UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement |_| Confidential, for Use of the
Commission Only (as permitted
|X| Definitive Proxy Statement by Rule 14a-6(e)(2))
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss. 240.14a-12
Brainstorm Cell Therapeutics Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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BRAINSTORM CELL THERAPEUTICS INC.
110 EAST 59TH STREET, 25TH FLOOR
NEW YORK, NY 10022
(212) 557-9000
August 22, 2006
Dear Shareholder:
Brainstorm Cell Therapeutics Inc. will hold its 2006 Annual Meeting of
shareholders on September 20, 2006 beginning at 10:00 a.m., New York City time,
at the offices of the Company, 110 East 59th Street, 25th Floor, New York, NY
10022. We look forward to your attending either in person or by proxy. The
enclosed notice of meeting, the proxy statement, and the proxy card from the
Board of Directors describe the matters to be acted upon at the meeting.
Your vote is important. Whether or not you expect to attend the meeting,
your shares should be represented. Therefore, we urge you to complete, sign,
date and promptly return the enclosed proxy card.
On behalf of the Board of Directors, we would like to express our
appreciation for your continued interest in our company.
Sincerely yours,
/s/ Yoram Drucker
YORAM DRUCKER
Chief Operating Officer
BRAINSTORM CELL THERAPEUTICS INC.
110 EAST 59TH STREET, 25TH FLOOR
NEW YORK, NY 10022
(212) 557-9000
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 20, 2006
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To the Shareholders of Brainstorm Cell Therapeutics Inc.:
Notice is hereby given that the 2006 Annual Meeting of Shareholders (the
"Meeting") of Brainstorm Cell Therapeutics Inc. (the "Company") will be held on
September 20, 2006 at 10:00 a.m., New York City time, at the offices of the
Company, 110 East 59th Street, 25th Floor, New York, NY 10022, for the following
purposes:
1. To elect one (1) Class I director for a one-year term, one (1) Class
II director for a two-year term and one (1) Class III director for a
three-year term;
2. To amend the Company's Articles of Incorporation to increase the
number of authorized shares of Common Stock from 200,000,000 to
440,000,000;
3. To authorize the Board of Directors of the Company, in its
discretion, should it deem it to be appropriate and in the best
interests of the Company and its shareholders, to amend the
Company's Articles of Incorporation to eliminate the class of
Preferred Stock and all authorized shares of Preferred Stock;
4. To ratify the appointment of Kost Forer Gabbay & Kasierer, a member
of Ernst & Young Global, as the Company's independent registered
public accounting firm for the current fiscal year; and
5. To transact such other business that may properly come before the
Meeting and any adjournments or postponements of the Meeting.
The Board of Directors has fixed the close of business on July 21, 2006 as
the record date for the Meeting. All shareholders of record on that date are
entitled to notice of, and to vote at, the Meeting.
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY IN THE
ENVELOPE PROVIDED WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING IN
PERSON. IF YOU ATTEND THE MEETING, YOU MAY CONTINUE TO HAVE YOUR SHARES VOTED AS
INSTRUCTED IN THE PROXY OR YOU MAY WITHDRAW YOUR PROXY AND VOTE YOUR SHARES IN
PERSON.
By Order of the Board of Directors
/s/ Yoram Drucker
YORAM DRUCKER
Secretary
New York, New York
August 22, 2006
BRAINSTORM CELL THERAPEUTICS INC.
--------------------------
PROXY STATEMENT
--------------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 20, 2006
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Brainstorm Cell Therapeutics Inc. (the
"Company") for use at the 2006 Annual Meeting of Shareholders (the "Meeting") to
be held on September 20, 2006, at the time and place set forth in the
accompanying notice of the Meeting, and at any adjournments or postponements
thereof. The approximate date on which this Proxy Statement and form of proxy
are first being sent to shareholders is on or about August 25, 2006.
The Company's principal executive offices are located at 110 East 59th
Street, 25th Floor, New York, New York 10022, telephone number (212) 557-9000.
VOTING AND REVOCABILITY OF PROXIES
If the enclosed proxy is properly executed and is received prior to the
meeting, it will be voted in the manner directed by the shareholder. If no
instructions are specified with respect to any particular matter to be acted
upon, properly executed proxies will be voted:
1. FOR the election of our Class I nominee to the Board of Directors;
2. FOR the election of our Class II nominee to the Board of Directors;
3. FOR the election of our Class III nominee to the Board of Directors;
4. FOR the amendment to the Company's Articles of Incorporation
increasing the number of authorized shares of Common Stock from
200,000,000 to 440,000,000;
5. FOR the authorization of the Board of Directors of the Company, in
its discretion, to amend the Company's Articles of Incorporation to
eliminate the class of Preferred Stock and all authorized shares of
Preferred Stock;
6. FOR the ratification of the appointment of Kost Forer Gabbay &
Kasierer, a member of Ernst & Young Global, as the Company's
independent registered public accounting firm for the current fiscal
year; and
7. At the discretion of the designated proxies named on the enclosed
Proxy Card, on any other matter that may properly come before the
Meeting, and any adjournment or postponement thereof.
Any person giving the enclosed form of proxy has the power to revoke it
by voting in person at the Meeting, by giving a duly executed proxy bearing a
later date or by giving written notice of revocation to the Secretary of the
Company any time before the proxy is exercised. A shareholder of record
attending the Meeting may vote in person whether or not a proxy has been
previously given, but the presence, without further action, of a shareholder at
the Meeting will not constitute revocation of a previously given proxy.
QUORUM AND REQUIRED VOTE
1
The holders of one-third of all shares of Common Stock issued, outstanding
and entitled to vote are required to be present in person or to be represented
by proxy at the Meeting in order to constitute a quorum for the transaction of
business. Votes withheld, abstentions and shares held in "street name" by
brokers or nominees who indicate on their proxies that they do not have
discretionary authority to vote such shares as to a particular matter ("broker
non-votes") shall be counted for purposes of determining the presence or absence
of a quorum for the transaction of business at the Meeting.
The affirmative vote of the holders of a plurality of the issued and
outstanding shares of the Company's Common Stock voting in person or by proxy
and entitled to vote is required for the election of directors (Proposal No. 1).
The affirmative vote of the holders of a majority of the shares entitled to vote
is required to amend the Company's Articles of Incorporation (Proposal No. 2).
The affirmative vote of the holders of a majority of the shares entitled to vote
is required to authorize the Board of Directors to amend the Company's Articles
of Incorporation to eliminate the class of Preferred Stock and all authorized
shares of Preferred Stock (Proposal No. 3). The affirmative vote of the holders
of a majority of the votes cast in person or by proxy of the shares entitled to
vote is required to ratify the appointment of Kost Forer Gabbay & Kasierer, a
member of Ernst & Young Global, as the Company's independent registered public
accounting firm for the current fiscal year (Proposal No. 4).
Shares which abstain from voting on a particular matter and broker
non-votes will not be counted as votes in favor of such matter and will also not
be counted as votes cast or shares voting on such matter, except for the
proposal to amend and restate the Articles of Incorporation and the proposal to
authorize the Board of Directors to amend the Articles of Incorporation to
eliminate the class of Preferred Stock and all authorized shares of Preferred
Stock. Abstentions and broker non-votes will have the same effect as a vote
against Proposal No. 2 and Proposal No. 3.
RECORD DATE AND VOTING SECURITIES
Only shareholders of record at the close of business on July 21, 2006 (the
"Record Date") are entitled to notice of and to vote at the Meeting. At the
close of business on that date, there were 23,429,961 shares of Common Stock
outstanding and entitled to vote. Each outstanding share of the Company's Common
Stock entitles the record holder to cast one (1) vote for each matter to be
voted upon.
