Warrant in whole
or in part into Common Stock at any time during the term of this Warrant (the
"Conversion Right") having value equal to the value (as determined below) of
this Warrant, or any part hereof, in which event the Company shall issue to the
Holder a number of shares of Common Stock computed using the following formula:
X = Y(A-B)
-----
A
Where: X = the number of shares of Common Stock to be
issued to the Holder;
Y = the number of shares of Common Stock issuable
upon exercise of this Warrant or, if only a
portion of this Warrant is being exercised, the
portion of this Warrant being canceled (at the
date of such calculation);
A = the Fair Market Value of one share of Common
Stock (at the date of such calculation);
B = the Purchase Price (as adjusted to the date of
such calculation).
(ii) No fractional shares shall be issuable upon exercise of
the Conversion Right, and, if the number of shares to be issued determined in
accordance with the foregoing formula is other than a whole number, the Company
shall pay to the holder an amount in cash equal to the Fair Market Value of the
resulting fractional share on the Conversion Date.
(iii) The Conversion Right provided under this Section 2(b)
may be exercised in whole or in part and at any time and from time to time while
any Warrant remains outstanding. In order to exercise the Conversion Right, the
Holder shall surrender to the Company, at its offices, this Warrant accompanied
by a duly completed Form of Subscription in the form attached hereto as Exhibit
A. The Warrant (or so much thereof as shall have been surrendered for
conversion) shall be deemed to have been converted immediately prior to the
close of business on the day (such day, the "Conversion Date") of surrender of
the Warrant for conversion in accordance with the foregoing provisions. As
promptly as practicable on or after the Conversion Date, the Company shall issue
and shall deliver to the Holder (A) a certificate or certificates representing
the number of shares of Common Stock to which the Holder shall be entitled as a
result of the conversion, and (B) if the Warrant is being converted in part
only, a new certificate in principal amount equal to the unconverted portion of
the Warrant.
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3. Adjustment for Reorganization, Consolidation, Merger, etc.
The Purchase Price in effect at the time, and the number and kind of
securities purchasable upon exercise of the Warrant, shall be subject to
adjustment from time to time upon the happening of certain events as follows.
3.1 Reorganization, Consolidation, Merger, etc. In case at any time
or from time to time, the Company shall (a) effect a reorganization, (b)
consolidate with or merge into any other person or (c) transfer all or
substantially all of its properties or assets to any other person then, in each
such case, as a condition to the consummation of such a transaction, proper and
adequate provision shall be made by the Company whereby the Holder of this
Warrant, on the exercise hereof as provided in Section 1, at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such transfer, as the case may be, shall receive, in lieu of the Common
Stock (or Other Securities) issuable on such exercise prior to such consummation
or such effective date, the stock and other securities and property (including
cash) to which such Holder would have been entitled upon such consummation or in
connection with such transfer, as the case may be, if such Holder had so
exercised this Warrant, immediately prior thereto, all subject to further
adjustment thereafter as provided in Section 4.
3.2 Dissolution. In the event of any dissolution of the Company
following the transfer of all or substantially all of its properties or assets,
the Company, prior to such dissolution, shall at its expense deliver or cause to
be delivered the stock and other securities and property (including cash, where
applicable) receivable by the Holder of the Warrants after the effective date of
such dissolution pursuant to this Section 3 to a bank or trust company (a
"Trustee") as trustee for the Holder of the Warrants, pursuant to a trust or
similar agreement in form and substance satisfactory to the Holder.
3.3 Continuation of Terms. Upon any reorganization, consolidation,
merger or transfer (and any dissolution following any transfer) referred to in
this Section 3, this Warrant shall continue in full force and effect and the
terms hereof shall be applicable to the Other Securities and property receivable
on the exercise of this Warrant after the consummation of such reorganization,
consolidation or merger or the effective date of transfer or dissolution
following any such transfer, as the case may be, and shall be binding upon the
issuer of any Other Securities, including, in the case of any such transfer, the
person acquiring all or substantially all of the properties or assets of the
Company, whether or not such person shall have expressly assumed the terms of
this Warrant as provided in Section 4. In the event this Warrant does not
continue in full force and effect after the consummation of the transaction
described in this Section 3, then only in such event will the Company's
securities and property (including cash, where applicable) receivable by the
Holder of the Warrants be delivered to the Trustee as contemplated by Section
3.2.
