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): May 20, 2008
NEOSTEM,
INC.
(Exact
name of registrant as specified in its charter)
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Delaware
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0-10909
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22-2343568
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(State
or Other
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(Commission
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(IRS
Employer
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Jurisdiction
of
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File
Number)
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Identification
No.)
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Incorporation)
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420
Lexington Avenue, Suite 450
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New
York, New York
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10170
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant's
telephone number, including area code: (212) 584-4180
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 (see General Instruction A.2. below):
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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CAUTION
REGARDING FORWARD-LOOKING STATEMENTS
Item
3.02. Unregistered Sales of Equity Securities.
On
May
21, 2008, the Company completed a private placement of securities pursuant
to
which $900,000 in gross proceeds were raised (the “May 2008 private placement”).
On May 20 and May 21, 2008, the Company entered into Subscription Agreements
(the "Subscription Agreements") with 16 accredited investors listed therein
(the
"Investors"). Pursuant to the Subscription Agreements, the Company issued to
each Investor units (the "Units") comprised of one share of its common stock,
par value $.001 per share (the "Common Stock") and one redeemable five-year
warrant to purchase one share of Common Stock at a purchase price of $1.75
per
share (the "Warrants"), at a per-Unit price of $1.20. The Warrants are not
exercisable for a period of six months and are redeemable by the Company if
the
Common Stock trades at a price equal to or in excess of $2.40 for a specified
period of time. In the May 2008 private placement, the Company issued an
aggregate of 750,006 Units to Investors consisting of 750,006 shares of Common
Stock and 750,006 redeemable Warrants, for an aggregate purchase price of
$900,000. Dr. Robin L. Smith, the Company’s Chairman and Chief Executive
Officer, purchased 16,667 Units for a purchase price of $20,000 and Catherine
M.
Vaczy, the Company’s Vice President and General Counsel, purchased 7,500 Units
for a purchase price of $9,000. New England Cryogenic Center, Inc. (“NECC”), one
of the largest full-service cryogenic laboratories in the world and a strategic
partner of the Company since October 2007, also participated in the offering.
Pursuant
to the terms of the Subscription Agreements, the Company is required to prepare
and file no later than forty-five days (with certain exceptions) after the
closing of the May 2008 private placement, a Registration Statement with the
SEC
to register the shares of Common Stock issued to Investors and the shares of
Common Stock underlying the Warrants.
In
connection with the May 2008 private placement, the Company paid as finders’
fees to accredited investors, cash in the amount of $3,240 and issued five
year
warrants to purchase an aggregate of 35,703 shares of Common Stock. Such
warrants contain generally the same terms as those sold to the Investors, except
they contain a cashless exercise feature and piggyback registration rights.
Cash
in the amount of 4% of the proceeds received by the Company from the future
exercise of 30,000 of the Investor Warrants is also payable to one of the
finders.
On
April
3, 2008, the Company entered into a one month non-exclusive investment banking
agreement in connection with the possible issuances by the Company of equity,
debt and/or convertible securities. In partial consideration for such services,
the Company agreed to issue 9,146 shares of common stock as a retainer. The
term
of this agreement was extended. The issuance of the securities under
this agreement was subject to the approval of the American Stock Exchange,
which approval was obtained and on May 21, 2008 the 9,146 retainer shares were
issued. This bank participated in the May 2008 private placement.
The
offer
and sale by the Company of the securities described above were made in reliance
upon the exemption from registration provided by Section 4(2) of the
Securities Act of 1933, as amended (the “Securities Act”), for transactions by
an issuer not involving a public offering. The offer and sale of such securities
were made without general solicitation or advertising to “accredited investors,”
as such term is defined in Rule 501(a) of Regulation D promulgated
under the Securities Act.
Item
8.01. Other Events.
On
May 9,
2008, NECC was granted a license from the State of New York to process, store
and use for research adult hematopoietic stem cells collected from New York
residents. NECC’s New York licensure will provide NeoStem with greatly expanded
storage capacity for one of its largest potential markets and facilitate
expanded relationships with leading physician practices.
On
May
21, 2008, the Company issued a press release announcing the Company's completion
of the May 2008 private placement described in Item 3.02 as well as matters
relating to moving forward its strategic relationship with NECC. A copy of
the
press release is attached as Exhibit 99.1.
Item
9.01. Financial Statements and Exhibits.
(d)
Exhibits.
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Exhibit
10.1
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Form
of Subscription Agreement among NeoStem, Inc. and certain investors
listed
therein.
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Exhibit
10.2
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Form
of Redeemable Warrant to Purchase Shares of Common Stock of NeoStem,
Inc.
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Exhibit
99.1
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Press
Release dated May 21, 2008
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SIGNATURE
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.
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NEOSTEM,
INC.
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By:
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/s/
Catherine M. Vaczy
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Catherine
M. Vaczy
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Vice
President and General Counsel
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Dated:
May 22, 2008
EXHIBIT
INDEX
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Exhibit
Number
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Description
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Exhibit
10.1
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Form
of Subscription Agreement among NeoStem, Inc. and certain investors
listed
therein.
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Exhibit
10.2
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Form
of Redeemable Warrant to Purchase Shares of Common Stock of NeoStem,
Inc.
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Exhibit
99.1
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Press
Release dated May 21, 2008
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EXHIBIT
10.1
SUBSCRIPTION
AGREEMENT
NeoStem,
Inc.
420
Lexington Avenue
Suite
450
New
York,
New York 10170
Attention:
Chief Executive Officer
Ladies
and Gentlemen:
The
undersigned investor (the “Investor”)
under
the following terms and conditions, offers to subscribe (the “Offer”) for the
securities of NeoStem, Inc., a Delaware corporation. (the “Company” or
“NeoStem”). The Company is issuing units (“Units”) at a per Unit price of $1.20
with each Unit consisting of (a) one share (the “Common Shares”) of common
stock, $.001 par value (the “Common Stock”) and (b) one accompanying warrant
(each, a “Warrant” and together the “Warrants”) for the purchase
of one share of Common Stock at an exercise price equal to $1.75, subject to
adjustment, expiring five years from the date of issuance (the “Warrant
Shares”). The
form
of Warrant is attached hereto as Exhibits
A.
The
Company is issuing up to 1,000,000 Units.
The
Investor understands that the Units are being issued pursuant to one or more
exemptions from the registration requirements of the Securities Act of 1933,
as
amended (the “Securities
Act”
or
the
“Act”),
in
a
private placement pursuant to an exemption from registration under Regulation
D
promulgated under Section 4(2) and Rule 506 of
the
Act. As such, the Common Stock, the Warrants and the Warrant Shares each are
“restricted
securities”
and
may
not be sold or transferred absent a registration statement declared effective
under the Act or an exemption from the registration requirements of the
Act.
1. Subscription.
The
closing (the “Closing”) of the transactions hereunder shall take place at the
offices of the Company or at such other location as the Company may determine
after the receipt by the Company of subscriptions for Units from Investors
from
time to time and after it has been determined that all conditions in this
Agreement have been met. At each Closing, funds equal to the Subscription Amount
of each Investor shall be delivered to the Company and the Company shall
promptly thereafter deliver to each such Investor his, her or its respective
Shares and Warrants as provided herein.