EXPENSES AND SOLICITATION
The cost of this solicitation of proxies will be borne by the Company. In
addition to soliciting shareholders by mail through its regular employees, the
Company may request banks, brokers, and other custodians, nominees and
fiduciaries to solicit their customers who have stock of the Company registered
in the names of a nominee, and, if so, will reimburse such banks, brokers and
other custodians, nominees and fiduciaries for their reasonable out-of-pocket
costs. Solicitation by officers and employees of the Company may also be made of
some shareholders in person or by mail, telephone or facsimile following the
original solicitation. Such officers and directors will receive no compensation
in connection with any such solicitations, other than compensation paid pursuant
to their duties described elsewhere in this proxy statement.
2
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 31, 2006
with respect to the beneficial ownership of Common Stock of the Company by the
following: (i) each of the Company's current directors; (ii) each of the Named
Executive Officers; (iii) the former Chief Executive Officer of the Company;
(iv) all of the current executive officers and directors as a group; and (v)
each person known by the Company to own beneficially more than five percent (5%)
of the outstanding shares of the Company's Common Stock.
For purposes of the following table, beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission (the "SEC")
and the information is not necessarily indicative of beneficial ownership for
any other purpose. Except as otherwise noted in the footnotes to the table, the
Company believes that each person or entity named in the table has sole voting
and investment power with respect to all shares of Brainstorm Common Stock shown
as beneficially owned by that person or entity (or shares such power with his or
her spouse). Under the SEC's rules, shares of Brainstorm Common Stock issuable
upon exercise of options that are exercisable on or within 60 days after March
31, 2006 ("Presently Exercisable Options") or under warrants that are
exercisable on or within 60 days after March 31, 2006 ("Presently Exercisable
Warrants") are deemed outstanding and therefore included in the number of shares
reported as beneficially owned by a person or entity named in the table and are
used to compute the percentage of the Common Stock beneficially owned by that
person or entity. These shares are not, however, deemed outstanding for
computing the percentage of the Common Stock beneficially owned by any other
person or entity. Unless otherwise indicated, the address of each person listed
in the table is c/o Brainstorm Cell Therapeutics Inc., 110 East 59th Street,
25th Floor, New York, NY 10022.
The percentage of the Common Stock beneficially owned by each person or
entity named in the following table is based on 22,854,587 shares of Common
Stock outstanding as of March 31, 2006 plus any shares issuable upon exercise of
Presently Exercisable Options and Presently Exercisable Warrants held by such
person or entity.
3
Shares Beneficially Owned
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Number Percentage
Name and Address of Beneficial Owner of Shares of Class
------------------------------------------------------------------ ----------- --------
Directors, Nominees and Named Executive Officers
Dr. Yaffa Beck (Former Chief Executive Officer) 800,000(1) 3.4%
Yoram Drucker 751,230(2) 3.2%
David Stolick 172,359(3) *
Irit Arbel 2,333,333(4) 10.2%
Michael Greenfield (Ben Ari) 100,000(5) *
Robert Shorr 100,000(6) *
All current directors and executive officers as a group (5) persons 3,456,922 14.8%
5% Shareholders
Ramot at Tel Aviv University Ltd. 6,363,849(7) 21.8%
32 Haim Levanon Street
Tel Aviv University, Ramat Aviv
Tel Aviv, L3 61392
Eldad Melamed 2,688,178(8) 10.5%
c/o Rabin Medical Center
Beilinson Campus
Sackler School of Medicine, Tel Aviv University
Petah-Tikva, L3 49100
Daniel Offen 2,688,177(9) 10.5%
c/o Felsenstein Medical Research Center
Rabin Medical Center, Tel Aviv University
Petah-Tikva, L3 49100
Zegal & Ross Capital 2,600,000(10) 11.4%
1748 54th Street
Brooklyn, New York 11204
Basad Holdings Ltd. 1,610,000(11) 7.0%
55 Ameer Avenue, Suite 9050
Toronto, Ontario, Canada M6A2Z1
Shareholder Group (12) 7,347,263(12) 31.6%
----------
* Less than 1%.
(1) Consists of 800,000 shares of Common Stock issuable upon the exercise of
Presently Exercisable Options at an exercise price of $0.15.
(2) Consists of (i) 400,000 shares of Common Stock owned by Mr. Drucker; and
(ii) 351,230 shares of Common Stock issuable upon the exercise of Presently
Exercisable Options at an exercise price of $0.15. Mr. Drucker is also
considered to be a member of a group within the meaning of Section 13(d)(3) of
the Securities Exchange Act of 1934 (see note 12 below). Other than the lock-up
agreements described below, the members of the group have not entered into any
agreement relating to the acquisition, disposition or voting of such shares.
4
(3) Consists of 172,359 shares of Common Stock issuable upon the exercise of
Presently Exercisable Options at an exercise price of $0.15.
(4) Consists of (i) 2,300,000 shares of Common Stock owned by Dr. Arbel; and
(ii) 33,333 shares of Common Stock issuable upon the exercise of Presently
Exercisable Options at an exercise price of $0.75. Dr. Arbel is also considered
to be a member of a group within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934 (see note 12 below). The members of the group
have not entered into any agreement relating to the acquisition, disposition or
voting of such shares. Dr. Arbel's address is 6 Hadison Street, Jerusalem,
Israel.
(5) Consists of 100,000 shares of restricted stock, which shares are subject to
the Company's right to repurchase at a purchase price of par value ($0.00005),
which repurchase right expires in three (3) equal annual installments beginning
on May 27, 2006.
(6) Consists of 100,000 shares of restricted stock, which shares are subject to
the Company's right to repurchase at a purchase price of par value ($0.00005),
which repurchase right expires in three (3) equal annual installments beginning
on May 27, 2006.
(7) Consists of shares of Common Stock issuable upon the exercise of Presently
Exercisable Warrants. Tel Aviv University and Tel Aviv University Economic Corp.
Ltd. may each be deemed the beneficial owners of these shares. Based solely on
information provided in Schedule 13D filed with the SEC by Ramot at Tel-Aviv
University Ltd. on November 21, 2005.
(8) Consists of shares of Common Stock issuable upon the exercise of Presently
Exercisable Warrants. Based solely on information provided in Schedule 13D filed
with the SEC by Prof. Eldad Melamed on September 26, 2005.
(9) Consists of shares of Common Stock issuable upon the exercise of Presently
Exercisable Warrants. Based solely on information provided in Schedule 13D filed
with the SEC by Daniel Offen on September 26, 2005.
(10) Based solely on information provided in Schedule 13D filed with the SEC by
Zegal & Ross Capital on July 16, 2004.
(11) Based solely on information provided in Schedule 13D filed with the SEC by
Basad Holdings Ltd. on July 27, 2004.
(12) Information is based on Schedule 13Ds received by the Company from the
following persons indicating beneficial ownership of the following number of
shares, respectively: Irit Arbel (2,300,000), Inon Barnea (40,000), Jonatan
Berlin (300,000), Yoram Drucker (400,000), Ilan Drucker (300,000), Rachel Even
(460,000), Gil Mastey (190,000), Iris Nehorai (700,000), Ilana Nehorai
(750,000), Elazar Nehorai (700,000), Osnat Reuveni (700,000), Erez Schwartz
(300,000). The Schedule 13Ds indicate that (i) such persons are considered to be
a group within the meaning of Section 13(d)(3) of the Securities Exchange Act;
(ii) the members of the group have not entered into any agreement relating to
the acquisition, disposition or voting of such shares; and (iii) each person has
sole voting and dispositive power with respect to his or her shares. Information
also includes Yoram Drucker's Presently Exercisable Options to purchase 351,230
shares of Common Stock at an exercise price of $0.15 and Dr. Irit Arbel's
Presently Exercisable Options to purchase 33,333 shares of Common Stock at an
exercise price of $0.75.