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4. Extraordinary Events Regarding Common Stock. In the event that the
Company shall (a) issue additional shares of the Common Stock or Other
Securities as a dividend or other distribution on outstanding Common Stock or
Other Securities, (b) subdivide or reclassify its outstanding shares of Common
Stock into a greater number of shares of Common Stock, or (c) combine or
reclassify its outstanding shares of the Common Stock into a smaller number of
shares of the Common Stock, then, in each such event, the Purchase Price shall,
simultaneously with the happening of such event, be adjusted by multiplying the
then Purchase Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such event and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately after such event, and the product so obtained shall thereafter be
the Purchase Price then in effect. The Purchase Price, as so adjusted, shall be
readjusted in the same manner upon the happening of any successive event or
events described herein in this Section 4. The number of shares of Common Stock
that the Holder of this Warrant shall thereafter, on the exercise hereof as
provided in Section 1, be entitled to receive shall be adjusted to a number
determined by multiplying the number of shares of Common Stock that would
otherwise (but for the provisions of this Section 4) be issuable on such
exercise by a fraction of which (a) the numerator is the Purchase Price that
would otherwise (but for the provisions of this Section 4) be in effect, and (b)
the denominator is the Purchase Price in effect on the date of such exercise. In
the event that any warrants issued to Trout Targets in the Transaction contain
more favorable protection against dilution and other events to the holders of
such warrants than the provisions contained in Section 3 and 4 of this Warrant,
the provisions of this Warrant automatically shall be amended to include such
more favorable provisions for the benefit of the Holder, and the Company,
promptly, at its expense, shall provide to the Holder a revised Warrant
containing such amended provisions.
5. Certificate as to Adjustments. In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable on the
exercise of the Warrants, the Company at its expense will promptly cause its
Chief Financial Officer or other appropriate designee to compute such adjustment
or readjustment in accordance with the terms of the Warrant and prepare a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based, including a
statement of (a) the consideration received or receivable by the Company for any
additional shares of Common Stock (or Other Securities) issued or sold or deemed
to have been issued or sold, (b) the number of shares of Common Stock (or Other
Securities) outstanding or deemed to be outstanding, and (c) the Purchase Price
and the number of shares of Common Stock (or Other Securities) to be received
upon exercise of this Warrant, in effect immediately prior to such adjustment or
readjustment and as adjusted or readjusted as provided in this Warrant. The
Company will forthwith mail a copy of each such certificate to the Holder of the
Warrant and any Warrant Agent of the Company (appointed pursuant to Section 3
hereof).
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6. Reservation of Stock, etc. Issuable on Exercise of Warrant; Financial
Statements. The Company will at all times reserve and keep available, solely for
issuance and delivery on the exercise of the Warrants, all shares of Common
Stock (or Other Securities) from time to time issuable on the exercise of the
Warrant. The Company covenants and agrees that all shares of Common Stock and
Other Securities which the Holder may purchase under this Warrant or are
otherwise issuable hereunder, will, upon issuance and delivery against the
payment therefore of the requisite Purchase Price, be duly and validly issued,
fully paid and nonassesable. This Warrant entitles the Holder hereof to receive
copies of all financial and other information distributed or required to be
distributed to the holders of the Company's Common Stock.
7. Assignment; Exchange of Warrant. Subject to compliance with applicable
securities laws, this Warrant, and the rights evidenced hereby, may be
transferred by any registered holder hereof (a "Transferor"). On the surrender
for exchange of this Warrant, with the Transferor's endorsement in the form of
Exhibit B attached hereto (the "Transferor Endorsement Form") and together with
an opinion of counsel reasonably satisfactory to the Company that the transfer
of this Warrant will be in compliance with applicable securities laws, the
Company at its expense, (but with payment by the Transferor of any applicable
transfer taxes), will issue and deliver to or on the order of the Transferor
thereof a new Warrant or Warrants of like tenor, in the name of the Transferor
and/or the transferee(s) specified in such Transferor Endorsement Form (each a
"Transferee"), calling in the aggregate on the face or faces thereof for the
number of shares of Common Stock called for on the face or faces of the Warrant
so surrendered by the Transferor. No such transfers shall result in a public
distribution of the Warrant; and the Company shall be responsible for "blue sky"
compliance expenses for resales under any registration statement.