Subject
to the terms and conditions hereinafter set forth in this Subscription
Agreement, the Investor hereby offers to subscribe for Units as set forth in
the
Investor Signature Page attached hereto and contemporaneously herewith makes
payment for the purchase of the Units by wire transfer or check.
2. Conditions.
The
Offer
is made subject to the following conditions: (i) that the Company, acting in
good faith, shall have the right to accept or reject this Offer, in whole or
in
part, for any reason; (ii) that the Investor agrees to comply with the terms
of
this Subscription Agreement; and (iii) the American Stock Exchange shall have
approved the Offering.
Acceptance
of this Offer shall be deemed given by the countersigning of this Subscription
Agreement by the Company. In the event the Company does not accept the Offer,
any and all proceeds for the purchase of the Units by the Investor shall be
returned to Investor.
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3. Representations
and Warranties of the Investor.
The
Investor, in order to induce the Company to accept this Offer, hereby warrants
and represents as follows:
(a) Organization;
Authority.
The
Investor, if not an individual, is an entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization
with
the requisite power and authority to enter into and to consummate the
transactions contemplated by this Subscription Agreement and otherwise to carry
out its obligations hereunder. The purchase by Investor of the Units hereunder
has been duly authorized by all necessary action on the part of Investor. This
Subscription Agreement has been duly executed by Investor, and when delivered
by
Investor in accordance with the terms hereof, will constitute the valid and
legally binding obligation of Investor, enforceable against it in accordance
with its terms, except (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and other laws
of
general application affecting enforcement of creditors’ rights generally, and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies.
(b) Investor
Representation.
Investor understands that the Units,
Common Shares, Warrants and Warrant Shares are each
“restricted securities” and have not been registered under the Securities Act or
qualified under any applicable state securities law by reason of their issuance
in a transaction that does not require registration or qualification (based
in
part on the accuracy of the representations and warranties of the Investor
contained herein), and that such securities must be held indefinitely unless
a
subsequent disposition is registered under the Securities Act or any applicable
state securities laws or is exempt from such registration. The Investor hereby
agrees that the Company may insert the following or similar legend on the face
of the certificates evidencing the Units,
Common Shares, Warrants and Warrant Shares,
if
required in compliance with federal and state securities laws:
“These
securities have not been registered under the Securities Act of 1933, as amended
(the “Securities Act”) nor under the securities laws of any state. They may not
be sold, offered for sale, or hypothecated in the absence of a registration
statement in effect with respect to the securities under such act or an opinion
of counsel reasonably satisfactory to the company that such registration is
not
required pursuant to a valid exemption therefrom under the Securities
Act.”
The
Investor understands and acknowledges that the Commission currently takes the
position that coverage of short sales of shares of the Common Stock “against the
box” prior to the effective date of a registration statement registering the
re-sale of the Common Shares and the Warrant Shares is a violation of Section
5
of the Securities Act, as set forth in Item 65, Section 5 under Section A,
of
the Manual of Publicly Available Telephone Interpretations, dated July 1997,
compiled by the Office of Chief Counsel, Division of Corporation Finance.
Accordingly, the Investor agrees not to use any of the Common Shares or Warrant
Shares to cover any short sales made prior to the effective date of such
registration statement.
(c) No
Distribution.
Investor
is acquiring the Units as principal for its own account, in the ordinary course
of its business, and not with a view to or for distributing or reselling such
Units or any part thereof. Investor has no present intention of distributing
any
of such Common Shares, Warrants or Warrant Shares and has no agreement or
understanding, directly or indirectly, with any other individual, corporation,
partnership, trust, incorporated or unincorporated association, joint venture,
limited liability company, joint stock company, government (or an agency or
subdivision thereof), or other entity of any kind (each, a “Person”)
regarding the distribution of such Common Shares, Warrants or Warrant Shares
(this representation and warranty not limiting such Investor’s right or intent
to sell the Common Share, Warrants or Warrant Shares pursuant
to a Registration Statement or otherwise in compliance with applicable federal
and state securities laws).
-2-
(d)Investor
Status.
Investor is, and on each date on which it exercises any Warrants it will be
an
“Accredited Investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or
(a)(8) under the Securities Act. In
general, an Accredited Investor is deemed to be an institution with assets
in
excess of $5,000,000 or individuals with net worth in excess of $1,000,000
or
annual income exceeding $200,000, or $300,000 jointly with their
spouse.
(e)Experience
of Investor.
Investor, either alone or together with its representatives, has such knowledge,
sophistication, and experience in business and financial matters so as to be
capable of evaluating the merits and risks of the prospective investment in
the
Units, and has so evaluated the merits and risks of such investment.
The
Investor has not authorized any Person to act as his Purchaser Representative
(as that term is defined in Regulation D of the General Rules and Regulations
under the Act) in connection with this transaction. Investor
is able to bear the economic risk of an investment in the Units and, at the
present time, is able to afford a complete loss of such investment.
(f)General
Solicitation.
Investor is not purchasing the Units as a result of any advertisement, article,
notice or other communication regarding the Units published in any newspaper,
magazine, or similar media or broadcast over television or radio or presented
at
any seminar or any other general solicitation or general
advertisement.
(g) Access
to Information.
The
Investor has reviewed the SEC Reports (as that term is defined in Section 4(g))
and neither the Company nor any of its representatives have made any other
representations or warranties to the Investor with respect to the Company except
as contained herein
or in
the SEC Reports. Specifically, the Investor acknowledges that the SEC Reports
disclose that the Company is actively exploring acquisition opportunities and
that prior to the Closing the Company may enter into one or more letters of
intent in connection with pursuing such an acquisition. The Investor has also
been afforded the opportunity to ask questions of, and receive answers from,
the
officers and/or directors of the Company concerning the terms and conditions
of
the Offering and to obtain any additional information, to the extent that the
Company possesses such information or can acquire it without unreasonable effort
or expense, necessary to verify the accuracy of the information furnished;
and
has availed himself of such opportunity to the extent he considers appropriate
in order to permit him to evaluate the merits and risks of an investment in
the
Units. It is understood that all documents, records, and books pertaining to
this investment have been made available for inspection by the Investor during
reasonable business hours at the Company’s principal place of business.
Notwithstanding the foregoing, it is understood that the Investor is purchasing
the Units without being furnished any prospectus setting forth all of the
information that would be required to be furnished under the Securities Act
and
this Offering has not been passed upon or the merits thereof endorsed or
approved by any state or federal authorities.
(h)
Placement
Agent Fees.
The
Investor has been advised by any placement agent (the “Placement Agent”) through
whom the Units have been purchased of the fees being paid to the Placement
Agent
in connection with its acting as Placement Agent in the Offering and Investor
has no objections to the fees being paid.
4. Representations
and Warranties of the Company.
The
Company hereby makes the following representations and warranties to the
Investor:
-3-
(a) Organization
and Qualification.