5
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Our Articles of Incorporation authorize no less than one and no more than
six directors. Our Board of Directors is currently comprised of three directors.
Our Articles of Incorporation divide the Board of Directors into three
classes--Class I, Class II and Class III. Each class of directors will normally
be elected for a three-year term. However, in order to stagger the election of
the three classes in the future, this year the Class I director will have a
one-year term and will be up for re-election at the 2007 Annual Meeting of
Shareholders for a three-year term, and the Class II director will have a
two-year term and will be up for re-election at the 2008 Annual Meeting of
Shareholders for a three-year term. The affirmative vote of the holders of a
plurality of the votes cast in person or by proxy at an annual meeting of
shareholders by the shares entitled to vote is required for the election by
shareholders of directors to the Board of Directors.
The Board of Directors recommends that the three nominees named below be
elected to serve on the Board of Directors, each of whom is presently serving as
a director. Shares of Common Stock represented by all proxies received and not
marked so as to withhold authority to vote for any individual nominee or for all
nominees will be voted for the election of the three nominees named below. Each
nominee has consented to being named in this Proxy Statement and has indicated
his willingness to serve if elected. If for any reason any nominee should become
unable or unwilling to serve, the persons named as proxies may vote the proxy
for the election of a substitute nominee selected by the Board of Directors. The
Board of Directors has no reason to believe that any nominee will be unable to
serve. Shareholders may vote for no more than three nominees for director.
Biographical and certain other information concerning the Company's
nominees for election to the Board of Directors is set forth below. Information
with respect to the number of shares of the Company's Common Stock beneficially
owned by each director as of March 31, 2006 appears above under "Security
Ownership of Certain Beneficial Owners and Management." No director or executive
officer is related by blood, marriage or adoption to any other director or
executive officer.
Name Age Position
---- --- --------
Nominee for Class I Director:
Irit Arbel 46 Director
Nominee for Class II Director:
Michael Greenfield (Ben-Ari) 46 Director
Nominee for Class III Director:
Robert Shorr 52 Director
Nominee for Class I Director:
Dr. Irit Arbel joined the Company in May 2004 as a director and as our
President. She served as President until she resigned in November 2004 in order
to enable Dr. Beck's appointment. Dr. Arbel was President and CEO of Pluristem
Life Systems, Inc. from 2003 to June 2004, and was Israeli Sales Manager of
Merck, Sharp & Dohme from 1998 to 2002. From 1995 to 1997, Dr. Arbel served as
the head of research for Hadassa-Ein Karem Hospital in Jerusalem. Dr. Arbel
specialized in the use of pharmaceuticals for neurology, ophthalmology and
dermatology treatments. Dr. Arbel earned her Post Doctorate degree in 1997 in
Neurobiology, after performing research in the area of Multiple Sclerosis. Dr.
Arbel also holds a Chemical Engineering degree from the Technion, Israel's
Institute of Technology.
Nominee for Class II Director:
6
Mr. Michael Greenfield (Ben-Ari) became a director of the Company in
December 2004. Mr. Greenfield (Ben-Ari) manages Evergreen Field Enterprises, his
own consulting company which he formed in 1997. From 1991 to 1997, Mr.
Greenfield (Ben-Ari) served as Vice President of Marketing at Bank Leumi. Mr.
Greenfield (Ben-Ari) holds an MBA from Tel-Aviv University and a BA from
Brandeis University.
Nominee for Class III Director:
Dr. Robert Shorr joined the Company as a director in March 2005. Since
2000, Dr. Shorr has served as President and CEO of Cornerstone Pharmaceuticals,
a bio-technology company. Since 1998, he has also served as Director of Business
Development at the State University of New York at the Stony Brook Center for
Advanced Technology. From 1998 until 2002, Dr. Shorr was Vice-President of
Science and Technology (CSO) of United Therapeutics, a NASDAQ listed company. He
has served as trustee at the Tissue Engineering Charities, Imperial College,
London since 1999. Prior to 1998 he held management positions at Enzon Inc., a
NASDAQ listed company, and AT Biochem of which he was also founder. Dr. Shorr
also served on the Board of Directors of Biological Delivery Systems Inc., a
NASDAQ listed company. Dr. Shorr holds both a Ph.D. and a D.I.C. from the
University of London, Imperial College of Science and Technology as well as a
B.Sc. from the State University of New York.
The Board of Directors recommends a vote FOR the election of the nominees named
above as directors of the Company.
7
PROPOSAL NO. 2
AMENDMENT OF ARTICLES OF INCORPORATION
This proposal would approve an amendment to the Company's Articles of
Incorporation, as described below. The amendment to the Articles of
Incorporation that you are being asked to approve pursuant to this Proposal No.
2 will be substantially in the form of Appendix A attached to this Proxy
Statement.
The Company's Articles of Incorporation, as currently in effect, authorize
the Company to issue up to 200,000,000 shares of Common Stock, par value
$0.00005 per share, and 40,000,000 shares of Preferred Stock, par value $0.00005
per share. The Board is proposing to amend and restate the Company's Articles of
Incorporation to increase the authorized shares of Common Stock from 200,000,000
to 440,000,000.
On the Record Date, the Company had 23,429,961 shares of Common Stock
outstanding. The Board is proposing the increase of the Common Stock to provide
the Company with greater flexibility in its financing options. The Company is
currently contemplating various financings. The additional Common Stock would be
available for issuance from time to time as determined by the Board for any
proper corporate purpose. The increase in the number of authorized shares of
Common Stock would enable the Company to promptly take advantage of market
conditions and the availability of favorable opportunities without the delay and
expense associated with holding a special meeting of shareholders at that time.
Any future issuances will remain subject to separate shareholder approval if
required under Washington law.
In addition to the corporate purposes discussed above, the authorization
of additional shares of Common Stock, under certain circumstances, may have an
anti-takeover effect, although this is not the intent of the Board. For example,
it may be possible for the Board to delay or impede a takeover or transfer of
control of the Company by causing the additional authorized shares of Common
Stock to be issued to holders who might side with the Board in opposing a
takeover bid that the Board determines is not in the best interests of the
Company and our shareholders. However, the Board is not aware of any attempt to
take control of the Company, and the Board did not propose the increase in the
Company's authorized capital stock with the intent that it be used as an
anti-takeover device.
The relative voting and other rights of holders of the Common Stock will
not be altered by the authorization of additional shares of Common Stock. Each
share of Common Stock will continue to entitle its owner to one vote. As a
result of the increase in the authorized number of shares of Common Stock, the
potential number of shares of Common Stock outstanding will be increased.
If the proposal is approved, the Company will file the amendment to the
Articles of Incorporation with the Washington Secretary of State, which will
become effective on the date the filing is accepted by the Secretary of State.
The Board of Directors recommends a vote FOR the amendment to the Company's
Articles of Incorporation.
8
PROPOSAL NO. 3
AUTHORIZATION OF BOARD OF DIRECTORS TO AMEND THE ARTICLES
OF INCORPORATION TO ELIMINATE THE PREFERRED STOCK
This proposal would authorize the Board of Directors, in its discretion,
should it deem it to be appropriate and in the best interests of the Company and
its shareholders, to amend the Company's Articles of Incorporation to eliminate
the class of Preferred Stock and all authorized shares of Preferred Stock. The
amendment to the Articles of Incorporation that you are being asked to approve
pursuant to this Proposal No. 3 will be substantially in the form of Appendix B
attached to this Proxy Statement.