8. Replacement of Warrant. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the case of any such loss, theft or destruction of this Warrant, on
delivery of an indemnity agreement or security reasonably satisfactory in form
and amount to the Company or, in the case of any such mutilation, on surrender
and cancellation of this Warrant, the Company at its expense, will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
9. Registration Rights. The Company covenants and agrees with the Holder
as follows:
(a) The Company shall advise the Holder or its permitted transferee,
whether the Holder holds the Warrant or has exercised the Warrant and holds
shares of Common Stock or any Other Securities issuable upon exercise of the
Warrant ("Registrable Securities"), by written notice at least ten (10) business
days prior to the filing of any registration statement under the Act, covering
any equity securities of the Company, for its own account or for the account of
others, except for any registration statement filed on Form S-4 or S-8 (or other
comparable form), or otherwise relating solely to the sale of securities to
participants in a Company stock plan, relating solely to the issuance of
securities pursuant to a corporate reorganization or other transaction under
Rule 145 of the Act, a registration on any form that does not include
substantially that same information as would be required to be included in a
registration statement covering the sale of the Registrable Securities, or a
registration in which the only Common Stock being registered is Common Stock
issuable upon conversion of debt securities that are also being registered, and
will, upon the request of the Holder, include in any such new registration
statement (the "Registration Statement") all such information as may be required
to permit a public offering of, all or any of the Registrable Securities.
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(b) For so long as the Registrable Securities included in any
Registration Statement remain unsold, the Company shall, subject to Section
9(f), (i) use its commercially reasonable efforts to maintain the effectiveness
of such Registration Statement; (ii) timely file all reports required under the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Securities and Exchange Commission (the "Commission") thereunder; (iii) file
such post-effective amendments to the Registration Statement as may be necessary
so that the Registration Statement does not contain any misstatement of a
material fact or omit to state any material fact required to make the statements
therein not misleading; (iv) supply prospectuses and such other documents as any
Holder whose Registrable Securities are included in such Registration Statement
may reasonably request in order to facilitate the public sale or other
disposition of such Registrable Securities; (v) register and qualify any of the
Registrable Securities for sale in such jurisdictions within the United States
as any such Holder designates, provided that the nothing in this clause (v)
shall require the Company to qualify to do business as a foreign corporation,
submit to taxation in any jurisdiction or to file a general consent to service
of process in any jurisdiction in which it is not otherwise so qualified or
required to file such a consent at the time; (vi) list or quote or shall cause
to be listed or quoted on the exchange or quotation system or other market on
which the other securities covered by such Registration Statement are listed or
quoted, all Registrable Securities of the Holders included in the Registration
Statement; (vii) provide a transfer agent and registrar for all Registrable
Securities registered pursuant to such Registration Statement and a CUSIP number
for all such Registrable Securities; (viii) furnish, at the request of the
Holder requesting registration of Registrable Securities, on the date that such
Registrable Securities are delivered to the underwriters for sale, if such
securities are being sold through underwriters, (A) an opinion, dated as of such
date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering and reasonably satisfactory to a majority in
interest of the Holders requesting registration, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities;
and (B) a "comfort" letter dated as of such date, from the independent certified
public accountants of the Company, in form and substance as is customarily given
by independent certified public accountants to underwriters in an underwritten
public offering and reasonably satisfactory to the Holder requesting
registration, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities; (ix) permit any Holder of
Registrable Securities that might be deemed, in the reasonable opinion of
counsel to such Holder, reasonably acceptable to the Company, to be an
underwriter or a controlling person of the Company, to require the insertion in
the registration statement of material, furnished to the Company in writing,
that in the reasonable opinion of counsel to such Holder should be included; (x)
otherwise comply with all applicable rules and regulations of the Commission and
make available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve (12) months, but not
more than eighteen (18) months, beginning with the first month after the
effective date of the Registration Statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Act and (xi) do any and all other
acts and things which may be commercially reasonable to enable any such Holder
to consummate the public sale or other disposition of the Registrable Securities
included in the Registration Statement, all at no expense to such Holder (except
as provided in the immediately following sentence). All costs and expenses in
connection with any Registration Statement shall be borne by the Company, except
that the Holder(s) shall bear the fees of their own counsel and any other
advisors retained by them and any underwriting discounts or sales or other
commissions applicable to any of the Registrable Securities sold by them. In
connection with any Registration Statement, the Company shall furnish
indemnification in the manner provided in Section 10 hereof, and each Holder
whose Registrable Securities are included therein shall furnish information and
indemnification in the manner provided in Section 10.