Each of
the Company and its subsidiaries (each, a “Subsidiary”) is an entity duly
incorporated or otherwise organized, validly existing and in good standing
under
the laws of the jurisdiction of its incorporation or organization (as
applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
Neither
the Company nor any Subsidiary is in violation or default of any of the
provisions of its respective certificate or articles of incorporation, bylaws
or
other organizational or charter documents. Each of the Company and the
Subsidiaries is duly qualified to conduct business and is in good standing
as a
foreign corporation or other entity in each jurisdiction in which the nature
of
the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing,
as
the case may be, would not have or reasonably be expected to result in (i)
a
material adverse effect on the legality, validity or enforceability of this
Subscription Agreement, (ii) a material adverse effect on the results of
operations, assets, business, prospects or financial condition of the Company
and the Subsidiaries, taken as a whole, or (iii) a material adverse effect
on
the Company’s ability to perform in any material respect on a timely basis its
obligations under this Subscription Agreement (any of (i), (ii), or (iii),
a
“Material
Adverse Effect”)
and no
Proceeding has been instituted in any such jurisdiction revoking, limiting
or
curtailing or seeking to revoke, limit or curtail such power and authority
or
qualification.
(b) Authorization;
Enforcement.
The
Company has the requisite corporate power and authority to enter into and to
consummate the Offering, to issue the Units and, upon due exercise of the
Warrants, to duly issue the shares of Common Stock deliverable thereunder.
The
execution and delivery of this Subscription Agreement and the Units by the
Company and the consummation by it of the transactions contemplated hereby
have
been duly authorized by all necessary action on the part of the Company
and no further consent or action is required by the Company, other than the
Required Approvals (as defined below). This Subscription Agreement, when
executed and delivered in accordance with the terms hereof, will constitute
the
valid and binding obligation of the Company enforceable against the Company
in
accordance with its terms, except
(i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium,
and other laws of general application affecting enforcement of creditors’ rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.
(c) No
Conflicts.
The
execution, delivery, and performance of this Subscription Agreement by the
Company and the consummation by the Company of the Offering and issuance of
the
Units does not and will not: (i) conflict with or violate any provision of
the
Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws
or other organizational or charter documents or (ii) subject to obtaining the
Required Approvals, conflict with, or constitute a default (or an event that
with notice or lapse of time or both would become a default) under, or give
to
others any rights of termination, amendment, acceleration or cancellation (with
or without notice, lapse of time or both) of any agreement, credit facility,
debt, or other instrument (evidencing the Company’s or a Subsidiaries’ debt or
otherwise) or other understanding to which the Company or either of the
Subsidiaries is a party or by which any property or asset of the Company or
its
Subsidiaries is bound or affected, or (iii) result in a violation of any law,
rule, regulation, order, judgment, injunction, decree, or other restriction
of
any court or governmental authority as currently in effect to which the Company
or any of the Subsidiaries is subject (including federal and state securities
laws and regulations), or by which any property or asset of the Company or
either of the Subsidiaries is bound or affected; except in the case of each
of
clauses (ii) and (iii), such as could not, individually or in the aggregate
have
a Material Adverse Effect.
(d) Filings,
Consents, and Approvals.
Neither
the Company nor any of the Subsidiaries is required to obtain any consent,
waiver, authorization, or order of, give any notice to, or make any filing
or
registration with, any court or other federal, state, local, or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of this Subscription Agreement, other
than: (i) the filing with the Securities and Exchange Commission (“Commission”)
of the
Registration Statement pursuant to Section 5, (ii) the filing with the
Commission of a Form D pursuant to Commission Regulation D, and
(iii) any applicable Blue Sky filings (collectively,
the “Required
Approvals”).
-4-
(e) Issuance
of the Units.
The
Units, and each component or underlying security, are duly authorized and,
when
issued and paid for in accordance with this Subscription Agreement, will be
duly
and validly issued, fully paid and nonassessable, free and clear of all liens,
and not subject to any preemptive rights. The Company will reserve from its
duly
authorized capital stock a number of shares of Common Stock required for
issuance of the Warrant Shares.
(f) Capitalization.
The
number of shares and type of all authorized, issued, and outstanding capital
stock of the Company is as set forth in the SEC Reports as of the respective
dates set forth therein. No Person has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the
Offering. No
further approval or authorization of any stockholder, the Board of Directors
of
the Company, or others is required for the issuance and sale of the Units and
the underlying Warrant
Shares.
Upon
exercise of the Warrants in accordance with their terms, the Warrant Shares
issuable thereby will be deemed duly authorized, validly issued, fully paid
and
non-accessible in all respects.
(g) SEC
Reports; Financial Statements.
The
Company has filed all reports required to be filed by it under the Securities
Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the one year preceding the date hereof (or such shorter period as the
Company was required by law to file such material) (the foregoing materials
being collectively referred to herein as the “SEC
Reports”).
As of
their respective dates, the SEC Reports complied in all material respects with
the requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The Company has advised Investor(s) that a
copy
of each of the SEC Reports (together with all exhibits and schedules thereto
and
as amended to date) is available at http://www.sec.gov,
a
website maintained by the Commission where Investor(s) may view the SEC Reports.
(h) Material
Changes.
Since
the date of the latest audited financial statements included in the SEC Reports,
except as specifically disclosed in the SEC Reports or referred to in this
Subscription Agreement, (i) there has been no event, occurrence, or development
that has had a Material Adverse Effect, (ii) the Company has not incurred any
liabilities (contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past
practice and (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or required to be disclosed in filings
made with the Commission, (iii) the Company has not altered its method of
accounting or the identity of its auditors, and (iv) the Company has not
declared or made any dividend or distribution of cash or other property to
its
stockholders except in the ordinary course of business consistent with prior
practice, or purchased, redeemed or made any agreements to purchase or redeem
any shares of its capital stock except consistent with prior practice or
pursuant to existing Company stock option or similar plans.
(i) Litigation.
Except
as set forth in the SEC Reports and routine inquiries, there is no action,
suit,
inquiry, notice of violation, proceeding, or investigation pending or, to the
knowledge of the Company, threatened against or affecting the Company, the
Subsidiaries or any of its properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority (federal, state,
county, local, or foreign) (collectively, an “Action”)
which:
(i) adversely affects or challenges the legality, validity or enforceability
of
this Subscription Agreement or the Units or (ii) could, if there were an
unfavorable decision, individually or in the aggregate, have or reasonably
be
expected to result in a Material Adverse Effect.
(j) Compliance.
Neither
the Company nor any Subsidiary (i) is in default under or in violation of (and
no event has occurred that has not been waived that, with notice or lapse of
time or both, would result in a default by the Company or any Subsidiary under),
nor has the Company or any Subsidiary received notice of a claim that it is
in
default under or that it is in violation of, any indenture, loan or credit
agreement, (ii) is in violation of any order of any court, arbitrator or
governmental body, or (iii) is in violation of any statute, rule or regulation
of any governmental authority, including without limitation all foreign,
federal, state and local laws applicable to its business except in each case
as
could not have a Material Adverse Effect.
-5-
(k) Regulatory
Permits.
The
Company and the Subsidiaries possess the certificates, authorizations, and
permits issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct its business as described in the SEC Reports,
except where the failure to possess such permits would not, individually or
in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect (“Material
Permits”).
(l) Title
to Assets.
Except
as set forth in the SEC Reports, the Company and the Subsidiaries have good
and
marketable title in all real and personal property owned by them that is
material to the business of the Company and the Subsidiaries, in each case
free
and clear of any liens, encumbrances or other restrictions.
(m)Patents
and Trademarks.
