-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RzIOXLgKc37pRo7tc7PQIziU8819lXQjDQLIUW6tupHou6kzr1e/a/tsdCMR0ZZB wTZD5mWP4k9twH1xLUwrnA== 0001144204-04-022923.txt : 20041228 0001144204-04-022923.hdr.sgml : 20041228 20041228130933 ACCESSION NUMBER: 0001144204-04-022923 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20041223 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Termination of a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041228 DATE AS OF CHANGE: 20041228 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BRAINSTORM CELL THERAPEUTICS INC CENTRAL INDEX KEY: 0001137883 STANDARD INDUSTRIAL CLASSIFICATION: TELEGRAPH & OTHER MESSAGE COMMUNICATIONS [4822] IRS NUMBER: 912061050 FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-61610 FILM NUMBER: 041228012 BUSINESS ADDRESS: STREET 1: SUITE 103-158TH HILLSIDE AVE. CITY: VICTORIA STATE: A1 ZIP: 00000 BUSINESS PHONE: 250-519-0553 MAIL ADDRESS: STREET 1: SUITE 103-158TH HILLSIDE AVE. CITY: VICTORIA STATE: A1 ZIP: 00000 FORMER COMPANY: FORMER CONFORMED NAME: GOLDEN HAND RESOURCES INC DATE OF NAME CHANGE: 20030827 FORMER COMPANY: FORMER CONFORMED NAME: WIZBANG TECHNOLOGIES INC DATE OF NAME CHANGE: 20010409 8-K 1 v010433.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) December 23, 2004 BrainStorm Cell Therapeutics Inc. (Exact name of registrant as specified in its charter) Washington 333-61610 912061053 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 36 Derech Bait Lechem Jerusalem, Israel 77002 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 011-972-2-6737445 N/A (Former name or former address, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT On December 23, 2004 following the rescission of consulting agreements with Mr. Malcolm E. Taub and Mr. Ernest Muller dated August 10, 2004, as further described in Item 1.02 of this report, we entered into new consulting agreements with each of Messrs. Taub and Muller. The new agreements have a term of twelve months from August 10, 2004 (the date of the original agreements). Pursuant to the new agreements, in consideration for the services performed, Mr. Taub and Mr. Muller were issued, respectively, warrants to purchase up to 1,350,000 and 450,000 shares of our Common Stock at a per share exercise price of par value ($0.00005 per share). These warrants are fully vested on the date of grant, exercisable for a period of 10 years from such date and are non-transferable. A copy of the new agreements and the warrants are attached hereto, respectively, as Exhibits 10.07 and 10.08, and 4.05 and 4.06. ITEM 1.02. TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT In August 10, 2004, we had entered into consulting agreements with Mr. Malcolm E. Taub and Mr. Ernest Muller pursuant to which they were issued 1,350,000 and 450,000 shares of our Common Stock respectively (the "Shares") as consideration for the services performed. Due to a discrepancy regarding the valuation of the Shares, on December 23, 2004 the parties rescinded the original agreements and entered into new agreements as set forth in Item 1.01 of this report. In connection with the rescission of the original agreements, Mr. Taub and Mr. Muller surrendered the Shares to us and the Shares will be cancelled and returned to the status of authorized but unissued shares. ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits. 4.05 Warrant dated December 23, 2004, issued to Malcolm E. Taub 4.06 Warrant dated December 23, 2004, issued to Ernest Muller 10.07 Consulting Agreement, dated December 23, 2004, between Malcolm E. Taub and the Registrant 10.08 Consulting Agreement, dated December 23, 2004, between Ernest Muller and the Registrant SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: December 23, 2004 BRAINSTORM CELL THERAPEUTICS INC. /s/ Yaffa Beck - ------------------------ Name: Yaffa Beck Title: President & CEO EXHIBIT INDEX Exhibit Number Description - -------------- ----------- 4.05 Warrant dated December 23, 2004, issued to Malcolm E. Taub 4.06 Warrant dated December 23, 2004, issued to Ernest Muller 10.07 Consulting Agreement, dated December 23, 2004, between Malcolm E. Taub and the Registrant 10.08 Consulting Agreement, dated December 23, 2004, between Ernest Muller and the Registrant. EX-4.5 2 v010433_ex4-5.txt 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 1,350,000 shares of Common Stock of BrainStorm Cell Therapeutics Inc. (subject to adjustment as provided herein) COMMON STOCK PURCHASE WARRANT AT $.00005 PER SHARE Issue Date: December 23, 2004 BrainStorm Cell Therapeutics Inc., a corporation organized under the laws of the State of Washington (the "Company"), hereby certifies that, for value received, Malcolm S. Taub, (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 TENTH anniversary of the Issue Date (the "Expiration Date"), up to 1,350,000 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 $.00005. 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. This Warrant is that certain Warrant referred to in the Consulting Agreement, of even date hereof, between the Company and the Holder. 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. hereunder. (b) The term "Common Stock" includes (a) the Company's Common Stock, $.00005 par value per share, as authorized on the date hereof, and (b) any other securities into which or for which any of the securities described in (a) 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. 