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(c ) Notwithstanding the foregoing set forth in this Section 9, the
Company shall not be required to include in any Registration Statement any
Registrable Securities of a Holder if in the opinion of counsel to the Company
(which counsel and opinion are reasonably acceptable to counsel to the Holder)
all Registrable Securities held by such Holder (and any affiliate of the Holder
with whom such Holder must aggregate its sales under Rule 144) would be saleable
without registration, restriction or limitation under the holding period
requirements and volume limitations under Rule 144 (or its successor) if the
Warrant was exercised or converted pursuant to this Agreement.
(d) If any registration pursuant to this Section 9 is in the form of
an underwritten offering, the Company will select and obtain the investment
banker or investment bankers and manager or managers that will administer the
offering and the Company shall not be required under this Section 9 to include
any of the Holder's securities in such underwriting unless they accept the terms
of the underwriting as agreed upon between the Company and the underwriters
selected by it and enter into an underwriting agreement in customary form with
an underwriter or underwriters selected by the Company, and then only in such
quantity as the underwriters determine in their good faith discretion will not
jeopardize the success of the offering by the Company (as further described in
Section 9(e) below). Each Holder hereby agrees that such Holder shall not sell
or otherwise transfer any securities of the Company held by such Holder (other
than those included in the registration) during a "lock-up" period specified by
the managing underwriter(s) of such registration, which shall not exceed 6
months. All Holders hereby agree to abide by any customary "lock-up" period
restrictions during the aforesaid applicable periods as may be required by the
managing underwriter(s) in such registrations; provided however that all
officers, directors and holders of at least five percent (5%) of the Company's
issued and outstanding shares are similarly bound and, provided further, that,
at the request of the Holder, the Company shall use commercially reasonable
efforts to cause the managing underwriter(s) to permit the Holder to sell during
any such restricted periods such number of Registrable Securities as may be
required so as to yield net proceeds to the Holder equal to the amount of the
Purchase Price and other costs, expenses and taxes paid or payable by the Holder
as a result of the exercise of this Warrant. Each Holder agrees to execute and
deliver such other agreements as may be reasonable requested by the Company or
the underwriter which are consistent with the foregoing or which are necessary
to give effect thereto. In order to enforce the foregoing covenant, the Company
may impose stop-transfer instructions with respect to the Registrable Securities
of each Holder (and the shares or securities of every other person subject to
the foregoing restriction) until the end of such period.
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(e) In the event that any registration pursuant to Section 9 shall
be in connection with an underwritten offering, and the managing underwriter
determines in good faith and advises that the number of Registrable Securities
to be included in such offering, together with the number of shares of Common
Stock to be included in the Registration Statement by the Company or other
holders of the Company's securities with the right to request inclusion in the
Registration Statement, if any, exceeds the number of shares of Common Stock
that it is advisable to offer and sell at such time or would interfere with the
successful marketing of the Common Stock covered by the Registration Statement,
then priority for including shares of Common Stock in the Registration
Statement, up to the number advised by the managing underwriter, shall be
allocated first, to the Company and each other person who has requested
inclusion of shares of Common Stock pursuant to a "demand" registration right,
pro rata in proportion to the respective number of shares of Common Stock to be
included by them, and second, to the extent of any remaining capacity as advised
by the managing underwriter, to all other holders of the Company's securities
with the right to request inclusion in the Registration Statement, including the
Holders requesting registration of their Registrable Securities, pro rata in
proportion to the respective number of shares of Common Stock (including
Registrable Securities) to be included by them and, then, to all other persons.
(f) In any registration in which Holders request inclusion of their
Registrable Securities pursuant to Section 9(a), if at any time after giving
notice of its intention to register securities and prior to the effective date
of the Registration Statement the Company or such other person shall determine
for any reason not to register or to delay registration of it securities, the
Company may, at its election, delay, terminate or withdraw such registration.