The Company's Articles of Incorporation, as currently in effect, authorize
the Company to issue up to 40,000,000 shares of Preferred Stock, par value
$0.00005 per share. There are no shares of Preferred Stock issued or
outstanding. The Company is currently contemplating various financings. Certain
of these financings may require that the Company only have one class of equity
securities outstanding. If the Board of Directors has the authority to eliminate
the Preferred Stock, it will enable the Company to promptly take advantage of
market conditions and the availability of favorable financing opportunities
without the delay and expense associated with holding a special meeting of
shareholders at that time. Any contemplated financing will remain subject to
separate shareholder approval if required under Washington law.
If the proposal is approved, and the Board of Directors determines that
the elimination of the Preferred Stock is appropriate and in the best interests
of the Company and its shareholders, the Company will file the amendment to the
Articles of Incorporation eliminating the Preferred Stock with the Washington
Secretary of State, which will become effective on the date the filing is
accepted by the Secretary of State.
The Board of Directors recommends a vote FOR the proposal to authorize the Board
of Directors, in its discretion, should it deem it to be appropriate and in the
best interests of the Company and its shareholders, to amend the Articles of
Incorporation to eliminate the class of Preferred Stock and all authorized
shares of Preferred Stock.
9
PROPOSAL NO. 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Board of Directors has appointed Kost Forer Gabbay & Kasierer, a
member of Ernst & Young Global, ("Kost") as the Company's independent registered
public accounting firm to audit the Company's financial statements for the
current fiscal year. Kost has audited the financial statements of the Company
for the fiscal years ending March 31, 2006 and March 31, 2005. The Board of
Directors is asking the Company's shareholders to ratify the appointment of Kost
as the Company's independent registered public accounting firm. Although
ratification is not required by the Company's Bylaws or otherwise, the Board is
submitting the appointment of Kost to the shareholders for ratification as a
matter of good corporate practice. If the shareholders do not ratify the
selection of Kost as the Company's independent registered public accounting
firm, the Board will reconsider its selection. Even if the appointment is
ratified, the Board, in its discretion, may direct the appointment of a
different independent registered public accounting firm at any time during the
year if the Board determines that such a change would be in the Company's and
its shareholders' best interests. A representative of Kost is not expected to be
present at the Meeting and will not have the opportunity to make a statement or
be available to respond to appropriate questions from shareholders.
The Board of Directors recommends a vote FOR ratification of the appointment of
Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global, as the Company's
independent registered public accounting firm for the current fiscal year.
10
CORPORATE GOVERNANCE AND BOARD MATTERS
Board Meetings
The Board of Directors held nine meetings during the fiscal year ended
March 31, 2006. Each incumbent director attended at least 75% of the aggregate
number of meetings of the Board of Directors during the fiscal year ended March
31, 2006.
Committees of the Board
The Board of Directors does not have an audit committee, and therefore
does not have an audit committee financial expert. The Board of Directors does
not currently have a compensation committee or a nominating committee. Two
"independent" directors (as the term is defined in Nasdaq Rule 4200(a)(15)) were
elected to our Board in December 2004 and March 2005, and we intend to create an
audit committee as well as a compensation committee and a nominating committee
consisting of such independent directors in the future. Until then, however, our
Board of Directors performs these functions.
Each member of the Board of Directors participates in the consideration of
director nominees. Due to the size of the Company, the Board of Directors does
not currently have a policy regarding shareholder recommendations of director
nominees. The Board of Directors does not have any specific, minimum
qualifications for director nominees, but considers a variety of factors in
selecting director nominees, including, but not limited to the following:
integrity, education, business acumen, knowledge of the Company's business and
industry, age, experience, diligence, conflicts of interest and the ability to
act in the interests of all shareholders.
Family Relationships
There are no family relationships between the executive officers or
directors of the Company.
Involvement in Certain Legal Proceedings
None.
Code of Ethics
On May 27, 2005, our Board of Directors adopted a Code of Business Conduct
and Ethics that applies to, among other persons, members of our Board of
Directors, our officers, including our Chief Operating Officer (our principal
executive officer) and our Chief Financial Officer (our principal financial and
accounting officer), contractors, consultants and advisors.
We will provide a copy of the Code of Business Conduct and Ethics to any
person without charge, upon request. Requests can be sent to Brainstorm Cell
Therapeutics Inc., 110 East 59th Street, 25th Floor, New York, NY 10022, Attn:
Chief Financial Officer.
Communication with the Board of Directors
Due to the size of the Company, the Company has no formal process for
shareholders to send communications to the Board of Directors. Shareholders may
send written communications to the Board of Directors or any individual members
to the Company's offices, 110 East 59th Street, 25th Floor, New York, NY 10022.
All such communications will be relayed accordingly, except for mass mailings,
job inquiries, surveys, business solicitations or advertisements, or patently
offensive or otherwise inappropriate material.
11
ADDITIONAL INFORMATION
Executive Officers
Set forth below is a summary description of the principal occupation and
business experience of each of the Company's executive officers.
Name Age Position
Yoram Drucker 41 Chief Operating Officer
(Principal Executive Officer)
David Stolick 40 Chief Financial Officer
Yoram Drucker joined the Company as our Chief Operating Officer in
November 2004. In connection with Dr. Beck's resignation from her positions as
President and Chief Executive Officer and director of the Company on November
10, 2005, Mr. Drucker has also assumed Dr. Beck's responsibilities as the
Company's principal executive officer. From 1998 through 2004, Mr. Drucker was
an independent consultant regarding business development, finance, strategy, and
operations. From 1997 to 1998, Mr. Drucker managed a real estate brokerage firm.
From 1995 through 1996, Mr. Drucker managed his own promotion company and
created and designed marketing and promotion concepts for various Israeli
companies. From 1990 through 1995, Mr. Drucker served as manager of the
production department of one of Israel's largest diamond factories.
David Stolick joined the Company in February 2005 as our Chief Financial
Officer. From 1995 to 2005, Mr. Stolick was Corporate Controller of M-Systems
Flash Disk Pioneers Ltd., a NASDAQ listed company. In 1994 he served as Deputy
Controller of Electronics Line Ltd., an Israeli publicly traded company, and
from 1991 until 1994 he was Audit Manager at Goldstein, Sabbo, and Tebet
Accountants. Mr. Stolick holds a B.A. in Economics and Accounting from
Ben-Gurion University. He has been qualified as a certified accountant in Israel
since 1993.
Director Compensation
We reimburse our directors for reasonable travel and other out-of-pocket
expenses incurred in connection with attending board meetings. On May 27, 2005,
we approved the following compensation for non-employee directors beginning
fiscal year 2006: (i) annual retainer of $10,000; (ii) meeting participation
fees of $1,000 for each meeting of the board or duly constituted committee of
the board attended in person; and (iii) $500 for each board or committee meeting
attended by telephone. In the fiscal year ended March 31, 2006, we paid our
directors the following compensation: (i) Dr. Irit Arbel received an aggregate
of $10,000 and was issued an option to purchase 100,000 shares of our Common
Stock, at an exercise price of $0.75 per share, vesting in three (3) equal
annual installments beginning on May 27, 2006; (ii) Dr. Robert Shorr received an
aggregate of $5,000 and was issued 100,000 restricted shares, which are subject
to the Company's right to repurchase at a purchase price of par value
($0.00005), which repurchase right lapses in three equal annual installments
beginning on May 27, 2006; and (iii) Michael Greenfield (Ben Ari) received an
aggregate of $5,000 and was issued 100,000 restricted shares, which are subject
to the Company's right to repurchase at a purchase price of par value
($0.00005), which repurchase right lapses in three (3) equal annual installments
beginning on May 27, 2006.