To the
best of the Company’s knowledge, the Company and the Subsidiaries have, or have
rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses, and other
similar rights necessary or material for use in connection with their respective
businesses as described in the SEC Reports and which the failure to so have
could have a Material Adverse Effect (collectively, the “Intellectual
Property Rights”).
Neither the Company nor any Subsidiary has received a written notice that the
Intellectual Property Rights used by the Company or any Subsidiary violates
or
infringes upon the rights of any Person. To the knowledge of the Company, all
such Intellectual Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property Rights of
others.
(n)Insurance.
The
Company is insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as are prudent in the Company’s
reasonable discretion. The Company has no reason to believe that it will not
be
able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business.
(o) Private
Placement.
Assuming the accuracy of the Investor representations and warranties set forth
in Section 3, no registration under the Securities Act is required for the
offer
and sale of the Units by the Company to the Investor as contemplated hereby
or
the exercise of the Warrants.
(p)No
General Solicitation.
Neither
the Company nor any Person acting on behalf of the Company has offered or sold
any of the Units by any form of general solicitation or general advertising.
The
Company has offered the Units for sale only to each investor in the Offering
and
certain other “accredited investors” within the meaning of Rule 501 under the
Securities Act.
(q)Foreign
Corrupt Practices.
The
Company has not to its knowledge (i) directly or indirectly, used any corrupt
funds for unlawful contributions, gifts, entertainment or other unlawful
expenses related to foreign or domestic political activity, (ii) made any
unlawful payment to foreign or domestic government officials or employees or
to
any foreign or domestic political parties or campaigns from corporate funds,
(iii) failed to disclose fully any contribution made by the Company (or made
by
any person acting on its behalf of which the Company is aware) which is in
violation of law, or (iv) violated in any material respect any provision of
the
Foreign Corrupt Practices Act of 1977, as amended
(r)Accountants.
The
Company’s accountants are set forth in the SEC Reports. To the Company’s
knowledge, such accountants, who the Company expects will express their opinion
with respect to the financial statements to be included in the Company’s
upcoming financial statements, are a registered public accounting firm as
required by the Securities Act.
-6-
(s)Listing
and Maintenance Requirements.
The
Company’s Common Stock currently is quoted on the American Stock Exchange
(“AMEX”).
5. Registration
Rights.
The
Company grants registration rights to the Investor under the following terms
and
conditions:
(a) The
Company will prepare and file (which may include the preparation and filing
of
one or more pre-effective amendments to any registration statements that relates
to the Company’s securities, which may be currently on file or may be
subsequently filed with the Commission), at its own expense, a registration
statement under the Securities Act (the “Registration
Statement”)
with
the Commission within forty five (45) days of the final closing of the offering
for the non-underwritten public offering and resale of the Common Shares and
the
Warrant Shares (subject to adjustment as set forth in the Warrants) (the
“Registrable
Securities”)
through the facilities of all appropriate securities exchanges, if any, on
which
the Company’s Common Stock is being sold or on the over-the-counter market if
the Company’s Common Stock is quoted thereon. Such registration statement may
include securities required to be included by the Company pursuant to
registration rights granted by the Company prior to the date of this
Subscription Agreement. Notwithstanding
anything in this Subscription Agreement to the contrary, if the Commission
refuses to declare a Registration Statement filed pursuant to this Agreement
effective as a valid secondary offering under Rule 415 due to the number of
securities included in such Registration Statement relative to the outstanding
number of shares of Common Stock, then, without any liability under Section
5(f)
or any further obligation to register such excess Registrable Securities, the
Company shall be permitted to reduce the number of Registrable Securities
included in such Registration Statement to an amount such that the number of
securities included in such Registration Statement does not exceed an amount
that the Commission allows for the offering thereunder to qualify as a valid
secondary offering under Rule 415. The Company shall not be liable for
liquidated damages pursuant to Section 5(f) under this Agreement or otherwise
as
to any Registrable Securities which are not permitted by the Commission to
be
included in a Registration Statement due solely to SEC Guidance from the time
that it is determined that securities are not permitted to be
registered due to SEC Guidance or as to any delay occasioned by such SEC
Guidance solely to the extent it relates to the time needed to reduce the amount
of securities included in the Registration Statement. In such case, the
liquidated damages shall be calculated to only apply to the percentage of
Registrable Securities which are permitted in accordance with SEC Guidance
to be
included in such Registration Statement.
“SEC
Guidance”
means
(i) any written or oral guidance, comments, requirements or requests of the
Commission staff and (ii) the Securities Act.
(b) The
Company will use its reasonable best efforts to cause such Registration
Statement to become effective. Subject to Section 5(a), the number of shares
designated in the Registration Statement to be registered shall include
appropriate language regarding reliance upon Rule 416 to the extent permitted
by
the Commission.
(c) The
Company will maintain the Registration Statement or post-effective amendment
filed under the terms of this Subscription Agreement effective under the
Securities Act until the earlier of (i) the date that all of the Registrable
Securities have been sold pursuant to such Registration Statement, (ii) all
Registrable Securities have been otherwise transferred to Persons who may trade
such shares without restriction under the Securities Act, and the Company has
delivered a new certificate or other evidence of ownership for such securities
not bearing a restrictive legend, (iii) all Registrable Securities may be sold
at any time, without volume or manner of sale limitations pursuant to Rule
144(k) or any similar provision then in effect under the Securities Act in
the
opinion of counsel to the Company, or (iv) one year from the effective date
of
the Registration Statement (the “Effectiveness Period”).
-7-
(d) All
fees,
disbursements and out-of-pocket expenses and costs incurred by the Company
in
connection with the preparation and filing of the Registration Statement, in
making filings with NASD (including, without limitation, pursuant to NASD Rule
2710), and in complying with applicable federal securities laws (including,
without limitation, all attorneys’ fees of the Company) shall be borne by the
Company. The Investor shall bear any cost of underwriting and/or brokerage
discounts, fees, and commissions, if any, applicable to the Registrable
Securities being registered and sold by an underwriter for the Investor and
the
fees and expenses of their counsel. The Company shall use its reasonable best
efforts to qualify the Common Shares and Warrant Shares in the State of
residence of the Investor. However, the Company shall not be required to qualify
in any state which will require an escrow or other restriction relating to
the
Company and/or the sellers, or which will require the Company to qualify to
do
business in such state or require the Company to file therein any general
consent to service of process. The Company at its expense will supply the
Investor with copies of the applicable Registration Statement and any prospectus
included therein and other related documents in such quantities as may be
reasonably requested by the Investor.
(e) Certificates
evidencing the Registrable Securities shall not contain any legend: (i)
following any sale of Common Shares or Warrant Shares pursuant to Rule 144,
or
(ii) if such Common Shares or Warrant Shares are eligible for sale under Rule
144(k); or (iii) following any sale of Common Shares or Warrant Shares pursuant
to the Registration Statement; provided,
however,
in
connection with the sale or transfer of the Common Shares or Warrant Shares,
Investor hereby agrees to adhere to and abide by all prospectus delivery
requirements under the Securities Act and rules and regulations of the
Commission and provide the Company with customary documentation, as applicable.
The Company shall cause its counsel to issue a legal opinion to the Company’s
transfer agent promptly upon request of the Investor if required by the
Company’s transfer agent to effect the removal of the legend
hereunder.