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. This Warrant is fully vested as of the Issue Date. 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 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, the NASDAQ SmallCap Market or the American Stock Exchange, LLC, then the closing or last sale price, respectively, reported for the last business 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 traded in the over-the-counter market, then the average of the closing bid and ask prices reported for the last business day immediately preceding the Determination Date; (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, upon the request of the Holder hereof 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. If the Holder shall fail to make any such request, such failure shall not affect the continuing obligation of the Company to afford to such Holder any such rights. 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, , 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. 2. Exercise. This Warrant may be exercisable 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. 3. Adjustment for Reorganization, Consolidation, Merger, etc. 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 under any plan or arrangement contemplating the dissolution of the Company, 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 dissolution, 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 dissolution, 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. 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 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. 4. Extraordinary Events Regarding Common Stock. In the event that the Company shall (a) issue additional shares of the Common Stock as a dividend or other distribution on outstanding Common Stock, (b) subdivide its outstanding shares of Common Stock, or (c) combine 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. 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 Warrant, 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 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 11 hereof). 6. Reservation of Stock, etc. Issuable on Exercise of Warrant. 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. 7. Non-transferable. This Warrant is non-transferable by the Holder and any purported transfer hereof is null and void. 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, twice only, will execute and deliver, in lieu thereof, a new Warrant of like tenor. 9. Registration Rights. The Holder of this Warrant has been granted certain piggy back registration rights by the Company with respect to the shares of Common Stock underlying this Warrant, subject to underwriter discretion, to be included by the Company in a registration statement filed with the Securities and Exchange Commission. The Company shall not be obligated by the Holder to file a registration statement. 10. Maximum Exercise. The Holder shall not be entitled to exercise this Warrant on an exercise date, in connection with that number of shares of Common Stock which would be in excess of the sum of (i) the number of shares of Common Stock beneficially owned by the Holder and its affiliates on an exercise date, and (ii) the number of shares of Common Stock issuable upon the exercise of this Warrant with respect to which the determination of this limitation is being made on an exercise date, which would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock on such date. For the purposes of the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder. Subject to the foregoing, the Holder shall not be limited to aggregate exercises which would result in the issuance of more than 4.99%. The restriction described in this paragraph may be revoked upon and effective after sixty-one (61) days prior notice from the Holder to the Company. The Holder may allocate which of the equity of the Company deemed beneficially owned by the Purchaser shall be included in the 4.99% amount described above and which shall be allocated to the excess above 4.99%. 11. 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 (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, 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 (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be: (i) if to the Company to: 36 Derech Bait Lechem, Jerusalem, Israel 77002 or to such other address as specified by the Company. (ii) if to the Holder, to_____________________________ or to such other address as specified by the Holder. 12. Miscellaneous. 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. This Warrant shall be construed and enforced in accordance with and governed by the laws of Washington. Any dispute relating to this Warrant shall be adjudicated in the State of Washington. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision. IN WITNESS WHEREOF, the Company has executed this Warrant as of the date first written above. BRAINSTORM CELL THERAPEUTICS INC. By: /s/ Yaffa Beck ----------------------------------- Name: Yaffa Beck Title: President & CEO Witness: - ---------------------------- 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 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. 