12
EXECUTIVE COMPENSATION
Summary Compensation
The following table sets forth certain summary information with respect to
the compensation paid during the fiscal years ended March 31, 2006 and 2005
earned by each of the following individuals: (i) the Chief Operating Officer,
(ii) the Chief Financial Officer and (iii) our former President and Chief
Executive Officer (collectively, the "Named Executive Officers"). None of the
Named Executive Officers earned any compensation in the fiscal year ended March
31, 2004. Each of the Named Executive Officers is paid in New Israeli Shekel
(NIS); the amounts below are the U.S. dollar equivalent. In the table below,
columns required by the regulations of the SEC have been omitted where the
Company did not have any information to disclose under those columns.
SUMMARY COMPENSATION TABLE
Annual Compensation
------------------------------
Long-Term Compensation
------------------------------------
Awards
------------------------------------
Securities
Other Annual Underlying Options/ All Other
Name and Principal Position Year Salary ($) Compensation ($)(1) SARS Granted Compensation ($)
Dr. Yaffa Beck
Former President, 2006 83,760 14,372 -- 47,355(2)
Chief Executive Officer 2005 42,675 7,075 1,828,692 --
Yoram Drucker
Chief Operating Officer 2006 60,462 11,025 -- --
(Principal Executive 2005 19,457 3,720 685,760 --
Officer)
David Stolick
Chief Financial Officer 2006 60,500 11,280 400,000(3) --
2005 18,872 349 400,000 --
(1) Includes management insurance (which includes pension, disability insurance
and severance pay), payments towards such employee's education fund and Israeli
social security.
(2) Represents the full amount of the severance payment owed to Dr. Beck, to be
paid to Dr. Beck in ten (10) monthly installments pursuant to the Termination
Agreement and General Release dated March 20, 2006. During the fiscal year ended
March 31, 2006, $5,000 of such severance payment was paid to Dr. Beck.
(3) Due to the amendment of the exercise price of the option originally granted
to Mr. Stolick on March 29, 2005, there was a deemed cancellation of that option
and a grant of a replacement option on February 6, 2006. Mr. Stolick only has an
option to purchase 400,000 shares of Common Stock, not 800,000.
Option Grants During Fiscal Year Ended March 31, 2006
The following table sets forth information regarding options to purchase
Common Stock granted to Mr. Stolick during the fiscal year ended March 31, 2006.
No options were granted to any other Named Executive Officer during the fiscal
year ended March 31, 2006. The Company has never granted any stock appreciation
rights.
13
OPTION GRANT IN LAST FISCAL YEAR
Number of Securities Percent of Total
Underlying Options Options Granted to Exercise or Base Price Expiration Date
Name Granted (#) Employees in Fiscal Year ($/Sh)
David Stolick 400,000(1) 100% 0.15 02/13/2015
(1) Due to the amendment of the exercise price of an outstanding option
originally granted to Mr. Stolick on March 29, 2005, there was a deemed
cancellation of that option and a grant of a replacement option on February 6,
2006.
Options Exercised During Fiscal Year Ended March 31, 2006
The following table sets forth the number of exercisable and unexercisable
options to purchase Brainstorm Common Stock held by the Named Executive Officers
as of March 31, 2006. No stock options to purchase Brainstorm Common Stock were
exercised by any Named Executive Officer during the fiscal year ended March 31,
2006.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND 2005 FISCAL YEAR END
OPTION VALUES
Number of Securities
Underlying Unexercised Value of Unexercised In-The-Money
Options at FY-End (#) Options at FY-End ($)
------------------------------------ ------------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
Dr. Yaffa Beck 800,000 -- 272,000 --
Yoram Drucker 313,132 372,628 106,456 126,693
David Stolick 150,137 249,863 51,047 84,953
Report of Board of Directors on Repricing of Options/SARs
On February 6, 2006, in light of the significant decline in the Company's
share price in the last fiscal year, the Company's Board of Directors approved
the repricing of Mr. Stolick's option to purchase 400,000 shares of Common Stock
granted pursuant to his employment agreement with the Company, such that his
stock option currently has an exercise price of $0.15 per share.
Executive Employment Agreements
Yoram Drucker. Pursuant to his employment agreement dated November 16,
2004 (the "Drucker Effective Date"), Mr. Drucker is entitled to an initial base
salary of $4,000 per month, which was increased six (6) months subsequent to the
Drucker Effective Date to $6,000 per month. Mr. Drucker is eligible to receive
an annual bonus in connection with the achievement of milestones and/or
objectives, in each case as determined by the Board of Directors.
Mr. Drucker is entitled to coverage under our Directors' and Officers'
liability insurance policy and to a written undertaking from the Company and its
subsidiary to indemnify and release him to the full extent possible in
accordance with the Israeli Companies Law 5759-1999 and the applicable laws of
the State of Washington.
14
Pursuant to his employment agreement and the Company's Global Plan, Mr.
Drucker was granted options to purchase 685,760 shares of our Common Stock at a
price per share of $0.15, which options vest and become exercisable in
thirty-six equal monthly installments from the Drucker Effective Date. These
options are exercisable by Mr. Drucker for a ten (10) year period following the
Drucker Effective Date, but in any case not later than four (4) years after
termination of his employment agreement.
Mr. Drucker's employment agreement has no stated term and is terminable by
either party upon 90 days prior notice or by the Company with 30 days prior
notice in the event of a termination for cause (including a 15 day opportunity
to cure). Mr. Drucker is prohibited, during the term of his employment and for a
period of 12 months thereafter, from competing with the Company or its
subsidiary or soliciting any of the Company's or its subsidiary's customers or
employees. Mr. Drucker's employment agreement also provides that if Mr.
Drucker's employment is terminated by the Company without cause, by Mr. Drucker
as a result of a constructive discharge or as a result of Mr. Drucker's
disability or death, all of the remaining unvested options granted to Mr.
Drucker shall vest immediately as of the notice of termination, and Mr. Drucker
or his successor shall be entitled to exercise the vested options from the date
of such termination until the earlier of four (4) years thereafter or their
expiration date. If Mr. Drucker's employment is terminated as a result of his
disability or death, or within two (2) years of the Drucker Effective Date, only
67% of the remaining unvested options shall vest immediately as of the date of
the notice of termination. If the Company terminates Mr. Drucker's employment
with cause, he shall be entitled to exercise the options vested as of the date
of the notice of termination until 12 months following such date.
David Stolick. Pursuant to his employment agreement effective as of
February 13, 2005 (the Stolick Effective Date), Mr. Stolick is entitled to an
initial base salary of 20,000 New Israeli Shekel (NIS) per month (approximately
$4,470), which was increased six (6) months subsequent to the Stolick Effective
Date, to NIS 28,000 per month. Mr. Stolick was granted, pursuant to the
Company's Global Plan, options to purchase 400,000 shares of the Company's
Common Stock at a price per share of $0.75 each, which options vest and become
exercisable in thirty-six equal monthly installments from the Stolick Effective
Date. Mr. Stolick's stock options are exercisable by Mr. Stolick for a ten (10)
year period following the Stolick Effective Date, but in any case not later than
two (2) years after termination of his employment agreement. On February 6,
2006, in light of the significant decline in the Company's share price in the
last fiscal year, our Board of Directors approved the repricing of Mr. Stolick's
400,000 options such that the options are currently exercisable at an exercise
price of $0.15 per share. Mr. Stolick is entitled to coverage under the
Company's Directors' and Officers' liability insurance policy and to a written
undertaking from the Company and its subsidiary to indemnify and release him to
the full extent possible in accordance with the Israeli Companies Law 5759-1999
and the applicable laws of the State of Washington.
Mr. Stolick's employment agreement has no stated term and is terminable by
either party upon 90 days prior notice or by the Company without prior notice
upon a termination for cause. If Mr. Stolick resigns as a result of a
constructive discharge, or if his employment is terminated as a result of Mr.