The Company shall give written notice of any such determination to each Holder
that has requested inclusion of Registrable Securities in the Registration
Statement (provided, that the failure to give such notice shall not prejudice
the Company's request to delay, terminate or withdraw such registration) and (i)
in the case of a determination not to register, shall be relieved of its
obligation to register any Registrable Securities in connection with such
registration (but shall be obligated to reimburse the Holder for any reasonable
fees and expenses it has incurred in connection therewith) and (ii) in the case
of a determination to delay registering, shall be permitted to delay registering
any Registrable Securities for the same period as the delay in registering such
other securities. If (iii) at any time when a prospectus relating to Registrable
Securities is required to be delivered under the Act, the Company discovers
that, or any event occurs as a result of which, the prospectus (including any
supplement thereto) included in any Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading, or
(iv) the Commission issues any stop order suspending the effectiveness of any
Registration Statement or proceedings are initiated or threatened for that
purpose, then the Company shall promptly deliver a written notice to such effect
to each Holder whose Registrable Securities are included in such Registration
Statement, and each such Holder shall immediately upon receipt of such notice
discontinue its disposition of Registrable Securities pursuant to such
Registration Statement until its receipt of the copies of the supplemented or
amended prospectus contemplated by the immediately following sentence and, if so
directed by the Company, shall deliver to the Company (at the Company's expense)
all copies, other than permanent file copies, then in such Holder's possession
of the prospectus or prospectus supplement relating to such Registrable
Securities current at the time of receipt of such notice. As promptly as
practicable following the event or discovery referred to in clause (iii) of the
immediately preceding sentence, the Company shall (at the Company's expense)
prepare and file with the Commission such amendment or supplement to the
Registration Statement or prospectus which does not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and furnish to the
Holders whose Registrable Securities are included in such Registration Statement
a reasonable number of copies of an amendment or supplement of such prospectus
so that, as thereafter delivered to purchasers of such Registrable Securities,
such prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
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(g) No Holder shall have any right to obtain or seek an injunction
restraining or otherwise delaying any registration as the result of any
controversy that might arise with respect to the interpretation or
implementation of this Section 9.
(f) The selling Holder shall furnish the Company such information
regarding themselves, the Registrable Securities held by them, and the intended
method of disposition of such securities as shall be required to timely effect
the Registration of their Registrable Securities.
10. Indemnification.
(a) Whenever pursuant to Section 9 a Registration Statement relating
to any shares of Common Stock or Other Securities issued upon exercise of the
Warrant is filed under the Act, amended or supplemented, the Company will
indemnify and hold harmless each Holder of the securities covered by such
Registration Statement, amendment or supplement (such Holder being hereinafter
called the "Distributing Holder"), and each person, if any, who controls (within
the meaning of the Act) the Distributing Holder, and each underwriter (within
the meaning of the Act) of such securities and each person, if any, who controls
(within the meaning of the Act) any such underwriter, against any losses,
deficiencies, claims, actions, damages, liabilities, assessments, judgments,
obligations, penalties, awards and other liabilities, costs and expenses,
including, but not limited to, interest, penalties, and reasonable fees,
disbursements, and expense of attorneys, accountants, financial and other
advisors, experts and witnesses, both those incurred in connection with the
defense or prosecution of the indemnifiable claim and those incurred in
connection with the enforcement of this provision (collectively, "Damages"),
joint or several, to which the Distributing Holder, any such controlling person
or any such underwriter may become subject, under the Act or otherwise, insofar
as such Damages are caused by, result from, arise out of or are based upon (i)
any violation by the Company or any of its representatives of the federal or
state securities laws, (ii) any untrue statement or alleged untrue statement of
any material fact contained in any such Registration Statement or any
preliminary prospectus or final prospectus constituting a part thereof or any
amendment or supplement thereto, (iii) the omission or the alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading or (iv) any act or failure to act, or any
alleged act or failure to act, by any Distributing Holder in connection with, or
relating in any manner to, the Registration Statement, the preliminary
prospectus, final prospectus or the offering contemplated thereby, and which is
included as part of or referred to in any Damage arising out of or based upon
matters covered by clause (i), (ii) or (iii) above; provided, however, that (i)
the Company will not be liable in any such case to the extent that any such
Damage arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in said Registration Statement,
said preliminary prospectus, said final prospectus or said amendment or
supplement in reliance upon and in conformity with written information furnished
by such Distributing Holder or any other Distributing Holder for use in the
preparation thereof , and (ii) the foregoing indemnity with respect to any
preliminary prospectus shall not inure to the benefit of any Distributing Holder
or underwriter, or any person controlling such Distributing Holder or
underwriter, from whom the person asserting any such Damage purchased shares in
the offering, if a copy of the prospectus (as then amended or supplemented if
the Company shall have furnished any amendments or supplements thereto) was not
sent or given by or on behalf of such Distributing Holder or underwriter to such
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the shares to such person, and if the prospectus (as
so amended or supplemented) would have cured the defect giving rise to such
Damage. This indemnity agreement is not exclusive and will be in addition to any
liability, which the Company might otherwise have and shall not limit any rights
or remedies that may otherwise be available at law or in equity to each
Distributing Holder.