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 must conform to name of holder as specified on the face of the Warrant) ---------------------------------------- ---------------------------------------- (Address) EX-4.6 3 v010433_ex4-6.txt 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 450,000 shares of Common Stock of BrainStorm Cell Therapeutics Inc. (subject to adjustment as provided herein) COMMON STOCK PURCHASE WARRANT AT $.00005 PER SHARE Issue Date: December 23, 2004 BrainStorm Cell Therapeutics Inc., a corporation organized under the laws of the State of Washington (the "Company"), hereby certifies that, for value received, Ernest Muller, (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 TENTH anniversary of the Issue Date (the "Expiration Date"), up to 450,000 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 $.00005. 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. This Warrant is that certain Warrant referred to in the Consulting Agreement, of even date hereof, between the Company and the Holder. 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. hereunder. (b) The term "Common Stock" includes (a) the Company's Common Stock, $.00005 par value per share, as authorized on the date hereof, and (b) any other securities into which or for which any of the securities described in (a) 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. 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. This Warrant is fully vested as of the Issue Date. 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 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, the NASDAQ SmallCap Market or the American Stock Exchange, LLC, then the closing or last sale price, respectively, reported for the last business 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 traded in the over-the-counter market, then the average of the closing bid and ask prices reported for the last business day immediately preceding the Determination Date; (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, upon the request of the Holder hereof 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. If the Holder shall fail to make any such request, such failure shall not affect the continuing obligation of the Company to afford to such Holder any such rights. 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, , 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. 2. Exercise. This Warrant may be exercisable 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. 3. Adjustment for Reorganization, Consolidation, Merger, etc. 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 under any plan or arrangement contemplating the dissolution of the Company, 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 dissolution, 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 dissolution, 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. 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 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. 4. Extraordinary Events Regarding Common Stock. In the event that the Company shall (a) issue additional shares of the Common Stock as a dividend or other distribution on outstanding Common Stock, (b) subdivide its outstanding shares of Common Stock, or (c) combine 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. 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 Warrant, 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 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 11 hereof). 6. Reservation of Stock, etc. Issuable on Exercise of Warrant. 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. 7. Non-transferable. This Warrant is non-transferable by the Holder and any purported transfer hereof is null and void. 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, twice only, will execute and deliver, in lieu thereof, a new Warrant of like tenor. 9. Registration Rights. The Holder of this Warrant has been granted certain piggy back registration rights by the Company with respect to the shares of Common Stock underlying this Warrant, subject to underwriter discretion, to be included by the Company in a registration statement filed with the Securities and Exchange Commission. The Company shall not be obligated by the Holder to file a registration statement. 10. Maximum Exercise. The Holder shall not be entitled to exercise this Warrant on an exercise date, in connection with that number of shares of Common Stock which would be in excess of the sum of (i) the number of shares of Common Stock beneficially owned by the Holder and its affiliates on an exercise date, and (ii) the number of shares of Common Stock issuable upon the exercise of this Warrant with respect to which the determination of this limitation is being made on an exercise date, which would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock on such date. For the purposes of the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder. Subject to the foregoing, the Holder shall not be limited to aggregate exercises which would result in the issuance of more than 4.99%. The restriction described in this paragraph may be revoked upon and effective after sixty-one (61) days prior notice from the Holder to the Company. The Holder may allocate which of the equity of the Company deemed beneficially owned by the Purchaser shall be included in the 4.99% amount described above and which shall be allocated to the excess above 4.99%. 11. 