Stolick's disability or death, 67% of the remaining unvested options granted to
Mr. Stolick will vest immediately as of the date of the notice of termination,
and Mr. Stolick or his successor will be entitled to exercise the vested options
from the date of such termination until the earlier of two (2) years thereafter
or their expiration date. Mr. Stolick is prohibited, during the term of his
employment and for a period of 12 months thereafter, from competing with the
Company or its subsidiary or soliciting any of the Company's or its subsidiary's
customers or employees.
Dr. Yaffa Beck. On March 20, 2006, in connection with Dr. Beck's
resignation from her positions as officer and director of the Company, the
Company and its subsidiary entered into a Termination Agreement and General
Release with Dr. Beck. Under the termination agreement, the Company and Dr. Beck
agreed to terminate their employment relationship effective February 9, 2006.
Pursuant to the termination agreement, the Company will pay in 10 monthly
installments beginning on March 1, 2006, a total of $47,355 to Dr. Beck. If the
Company raises an aggregate of $1,000,000 through equity financings after
February 9, 2006, the Company will pay the then total outstanding amount to Dr.
Beck in one lump-sum payment. In addition, if the Company is granted certain EC
research and development grants as detailed in the termination agreement, it
will pay Dr. Beck a bonus of $30,000 upon the earlier of (i) 15 days after the
Company receives an initial payment of such EC grant of at least $50,000 or (ii)
15 days after the receipt of aggregate proceeds of $1,000,000 from equity
financings. Under the termination agreement, options granted to Dr. Beck to
acquire 800,000 shares of the Company's Common Stock at an exercise price of
$0.15 per share are fully vested and are exercisable until February 9, 2010. All
other options previously granted to Dr. Beck were forfeited to the Company. The
Company was recently notified that its applications for the EC research and
development grants were declined; therefore, Dr. Beck is not entitled to receive
the $30,000 bonus described above.
15
In addition, under the termination agreement, Dr. Beck released the
Company from any and all claims arising out of or related to her employment or
termination from employment with the Company, except for (i) claims based on the
enforcement of the termination agreement, (ii) claims for unemployment payment,
(iii) claims based on events occurring after the date of the termination
agreement and (iv) any right of Dr. Beck under the Company's 2004 Global Share
Option Plan with respect to the 800,000 vested stock options granted to Dr.
Beck. The Company released Dr. Beck from any and all claims arising from or
related to Dr. Beck's employment or termination from employment with the
Company, except for (i) claims based on the enforcement of the termination
agreement, and (ii) claims based on events occurring after the date of the
termination agreement.
Lock-up Agreements
On March 21, 2005, we entered into lock-up agreements with (i) 29
shareholders with respect to 15,290,000 shares of our Common Stock, and (ii)
holders of warrants to purchase 12,800,844 shares of our Common Stock. Under the
lock-up agreements, the security holders may not transfer the shares of Common
Stock and warrants to anyone other than permitted transferees without the prior
consent of our Board of Directors, for the period of time as follows: (1)
eighty-five percent (85%) of the securities are restricted from transfer for the
twenty-four (24) month period following July 8, 2004 (the date of our original
research and license agreement with Ramot at Tel Aviv University Ltd.) and (2)
fifteen percent (15%) of the securities are restricted from transfer for the
twelve (12) month period following July 8, 2004. On July 8, 2005, the lock-up
agreements expired with respect to fifteen percent (15%) of the securities that
were subject to the lock-up agreements, and on July 8, 2006 the lock-up
agreements expired with respect to eighty-five percent (85%) of the securities
that were subject to the lock-up agreements.
On March 26, 2006, we entered into new lock-up agreements (the "New-Lock
Up Agreements") with each of Zegal & Ross Capital LLC, Ms. Irit Arbel, Based
Holdings Ltd., Ofilam LLC, and Yoram Drucker, with respect to 7,810,000 shares
of our Common Stock held by them. These lock-up agreements amend and restate the
previous lock-up agreements described above. Under the New Lock-Up Agreements,
these shareholders may not sell or otherwise transfer their shares to anyone
other than permitted transferees without the prior written consent of the
Company's Board of Directors, as follows: (i) eighty-five percent (85%) of the
shares will be restricted from transfer until December 31, 2006, and (ii)
fifteen percent (15%) of the shares will be free from the transfer restrictions.
All of the restrictions under the New Lock-Up Agreements will automatically
terminate upon the effectiveness of any registration statement filed by the
Company for the benefit of Ramot at Tel Aviv University Ltd.
Certain Relationships and Related Transactions.
On July 8, 2004, we entered into the Original Ramot Agreement with Ramot,
the technology licensing company of Tel Aviv University, which agreement was
amended on March 30, 2006 by the Amended Research and License Agreement
(described below). Under the terms of the Original Ramot Agreement, Ramot
granted to us an exclusive license to (i) the know-how and patent applications
on the stem cell technology developed by the team led by Prof. Melamed and Dr.
Offen, and (ii) the results of further research to be performed by the same team
on the development of the stem cell technology. Simultaneously with the
execution of the Original Ramot Agreement, we entered into individual consulting
agreements with Prof. Melamed and Dr. Offen pursuant to which all intellectual
property developed by Prof. Melamed or Dr. Offen in the performance of services
thereunder will be owned by Ramot and licensed to us under the Original Ramot
Agreement.
16
As of November 4, 2004, we entered into consulting agreements with Prof.
Melamed and Dr. Offen, under which we pay each of them an annual consulting fee
of $72,000 and we issued each of them warrants to purchase 1,097,215 shares of
our Common Stock (3% of our issued and outstanding shares at such time). Each of
the warrants is exercisable for a five-year period beginning on November 4,
2005.
Under the Original Ramot Agreement, we agreed to fund further research
relating to the licensed technology in an amount of $570,000 per year for an
initial period of two years and for an additional two-year period if certain
research milestones are met.
In consideration for the license, we originally agreed to pay Ramot:
o An up-front license fee of $100,000;
o 5% of all net sales of products, as those terms are defined in the
Original Ramot Agreement; and
o 30% of all sublicense receipts, as such term is defined in the
Original Ramot Agreement.
In addition, under the Original Ramot Agreement, we issued to Ramot and
its designees warrants to purchase an aggregate of 10,606,415 shares of our
Common Stock, which represented 29% of our issued and outstanding shares of
Common Stock as of November 4, 2004. Each of the warrants is exercisable for a
five-year period beginning on November 4, 2005.
On March 30, 2006, we entered into the Amended Research and License
Agreement with Ramot. Under the amended agreement, the funding of further
research relating to the licensed technology in an amount of $570,000 per year
has been reduced to $380,000 per year. In addition, under the amended agreement,
the initial period of time that the Company has agreed to fund the research has
been extended from an initial period of two (2) years to an initial period of
three (3) years. The amended agreement also extends the additional two-year
period in the Original Ramot Agreement to an additional three-year period, if
certain research milestones are met. The amended agreement reduces certain
royalty payments that the Company may have to pay from five percent (5%) to
three percent (3%) of all net sales (as defined in the agreement). The amended
agreement also reduces potential payments concerning sublicenses from 30% to
20-25% of sublicense receipts (as defined in the agreement).
Independent Registered Public Accounting Firm
On November 1, 2004, we appointed Kost Forer Gabbay & Kasierer, a member
of Ernst & Young Global, ("Kost") as the Company's independent auditor and
dismissed Manning Elliott. The decision to change auditors was considered and
approved by our Board of Directors.