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(b) The Distributing Holder will indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed said
Registration Statement and such amendments and supplements thereto, and each
person, if any, who controls the Company (within the meaning of the Act) against
any Damages, joint or several, to which the Company or any such director,
officer or controlling person may become subject, under the Act or otherwise,
insofar as such Damages are caused by, results from, arise out of or are based
upon (i) any untrue or alleged untrue statement of any material fact contained
in said Registration Statement, said preliminary prospectus, said final
prospectus, or said amendment or supplement, or (ii) the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such Damage is caused by, results from,
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in said Registration Statement, said
preliminary prospectus, said final prospectus or said amendment or supplement in
reliance upon and in conformity with written information furnished by such
Distributing Holder for use in the preparation thereof. This indemnity agreement
is not exclusive and will be in addition to any liability, which each
Distributing Holder might otherwise have and shall not limit any rights or
remedies that may otherwise be available at law or in equity to the Company.
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(c) Promptly after receipt by an indemnified party under this
Section 10 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
under this Section 10, notify the indemnifying party in writing of the
commencement thereof, but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party for
indemnity or contribution to the extent it is not prejudiced as a proximate
result of such failure. In case any such action is brought against any
indemnified party, and such indemnified party seeks or intends to seek indemnity
from an indemnifying party, the indemnifying party will be entitled to
participate in, and, to the extent that it shall elect, jointly with any other
indemnifying party similarly notified, by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; provided, however, that if (i) the
indemnified claim seeks an order, injunction or other equitable or declaratory
relief; (ii) the indemnified party shall have reasonably concluded that there is
an actual or potential conflict of interest between the positions of the
indemnifying party and the indemnified party in conducting the defense of any
such action; (iii) there are legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party; (iv) the indemnifying party shall have failed to employ
counsel reasonably satisfactory to the indemnified party, or (v) the
indemnifying party is not timely or diligently defending such claim, then, in
any such event, the indemnified party or parties shall have the right to select
one separate counsel (plus such local counsel as may be necessary and, if there
is more than one indemnified party, and such parties may not be represented by
one counsel because of a conflict of interest, than such additional other
counsel as may be necessary as a result of such conflicts) to assume such legal
defenses and to otherwise participate in the defense of such action on behalf of
such indemnified party or parties, all at the expense of the indemnifying party.
Upon receipt of notice from the indemnifying party to such indemnified party of
such indemnifying party's election so to assume the defense of such action and
approval by the indemnified party of counsel (which approval shall not be
unreasonably withheld or delayed), the indemnifying party will not be liable to
such indemnified party under this Section 10 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless: (i) the indemnified party shall have employed separate counsel
in accordance with the preceding sentence; (ii) the indemnifying party shall not
have employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement of the
action; (iii) the indemnifying party is not permitted to defend the indemnified
claim in accordance with the preceding sentence; (iv) the indemnifying party
contests its obligations to indemnify such claim; or (v) the indemnifying party
has authorized the employment of counsel for the indemnified party satisfactory
to the indemnified party at the expense of the indemnifying party, in each of
which cases the fees and expenses of counsel and the fees and expenses otherwise
associated with the defense of such claim, shall be at the expense of the
indemnifying party.