(f) In
the
event that the Registration Statement is not filed as set forth in above, and
the Company does not use its reasonable best efforts to respond to any comments
of the SEC within twenty (20) business days following receipt thereof, then
the
Company will issue to each Investor one percent (1%) of the net proceeds
received from such Investor in the Private Placement for no additional cost.
Additionally, for every thirty (30) days that the Company continues to be
delayed from filing the Registration Statement with the Commission or continues
to fail to use its reasonable best efforts to respond to any comments from
the
Commission, the Company will issue to each Investor 1% of the net proceeds
received from such Investor in the Private Placement for no additional cost.
All
additional amounts that may be issued as provided herein shall not exceed 5%
of
the net proceeds received in the Private Placement. Such amounts shall be as
partial compensation for such failure and not as a penalty.
The
provisions of this paragraph 5(f) shall not apply in the event the Company
does
not file as set forth above the Registration Statement because the Company
does
not have available audited financial statements required by the SEC of a company
with which the Company has signed a letter of intent to acquire.
(g) The
Company
will use
its reasonable best efforts to prepare and make publicly available in accordance
with Rule 144(c) such information as is required for Investor to sell the
Registrable Securities under Rule 144 in the event the Registration Statement
is
unavailable. The Company further covenants that, in the event the Registration
Statement is unavailable, it will take such further action as any holder of
Registrable Securities may reasonably request, all to the extent required from
time to time to enable such Person to sell such Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144.
(h)
In
the
case of each registration effected by the Company pursuant to any section
herein, the Company will:
-8-
(i) Prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of
the
Securities Act with respect to a disposition of all securities covered by such
registration statement;
(ii) Notify
the Investor at any time when a prospectus relating thereto is required to
be
delivered under the Securities Act, of the happening of any event as a result
of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or incomplete in light of the circumstances then existing, and
at
the request of the shareholders, prepare and furnish to them a reasonable number
of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the Investor, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or incomplete in light of the circumstances then
existing; provided that,
for not
more than 120 consecutive business days (or a total of not more than 240
calendar days in any 12-month period), the Company may delay the disclosure
of
material non-public information concerning the Company the public disclosure
of
which at the time is not, in the good faith opinion of the Company in the best
interests of the Company and which may, based on advice of outside counsel,
be
delayed under applicable law or regulation (an “Allowed
Delay”);
provided,
further,
that
the Company shall promptly (a) notify each Investor in writing of the existence
of (but in no event, without the prior written consent of such Investor, shall
the Company disclose to such Investor any of the facts or circumstances
regarding) material non-public information giving rise to an Allowed Delay
and
(b) advise each Investor in writing to cease all sales under such registration
statement until the termination of the Allowed Delay;
(iii)
Use
its
reasonable best efforts to prevent the issuance of any stop order or other
suspension of effectiveness of a registration statement, and, if such an order
is issued, to obtain the withdrawal of such order at the earliest possible
moment and to notify Investor (and, in the event of an underwritten offering,
the managing underwriter) of the issuance of such order and the resolution
thereof;
(iv) If
NASD
Rule 2710 requires any broker-dealer to make a filing prior to executing a
sale
of Registrable Securities by an Investor, make an Issuer Filing with the NASD
Corporate Financing Department pursuant to NASD Rule 2710 and respond within
five business days to any comments received from NASD in connection
therewith.
(v) Otherwise
use its reasonable best efforts to comply with all applicable rules and
regulations of the Commission.
(i) To
the
extent Investor includes any Common Shares or Warrant Shares in a registration
statement pursuant to the terms hereof, the Company will indemnify and hold
harmless Investor, its directors and officers, and each Person, if any, who
controls Investor within the meaning of the Securities Act, from and against,
and will reimburse Investor, its directors and officers and each controlling
Person with respect to, any and all loss, damage, liability, cost, and expense
to which Investor or such controlling Person may become subject under the
Securities Act or otherwise, insofar as such losses, damages, liabilities,
costs, or expenses are caused by any untrue statement or alleged untrue
statement of any material fact contained in such registration statement, any
prospectus contained therein or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein
a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading;
provided,
however,
that
the Company will not be liable in any such case to the extent that any such
loss, damage, liability, cost or expense arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
so
made in conformity with information furnished by Investor or any such
controlling Person in writing specifically for use in the preparation
thereof.
-9-
(j) To
the
extent Investor includes any Common Shares or Warrant Shares in a registration
statement pursuant to the terms hereof, Investor will indemnify and hold
harmless the Company, its directors and officers and any controlling Person
from
and against, and will reimburse the Company, its directors and officers and
any
controlling Person with respect to, any and all loss, damage, liability, cost,
or expense to which the Company, its directors and officers or such controlling
Person may become subject under the Securities Act or otherwise, insofar as
such
losses, damages, liabilities, costs, or expenses are caused by any untrue
statement or alleged untrue statement of any material fact contained in such
registration statement, any prospectus contained therein or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in
which
they were made, not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission
or
alleged omission was so made in reliance upon and in conformity with written
information furnished by or on behalf of the Investor specifically for use
in
the preparation thereof and provided further, that the maximum amount that
may
be recovered from Investor shall be limited to the amount of proceeds received
by Investor from the sale of such shares of Common Stock.
(k) To
the
extent any indemnification by an indemnifying party is prohibited or limited
by
law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable hereunder to the extent
permitted by law, provided that (i) no contribution shall be made under
circumstances where the indemnifying party would not have been liable for
indemnification pursuant to the provisions hereof, (ii) no seller of securities
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of
the Securities Act) shall be entitled to contribution from any seller of
securities who was not guilty of such fraudulent misrepresentation, and
(iii) the amount of the contribution together with any other payments made
in respect of such loss, damage, liability, or expense, by any seller of
securities shall be limited to the net amount of proceeds received by such
seller from the sale of such securities.
(l) The
Investor will cooperate with the Company in connection with this Subscription
Agreement, including timely supplying all information and executing and
returning the Selling Securityholder Notice and Questionnaire attached hereto
as
Exhibit
B,
and any
other documents requested by the Company that are required to enable the Company
to perform its obligations to register the Common Shares and Warrant
Shares.
6. Other
Agreements of the Company and the Investor.
(a)Acknowledgment
of Dilution.
The
Company and Investor acknowledge that the issuance of the Common Shares and
the
Warrant Shares will result in dilution of the outstanding shares of Common
Stock, which dilution may be substantial.
(b)Exercise
Procedures.
The
form of Notice of Exercise included in the Warrants sets forth the totality
of
the procedures required of the Investor in order to exercise the
Warrants.
(c)Use
of
Proceeds.
The
Company shall use the net proceeds from the sale of the Units hereunder for
general working capital purposes.
(d) Press
Releases.
The
Company shall issue a press release or file a Current Report on Form 8-K as
required disclosing all material terms of the transactions contemplated hereby
upon the final closing of the offering and in its reasonable discretion.
-10-
(e)
Confidentiality.