During the Company's two most recent fiscal years preceding Manning
Elliott's dismissal, the reports of Manning Elliott on the financial statements
of the Company did not contain any adverse opinion or disclaimer of opinion and
were not qualified or modified as to uncertainty, audit scope or accounting
principles, except that the reports contained an explanatory paragraph that
expressed that substantial doubt existed regarding the Company's ability to
continue as a going concern. During the Company's two most recent fiscal years
preceding the dismissal, there was no disagreement with Manning Elliott on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which, if not resolved to Manning Elliott's
satisfaction, would have caused it to make a reference to the subject matter of
the disagreements in connection with its report. Manning Elliott has never
presented a written report or otherwise communicated in writing to the Company
or its Board of Directors the existence of any "disagreement" or "reportable
event" within the meaning of Item 304 of Regulation S-B.
On November 2, 2004, we filed a Current Report on Form 8-K with the SEC
reporting the events described above. Attached as an exhibit to the Current
Report on Form 8-K is a letter from Manning Elliott indicating that the Company
provided Manning Elliott with a copy of the foregoing disclosure and stating
that it agreed with the statements contained in the disclosure, except with
respect to certain statements with respect to which it had no basis on which to
agree or disagree.
17
The following table presents fees for professional audit services rendered
by Kost for the audit of the Company's annual financial statements for the years
ended March 31, 2006 and 2005, and fees billed for other services rendered by
Kost during those periods.
2006 2005
------- -------
Audit Fees (1) $55,000 $47,974
Audit-Related Fees(2) -- $14,526
Tax Fees -- --
All Other Fees (3) -- --
Total Fees (3) $55,000 $62,500
(1) Audit fees are comprised of fees for professional services performed by Kost
for the audit of the Company's annual financial statements and the review of the
Company's quarterly financial statements, as well as other services provided by
Kost in connection with statutory and regulatory filings or engagements.
(2) Audit-related fees are comprised of fees related to the audits of employee
benefit plans.
(3) In addition to the Total Fees included above, the Company paid to Manning
Elliott LLP (a) $4,600 in fees for the review of one of the Company's quarterly
financial statements in the fiscal year ended March 31, 2005 and (b) $750 in
fees for other services provided in connection with regulatory filings in the
fiscal year ended March 31, 2006.
We do not use Kost for financial information system design and
implementation. These services, which include designing or implementing a system
that aggregates source data underlying the financial statements and generates
information that is significant to our financial statements, are provided
internally or by other service providers. We do not engage Kost to provide
compliance outsourcing services.
Pre-approval Policies
The Board of Directors pre-approves all services provided by our
independent auditors. All of the above services and fees were reviewed and
approved by the Board before the services were rendered.
The Board of Directors has considered the nature and amount of fees billed
by Kost and believes that the provision of services for activities unrelated to
the audit is compatible with maintaining Kost's independence.
Report of Board of Directors
The Board of Directors has reviewed and discussed the Company's audited
financial statements for the fiscal year ending March 31, 2006 with the
Company's management. The Board of Directors has discussed with Kost, the
Company's independent registered public accounting firm, the matters required to
be discussed by Statement on Auditing Standards No. 61. The Board of Directors
has received the written disclosures and the letter from Kost required by
Independence Standards Board Standard No. 1 and has discussed with Kost its
independence. The Board of Directors has also considered whether Kost's
provision of non-audit services to the Company is compatible with maintaining
Kost's independence. Based on such reviews and discussions, among other things,
the Board of Directors approved the inclusion of the audited financial
statements referred to above in the Company's Annual Report on Form 10-KSB for
the fiscal year ended March 31, 2006.
BOARD OF DIRECTORS
Dr. Irit Arbel
Michael Greenfield (Ben-Ari)
Dr. Robert Shorr
18
The information contained in the foregoing Report of Board of Directors
shall not be deemed to be "soliciting material" or "filed" or incorporated by
reference into any of the Company's previous or future filings with the SEC, or
subject to the liabilities of Section 18 of the Exchange Act, except to the
extent specifically incorporated by reference into a document filed under the
Securities Act of 1933, as amended or the Exchange Act.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act requires our executive
officers and directors, and persons who own more than 10% of our Common Stock
(collectively, the "Reporting Persons"), to file reports regarding ownership of,
and transactions in, our securities with the Securities and Exchange Commission
and to provide us with copies of those filings. Based solely on our review of
the copies of such forms received by us, or written representations from the
Reporting Persons, we believe that during the fiscal year ended March 31, 2006,
all Reporting Persons complied with the applicable requirements of Section 16(a)
of the Exchange Act. There are no known failures to file a required Form 3, Form
4 or Form 5.
Annual Report on Form 10-KSB
Together with this Proxy Statement, the Company is sending a copy of its
2006 Annual Report on Form 10-KSB (without exhibits) to all of its shareholders
of record as of July 21, 2006. The 2006 Annual Report contains the Company's
audited consolidated financial statements for the fiscal years ended March 31,
2006 and 2005.
A copy of the Company's Annual Report on Form 10-KSB (with all exhibits)
for the fiscal year ended March 31, 2006 filed with the SEC may be accessed from
the SEC's website at www.sec.gov and from the Investor Relations section of the
Company's website at www.Brainstorm-cell.com and may be obtained without charge
upon written request to Brainstorm Cell Therapeutics Inc., 110 East 59th Street,
25th Floor, New York, NY 10022, Attention: Chief Financial Officer.
Other Matters
The Board of Directors does not know of any other matters which may come
before the Meeting. However, if any other matters are properly presented at the
Meeting, it is the intention of the persons named in the accompanying proxy to
vote, or otherwise act, in accordance with their judgment on such matters.
Discretionary authority for them to do so is contained in the enclosed proxy
card.
An adjournment of the Meeting may be made from time to time by the
chairman of the Meeting or by approval of the holders of shares representing a
majority of the votes present in person or by proxy at the Meeting, whether or
not a quorum exists. In their discretion, the proxies named in the proxy card
are authorized to vote upon any adjournment of the Meeting.
Shareholder Proposals
Proposals of shareholders intended for inclusion in the Company's proxy
statement for the annual meeting of shareholders to be held in 2007 or special
meeting of shareholders held in lieu thereof in accordance with Rule 14a-8
promulgated under the Exchange Act, must be received by the Company at its
principal executive offices at the following address: Brainstorm Cell
Therapeutics Inc.; 110 East 59th Street, 25th Floor, New York, NY 10022 not
later than April 24, 2007 in order to be included in the Company's proxy
statement relating to the 2007 Meeting. Any such proposal must also comply with
the requirements as to form and substance established by the SEC in order to be
included in the proxy statement relating to the 2007 meeting of shareholders.
Pursuant to Rule 14a-4 promulgated under the Exchange Act ("Rule 14a-4"),
shareholders who wish to make a proposal at the 2007 meeting of shareholders,
other than a proposal intended for inclusion in the Company's proxy statement
for the 2007 meeting of shareholders, must notify the Company not later than
July 11, 2007. If a shareholder who wishes to present such a proposal fails to
notify the Company by July 11, 2007, and such proposal is brought before the
2007 meeting of shareholders, then under the SEC's proxy rules, the proxies
solicited by management with respect to such meeting will confer discretionary
voting authority with respect to such shareholder proposal on those persons
selected by management to vote the proxies. Even if a shareholder makes a timely
notification, those persons selected by management to vote the proxies may still
exercise discretionary voting authority under circumstances consistent with Rule
14a-4.
19
In order to curtail controversy as to the date on which a proposal was
received by the Company, it is suggested that shareholders submit any proposals
they might have by certified mail, return receipt requested to the Company.
Incorporation by Reference
The SEC allows the Company to incorporate information "by reference" into
this Proxy Statement, which means that we may disclose important information to
you by referring you to another document filed separately with the SEC. The
information incorporated by reference herein is deemed to be a part of this
Proxy Statement and is being delivered to you with this Proxy Statement.