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(d) The indemnifying party under this Section 10 shall not be liable
for any settlement of any proceeding effected without its written consent, which
consent shall not be unreasonably withheld or delayed, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party against any Damage by reason of
such settlement or judgment. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement, compromise or
consent to the entry of judgment in any pending or threatened action, suit or
proceeding in respect of which any indemnified party is or could have been a
party and indemnity was or could have been sought hereunder by such indemnified
party, unless such settlement, compromise or consent includes: (i) an
unconditional release of such indemnified party from all liability, claims or
other Damages that are the subject matter of such action, suit or proceeding;
and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.
(e) Any Damages for which an indemnified party is entitled to
indemnification or contribution under this Section 10 shall be paid by the
indemnifying party to the indemnified party as such Damages are incurred.
(f) If the indemnification provided for in this Section 10 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 10 in respect of any Damages (or actions or proceedings in respect
thereof) then each indemnifying party shall contribute to the aggregate amount
paid or payable by such indemnified party in such proportion as is appropriate
to reflect the relative fault of such indemnifying party on the one hand and the
Distributing Holder on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof), as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the "control" stockholders on the one
hand or the Distributing Holder on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and each Distributing Holder agree that it
would not be just and equitable if contributions pursuant to this Section 10(f)
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this Section 10(f). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions or proceedings
in respect thereof) referred to above in this Section 10(f) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 10(f): (i) each Distributing
Holder shall not be required to contribute any amount in excess of the amount of
proceeds received by such Holder from sale(s) of such Holder's shares of Common
Stock or Other Securities pursuant to the Registration Statement; and (ii) no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
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11. Notice of Certain Events.
11.1 In the event that:
(a) the Company shall declare any cash dividend upon its
Common Stock or Other Securities, or
(b) the Company shall declare any dividend upon its Common
Stock or Other Securities payable in stock or other securities or make any
special dividend or other distribution to the holders of its Common Stock or
Other Securities, or
(c) the Company shall offer for subscription pro rata to the
holders of its Common Stock or Other Securities any additional shares of stock
of any class or other rights, or
(d) there shall be any capital reorganization or
reclassification of the capital stock of the Company, including any subdivision
or combination of its outstanding shares of Common Stock or Other Securities, or
consolidation or merger of the Company into or with another company, the merger
or consolidation of any other company into or with the Company, or
(e) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company; or
(f) there shall be a sale or other transfer of all or
substantially all of the assts of the Company;
then, in connection with such event, the Company shall give to the Holders:
(i) at least fifteen (15) days prior written notice of
the date on which the books of the Company shall close or a record shall be
taken for such dividend, distribution, payment or subscription rights or for
determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up or other event; and
(ii) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up or other event, at least fifteen (15) days prior written notice of
the date when the same shall take place. Such notice in accordance with the
foregoing clause (i) shall also specify, in the case of any such dividend,
distribution, payment or subscription rights, the date on which the holders of
Common Stock or Other Securities shall be entitled thereto, and such notice in
accordance with this clause (ii) shall also specify the date on which the
holders of Common Stock or Other Securities shall be entitled to exchange their
Common Stock or Other Securities for securities or other property deliverable
upon such reorganization, reclassification consolidation, merger, sale,
dissolution, liquidation or winding up or other event, as the case may be. Each
such written notice shall be given in accordance with the provisions of Section
12 of this Warrant.
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11.2 Failure to give any such notice or any defect therein shall not
affect the validity of any action taken in connection with such dividend,
distribution, subscription offer, payment, reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation, winding-up or other
event; provided, however that any rights of the Holders with respect to any
failure of the Company to give notice as provided herein of any such action
shall not be prejudiced by any such action.
12. Notices. All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (a) personally served, (b) deposited
in the mail, registered or certified, return receipt requested, postage prepaid,
(c) delivered by reputable air courier service with charges prepaid, or (d)
transmitted by hand delivery, addressed as set forth below or to such other
address as such party shall have specified most recently by written notice. Any
notice or other communication required or permitted to be given hereunder shall
be deemed effective upon actual receipt (or if refused, upon such refusal). The
addresses for such communications shall be:
(i) if to the Company to: 1350 Avenue of Americas, New
York, NY 10019
(ii) if to the Holder, to the address listed on the
first paragraph of this Warrant.
or such other address as either party may provide to the
other in accordance with the provisions of this Section
12.