Each
Investor agrees that he, she or it will keep confidential and will not disclose,
divulge or use for any purpose other than to monitor his, her or its investment
in the Company any confidential, proprietary or secret information which such
Investor
may obtain from the Company pursuant to financial statements, reports and other
materials or information submitted by the Company to such Investor pursuant
to
this Agreement or otherwise (but not including the SEC Reports) (“Confidential
Information”), unless such Confidential Information is known, or until such
Confidential Information becomes known, to the public (other than as a result
of
a breach of this section by such Investor); provided,
however,
that an
Investor may disclose Confidential Information (i) to his, her or its
attorneys, accountants, consultants, and other professionals to the extent
necessary to obtain their services in connection with monitoring his, her or
its
investment in the Company,
or (ii)
as may otherwise be required by law, provided that the Investor takes reasonable
steps to minimize the extent of any such required disclosure and promptly
notifies the Company when it becomes aware of such legal requirement
.
7. Miscellaneous.
(a) Termination.
The
Investor agrees that he shall not cancel, terminate, or revoke this Subscription
Agreement or any agreement of the Investor made hereunder other than as set
forth herein, and that this Subscription Agreement shall survive the death
or
disability of the Investor. If the Company elects to cancel this Subscription
Agreement, provided that it returns to the Investor, without interest and
without deduction, all sums paid by the Investor, this Offer shall be null
and
void and of no further force and effect, and no party shall have any rights
against any other party hereunder.
(b)Entire
Agreement.
This
Subscription Agreement, together with the exhibits hereto, contains the entire
understanding of the Company and the Investor with respect to the subject matter
hereof.
(c) Notices.
Any and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (a) the second Business Day following the date of mailing,
if
sent by U.S. nationally recognized overnight courier service, or (b) upon actual
receipt by the party to whom such notice is required to be given. The address
for such notices and communications shall be to the
Investor at his address set forth on the Investor Signature Page, and to the
Company at the addresses set forth in the SEC Reports.
(d) Amendments;
Waivers.
No
provision of this Agreement may be waived or amended except in a written
instrument signed, in the case of an amendment, or in the case of a waiver,
by
the Company and the individual Investor. No waiver of any default with respect
to any provision, condition or requirement of this Agreement shall be deemed
to
be a continuing waiver in the future or a waiver of any subsequent default
or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right.
(e)Construction.
The
headings herein are for convenience only, do not constitute a part of this
Subscription Agreement and shall not be deemed to limit or affect any of the
provisions hereof.
(f)Successors
and Assigns.
This
Subscription Agreement shall be binding upon and inure to the benefit of the
parties and their successors and permitted assigns. The Company may not assign
this Subscription Agreement or any rights or obligations hereunder without
the
prior written consent of each Investor in the Offering. Investor may assign
any
or all of its rights under this Agreement to any Person to whom Investor assigns
or transfers any of the Common Shares or Warrant Shares.
(g)No
Third-Party Beneficiaries.
This
Subscription Agreement is intended for the benefit of the parties hereto and
their respective successors and permitted assigns and is not for the benefit
of,
nor may any provision hereof be enforced by, any other Person.
-11-
(h)Governing
Law.
All
questions concerning the construction, validity, enforcement, and interpretation
of this Subscription Agreement shall be governed by and construed and enforced
in accordance with the internal laws of the State of New York, without regard
to
the principles of conflicts of law thereof. Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Subscription Agreement (whether brought
against a party hereto or its respective affiliates, directors, officers,
shareholders, employees, or agents) shall be commenced exclusively in the state
and federal courts sitting in the City of New York. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, Borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper or inconvenient venue for such
proceeding. Each party hereby irrevocably waives personal service of process
and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Subscription Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. The parties hereby waive all rights to a trial
by jury. If either party shall commence an action or proceeding to enforce
any
provisions of this Subscription Agreement, then the prevailing party in such
action or proceeding shall be reimbursed by the other party for its attorneys’
fees and other costs and expenses incurred with the investigation, preparation,
and prosecution of such action or proceeding.
(i)Survival.
The
representations and warranties contained herein shall survive the closing of
the
transaction hereunder.
(j)Execution.
In the
event that any signature is delivered by facsimile transmission, such signature
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
facsimile signature page were an original thereof. This Agreement may be
executed in two or more counterparts each of which shall be deemed an original,
but all of which shall together constitute one and the same
instrument.
(k)Severability.
If any
provision of this Subscription Agreement is held to be invalid or unenforceable
in any respect, the validity and enforceability of the remaining terms and
provisions of this Subscription Agreement shall not in any way be affected
or
impaired thereby and the parties will attempt to agree upon a valid and
enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Subscription
Agreement.
(l)Remedies.
In
addition to being entitled to exercise all rights provided herein or granted
by
law, including recovery of damages, each of Investor and the Company will be
entitled to specific performance under this Subscription Agreement. The parties
agree that monetary damages may not be adequate compensation for any loss
incurred by reason of any breach of obligations described in the foregoing
sentence and hereby agrees to waive in any action for specific performance
of
any such obligation the defense that a remedy at law would be
adequate.
(m) Fees
and Expenses.
Except
as provided in writing, the parties hereto shall be responsible for their own
legal and other expenses, if any, in connection with this transaction.
-12-
INVESTOR
SIGNATURE PAGE FOR NEOSTEM, INC. SUBSCRIPTION AGREEMENT
Please
print or type, Use ink only. (All Parties Must Sign)
The
undersigned Investor hereby certifies that he (i) has received and relied solely
upon the SEC Reports, this Subscription Agreement and their respective exhibits
and schedules, (ii) agrees
to
all the terms and conditions of this Subscription Agreement, (iii) meets the
suitability standards set forth herein and (iv) is a resident of the state
or
foreign jurisdiction indicated below.
Dollar
Amount of Units Subscribed for: $____________
|
______________________________________________
|
If
other than individual check one and
|
|
Name
of Investor (Print)
|
indicate
capacity of signatory under the
|
|
signature:
|
|
|
______________________________________________
|
o
Trust
|
|
Name
of Joint Investor (if any) (Print)
|
o Estate
|
|
o Uniform
Gifts to Minors
Act
|
|
|
______________________________________________
|
State
of_______________
|
|
Signature
of Investor
|
o Attorney-in-fact
|
|
o Corporation
|
|
|
______________________________________________
|
o Other
|
|
Signature
of Joint Investor (if any)
|
|
|
If
Joint Ownership, Check one:
|
|
|
______________________________________________
|
o Joint
Tenants with Right of
|
|
Capacity
of Signatory (if applicable)
|
Survivorship
|
|
o Tenants
in
Common
|
|
|
______________________________________________
|
o Tenants
by the
Entirety
|
|
Social
Security or Taxpayer Identification Number
|
o Community
Property
|
|
Investor
Address:
|
Backup
Withholding Statement:
|
|
o Please
check this box only if
the
|
|
|
______________________________________________
|
investor is subject to backup
|
|
Street
Address
|
withholding
|
|
|
|
|
______________________________________________
|
Foreign
Person:
|
|
City
State
Zip Code
|
o Please
check this box only if
the
|
|
investor is a nonresident alien, foreign
|
|
|
Telephone:(
)
|
foreign partnership, foreign trust,
|
|
corporation, or foreign estate
|
|
|
Fax:
(
)
|
Country______________________
|
|
Passport
#____________________
|
|
|
ID
#_________________________
|
|
|
E-mail:____________________________________
|
ID
Type______________________
|
|
Address
for Delivery of Units (if different from above):
|
|
|
______________________________________________
|
|
|
______________________________________________
|
|
|
City
State
Zip Code
|
-13-
THE
SUBSCRIPTION FOR UNITS OF NEOSTEM, INC. BY THE ABOVE NAMED INVESTOR(S) IS
ACCEPTED THIS ________ DAY OF ______________________, 2008.
|
NEOSTEM,
INC.
|
||
|
By:
|
||
|
Name:
|
Robin
L. Smith
|
|
|
Title:
|
Chairman
and CEO
|
|
-14-
EXHIBIT
10.2
THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY OTHER
APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED, OR OTHERWISE DISPOSED OF, EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED.