This Proxy Statement incorporates by reference our Annual Report on Form
10-KSB for the fiscal year ended March 31, 2006, a copy of which (without
exhibits) is being delivered to you with this Proxy Statement and which contains
important information about the Company that is not set forth in this Proxy
Statement. A copy of our Annual Report on Form 10-KSB (with exhibits) has also
been filed with the SEC and may be accessed from the SEC's homepage at
www.sec.gov and from the Investor Relations section of the Company's website at
www.Brainstorm-cell.com and may be obtained without charge upon written request
to Brainstorm Cell Therapeutics Inc., 110 East 59th Street, 25th Floor,
Attention: Chief Financial Officer.
By Order of the Board of Directors
/s/ Yoram Drucker
YORAM DRUCKER, Secretary
New York, New York
August 22, 2006
20
APPENDIX A
FORM OF ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
BRAINSTORM CELL THERAPEUTICS INC.
The undersigned corporation under the Washington Business Corporation Act,
hereby adopts the following Articles of Amendment to the Articles of
Incorporation of said corporation:
1. The name of the corporation is Brainstorm Cell Therapeutics Inc. (the
"Corporation").
2. The Articles of Incorporation of the Corporation are hereby amended by
replacing Section 2.1, in its entirety, with the following:
"2.1. Authorized Capital
The total number of shares that this corporation is
authorized to issue is 480,000,000, consisting of 440,000,000
shares of Common Stock having a par value of $0.00005 per share
and 40,000,000 shares of Preferred Stock having a par value of
$0.00005 per share. The Common Stock is subject to the rights
and preferences of the Preferred Stock as set forth below."
3. The Board of Directors of the Corporation recommended the foregoing
amendment to the Corporation's shareholders pursuant to RCW 23B.10.060. The
foregoing amendment was duly approved by the Corporation's shareholders at the
Annual Meeting of Shareholders held on September 20, 2006, in accordance with
the provisions of RCW 23B.10.030 and RCW 23B.10.040.
These Articles of Amendment shall become effective upon filing.
IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment
to be signed by Yoram Drucker, its Chief Operating Officer, this ____ day of
______, 2006.
BRAINSTORM CELL THERAPEUTICS INC.
By: _____________________________
Yoram Drucker
Chief Operating Officer
APPENDIX B
FORM OF ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
BRAINSTORM CELL THERAPEUTICS INC.
The undersigned corporation under the Washington Business Corporation Act,
hereby adopts the following Articles of Amendment to the Articles of
Incorporation of said corporation:
1. The name of the corporation is Brainstorm Cell Therapeutics Inc. (the
"Corporation").
2. The Articles of Incorporation of the Corporation are hereby amended by
replacing Article II, in its entirety, with the following:
"ARTICLE II
The total number of shares that this corporation is
authorized to issue is 440,000,000, consisting of 440,000,000
shares of Common Stock having a par value of $0.00005 per
share."
3. The Board of Directors of the Corporation recommended the foregoing
amendment to the Corporation's shareholders pursuant to RCW 23B.10.060. The
foregoing amendment was duly approved by the Corporation's shareholders at the
Annual Meeting of Shareholders held on September 20, 2006, in accordance with
the provisions of RCW 23B.10.030 and RCW 23B.10.040.
These Articles of Amendment shall become effective upon filing.
IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment
to be signed by Yoram Drucker, its Chief Operating Officer, this ____ day of
______, 2006.
BRAINSTORM CELL THERAPEUTICS INC.
By: _____________________________
Yoram Drucker
Chief Operating Officer
BRAINSTORM CELL THERAPEUTICS INC.
Dear Shareholder:
Please take note of the important information enclosed with this proxy
card. There are important issues related to the operation of the Company that
require your immediate attention and approval. The issues are discussed in
detail in the enclosed proxy materials.
Your vote counts and you are strongly encouraged to exercise your right to
vote your shares.
Please mark the boxes on this proxy card to indicate how your shares will
be voted. Then sign the card, detach it, and return your proxy card in the
enclosed postage paid envelope.
Your vote must be received prior to the 2006 Annual Meeting of
Shareholders on September 20, 2006.
Thank you in advance for your prompt consideration of these matters.
FOLD AND DETACH HERE
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BRAINSTORM CELL THERAPEUTICS INC.
PROXY 2006 ANNUAL MEETING OF SHAREHOLDERS PROXY
SEPTEMBER 20, 2006
The undersigned hereby appoints Yoram Drucker and David Stolick, and each
of them singly, with full power of substitution, proxies to represent the
undersigned at the 2006 Annual Meeting of Shareholders of Brainstorm Cell
Therapeutics Inc. to be held on September 20, 2006 at 10:00 a.m., New York City
Time, at the offices of the Company, 110 East 59th Street, 25th Floor, New York,
NY 10022, and at any adjournments or postponements thereof, to vote in the name
and place of the undersigned, with all powers which the undersigned would
possess if personally present, upon such business as may properly come before
the meeting including the proposals set forth on the reverse side of this proxy
card.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THE BOARD
RECOMMENDS AN AFFIRMATIVE VOTE ON THE PROPOSALS. THIS PROXY WHEN PROPERLY
EXECUTED WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS GIVEN WITH RESPECT TO A
PARTICULAR PROPOSAL, THIS PROXY WILL BE VOTED FOR SUCH PROPOSAL.
PLEASE VOTE, DATE AND SIGN THIS PROXY IN THE SPACE PROVIDED AND RETURN IT
IN THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN
PERSON.
Please sign exactly as your name(s) appear(s) on this proxy card. When
shares are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by the
authorized person.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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FOLD AND DETACH HERE
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BRAINSTORM CELL THERAPEUTICS INC.
(X) PLEASE MARK VOTES AS IN THIS EXAMPLE.
1. a) Election of Class I director to serve until the 2007 annual meeting.
Nominee:
Dr. Irit Arbel
FOR WITHHOLD
|_| |_|
b) Election of Class II director to serve until the 2008 annual meeting.
Nominee:
Michael Greenfield (Ben-Ari)
FOR WITHHOLD
|_| |_|
c) Election of Class III director to serve until the 2009 annual
meeting.
Nominee:
Dr. Robert Shorr
FOR WITHHOLD
|_| |_|
2. To approve the amendment of the Company's Articles of Incorporation
increasing the number of authorized shares of Common Stock from
200,000,000 to 440,000,000.
FOR AGAINST ABSTAIN
|_| |_| |_|
3. To authorize the Board of Directors, in its discretion, should it deem
it to be appropriate and in the best interests of the Company and its
shareholders, to amend the Company's Articles of Incorporation to
eliminate the class of Preferred Stock and all authorized shares of
Preferred Stock;
FOR AGAINST ABSTAIN
|_| |_| |_|
4. To ratify the appointment of Kost Forer Gabbay & Kasierer, a member of
Ernst & Young Global, as the Company's independent registered public
accounting firm for the current fiscal year.
FOR AGAINST ABSTAIN
|_| |_| |_|
5. To transact such other business as may properly come before the meeting
and any adjournment or postponement thereof.
MARK HERE IF YOU PLAN TO ATTEND THE MEETING.|_|
Mark box at right if an address change or comment has been noted on the reverse
side of this proxy card.|_|
The undersigned hereby acknowledge(s) receipt of a copy of the
accompanying Notice of the 2006 Annual Meeting of Shareholders and the proxy
statement with respect thereto and hereby revoke(s) any proxy or proxies
heretofore given.
PLEASE BE SURE TO DATE AND SIGN THIS PROXY.
Signature:____________________________________ Date:______________________
Signature:____________________________________ Date:______________________