13. Miscellaneous.
(a) This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
(b) This Warrant shall be construed and enforced in accordance with
and governed by the laws of New York. THE PARTIES HERETO IRREVOCABLY: (I) AGREE
THAT ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT SHALL BE
BROUGHT ONLY IN THE COURTS OF THE STATE OF NEW YORK OR THE COURTS OF THE UNITED
STATES LOCATED WITHIN THE STATE OF NEW YORK, IN EACH CASE IN THE COUNTY OF NEW
YORK, (II) CONSENT AND SUBMIT TO THE EXCLUSIVE JURISDICTION AND VENUE OF EACH
SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING, (III) WAIVE ANY OBJECTION
WHICH THEY, OR ANY OF THEM, MAY HAVE TO PERSONAL JURISDICTION OR THE LAYING OF
VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY OF SUCH COURTS, AND AGREE
NOT TO SEEK TO CHANGE VENUE, (IV) WAIVE THE RIGHT TO TRIAL BY JURY IN ANY SUIT,
ACTION OR OTHER PROCEEDING AND (V) CONSENT TO SERVICE OF PROCESS IF GIVEN IN
WRITING IN ACCORDANCE WITH THE PROVISIONS OF SECTION 12.
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(c) The headings in this Warrant are for purposes of reference only,
and shall not limit or otherwise affect any of the terms hereof.
(d) The invalidity or unenforceability of any provision hereof shall
in no way affect the validity or enforceability of any other provision.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be issued at
the date first above written.
BRAINSTORM CELL THERAPEUTICS INC.
By: /s/ Yaffa Beck
-------------------------------------
Name: Yaffa Beck
Title: President & CEO
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-------------------------------------
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EXHIBIT A
FORM OF SUBSCRIPTION
(to be signed only on exercise of Warrant)
TO: BRAINSTORM CELL THERAPEUTICS INC.
The undersigned, pursuant to the provisions set forth in the attached
Warrant (No.____), hereby irrevocably elects to purchase ________ shares of the
Common Stock covered by such Warrant.
The undersigned herewith either:
|_| makes payment of the full purchase price for such shares at the price
per share provided for in such Warrant, which is $___________. Such payment
takes the form of $__________ in lawful money of the United States; or
|_| elects pursuant to Section 2(b) of the Warrant to convert such Warrant
into Common Stock in accordance with the formula set forth in Section 2(b).
The undersigned requests that the certificates for such shares be issued
in the name of, and delivered to
_____________________________________________________ whose address is
__________________________________.
The undersigned represents and warrants that all offers and sales by the
undersigned of the securities issuable upon exercise of the within Warrant shall
be made pursuant to registration of the Common Stock under the Securities Act of
1933, as amended (the "Securities Act"), or pursuant to an exemption from
registration under the Securities Act.
Dated:___________________
---------------------------------------
(Signature to conform to name of holder
as specified on the face of the Warranty)
---------------------------------------
---------------------------------------
---------------------------------------
(Address)
A-1
EXHIBIT B
FORM OF TRANSFEROR ENDORSEMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and transfers
unto the person(s) named below under the heading "Transferees" the right
represented by the within Warrant to purchase the percentage and number of
shares of Common Stock of BRAINSTORM CELL THERAPEUTICS INC. to which the within
Warrant relates specified under the headings "Percentage Transferred" and
"Number Transferred," respectively, opposite the name(s) of such person(s) and
appoints each such person Attorney to transfer its respective right on the books
of BRAINSTORM CELL THERAPEUTICS INC. with full power of substitution in the
premises.
--------------------------------------------------------------------------
Transferees Percentage Transferred Number Transferred
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Dated: ______________, ___________
---------------------------------------
(Signature to conform to name of holder
as specified on the face of the Warranty)
Signed in the presence of:
---------------------------------------
(Name)
---------------------------------------
---------------------------------------
(Address)
B-1
ACCEPTED AND AGREED:
---------------------------------------
[TRANSFEREE]
---------------------------------------
(address)
---------------------------------------
(Name)
B-2