Warrant
No. _____
WARRANT
TO PURCHASE SHARES OF COMMON STOCK
OF
NEOSTEM,
INC.
THIS
CERTIFIES that, for value received, ______________is entitled to purchase from
NEOSTEM, INC., a Delaware corporation (the “Corporation”),
subject to the terms and conditions hereof, ____________________ (______) shares
(the “Warrant
Shares”)
of
common stock, $.001 par value (the “Common
Stock”).
This
warrant, together with all warrants hereafter issued in exchange or substitution
for this warrant, is referred to as the “Warrant”
and
the
holder of this Warrant is referred to as the “Holder.”
The
number of Warrant Shares is subject to adjustment as hereinafter provided.
Notwithstanding anything to the contrary contained herein, this Warrant shall
expire at 5:00 p.m. (Eastern Time) on _____________,
2013
(the
“Termination
Date”).
1. Exercise
of Warrants.
The
Holder may, at any time six months after the date of issuance (i.e. on
_____________,
2008)
and
prior to the Termination Date, exercise this Warrant in whole or in part at
an
exercise price per share equal to $1.75 per share, subject to adjustment as
provided herein (the “Exercise
Price”),
by
the surrender of this Warrant (properly endorsed) at the principal office of
the
Corporation, or at such other agency or office of the Corporation in the United
States of America as the Corporation may designate by notice in writing to
the
Holder at the address of such Holder appearing on the books of the Corporation,
and by payment to the Corporation of the Exercise Price in lawful money of
the
United States by check or wire transfer for each share of Common Stock being
purchased. Upon any partial exercise of this Warrant, there shall be executed
and issued to the Holder a new Warrant in respect of the shares of Common Stock
as to which this Warrant shall not have been exercised. In the event of the
exercise of the rights represented by this Warrant, a certificate or
certificates for the Warrant Shares so purchased, as applicable, registered
in
the name of the Holder, shall be delivered to the Holder hereof as soon as
practicable after the rights represented by this Warrant shall have been so
exercised.
2. Reservation
of Warrant Shares.
The
Corporation agrees that, prior to the expiration of this Warrant, it will at
all
times have authorized and in reserve, and will keep available, solely for
issuance or delivery upon the exercise of this Warrant, the number of Warrant
Shares as from time to time shall be issuable by the Corporation upon the
exercise of this Warrant.
3. No
Stockholder Rights.
This
Warrant shall not entitle the holder hereof to any voting rights or other rights
as a stockholder of the Corporation.
4. Transferability
of Warrant.
Prior
to the Termination Date and subject to compliance with applicable Federal and
State securities and other laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company by
the
Holder in person or by duly authorized attorney, upon surrender of this Warrant
together with the Assignment Form annexed hereto properly endorsed for transfer.
Any registration rights to which this Warrant may then be subject shall be
transferred together with the Warrant to the subsequent Investor.
-1-
5. Certain
Adjustments.
With
respect to any rights that Holder has to exercise this Warrant and convert
into
shares of Common Stock, Holder shall be entitled to the following
adjustments:
(a) Merger
or Consolidation.
If at
any time there shall be a merger or a consolidation of the Corporation with
or
into another entity when the Corporation is not the surviving corporation,
then,
as part of such merger or consolidation, lawful provision shall be made so
that
the holder hereof shall thereafter be entitled to receive upon exercise of
this
Warrant, during the period specified herein and upon payment of the aggregate
Exercise Price then in effect, the number of shares of stock or other securities
or property (including cash) of the successor corporation resulting from such
merger or consolidation, to which the holder hereof as the holder of the stock
deliverable upon exercise of this Warrant would have been entitled in such
merger or consolidation if this Warrant had been exercised immediately before
such transaction. In any such case, appropriate adjustment shall be made in
the
application of the provisions of this Warrant with respect to the rights and
interests of the holder hereof as the holder of this Warrant after the merger
or
consolidation.
(b) Reclassification,
Recapitalization, etc.
If the
Corporation at any time shall, by subdivision, combination or reclassification
of securities, recapitalization, automatic conversion, or other similar event
affecting the number or character of outstanding shares of Common Stock, or
otherwise, change any of the securities as to which purchase rights under this
Warrant exist into the same or a different number of securities of any other
class or classes, this Warrant shall thereafter represent the right to acquire
such number and kind of securities as would have been issuable as the result
of
such change with respect to the securities that were subject to the purchase
rights under this Warrant immediately prior to such subdivision, combination,
reclassification or other change.
(c) Split
or Combination of Common Stock and Stock Dividend.
In case
the Corporation shall at any time subdivide, redivide, recapitalize, split
(forward or reverse) or change its outstanding shares of Common Stock into
a
greater number of shares or declare a dividend upon its Common Stock payable
solely in shares of Common Stock, the Exercise
Price
shall be
proportionately reduced and the number of Warrant Shares proportionately
increased. Conversely, in case the outstanding shares of Common Stock of the
Corporation shall be combined into a smaller number of shares, the Exercise
Price
shall be
proportionately increased and the number of Warrant Shares proportionately
reduced.
6. Legend
and Stop Transfer Orders.
Unless
the Warrant Shares have been registered under the Securities Act, upon exercise
of any part of the Warrant, the Corporation shall instruct its transfer agent
to
enter stop transfer orders with respect to such Warrant Shares, and all
certificates or instruments representing the Warrant Shares shall bear on the
face thereof substantially the following legend:
THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY OTHER
APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED, OR OTHERWISE DISPOSED OF, EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION THAT SUCH
REGISTRATION IS NOT REQUIRED.
-2-
7.Redemption
of Warrant.
This
Warrant is subject to redemption by the Company as provided in this Section
7.
(a) This
Warrant may be redeemed, at the option of the Company, in whole and not in
part,
at a redemption price of $.0001 per Warrant (the “Redemption
Price”),
provided (i) the average closing price of the Common Stock as quoted by
Bloomberg, LP., or the Principal Trading Market (as defined below) on which
the
Common Stock is included for quotation or trading, shall equal or exceed $2.40
per share (taking into account all adjustments) for twenty (20) out of thirty
(30) consecutive trading days.
(b) If
the
conditions set forth in Section
7(a)
are met,
and the Company desires to exercise its right to redeem this Warrant, it shall
mail a notice (the “Redemption
Notice”)
to the
registered holder of this Warrant by first class mail, postage prepaid, at
least
ten (10) business days prior to the date fixed by the Company for redemption
of
the Warrants (the “Redemption
Date”).