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 (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, 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 (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be: (i) if to the Company to: 36 Derech Bait Lechem, Jerusalem, Israel 77002 or to such other address as specified by the Company. (ii) if to the Holder, to_____________________________ or to such other address as specified by the Holder. 12. Miscellaneous. 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. This Warrant shall be construed and enforced in accordance with and governed by the laws of Washington. Any dispute relating to this Warrant shall be adjudicated in the State of Washington. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision. IN WITNESS WHEREOF, the Company has executed this Warrant as of the date first written above. BRAINSTORM CELL THERAPEUTICS INC. By: /s/ Yaffa Beck ----------------------------------- Name: Yaffa Beck Title: President & CEO Witness: - ---------------------------- 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 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. 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 must conform to name of holder as specified on the face of the Warrant) ---------------------------------------- ---------------------------------------- (Address) EX-10.7 4 v010433_ex10-7.txt CONSULTING AGREEMENT THIS CONSULTING AGREEMENT is entered into as of December 23, 2004 (the "EFFECTIVE DATE"), by and between BRAINSTORM CELL THERAPEUTICS INC., a company incorporated under the laws of the State of Washington (the "COMPANY") and Mr. Malcolm S. Taub ("TAUB"). Whereas, Taub and the Company (the "PARTIES") entered into a Consulting Agreement dated August 10, 2004 (the "FIRST AGREEMENT") pursuant to which in consideration for services rendered Taub was issued 1,350,000 shares of the Common Stock of the Company (the "SHARES"); Whereas, due to a discrepancy in the valuation of the Shares, the Parties have rescinded the First Agreement, Taub has surrendered the Shares to the Company for cancellation, and the Parties have agreed to enter into this new Consulting Agreement; NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows: 1. SERVICES. Taub shall use its best efforts to perform the following services in a timely manner: to become familiar with the business and operations of the Company so that he (i) may introduce the company to entities or individuals that would enhance and accelerate the commercialization of the Company's technology and business objectives and (ii) work with the Company, if needed, on capital structure, management, reorganization and related corporate issues. 2. TERM. This Agreement shall be in effect for twelve months from August 10, 2004. Taub shall not be required to be available at any specific time for consultation; shall not be required to appear at the offices of the Company and may perform such service telephonically, by e-mail or in any other reasonable manner. 3. CONSIDERATION. For the valuable advice and services to be provided by Taub to the Company under this Agreement, the Company shall issue Taub a Warrant to purchase up to 1,350,000 shares of the Company's common stock at a per share purchase price of $0.00005. The Warrant shall be fully vested as of the date of issuance, exercisable at any time for a period of 10 years from such date and fully issued upon delivery thereof. 4. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants to Taub that the statements contained in paragraph 4 are correct and complete as of the Effective Date: (a) The Company is a corporation duly organized, validly existing and active under the laws of its state of incorporation. (b) The Company has full corporate power and authority to (i) conduct its business as now conducted and as proposed to be conducted and to own, use, license, and lease its assets and properties and (ii) enter into this Agreement and to consummate the transactions contemplated herein. 5. INDEMNITY. The Company agrees to indemnify, defend, and hold harmless Taub and his affiliates, counsel, employees, agents, successors, and assigns. (each, an "Indemnified Party") from and against any and all losses, claims, damages, costs, expenses, and liabilities (including any investigatory, legal, and other expenses incurred as they are incurred by an Indemnified Party in connection with preparing for or defending any action, claim, or proceeding, whether or not resulting in any liability) (collectively, "Indemnifiable Losses") to which any Indemnified Party may become subject or liable relating to or arising out of (a) the services to be performed under the Agreement, (b) any inaccuracy in or breach in the representations and warranties of the Company contained in this Agreement, and (c) any failure of the Company to perform its obligations under this Agreement, provided that the Company shall not be liable to an Indemnified Party in any such case to the extent that any such Indemnifiable Loss is found in a final, nonappealable judgment by a court of competent jurisdiction to have resulted as a direct and proximate cause from the willful misconduct or gross negligence of an Indemnified Party. No Indemnified Party shall be liable, responsible, or accountable in damages and costs and expenses (including attorneys' fees) under this Agreement except for any liability for losses, claims, damages, or liabilities finally judicially determined to have resulted solely and exclusively from actions taken or omitted to be taken as a direct result of such Indemnified Party's gross negligence or willful misconduct. If for any reason, except as specifically provided herein, the foregoing indemnity for Indemnifiable Losses is unavailable to an Indemnified Party or insufficient to fully hold any Indemnified Party harmless, then the Company agrees to contribute to the amount paid or payable by such Indemnified Party as a result of such Indemnifiable Losses in such proportion as is appropriate to reflect the relative benefits received by and fault of the Company, on the one hand, and the relative benefits received by and fault of Taub, on the other hand. 6. LEGAL MATTERS. This Agreement shall be interpreted under and governed by the laws of the State of New York. Any controversy, dispute, or claim between the parties relating to this Agreement shall be resolved by binding arbitration in accordance with the rules of the American Arbitration Association. 7. REPRESENTATION. The Company acknowledges that it has been given notice by Taub that Taub is not a licensed securities broker-dealer and therefore Taub is not required under this Agreement or any side agreement, whether verbally or in writing, to sell securities on behalf of the Company or any issuer affiliated with the Company. Moreover, the Company acknowledges that Taub does not intend to negotiate raising of capital transactions, does not intend to directly solicit purchasers of the Company's common stock, will not hold any funds or securities in a capital raising transaction, and the compensation due to Taub is not based on a specified percentage of any actual or proposed funds raised. The Company acknowledges that Taub has informed it that neither Taub nor any of its members or employees provides any legal advice or counsel. 8. INDEPENDENT CONTRACTOR. Taub is an independent contractor and may engage in other business activities. Since Taub is an independent contractor, nothing in this Agreement shall be interpreted to constitute that Taub is an agent, employee, or partner of the Company, nor shall either party have any authority to bind the other. In furtherance of, but without limiting the foregoing, Company shall not be responsible for payment of workers' compensation, disability benefits, unemployment insurance and for withholding or paying income taxes and social security for Taub but such responsibility shall be solely that of Taub. 9. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the parties pertaining to the subject matter hereof and supersedes and cancels any prior communications, representations, understandings, and agreements between the parties. No modifications of or changes to this Agreement shall be binding, nor can any of its provisions be waived, unless agreed to in writing by the parties. There are no side agreements, whether verbally or in writing, between the Company and Taub. 10. CONFIDENTIALITY. The parties agree that the terms and all of the encompassing components of this Agreement shall be kept confidential, unless this information is required to be disclosed pursuant to any inquiries by federal, state, or local law enforcement. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. By: /s/ Malcolm Taub -------------------- Malcolm S. Taub By: /s/ Yaffa Beck ------------------- Name: Dr. Yaffa Beck Title: President & CEO EX-10.8 5 v010433_ex10-8.txt CONSULTING AGREEMENT THIS CONSULTING AGREEMENT is entered into as of December 23, 2004 (the "EFFECTIVE DATE"), by and between BRAINSTORM CELL THERAPEUTICS INC., a company incorporated under the laws of the State of Washington (the "COMPANY") and Mr. Ernest Muller ("MULLER"). Whereas, Muller and the Company (the "PARTIES") entered into a Consulting Agreement dated August 10, 2004 (the "FIRST AGREEMENT") pursuant to which in consideration for services rendered Muller was issued 450,000 shares of the Common Stock of the Company (the "SHARES"); Whereas, due to a discrepancy in the valuation of the Shares, the Parties have rescinded the First Agreement, Muller has surrendered the Shares to the Company for cancellation, and the Parties have agreed to enter into this new Consulting Agreement; NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows: 1. SERVICES. Muller shall use its best efforts to perform the following services in a timely manner: to become familiar with the business and operations of the Company so that he (i) may introduce the company to entities or individuals that would enhance and accelerate the commercialization of the Company's technology and business objectives and (ii) work with the Company, if needed, on capital structure, management, reorganization and related corporate issues. 2. TERM. This Agreement shall be in effect for twelve months from August 10, 2004. Muller shall not be required to be available at any specific time for consultation; shall not be required to appear at the offices of the Company and may perform such service telephonically, by e-mail or in any other reasonable manner. 3. CONSIDERATION. For the valuable advice and services to be provided by Muller to the Company under this Agreement, the Company shall issue Muller a Warrant to purchase up to 450,000 shares of the Company's common stock at a per share purchase price of $0.00005. The Warrant shall be fully vested as of the date of issuance, exercisable at any time for a period of 10 years from such date and fully issued upon delivery thereof. 4. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants to Muller that the statements contained in paragraph 4 are correct and complete as of the Effective Date: (a) The Company is a corporation duly organized, validly existing and active under the laws of its state of incorporation. (b) The Company has full corporate power and authority to (i) conduct its business as now conducted and as proposed to be conducted and to own, use, license, and lease its assets and properties and (ii) enter into this Agreement and to consummate the transactions contemplated herein. 5. INDEMNITY. The Company agrees to indemnify, defend, and hold harmless Muller and his affiliates, counsel, employees, agents, successors, and assigns. (each, an "Indemnified Party") from and against any and all losses, claims, damages, costs, expenses, and liabilities (including any investigatory, legal, and other expenses incurred as they are incurred by an Indemnified Party in connection with preparing for or defending any action, claim, or proceeding, whether or not resulting in any liability) (collectively, "Indemnifiable Losses") to which any Indemnified Party may become subject or liable relating to or arising out of (a) the services to be performed under the Agreement, (b) any inaccuracy in or breach in the representations and warranties of the Company contained in this Agreement, and (c) any failure of the Company to perform its obligations under this Agreement, provided that the Company shall not be liable to an Indemnified Party in any such case to the extent that any such Indemnifiable Loss is found in a final, nonappealable judgment by a court of competent jurisdiction to have resulted as a direct and proximate cause from the willful misconduct or gross negligence of an Indemnified Party. No Indemnified Party shall be liable, responsible, or accountable in damages and costs and expenses (including attorneys' fees) under this Agreement except for any liability for losses, claims, damages, or liabilities finally judicially determined to have resulted solely and exclusively from actions taken or omitted to be taken as a direct result of such Indemnified Party's gross negligence or willful misconduct. If for any reason, except as specifically provided herein, the foregoing indemnity for Indemnifiable Losses is unavailable to an Indemnified Party or insufficient to fully hold any Indemnified Party harmless, then the Company agrees to contribute to the amount paid or payable by such Indemnified Party as a result of such Indemnifiable Losses in such proportion as is appropriate to reflect the relative benefits received by and fault of the Company, on the one hand, and the relative benefits received by and fault of Muller, on the other hand. 6. LEGAL MATTERS. This Agreement shall be interpreted under and governed by the laws of the State of New York. Any controversy, dispute, or claim between the parties relating to this Agreement shall be resolved by binding arbitration in accordance with the rules of the American Arbitration Association. 7. REPRESENTATION. The Company acknowledges that it has been given notice by Muller that Muller is not a licensed securities broker-dealer and therefore Muller is not required under this Agreement or any side agreement, whether verbally or in writing, to sell securities on behalf of the Company or any issuer affiliated with the Company. Moreover, the Company acknowledges that Muller does not intend to negotiate raising of capital transactions, does not intend to directly solicit purchasers of the Company's common stock, will not hold any funds or securities in a capital raising transaction, and the compensation due to Muller is not based on a specified percentage of any actual or proposed funds raised. The Company acknowledges that Muller has informed it that neither Muller nor any of its members or employees provides any legal advice or counsel. 8. INDEPENDENT CONTRACTOR. Muller is an independent contractor and may engage in other business activities. Since Muller is an independent contractor, nothing in this Agreement shall be interpreted to constitute that Muller is an agent, employee, or partner of the Company, nor shall either party have any authority to bind the other. In furtherance of, but without limiting the foregoing, Company shall not be responsible for payment of workers' compensation, disability benefits, unemployment insurance and for withholding or paying income taxes and social security for Muller but such responsibility shall be solely that of Muller. 9. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the parties pertaining to the subject matter hereof and supersedes and cancels any prior communications, representations, understandings, and agreements between the parties. No modifications of or changes to this Agreement shall be binding, nor can any of its provisions be waived, unless agreed to in writing by the parties. There are no side agreements, whether verbally or in writing, between the Company and Muller. 10. CONFIDENTIALITY. The parties agree that the terms and all of the encompassing components of this Agreement shall be kept confidential, unless this information is required to be disclosed pursuant to any inquiries by federal, state, or local law enforcement. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. By: /s/ Ernext Muller -------------------- Ernest Muller By: /s/ Yaffa Beck ------------------- Name: Dr. Yaffa Beck Title: President & CEO -----END PRIVACY-ENHANCED MESSAGE-----