(c
) The
Redemption Notice shall specify (i) the Redemption Price, (ii) the Redemption
Date, (iii) the place where the Warrant certificates shall be delivered and
the
redemption price paid, and (iv) that the right to exercise this Warrant shall
terminate at 5:00 p.m. (New York time) on the business day immediately
preceding the Redemption Date. No failure to mail such notice nor any defect
therein or in the mailing thereof shall affect the validity of the proceedings
for such redemption except as to a holder (a) to whom notice was not mailed,
or
(b) whose notice was defective. An affidavit of the Secretary or an
Assistant Secretary of the Company that the Redemption Notice has been mailed
shall, in the absence of fraud, be prima
facie
evidence
of the facts stated therein.
(d) Any
right
to exercise a Warrant shall terminate at 5:00 p.m. (New York time) on the
business day immediately preceding the Redemption Date. On and after the
Redemption Date, the holder of this Warrant shall have no further rights except
to receive, upon surrender of this Warrant, the Redemption Price.
(e) From
and
after the Redemption Date, the Company shall, at the place specified in the
Redemption Notice, upon presentation and surrender to the Company by or on
behalf of the holder thereof the warrant certificates evidencing this Warrant
being redeemed, deliver, or cause to be delivered to or upon the written order
of such holder, a sum in cash equal to the Redemption Price of this Warrant.
From and after the Redemption Date, this Warrant shall expire and become void
and all rights hereunder and under the warrant certificates, except the right
to
receive payment of the Redemption Price, shall cease.
8. Miscellaneous.
This
Warrant shall be governed by and construed in accordance with the laws of the
State of New York. All the covenants and provisions of this Warrant by or for
the benefit of the Corporation shall bind and inure to the benefit of its
successors and assigns hereunder. Nothing in this Warrant shall be construed
to
give to any person or corporation other than the Corporation and the holder
of
this Warrant any legal or equitable right, remedy, or claim under this Warrant.
This Warrant shall be for the sole and exclusive benefit of the Corporation
and
the Holder. The section headings herein are for convenience only and are not
part of this Warrant and shall not affect the interpretation hereof. Upon
receipt of evidence satisfactory to the Corporation of the loss, theft,
destruction, or mutilation of this Warrant, and of indemnity reasonably
satisfactory to the Corporation, if lost, stolen, or destroyed, and upon
surrender and cancellation of this Warrant, if mutilated, the Corporation shall
execute and deliver to the Holder a new Warrant of like date, tenor, and
denomination.
-3-
IN
WITNESS WHEREOF, the Corporation has caused this Warrant to be executed by
its
duly authorized officers under its seal, this ___ day of ________
2008.
|
NEOSTEM,
INC.
|
|
|
Robin
L. Smith, Chairman & & Chief Executive Officer
|
|
-4-
WARRANT
EXERCISE FORM
To
Be Executed by the Holder in Order to Exercise Warrant
| To: |
NeoStem,
Inc. Dated:
________________ __, 20__
|
420
Lexington Avenue
Suite
450
New
York,
New York 10170
Attn:
Chairman and CEO
The
undersigned, pursuant to the provisions set forth in the attached Warrant
No. ______, hereby irrevocably elects to purchase ____________ shares of
the Common Stock of NeoStem, Inc. 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. Such
payment
takes the form of $__________ in lawful money of the United
States.
|
The
undersigned hereby requests that certificates for the Warrant Shares purchased
hereby be issued in the name of:
(please
print or type name and address)
(please
insert social security or other identifying number)
and
be
delivered as follows:
(please
print or type name and address)
(please
insert social security or other identifying number)
and
if
such number of shares of Common Stock shall not be all the shares evidenced
by
this Warrant Certificate, that a new Warrant for the balance of such shares
be
registered in the name of, and delivered to, Holder.
|
Signature
of Holder
|
|
|
|
SIGNATURE
GUARANTEE:
|
-5-
ASSIGNMENT
FORM
(To
assign the foregoing warrant, execute
this
form. Do not use this form to exercise the warrant.)
FOR
VALUE
RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
assigned to
whose
address is
|
Holder’s
Signature:
|
||
|
Holder’s
Address:
|
||
|
|
||
| Signature Guaranteed: |
NOTE:
The
signature to this Assignment Form must correspond with the name as it appears
on
the face of the Warrant, without alteration or enlargement or any change
whatsoever, and must be guaranteed by a bank or trust Corporation. Officers
of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing
Warrant.
-6-
EXHIBIT
99.1
NeoStem
Announces Private Placement Financing to Advance Marketing Campaign;
Financing
Includes Investment from New England Cryogenic Center
NEW
YORK, May 21, 2008-- NeoStem, Inc. (AMEX:NBS),
which
is pioneering the pre-disease collection, processing and long-term storage
of
adult stem cells for future medical need, today announced a private placement
financing in a total amount of $900,000, which includes a strategic investment
from the New England Cryogenic Center, Inc. (NECC), one of the largest
full-service cryogenic laboratories in the world.
The
financing consists of units priced at $1.20 per unit with each unit consisting
of one share of common stock and a warrant to purchase one share of common
stock
at $1.75 per share.
Robin
Smith, MD, MBA, NeoStem’s CEO, stated, “We are pleased to announce this new
financing, which included investments from both NECC and NeoStem management.
These funds will be instrumental in executing on our plan to educate potential
clientele about our services, particularly in the Northeast which we believe
will be a powerful market. We look forward to working closely with NECC, a
strategic partner since October 2007 and located in Massachusetts, to provide
extensive new stem cell processing and storage capabilities on the East Coast
as
well as to embark on a marketing campaign to NECC customers.”
On
May 9,
2008, NECC was granted a license from the State of New York to process, store
and use for research adult hematopoietic stem cells collected from New York
residents. NECC’s New York licensure will provide NeoStem with greatly expanded
storage capacity for one of its largest potential markets and facilitate
expanded relationships with leading physician practices.
“We
are
excited to expand our laboratory offerings to NeoStem in connection with this
exciting new project and plan to offer NeoStem’s services to our current clients
who have elected to store their children’s stem cells at the time of birth and
those customers who have recovered from cancer” said John Rizza, CEO of New
England Cryogenic Center.
Note:
The securities sold in the private placement were sold without registration
under the Securities Act of 1933, as amended and may not be resold unless
subsequently registered under the Act or pursuant to an exemption from
registration under the Act.
About
NeoStem, Inc.
NeoStem
has a growing nationwide network of adult stem cell collection centers, enabling
people to donate and store their own (autologous) stem cells when they are
young
and healthy for their personal use in times of future medical need. The Company
has also recently entered into research and development through the acquisition
of a worldwide exclusive license to technology to identify and isolate VSELs
(very small embryonic-like stem cells), which have been shown to have several
physical characteristics that are generally found in embryonic stem
cells.
Forward-Looking
Statements
This
press release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
reflect management's current expectations, as of the date of this press release,
and involve certain risks and uncertainties. The Company's actual results could
differ materially from those anticipated in these forward-looking statements
as
a result of various factors. Factors that could cause future results to
materially differ from the recent results or those projected in forward-looking
statements include the 'Risk Factors' described in the Company's periodic
filings with the Securities and Exchange Commission.
Contact:
NeoStem,
Inc.
Robin
Smith, Chief Executive Officer
T:
212-584-4180
E:
rsmith@neostem.com
www.neostem.com